Ethiopia’s FDI Boom: How Economic Reforms Are Outweighing Corruption Risks
Despite concerns over corruption, Ethiopia has emerged as East Africa’s top destination for foreign direct investment (FDI). Strategic reforms, infrastructure development, and investor-friendly policies have boosted confidence, attracting major global players—especially from China. Find out how Ethiopia is balancing risk and reward to drive economic growth.
In 2024, Transparency International's Corruption Perceptions Index (CPI) assigned Ethiopia a score of 37 out of 100,
ranking it 99th out of 180 countries. This reflects a slight decline from previous years, indicating ongoing challenges with public sector corruption.
Despite these corruption concerns, Ethiopia has demonstrated a strong performance in attracting foreign direct investment (FDI). In the 2023/2024 fiscal year, the country secured approximately $3.82 billion in FDI, marking an 11.5% increase compared to the previous year. Notably, China accounted for nearly 50% of these investments.
This influx of FDI suggests that investors are weighing the potential returns against the perceived risks associated with corruption. While corruption can deter investment by creating an unpredictable business environment,
Ethiopia's strategic initiatives—such as infrastructure development, public-private partnerships, and opening sectors like digital payments to foreign investors—appear to have bolstered investor confidence. These efforts have positioned Ethiopia as a leading destination for FDI in East Africa, surpassing regional counterparts like Kenya and Uganda.
In summary, although corruption remains a significant issue in Ethiopia, the country's proactive economic reforms and investment-friendly policies have played a pivotal role in attracting substantial foreign investment. This indicates that while corruption is a critical factor for investors, it can be mitigated by strategic national initiatives that enhance the overall investment climate.
