Ethiopian Business Opportunities
Ethiopian business opportunities can seem daunting due to the country's expanding economic scene and the fact that the country has many sectors that are largely undeveloped.
This opens up an opportunity for individuals that are actively enterprising and hoping to get a bigger piece of the pie that is Ethiopia's growing economy.
There are no more excuses for those that want to change theirs and their family's lives through engaging in business.
Especially, now with the new reforms taking place by Prime Minister Abiy Ahmed, who is tackling large corporations and opening up the door for small to medium traders, producers, and service sector players.
Hard work, dedication, and discipline are the only ingredients needed for an average Ethiopian to grow his income and live the life they deserve.
We created this list of 20 business opportunities we believe can be useful for those with huge financial backing or those with limited savings hoping to create a meaningful and profitable business in Ethiopia.
1. Building Management
Building Management is a business that is also sometimes called facility management. The building management company is responsible for supervising the hard and soft services of a residential or commercial building.
Hard services relate to physical structural services such as the elevators/lifts, fire alarms, etc., while the soft services are cleaning, landscaping/gardening, security, and other human sourced services.
Today, Ethiopia has hundreds if not thousands of new buildings both residential and commercial. The need for building management services is booming. Example: Tsehay Real Estate in CMC which uses a building management service to take care of everything the residents need such as the cleaning (maids), security (security guards, cameras), water/electricity bills, gardening, etc. The Chinese have the responsibility to only sell and construct the apartments, while the day-to-day running of the building is left to the company they hired.
Residents currently pay about 1,000 ETB or 38 USD every month. With 13 buildings and 646 residential units, the company receives about 646,000 ETB or 24,000 USD a month.
The biggest challenge in this business for Ethiopia is to manage the resident's expectations and match these up to the budget constraints and legal requirements.
2. Child Care Service/School
Child Care Service or as it is also known as day care service, is the supervision and care of multiple children at a time. Their ages range from a baby of 6 weeks old to a child of about 13 years of age.
Early child care is an important and often overlooked component of child development in Ethiopia. Quality care from a young age can have a substantial impact on the future successes of children.
Childcare centers have teachers focus on the mental and physical developments of their students. In order to have a better understanding of the student, the teachers must create a relationship with their student that benefits their wants and needs while elevating them toward a higher set of core values.
The quality of the child care center in Ethiopia will have a very influential affect on the child's overall development; therefore a clear mission objective of the school must be printed and displayed.
Example: A&E Pre-kindergarten which is owned by a female Ethiopian Diaspora who was living in the US for 32 years and has a background in finance. Wanting to do something for her country, and seeing the value of education at an early age, she used her parents home to open up the pre-kindergarten.
She made extensive renovations to create a beautifully child friendly environment with an outdoor playground.
There is a 1 : 6 teacher to pupil ratio, and the child care center uses Montessori's methods which focuses on the staff encouraging each child's development through structured play and fun-learning in a non-competitive environment.
The child care center/school is open from 7 a.m. to 5 p.m. and the fees are 36,000 ETB or 1,333 USD per child per year or 3,000 ETB or 111 USD a month.
3. Brick Making
Construction of houses, offices, malls, government buildings, etc. has seen a veritable explosion in Ethiopia. But this boon in the construction sector is not limited to huge companies with massive financial resources.
Small to medium businesses can also take part and profit very well from the construction boom in Ethiopia.
One automatic brick making machine costs in the range of about 29,180 ETB or 1,080 USD.
The biggest challenge that currently is an obstacle for brick making in Ethiopia is the access to land from the government and the need for a constant supply of water, which is essential for mass production of brick blocks.
Some water related obstacles could be alleviated through the use of water containers in the ground, above ground water tanks, and wooden pallets to raise the blocks till they harden.
4. Solar Panel Sales and Service
Solar Panel prices are reaching levels that are record lows, this coupled with rapid advances in battery storage technology and you have the ingredients for a very lucratively profitable business model for Ethiopia.
The Ethiopian Ministry of Environment, Forest and Climate Change (MoWIE), the Ethiopia Standards Agency, and the Ethiopian Ministry of Water, Irrigation, and Electricity have recently drafted a plan to introduce a new standard for the imports of residential solar panels.
This huge development for solar panel sales in Ethiopia means that low quality panels often imported from China will begin to disappear from the Ethiopian market. This leaves a gap in the supply and demand of solar panels.
Any enterprising individual or company can now take advantage of this situation and import solar panels according to the new standards.
Add to this initiatives put in place by the US government for Africa, Ethiopians can import them with incentives.
5. Cleaning Services
Cleaning Services or Janitorial Contracting Services are now increasingly becoming in demand in Ethiopia.
This is due to the many offices that exist, especially in Addis Ababa. With the increase in the number NGO's, international companies, as well as local businesses, the need for cleaning service companies is increasing.
Unlike in other countries around the world, especially in the developed world, the provision of furniture, walls, and floors cleaning service is not common in Ethiopia.
As of 2014, there were only 48 licensed cleaning service companies in Ethiopia. Entrepreneurs should realize that this business sector is very profitable in terms that it has a very low input cost and Ethiopia's fairly good accessibility of human resources.
Example: The owner of Clean Way Plc. is an Ethiopian Diaspora from the United States who established his company in Ethiopia, at a time when cleaning services were almost non-existent.
The company offers services such as cleaning buildings, carpets, houses, sofas and cars.
Today the company has about 100 employees with salaries ranging from 1,500 ETB or 55 USD to 2,500 ETB or 93 USD and numerous contracts from businesses as well as from the private sector. Other cleaning services offer employees 550 ETB or 20 USD to 800 ETB or 30 USD.
6. Consultancy Services
The Consultancy Services industry in Ethiopia is indeed a broad industry that covers a range of services, such as: strategy consulting, management consulting, technology consulting, human resource consulting, marketing consulting, tax consulting, training consulting, agriculture consulting, finance consulting, and much, much more.
Consulting business are hired or contracted to offer solutions to problems organizations face. The minimum requirement to becoming a consultant in Ethiopia is to have good coaching skills, know how for technology implementation, good process analysis, skill at strategy development, and/or the ability for operational improvement.
There are many bright and personable people in Ethiopia that can provide this service, and couple this with the many organizations that need people that know how to navigate the often hectic business environment in Ethiopia, then you have the making for a hugely successful business with very low startup cost.
International consultancy firms are very expensive which leaves further room for Ethiopian consultancy firms to fill in the gap at affordable prices for Ethiopian companies.
7. Advertising Agency
Advertising Agencies in Ethiopia are experiencing a huge increase in the prices that companies are offering them.
In 2016, there were a little over 1,000 licensed advertising agencies in Ethiopia, these to cater to the hundreds of thousands of businesses.
Although the number of agencies is increasing, there is no decline in the prices being offered, instead they are increasing dramatically.
In the past the often used TV and radio medium has now reached costs ranging from 250,000 ETB or 9,300 USD for a one minute TV advertisement segment to 25,000 ETB or 926 USD for a one minute radio broadcast.
These high prices are causing companies to look towards different venues for advertising their products. This is where Ethiopian advertising companies can fill in the gap and expect to get lucrative profits.
Furthermore, the advertising sector is protected by Ethiopian law, in that only Ethiopian and foreign nationals of Ethiopian origin can participate, although, the law allows advertisements produced by foreigners, as long as it is done through an Ethiopian advertising agent.
Advertising agencies in Ethiopia should also offer newer services such as market research, developing strategies, and undertaking public relations.
Example: 251 Advertising agency which began in 2011 now has over 70 companies as clients, and some include the huge brewery companies that spend upwards of 50,000,000 ETB or 1,852,000 USD to 100,000,000 ETB or 3,704,000 USD a year alone on advertising.
8. Mobile Phone Repair
Mobile Phone Repair is a huge business not only in Ethiopia but the world over. One research conducted in the UK states that people have spent over 1,000,000,000 Pounds in the past three years alone.
Close to 1 in 5 people have cracked their screens by dropping them in the same time period and despite this a huge 77 percent of them have no insurance for their mobile phones and only about 56 percent of them cover their mobile phones with protective/hard cases.
Take these statistics and consider how with the explosion of smart phone users in Ethiopia will provide a huge and extremely lucrative business opportunity.
This business can be entered in as a small to medium enterprise or could be invested in to produce a large, modern type of franchise, with a well known brand name.
9. Vending Machines
Vending Machines in Ethiopia are a new phenomenon and have been relatively left out of the market. A vending machine is an automated machine that provides various items such as snacks, newspapers, beverages, lottery tickets, cigarettes, etc. to customers after taking their money or credit cards.
A full-line vending company can set up several types of products for their consumers, such as candy, cookies, chips, fresh fruit, milk, cold food (sandwiches), coffee, and other hot drinks.
Seeing the rise of consumers in Ethiopia wanting to eat a quick snack of French fries, an enterprising individual can even setup a vending machine which dispenses hot French Fries.
Start up cost is relatively low, with most machines being made in China and running the business requires only period checkups and maintenance.
Example: Swift Media began their business by buying movie vending machines from China for the low cost of 50,000 ETB or 1,852 USD a machine which they sell for 85,000 ETB or 3,149 USD to interested buyers looking to engage in the business.
They run their own movie vending machines but also sell them out in order to fill the gap in the city for movie renting centers.
Swift Media as so far setup their machines in 5 different locations throughout the city of Addis Ababa and charge about 25 ETB or .93 USD to 300 ETB or 12 USD for the series and movies taken by flash disks.
10. Real Estate
No list of business opportunities in Ethiopia would be complete without the juggernaut: Real Estate. The real estate market in Ethiopia has been incrementally heating up and not only in the capital city Addis Ababa, but throughout the country.
It has been attracting capital from domestic and foreign investors due to the rapid urbanization and severe housing problems facing the citizens.
The real estate sector has contributed over 12.5 percent to the domestic growth of Ethiopia in the past ten years.
Foreign investors are leading the market, as consumers are seeking more stability and transparency, due to local developers being bogged down by accusations of overpricing and delays.
Being a property developer is not the only way to amass a small fortune from the Ethiopian real estate. Simply buying property, renting it out for about 6 months to a year then selling it is a great way to optimize the use of your savings in the bank.
Home and land prices have been going up by more than 50% in one year and it is now cheaper to buy property in the developed world than it is in some cities of Ethiopia.
For example a 500 square meter plot in Addis Ababa's Bole area with a demolishable home is selling from 13,500,000 ETB or 500,000 USD to 27,000,000 ETB or 1,000,000 USD. In the Merkato area of Addis Ababa, a 500 square meter plot is selling for 189,000,000 ETB or 7,000,000 USD.
Buying condominiums for cheap, simply but beautifully designing the finishing work, furnishing it and renting it out weekly or monthly to foreigners is also another great way to make use of money sitting in the bank.
Some examples: a standard 300 square meter G+1 villa house in Addis Ababa's Ayat bought for 460,000 ETB or 17,037 USD in 1996 is now selling for 9,000,000 ETB or 333,334 USD to 13,000,000 ETB or 481,482 USD, that's an average of over 2000% increase of value.
As an investor with disposable cash, ones first job is to protect its value, and if the money is sitting in a bank then it is losing value plain and simple.
An example of this is a deposit of 100,000 ETB or 4,486 USD on January 1, 2017 would leave you with about 110,000 ETB or 4,044 on January 1, 2018...a loss of about 10 percent in "real" value.
This makes investing in real estate a wise option to consider when planning on protecting your hard earned cash.
11. Bakery/Pastry Shop
With the growth of the Ethiopian economy, disposable income available to individuals is also rising. This has fueled the popularity and boom of pastries and bakeries, as more and more entrepreneurs start baking with their own signature ingredients.
One of the oldest and well known bakeries in Addis Ababa is Enrico Pastry located in Piassa.
They began business in 1954 and have been consistent in their products taste, freshness, and fair price. Most notably, to this day, they hold their recipe with the utmost secrecy.
They provide 8 types of cakes for about 8 ETB or .30 USD a slice, and their torte cake which goes for about 230 ETB or 8.52 USD a kilo.
They bake an average of about 4000-9000 cakes depending if the season is one for fasting or not. Enrico has been used as a guide for newer entrants in the bakery/pastry business in Ethiopia.
Semret Abate began Mulmul Bakery in 1999 using only 1 quintal of flour a day, but today they have 6 branches, over 320 employees, and 104 different kinds of products.
Their products include breads and pastries made from 13 different grains and ingredients, including barley, teff, oats...
Not only is Mulmul respected for their quality and taste by the general public, but large companies also have contracts with them, namely, Ethiopian Airlines and Bambis Supermarket.
Karavan Cafe began with a branch in Addis Ababa's Megenagna area in 2012. They import different ingredient such as powders and flavors, directly from Turkey, to make their 27 different cake varieties, with a slice costing about 16 ETB or .60 USD to 35 ETB or 1.30 USD.
Their business is expanding rapidly and they have now opened a second branch in the exclusive Bole Medhanialem, with plans to open other stores throughout the city.
The keys to becoming successful in the Ethiopian bakery and pastry industry is to consistently have a great tasting and unique product, special attention to hygiene, attractive displays, and great customer service.
12. Garbage Collection Service
Taking Ethiopia's capital Addis Ababa as an example for how profitable the Garbage Collection business can be, we see that more than 3 million cubic meters of garbage is created in the city every year.
Institutions account for 18 percent of this garbage, while private households account for 76 percent of this astronomical amount of garbage.
From the 3 million cubic meters of trash, only about 1 million is collected by Addis Ababa's Cleaning Management Agency with their 169 trucks, leaving the business wide open for a public-private partnership to collect the remaining 2 million cubic meters of garbage.
Furthermore, studies show that garbage production per person is to increase to 2.1 cubic meters causing the total yearly amount to increase to 7 million cubic meters.
The government of Ethiopia has allowed the private sector, as well as, small and micro enterprises (SME) to collect the garbage in a partnership system with Cleaning Management Agency cannot.
In 2017, there were only 27 companies representing the private sector and 610 SME's (each with 10 individual members).
For solid waste management and cleaning purposes, the Agency divided the city into 550 zones each containing a curving average of about 900 households.
These zones have been allocated to SME's to serve the households, while private waste collection companies can only collect from public and private institutions.
The Agency now dispenses the 2 ETB or .08 USD it collects from each resident's utility bills to pay 90 ETB or 3.34 USD per cubic meter trash delivered to the landfills. One cubic meter is defined as 330 kilograms.
All in all, the garbage collecting sector is ripe for an enterprising individual to take advantage of the many opportunities available.
13. Entertainment Venue
Ethiopia is widely considered the capital of Africa and this is proven by the many diplomatic missions, embassies, international organizations, etc. that have made the country their home.
The large number of foreigners and foreign workers, especially in Addis Ababa, need a place where they can socialize, relax, and even hold meetings after a long day at the office.
To cater to these people by opening up a bar, hotel, restaurant or even a night club that targets their specific wants and needs would likely lead to a successful business.
14. Music Industry
The Music Industry in Ethiopia is very profitable for those that engage in the various sectors within the industry.
Event organizers and promoters make a killing with concerts in Ethiopia; they achieve this by preparing the venue, recruiting performers, and advertising their shows.
In 2017, Jorka Promotion worked their sponsors Habesha Breweries S.C., paid 3,200,000 ETB or 118,519 USD to organize a concert and their performers were paid from 20,000 ETB or 740,741 USD to 500,000 ETB or 18,513 USD depending on their popularity.
Estimates on profit vary from 2 to 5 times the initial investment.
Recording in Ethiopia, is most often not done in an institutionalized and professional manner, with artists or "bedroom producers" creating their music in their homes or small studios.
Ethiopia is a country full of musically talented individuals that have produced great outputs but do not have a clue how to get it out into the world.
The need for well-organized record labels, highly-equipped studios and music training institutions is one of the best investments one can make entering into the music industry.
Music video production is another great sector within the Ethiopian music industry. The music business has changed due to the introduction of YouTube and other video sharing sites.
Instead of recording and selling entire albums, artists are now just releasing singles, one at a time and monetizing the videos online, dependent on the number of views per video.
As the industry becomes more and more reliant on music videos, the question of quality comes in to the picture, and video producers can charge prices ranging from 60,000 ETB or 2,223 USD to about 150,000 ETB or 5,556 USD a video, making it a great way to make money.
15. Private Security Service & Equipment
In Ethiopia, there is no real legislation that is separately and comprehensively enacted to provide regulations for private security service providers.
As this is a relatively new sector and largely forgotten, there have been a few that have been able to take a lion share of the profits involved in this very lucrative venture.
Established in 1992, Sebhatu & Sons Property Administration and Security Services Plc. is now Ethiopia's leading private security provider with a Level 1 Security and Quality Assurance Certificate from the Ethiopian Federal Police.
S&S provides security solutions to a variety of clients, most of which are diplomatic missions, international institutions, Fortune 500 companies, etc.
Beginning with only 40 permanent staff members in 1992, S&S today has a little less than 3,000 employees which offer deterrence, detection, efficient reporting services, as well as 24 hour emergency availability.
Although most financial information in the private security service business is not revealed, estimates range from a 4-man well-armed and well-trained team protection costing about 40,500 ETB or 1,500 USD to 405,000 ETB or 15,000 USD making it a very profitable venture.
The sale, installation, service, and maintenance of modern IT-based security systems are also in high demand throughout Ethiopia, with clients ranging from supermarkets to private residences.
16. Laundry Service
Most Ethiopians today are too busy to take care of simple things such as doing their laundry.
Add to this the growing number of middle income and unmarried people living in apartments and condominiums without any servants and you have a simple business that is very profitable.
Starts up costs consist of buying a couple of washing machines, dryers, pressing irons, and a few other items.
Once this initial investment has been made, then it is a matter of providing great customer service and further expenses are limited to rent, salaries, etc.
17. Driving School
Driving Schools are very profitable as there are an increasing number of students attempting to get their drivers licenses.
Every year there are eager young adults, and even older men and women who do not know how to drive that want to find a way to learn.
Recently, there is public debate going on to take action upon the many illegal methods employed by many of the established driving schools.
In 2012 alone, the Addis Ababa Road and Transport Bureau closed 48 out of the 58 driving schools in the city. It is likely something close to this type of action is inevitable. This would open up the opportunity for people to invest in this business.
The driving school should be above board and obey all pertinent laws; furthermore they should focus on creating good drivers and not only focus on getting them to pass tests.
18. Computer Service and Repair
Problems associated with computers range from viruses, malware, the blue screen of death, hacking, etc. If you have the knowledge and experience in fixing computers, then you can start a computer repair business quickly and fairly cheaply.
Computer repair technicians in Ethiopia earn from about 100 ETB or 3.8 USD to about 800 ETB or 30 USD depending on the issue at hand.
The business is a stable and highly in-demand service that both individuals and businesses need. Ethiopians of all ages and ability have computers that they count on for banking, entertainment, communications, and much more.
Unfortunately, especially for computers connecting to the internet, there are always a myriad of problems, and this creates a ready and steady pool of clients.
Advertising through flyers, word of mouth, reaching out to offices, etc. will get the word out.
This is a great business for someone who has the skills but does not have much in the way of finances.
19. Car Decoration and Accessories
Recent amendments to the existing regulations in Ethiopia concerning car parts and accessories have opened up a booming business opportunity.
Belay Getachew, owner of Palace Decor located in Addis Ababa's Gullele area started his business with only 80,000 ETB or 2,963 USD and has now grown it to over 500,000 ETB or 18,519 USD.
Car decoration businesses offer many services such as installing mud flaps, tinting windows, bumper guards, gas tank covers, body polish, car alarms, etc.
They import their materials from Dubai and/or China on a credit system since the prices are too high for some to afford.
Taxes paid are also high, since they are considered luxury items but the cost is transferred to the customer, who apparently does not mind, as the business is thriving.
Most of the customers are young individuals who own the popular Toyota Vitz/Yaris/Corolla.
This is a great business for small and medium traders interested in importing and selling the products themselves.
20. Salt and/or Soap Production
Everyone needs soap and salt, and this is a fact in Ethiopia as it is everywhere else in the world.
At the moment, there are many small and medium entrepreneurs that use a small start up investment to begin their own salt and soap business, some even at home.
Salt is bought in bulk from the major producers in Afar and it is ground and packaged with simple equipment.
The major obstacle is to get a market share, and this can be achieved by having a good brand name and a lively and active marketing team.
Once you have established regular customers from stores, restaurants, hotels, etc., then expect your business to incrementally grow. The same with slight variations applies for the production and sale of soap.