The Invest in Ethiopia 2025 High-Level Business Forum, held on May 12–13 in Addis Ababa and organized by the Ministry of Finance, Ethiopian Investment Commission, and the Development Partners group, was a significant moment in promoting Ethiopia’s recent economic reforms. The forum concluded with the signing of over $1.6 billion in investment deals, primarily in mining, energy, and solar manufacturing sectors.
This event’s primary purpose was showing Ethiopia’s commitment to opening its economy to foreign investment, presenting new opportunities for businesses. The event was opened by the president of the Federal Democratic republic of Ethiopia H.E.Taye Atske Selassie. Moreover, ambassadors from various countries including Germany’s ambassador to Ethiopia H.E. Mr. Jens Hanefeld, and Ethiopian ministers from the Ministries of Finance, Agriculture, Planning and Development, Tourism, National Bank of Ethiopia, Ethiopian Investment Holding, and more were present.
The Promise Behind the Headlines: A Shift Toward Openness
What underpins the Forum is Ethiopia’s ongoing economic liberalization, which is part of a broader transition from state-led growth to a private sector-driven model. The country has launched its first-ever stock exchange, passed a new Public-Private Partnership framework, and opened previously restricted sectors like banking, logistics, and telecoms to foreign participation.
This liberalization is structural, pushed forward under the pressure of necessity. With support from a newly approved $3.5 billion IMF program, Ethiopia has now moved toward a market-clearing foreign exchange regime, ending the long-standing fixed currency system that had created chronic distortions. This shift is already helping to ease the shortages of foreign currency that had long frustrated foreign firms, especially those looking to import inputs or repatriate profits. While the move has caused short-term inflation and volatility, it is widely seen as a necessary and overdue correction.
For foreign investors, this sends a signal that Ethiopia is trying to fix its fundamentals. And the shift toward market-based principles is not a temporary experiment.
What It Means for Bavarian and European Businesses
For companies in Bavaria and across Europe, there is a window of opportunity, if approached strategically. Ethiopia remains one of the largest untapped consumer markets in Africa, with a population of almost 130 million, a growing urban middle class, and improving infrastructure links to regional markets through the African Continental Free Trade Area (AfCFTA).
The potential is not limited to consumer goods. Ethiopia’s reforms in renewable energy, digital technology, pharmaceuticals, and agro-processing are all areas where European firms bring comparative advantages, in technology, standards, and financing. Bavarian expertise in green manufacturing, vocational education systems, and industrial automation would potentially align with the Ethiopian government’s push to modernize its economy.
Additionally, the new PPP framework allows foreign investors to enter into joint ventures with state and local actors in infrastructure, health, and energy. This model is already being tested in large-scale solar and industrial park projects.
But perhaps the most important factor is timing. The macroeconomic reforms especially around the forex regime and IMF-backed fiscal adjustments have created a narrow but significant window for foreign capital to be part of shaping Ethiopia’s post-crisis recovery. Investment now would not just be market-seeking; it would be system-shaping.
An Opening, But Plenty of Work Ahead
That said, optimism must be tempered by realism. While the foreign exchange bottleneck has been addressed, its sustainability will depend heavily on the inflow of new investment, continued export diversification, and the discipline of macroeconomic reform. The government has pledged to maintain a more transparent monetary policy, but that will be tested in a context of high debt and inflation pressures.
Moreover, regulatory clarity and consistency remain concerns. While institutions like the Ethiopian Investment Commission are making progress on one-stop-shop services, foreign businesses still cite issues around licensing delays, opaque tax enforcement, and difficulties navigating federal-regional coordination.
Infrastructure remains another challenge not only in terms of roads and power, but also in institutional infrastructure: the ability to enforce contracts, resolve disputes, and ensure fair competition.
Finally, the political context while currently stable is still delicate. Recent conflicts and the ongoing process of national dialogue and federal restructuring introduce a degree of uncertainty that businesses must weigh carefully.
The Role of Bavarian Partners Going Forward
Already, we see examples where Bavarian-supported projects have added value not just economically, but in terms of capacity-building, skills development, and innovation transfer. The challenge now is to scale these types of engagements and sustainably driven by participation of private sector.
If you’re interested in exploring sector-specific investment opportunities or learning more about doing business in Ethiopia, feel free to contact the Bavarian Office for Africa at: addisabeba@internationaloffice.bayern.