The Ethiopian Information and Communica- tions technology (ICT) sector has been growing rapidly in recent years, propelled into its lift-off phase by the government’s continuous focus on developing the digital economy. Currently, the industry is primarily focused on expanding its ICT infrastructure. However, software development and IT services follow right behind, particularly web and mobile app development, software testing, and IT consulting.

The sector currently contributes 2% to the country’s GDP, which is still below the regional average of 4%, and it even shrank a bit in 2022 in terms of GDP contribution ($2.9 billion in 2023, down from $3.1 in 2022). It is estimated to bounce back and grow further from 2023 onwards (ISS-AFI 2023, ITA 2022, World Bank 2021).

Nevertheless, the ICT sector is growing steadily, but also very differently. At the moment, the government has prioritized expanding its telecommunications infrastructure as part of its efforts to modernize the country’s economy and improve access to information and communication technology services.

In January 2023, there were over 20.86 million internet users in Ethiopia (16.7% of the population), an increase of 520 thousand (2.6%) from 2022. And while this does not seem much in a country of over 120 million, it is a significant number. Taking into account that only about half the population (66.80 million) owns a cellular mobile phone or another internet-enabling device, representing a 17.8% increase compared to the previous year, or an additional 10 million more mobile connections.

Thus, the sector is booming, particularly in telecommunications, which becomes especially apparent in light of the recent liberalization endeavors of the industry. In 2019, the Government of Ethiopia (GoE) put out two new tenders for telecommu- nications licenses, of which one was awarded to a consortium (including Kenyan Safaricom, Vodafone & Vodacom, CDC Group, and Sumimoto Corporation) in 2021, while the second has been post- poned multiple times since then (ATR 2023, DataReportal 2023, DT 2022, Statista 2023).

The startup and ICT services sector tells a slightly different story but a successful one. With nearly 600 companies and new startups emerging constantly, including 300 in Addis Ababa alone, Ethiopia’s startup scene and digital economy are thriving. Especially the startup scene has been growing over the past few years, as the overall data shows an annual growth rate of 52% in the number of startups between 2018 and 2022.

In terms of BPO (Business Process Out- sourcing), Ethiopia is becoming a popu- lar destination for call center services, with several international companies turning to Ethiopia for their outsourcing needs. The sector is still relatively small but has produced some very successful companies, some of whom will be intro- duced later on, and it is growing rapidly. In addition, the ITO (Information technology Outsourcing) and the KPO (Knowledge Process Outsourcing) sectors in Ethiopia have experienced a  significant development in recent years. The country has actively promoted these sectors as part of its HERA, which led to an expansion and diversification of service offerings across the board.

Several niche services have emerged, showing promising growth in recent years, such as language services, healthcare outsourcing (medical transcription and coding), financial analysis and research, and legal process outsourcing.

Furthermore, the GoE’s infrastructure developments, particularly telecommuni- cations, have boosted internet penetra- tion rates and mobile phone usage, espe- cially in major urban areas. This growth created opportunities for startups in sectors like fintech and e-commerce. These cities have also implemented several programs to support the development of technology hubs and coworking spaces, providing startups with access to essential infrastructure and resources.

Numerous fields are witnessing increased entrepreneurial activity, including Ed-, Health-, Job-, and Agri-Tech, of which the latter holds particular importance as it synergizes best with Ethiopia’s most sig- nificant economic sector. Various agri-tech startups have emerged in recent years, offering a plethora of applications and services to connect farmers with markets, financing, and other critical services across the agricultural value chain, such as: productivity and farm monitoring, agricultural inputs, tractor and machinery access, etc.