Ethiopia has finally approved its long-anticipated startup law, marking a pivotal moment for the country’s growing tech and innovation landscape.
After nearly five years of consultations and drafting, the Council of Ministers ratified the “Startup Business Proclamation” on Sunday, July 13, 2025. This move provides long-awaited regulatory support for local entrepreneurs who have operated for years in a policy vacuum.
The law offers a formal definition for startups in Ethiopia and sets the foundation for a more structured innovation ecosystem. It introduces a comprehensive framework that includes a National Startup Council and official recognition.
These bodies will coordinate and implement initiatives to support startups, including facilitating access to funding, creating incubation spaces, and providing tax incentives.
For startups, the law is expected to simplify business registration, reduce bureaucratic hurdles, and offer legal protections previously unavailable. Those recognised under the new framework will also gain access to government-supported capacity-building programmes, making it easier to scale.
Beyond regulatory relief, the law takes bold steps to address structural market barriers. Notably, five percent of all government ICT procurement tenders will now be reserved for startups, ensuring preferential access to public contracts.
A newly announced Ethiopian Startup Fund — capitalised at 2 billion birr ( $36 million) — will provide grants and soft loans to early-stage ventures.
Even the country’s traditionally inflexible state-owned enterprises (SOEs) are not exempt. The law mandates that SOEs such as Ethio Telecom and the Commercial Bank of Ethiopia must pilot at least one startup-led proof-of-concept project every fiscal year.
This move is expected to encourage collaboration between startups and major state institutions, historically siloed from private innovation.
Until now, local startups — including ventures nurtured by accelerators like weVenture and blueMoon — have struggled with policy uncertainty and limited investor confidence. The new law is intended to change that by improving the ease of doing business and sending a strong signal to both local and international investors.
Ethiopia’s startup law mirrors similar initiatives in countries like Nigeria, where the Startup Act, passed in 2022, offers a favourable business climate for tech founders.
By joining this growing cohort of African nations formalising startup support through legislation, Ethiopia hopes to position itself as a destination for innovation on the continent.
The approval of the law comes when Ethiopia is increasingly investing in its digital transformation agenda. Government initiatives, including the Digital Ethiopia 2025 strategy, have aimed to improve ICT infrastructure and drive digital services.
With the legal backing now in place, stakeholders expect a more robust startup pipeline and stronger collaboration between the public and private sectors.
While the proclamation still awaits implementation details, this is a welcome development for the country’s startups. However, the effectiveness of the law will depend on how well the upcoming council and support bodies execute their mandates.
Nevertheless, the passage of the startup law is a clear step forward in aligning Ethiopia’s innovation ecosystem with global and regional standards. Entrepreneurs and investors alike will be watching closely to see how the country turns its policy promise into measurable progress.
