Investment Crisis in Ethiopia: Rising Costs and Uncertainty Drive Business Exodus

Amid shifting policies and persistent instability, investors in Ethiopia are grappling with significant challenges in managing their businesses, with many opting to migrate abroad in search of more favorable opportunities. In response, the Addis Ababa Investors Forum recently brought together key stakeholders, offering a platform for them to share their struggles and call for a united approach to overcome these obstacles. Ethiopia’s shift to a market-based foreign exchange system in July 2024, which saw the Ethiopian birr devalued by 30% against the US dollar, has further complicated the investment climate, particularly for those looking to enter the country’s industrial parks. “It is not profitable to buy the land with USD,” said Ashenafi Mussie, President of the Addis Ababa Investors Forum. “Because most of our customers are domestic.” He further noted that many investors are reconsidering their plans to join the industrial parks, as other sectors have become more profitable. “For instance, if an investor wants 10,000 square meters of empty land, it will cost around ETB 400 million. With this investment, the investor could instead start an alternate, more profitable business,” he emphasized. In addition to these challenges, the Addis Ababa Investors Forum, which represents over 65,000 investors, highlighted several key issues that are hindering investment. The president pointed to a limited land supply, restricted access to credit, higher taxes, and ongoing political instability and insecurity. As a result, many investors are now migrating abroad in search of more favorable opportunities. “I urge all investors in the country, as well as those who have already migrated abroad, to come together and voice these challenges collectively,” said Ashenafi. “There are solutions if we collaborate; otherwise, these challenges will continue to persist.” The Commercial Bank of Ethiopia (CBE) has recently revised its interest rates across multiple loan categories, a move that is expected to significantly impact businesses. The increased borrowing costs, especially for agricultural, commercial, and import-related loans, are likely to strain cash flows and limit access to affordable credit for many enterprises. “The dollar is not ours, we can’t control it,” he told Addis Insight. “Unless Ethiopia improves productivity across various sectors, such as agriculture and industries, beyond the banking sector, everything will get more expensive.” He highlighted that the solution lies in fostering a more conducive business environment and supporting investors. By encouraging investment and focusing on import-substitution and productivity improvements, Ethiopia can strengthen its economy, allowing the local birr to appreciate and reduce the pressure on businesses. The Addis Ababa Investors Forum, in order to negotiate with the concerned authorities about the challenges they are facing, is collecting documented complaints from investors between March 10 and March 27, 2025. The forum also invites migrated investors to submit their complaints via phone call.

Ethiopia to Launch Its Third Earth Observation Satellite in 2026 with Chinese Collaboration

Ethiopia is making significant strides in space technology with plans to launch its third Earth observation satellite (EOS) in 2026. This project is spearheaded by the Ethiopian Space Science and Geospatial Institute (ESSGI), in partnership with China. The new satellite is expected to provide higher resolution images and enhanced monitoring capabilities compared to its predecessors. According to Mr. Tesfaye Fufa, the Executive Director of Satellite Monitoring at ESSGI, preparations for the launch are already underway. However, he did not disclose the financial details of the collaboration between Ethiopia and China. Ethiopia’s space program is relatively young, but it has made notable advancements in a short time: With the launch of the third Earth observation satellite, Ethiopia aims to strengthen its capabilities in: Ethiopia is among the few African nations actively developing space programs, but other countries are ahead in terms of the number and types of satellites launched. Here’s how Ethiopia compares to some of the leading space programs in Africa: Many African countries are recognizing the strategic value of space technology for national development. Satellites play a crucial role in addressing challenges such as climate change, food security, and natural disaster management. Countries like Egypt, South Africa, and Nigeria have more developed space programs and have launched satellites for communications, military surveillance, and scientific research. While Ethiopia is still in the early stages, its space ambitions are growing, especially with strong support from China. China has been a key partner for many African countries in space projects, funding and supporting satellite development to enhance scientific research and technological advancements. With the launch of its third satellite in 2026, Ethiopia is positioning itself as a leader in Earth observation technology in East Africa. If Ethiopia continues on this trajectory, it could become a regional hub for satellite-based research, climate monitoring, and data analysis, benefiting sectors such as agriculture, water management, and infrastructure development. Ethiopia’s upcoming satellite launch is a significant step in the country’s space exploration journey. While countries like Egypt, South Africa, and Nigeria have more advanced space programs, Ethiopia’s continued investment in satellite technology demonstrates its commitment to leveraging space science for national development. With support from China and other global partners, Ethiopia’s space program is expected to grow further, offering long-term benefits in scientific research, environmental protection, and technological innovation.

Gebeta Maps Launches Independent Map Tiles, Aiming to Disrupt Africa’s Digital Mapping Space

March 11, 2025 Gebeta Maps, an emerging player in Africa’s digital mapping industry, has announced the launch of its own map tile rendering technology, positioning itself as a fully independent mapping provider. This development marks a shift from its previous reliance on third-party map tile services, allowing the company to offer a more localized and cost-effective solution for businesses, developers, and government entities in emerging markets. Digital maps play a critical role in industries such as ride-hailing, logistics, e-commerce, and urban planning. However, the mapping ecosystem in Africa has long been dominated by a few global providers, which often results in high costs, outdated data, and limited localization. According to Gebeta Maps, these challenges have hindered businesses and organizations from fully leveraging location-based services. With the introduction of Gebeta Maps Tiles, the company is looking to address these pain points by offering faster-loading, customizable, and highly detailed maps tailored specifically to Africa’s evolving urban landscapes. “This launch represents a significant step forward in our mission to build a truly local mapping system,” Gebeta Maps stated in its announcement. “By owning the full mapping experience—from data collection to rendering—we can ensure greater accuracy, affordability, and customization for our users.” Most digital maps are constructed using map tiles, which function as individual pieces of a larger map. When a user accesses a map-based application, only the relevant tiles load, improving speed and performance. This process, known as map rendering, has traditionally been controlled by a few major players, leaving businesses in emerging markets dependent on external providers. By developing its own tile rendering engine, Gebeta Maps is aiming to reduce reliance on foreign mapping platforms while offering a more affordable and regionally optimized alternative. Gebeta Maps is positioning its new technology as a foundational tool for industries that rely on accurate and real-time geographic data. The company sees particular relevance for logistics firms, ride-hailing platforms, e-commerce businesses, and government agencies involved in urban planning and infrastructure development. For developers, the company has introduced an API for easy integration into applications, providing an alternative to established mapping providers such as Google Maps, Mapbox, and OpenStreetMap. The launch of Gebeta Maps Tiles comes at a time when digital mapping in Africa is gaining increased attention. With growing urbanization, expansion of e-commerce, and increased investments in smart infrastructure, the demand for localized, cost-efficient, and data-rich mapping solutions is on the rise. While Gebeta Maps enters a space traditionally dominated by global players, its regional focus and self-hosted solutions could attract businesses looking for alternatives that provide greater control over data and cost savings. According to the company, this is just the beginning. Future plans include expanding its data coverage, refining its AI-powered mapping tools, and offering industry-specific solutions for sectors such as agriculture, transportation, and real estate. With an increasing demand for independent mapping solutions in emerging markets, the question remains: Can Gebeta Maps establish itself as a competitive alternative in Africa’s growing digital mapping landscape? For now, the company appears confident that its localized approach and full-stack mapping capabilities will resonate with businesses looking for a more tailored solution.

Selecta One Shuts Down Kunzila Production Site in Ethiopia Amid Political Instability

March 10, 2025 – In a significant setback for Ethiopia’s agricultural and horticultural sector, Selecta One has announced the closure of its production site in Kunzila, citing political instability and security concerns. The German-based floriculture company made the difficult decision after years of investment in the region, despite efforts to maintain operations post-civil war. Per Ansgar Klemm, CEO of Selecta One, shared the news via LinkedIn, calling the decision a “bitter pill to swallow.” He emphasized that the safety of employees on the ground could no longer be guaranteed under the current political and military tensions. The closure will result in the loss of over 1,000 jobs, affecting around 10,000 people directly and indirectly in the area. The Kunzila production site was established with high hopes of contributing to the economic development of the region. Selecta One had invested heavily in knowledge transfer, workforce development, and production infrastructure. The company had remained committed to operating in Ethiopia even after the civil war ended in November 2022, anticipating improved conditions. However, ongoing instability has rendered it impossible to sustain operations or execute necessary business expansions. Klemm expressed deep regret over the decision, highlighting the devastating impact on local employees and their families. “For many people from Kunzila and the surrounding area, our young company was an opportunity for economic prospects. It is with a heavy heart that we leave them behind, hoping for better times,” he stated. Despite the setback in Ethiopia, Selecta One is shifting resources to strengthen its operations in Kenya and Uganda to ensure continuity in supply for its customers. However, the closure underscores the growing challenges faced by foreign investors in Ethiopia, particularly in sectors reliant on political stability and security. Ethiopia has been striving to attract foreign direct investment (FDI) to boost its economy, but recurrent conflicts and regulatory uncertainties have led to concerns among international businesses. Selecta One’s exit raises further questions about the business climate in the country, particularly in regions affected by instability. As the Ethiopian government works to stabilize the political landscape and restore investor confidence, the departure of companies like Selecta One serves as a stark reminder of the risks associated with operating in conflict-prone environments. The company remains hopeful for future opportunities to re-establish operations in Ethiopia should conditions improve.

Lemi National Cement Factory Supplies Over 7 Million Quintals of Cement to Market

Lemi National Cement Factory has supplied more than 7 million quintals of cement to the Ethiopian market since it began operations, the company has announced. The factory is working closely with key stakeholders in the construction sector to expand market accessibility and promote efficient industry practices. By improving distribution and addressing supply shortages, Lemi National Cement has played a leading role in stabilizing cement prices and ensuring product availability. Currently, the factory produces 100,000 quintals of cement daily, covering over 33% of Ethiopia’s total cement supply. This output has significantly eased cement shortages in the country, providing a much-needed boost to the construction industry. In the 2017 Ethiopian fiscal year, Lemi National Cement achieved key production milestones and reaffirmed its commitment to offering high-quality, locally-produced cement that meets international standards. Moreover, the newly operational factory has created over 1,000 job opportunities, including both permanent and temporary positions. The company plans to further expand cement distribution nationwide in collaboration with industry stakeholders. Lemi National Cement is set to continue playing a crucial role in Ethiopia’s construction sector, ensuring steady supply, stabilizing prices, and driving economic growth.

Ethiopia to Increase Electricity Tariffs Starting April

Ethiopian Electric Service has announced that from April to June, electricity tariffs will increase for both consumption and service fees. According to the statement, starting in April, residential customers consuming up to 0.50 kWh will see their tariff increase to 0.60 cents per kWh. Additionally, service fees will also rise, with postpaid customers paying 10 ETB and 95 cents, while prepaid customers will pay 4 ETB and 18 cents. For residential customers: Service fees will also vary based on consumption. The maximum charge for postpaid users will be 45 ETB and 80 cents, while prepaid users will pay 15 ETB and 97 cents. Bahiru Olijira, Executive Director of Energy Supply and Distribution Regulation at the Ministry of Petroleum and Energy, confirmed that these tariff adjustments will take place every three months, beginning in April. The adjustments will apply to various sectors, including residential, commercial, small and medium industries, and street lighting. Previously, from January to March, residential customers consuming up to 0.50 kWh were charged 0.52 cents per kWh, while postpaid service fees were 10 ETB and 71 cents, and prepaid service fees were 4 ETB and 1 cent. For commercial, small and medium industries, and street lighting, payments will continue based on assigned usage brackets. The Ethiopian Electric Service aims to gradually implement these changes every three months to avoid sudden financial burdens on the public, according to Melaku Taye, the institution’s Communication Executive. The cost-reflective tariff, which accounts for increased power generation costs, will bring the price per kWh to 6.01 ETB after four years.

Ethiopia Develops Capacity to Export Drones to International Markets – Prime Minister Abiy (Dr.)

Addis Ababa, February 29, 2025 (FMC) – Ethiopia has built the capacity not only to manufacture and use drones but also to export them to international markets, Prime Minister Abiy Ahmed (Dr.) has announced. The Prime Minister inaugurated Sky Wing Industry, a company engaged in the production of unmanned aerial vehicles (drones) for both civilian and military applications. During the inauguration, he highlighted that the establishment of this industry is part of Ethiopia’s broader efforts to enhance its technological self-sufficiency, particularly in security and defense sectors. The drones manufactured by the company are expected to strengthen Ethiopia’s sovereignty and defense capabilities significantly. According to the announcement, these drones are designed to operate efficiently at high altitudes and come equipped with counter-drone systems to neutralize potential aerial threats. Moreover, the drones utilize advanced artificial intelligence (AI) technologies to enhance their operational effectiveness. They are capable of intelligence gathering, surveillance, defense, and offensive operations, making them versatile tools for various strategic purposes. The Prime Minister further emphasized that Ethiopia now possesses the necessary infrastructure to export these drones to international markets. Additionally, he encouraged further research and collaboration among institutions working in this sector to strengthen Ethiopia’s position in drone technology and innovation.

NBE’s Forex Auctions: Is Ethiopia’s Market-Based Exchange Failing?

As banks compete for scarce dollars, concerns grow over the transparency and effectiveness of Ethiopia’s forex auctions. Ethiopia’s commercial banks are facing a severe liquidity crisis, worsened by recent policy changes and financial sector inefficiencies. The National Bank of Ethiopia’s (NBE) strict credit cap and high demand for cash have left banks struggling to meet withdrawals and sustain lending. The shift to a market-based foreign exchange system has further drained liquidity, making it harder for banks to issue loans and increasing financial distress. Amid this crisis, NBE’s recent forex auction has sparked concerns among experts, particularly about its timing and lack of transparency. With limited cash available, banks are being forced to prioritize forex bidding over lending, potentially worsening the credit shortage. “Cash is disappearing from the banking system as businesses struggle to transact. Some banks are even buying local currency, birr, at an interest rate,” said Getachew, an economist and public policy expert. “The first auction after floating the birr was necessary to show stability, but this one raised serious questions.” He added that while forex auctions help when the birr depreciates or forex is scarce, NBE’s process for deciding auction timing and amounts remains unclear. “There is no data to verify if the allocated forex matches actual market demand,” he said, questioning whether the auctions address shortages or create more uncertainty. Economist and social media commentator Wassihun Belay echoed these concerns, criticizing the lack of transparency. “We need data for investment decisions and to help businesses choose banks wisely,” he said. “Auctions should be announced earlier so banks can prepare, and NBE must ensure smaller banks aren’t excluded.” He also urged NBE to publicly disclose future auction dates to reduce uncertainty. “Banks’ forex rates should be monitored since some add extra commissions beyond the official rate,” he added. “NBE’s decisions should not be unpredictable.” Wassihun further claimed that although NBE stated 27 banks received forex, only five banks—those with the highest bids—actually secured it. Getachew acknowledged that despite its flaws, the auction provides a reference exchange rate, helps banks manage forex reserves, and partially meets demand. However, he warned that without oversight, the forex could flow into the black market. Following the auction, the parallel market saw sharp fluctuations, with the dollar trading at ETB 145–150, widening the gap between the official and black market rates. Getachew argued that Ethiopia’s foreign exchange market is not truly market-based. “A real market-based forex system responds to global economic forces, but Ethiopia’s rates are still controlled by state-owned banks like the Commercial Bank of Ethiopia (CBE) and the Development Bank of Ethiopia (DBE),” he said. He emphasized that transparency is critical. “Auction details—who bid and how much—must be public,” he argued. “This helps decision-makers plan and allows analysts to track market trends.” Without this, he warned, businesses and investors will struggle to navigate Ethiopia’s forex system. The Reporter stated that the latest auction had bids ranging from ETB 130 to ETB 141 per USD. One bank secured just USD 200,000 at ETB 141 per USD, while the average rate was ETB 135.6185—ETB 10 above the official exchange rate. NBE offered a total of USD 60 million. A financial expert told The Reporter that many banks rely on these auctions as their only source of forex, especially for fuel imports. Smaller banks, in particular, prefer auctions over buying from larger banks, which charge high fees. An economist warned that uncertainty about future auctions is driving banks to buy as much forex as possible, potentially increasing inflation. “The new rate of nearly ETB 136 per USD could push up prices. Exporters might hold onto goods, expecting the birr to weaken further and fetch higher profits later.” Ethiopia’s forex auction system is struggling to function as a true market-based exchange. Without better transparency and planning, it risks worsening liquidity shortages, driving up inflation, and fueling speculation. Experts agree: for the system to work, NBE must improve oversight, ensure fair participation, and make auction details public.

Sustainability meets leather: Africa’s talent on display

The Leather & Hide Council of America (LHCA) and the Africa Leather and Leather Products Institute (ALLPI) have launched the Africa Talent Leather Design Showcase 2025, an initiative aimed at mentoring and promoting African designers while advocating for sustainable leather products. “This competition champions leather as the material of choice for a sustainable future, providing designers across Africa with skills, exposure, and a platform to harness its beauty, versatility, and durability,” said Nicholas Mudungwe, executive director of ALLPI. Ethiopia, known for its beautifully crafted leather products, continues to face challenges in quality perception and market competition from imported goods. Many local consumers appreciate Ethiopian leather’s affordability and design but believe improvements are necessary to boost consumer confidence. “Ethiopian leather is well-designed and affordable, but quality improvements are needed to compete with imported products that dominate the market,” said Henok Petros, a Seattle-based entrepreneur and frequent customer at Addis Ababa’s leather stores. While he proudly purchases locally made leather goods for his children, he acknowledges concerns about durability. An Italian IT professional shopping at the same store echoed this sentiment, praising the unique designs but emphasizing the need for higher quality and sustainability. “Price is secondary. What matters is quality and environmental responsibility, which influence our purchasing decisions,” he said. The LHCA and ALLPI initiative seeks to bridge this gap. Last year, they hosted a competition at Skylight Hotel during Africa Sourcing and Fashion Week in Addis Ababa, where Ruth Girmay, an Ethiopian designer, won the Most Commendable Designer Award for her “Overfishing Bag” inspired by marine conservation. “This recognition affirms my hard work and dream to excel in sustainable, locally made designs that will elevate Ethiopia in the international market,” Ruth said. The competition also connects African designers with global industry players, potential partnerships, and sustainable fashion advocates. Kerry Brozyna, president of LHCA, emphasized the importance of sustainability in fashion: “The industry cannot afford to ignore its environmental impact. Leather is at the heart of slow fashion due to its durability, offering an ethical alternative to disposable fashion trends.” A local designer who competed last year and plans to participate again this year expressed her excitement, saying, “African designs are beautiful and colorful, but we lack exposure, wisdom, and the know-how to elevate our products. I hope Africa will one day embrace its own creations instead of prioritizing cheap imports.”