Ethiopia Ranks at Top for Foreign Direct Investment in East Africa

In 2023, Ethiopia emerged as the top destination for foreign direct investment (FDI) in East Africa. According to the World Investment Report published by the United Nations Conference on Trade and Development (UNCTAD), Ethiopia attracted $3.3 billion in 2023. This figure surpassed that of neighboring countries like Kenya, which received $1.5 billion in FDI.

China played a significant role, accounting for half of all foreign direct investment projects in Ethiopia. The Ethiopian Investment Commission (EIC) attributed this success to the country’s strategic embrace of public-private partnerships (PPPs), with notable investments such as the UAE’s Masdar investing $600 million in the Shire wind power project.

Ethiopia’s openness to foreign investment in digital payment systems also contributed to its FDI growth. In 2023, Safaricom Ethiopia, a subsidiary of the Kenyan telecom giant, was granted a Payment Issuer License, propelling M-Pesa’s growth to 3.1 million users and $3 billion in transactions.

The report also highlighted that while Ethiopia led the East African region, overall FDI flows to Africa decreased by 3% in 2023, totaling $45 billion. Egypt and South Africa followed Ethiopia in the rankings, but developed countries still accounted for the lion’s share of greenfield projects.

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