Starting a business in Ethiopia: foreigner's guide (2026)

The Ethiopian Investment Board replaced Directive 1001/2024 with a broader liberalization framework that, for the first time, allows foreign investors into Ethiopia's retail sector (minimum USD 2.5 million capital) and eases entry conditions in wholesale, import, and export trade. The directive simplifies permit procedures and removes conditions that had proved too restrictive to attract meaningful foreign capital.

For the first time in Ethiopia's modern history, the Ethiopian Investment Board permitted foreign investors to participate in previously reserved commercial trade sectors — including raw coffee export, broad import trade, wholesale distribution, and domestic retail — breaking a longstanding exclusion. This was a flagship step in Prime Minister Abiy Ahmed's market-liberalization agenda.

The Ministry of Trade and Regional Integration issued comprehensive implementing rules to activate key provisions of the 2021 Commercial Code, covering registration of one-person PLCs, limited liability partnerships, M&A transactions, and business transfers to foreigners. Critically, it mandated that all licensing services — issuance, renewal, amendment, and cancellation — move to an online system, establishing the legal basis for full digitalization of business registration.

Parliament enacted a sweeping overhaul replacing the 1960 Commercial Code with a modern framework introducing one-person private limited companies (PLCs), limited liability partnerships for professionals, legally recognized holding companies, virtual shareholder meetings, derivative actions for minority shareholders, and updated insolvency procedures including preventive restructuring. The reform fundamentally lowered barriers to business formation and attracted renewed foreign investor interest.

Ethiopia enacted a legal framework for electronic transactions, recognizing e-commerce operators, platform operators, and intra-platform operators, while setting consumer protection standards and validating digital contracts and signatures. This law enabled the subsequent launch of the government's online business registration portals (business.gov.et, etrade.gov.et) and the EIC's eInvest system.

Ethiopia repealed the decade-old Investment Proclamation 769/2012 and shifted from a positive-list to a negative-list regime — all sectors are presumptively open to foreign investors unless explicitly restricted. The Ethiopian Investment Commission (EIC) was designated the single one-stop service provider for investment permits, business license issuance and renewal, and post-registration services, significantly reducing the number of agencies investors must interact with.

Amending Proclamation 980/2016, this law refined definitions, simplified requirements for obtaining and renewing business licenses, and set the stage for more accessible services. It was a transitional reform preparing the system for the bigger overhaul of the Commercial Code that followed two years later.

Ethiopia enacted a new unified commercial registration and business licensing framework replacing Proclamation 686/2010 and its 2013 amendment, streamlining requirements to support the growing private sector. This law — as subsequently amended — remains one of the core pillars of the current business registration regime alongside the 2021 Commercial Code.

Ethiopia adopted an updated Commercial Registration and Business Licensing Proclamation to replace the 1997 law, requiring all commercial actors to register and obtain a valid business license before operating and setting clearer procedures for licensing. World Bank analysis later noted that requirements under this law were still burdensome, motivating the further reforms of 2016 and 2019.

Following the fall of the Derg regime and Ethiopia's shift to a market economy, Parliament enacted the first dedicated Commercial Registration and Business Licensing Proclamation, consolidating previously scattered provisions into a single statute. It marked the formal beginning of a modern, codified approach to business registration under the new Federal Democratic Republic.

Emperor Haile Selassie enacted Ethiopia's first comprehensive Commercial Code on 11 September 1960 as part of a broad modernization codification drive drawing on French and Swiss commercial law traditions. Covering business organizations, partnerships, company formation, commercial registration, and commercial contracts across six books, it governed Ethiopian commerce — largely unchanged — for over 60 years until it was replaced by Proclamation 1243/2021.