Ethiopia Country Profile

Snapshot of the Ethiopia Country Profile


Since the early 2000s, the federal government has continuously aimed at implementing an economic reform programme designed to stabilise the financial position of the country, promote private sector participation in the economy and attract foreign investment. Nevertheless, the private sector remains relatively small, characterised by small companies, low labour productivity and a high degree of corruption. Although official and unofficial barriers, such as corruption, still deter foreign investment and certain sectors remain off-limits to foreign participation (e.g. banking), the country has taken several steps to liberalise its foreign investment laws, such as those relating to agriculture, and to streamline the regulatory environment.

Positive developments in relation to corruption and investments:

  • The legislative framework against corruption in Ethiopia is comprehensive and strong.
  • The Ethiopian government generally reviews investment proposals in a non-discriminatory manner, and foreign investors do not regard the screening process as an impediment to investment or a limit to competition.
  • The government-established, Ethiopian Investment Commission (EIC), provides investment information and a one-stop shop that reportedly has cut the cost of obtaining investment and business licences.

Risk of corruption:

  • Practices of corruption are increasingly taking the form of private-to-private corruption whereby private companies yield procurement contracts to other private companies in return for bribes, etc.
  • Land distribution and administration is continuously reported to be a sector where corruption is institutionalised. Corrupt practices involve facilitation payments as well as bribes in order to be allowed to keep land that is leased from the state.
  • Investors in Ethiopia should be aware that the tax system is generally considered to lack transparency and to contain many corrupt officials.
  • The customs authority lacks qualified staff, and customs laws are not exercised uniformly and without discrimination, which allows ample possibilities for corruption in interactions with customs officials.