Powered by Ethio telecom’s expansion, the entry of Safaricom Ethiopia and the rise of Fintech players like Kacha, Kifiya and Gebeya, Ethiopia is assembling a dense tech ecosystem. But the absence of domestic venture capital and unfinished regulatory reforms still hold back its full potential.

Ethiopia’s technology ecosystem has been accelerating in recent years, driven by financial reforms and by the expansion of public and private actors. However, it remains largely off the radar for many African and global investors.

A recent feature on Ethiopia in a series on African innovation markets portrays a country where digital infrastructure is advancing fast and engineers are increasingly in demand, but where the lack of domestic venture capital could decide whether the ecosystem counts twenty or two hundred venture‑scale companies by the end of the decade.

A market driven by digital transformation and financial inclusion

Ethio telecom, the incumbent telecommunications operator, has made its “Next Horizon: Digital & Beyond 2028” plan the backbone of its expansion, launching in February 2026 its teleStream streaming service and a zero‑touch fibre operations platform with a stated aim of widening digital inclusion and supporting the “Digital Ethiopia 2030” vision.

The company’s leadership highlights rapid modernisation of metro fibre and fixed services, together with the systematic integration of payments via the telebirr SuperApp, in order to turn connectivity into a foundation for new digital services, from local content to e‑government applications.

In its half‑year results for July–December 2025, Ethio telecom reports that its expanded network now serves 87 million customers, making it one of the continent’s largest operators, and that the telebirr platform has become a core driver of its growth in digital financial services.

A recent World Bank assessment of the Digital Ethiopia strategy highlights that reforms led by the Ministry of Innovation and Technology, the National Bank of Ethiopia and sector regulators have supported the growth of the digital ecosystem, with more than 3,000 licensed digital firms and around 60 million mobile money users by late 2024 and early 2025.

These shifts place Ethiopia among a small group of African markets where digital payments are rapidly reaching mass scale, while still being heavily structured around a state‑owned champion.

A shaping duopoly: Safaricom Ethiopia versus Ethio telecom

Safaricom Telecommunications Ethiopia, a subsidiary of Kenyan group Safaricom, was licensed in 2021 as part of the phased liberalisation of the sector, with an announced multi‑billion‑dollar investment plan to build a mobile and data network in direct competition with Ethio telecom.

Policymakers view Safaricom Ethiopia’s rise as a way to reshape investment and pricing dynamics, in the hope that two large operators will spur innovation in mobile services, mobile money and rural connectivity.

Ethio telecom, however, had already established a decisive lead in 2021 by launching its telebirr mobile‑money platform, enabling it to lock in significant market share in retail payments and domestic transfers before M‑Pesa’s arrival. This first‑mover advantage, combined with Ethio telecom’s status as a state‑owned enterprise, helps explain why competition today is more intense in data and enterprise segments than in mass‑market financial services. The result is an ecosystem where public infrastructure remains central, while specialised players can still carve out innovation niches.

A Fintech and platform fabric still short of capital

Beyond network operators, Ethiopia’s tech scene is seeing the rise of Fintechs such as Kacha, the first fully private mobile‑money provider, and Kifiya, which has secured significant funding by building solutions in digital credit, agricultural finance and online public‑administration services.

On the talent side, platform Gebeya has emerged as a pan‑African marketplace for software engineers and AI specialists, giving developers based in Addis Ababa access to international contracts and effectively exporting Ethiopian tech skills to global clients.

Addis Ababa’s Information Technology Park, the country’s first ICT park, was designed to provide world‑class infrastructure and an incubation environment to position Ethiopia as an African innovation hub, combining office space, data‑centre capacity and support services for start‑ups.

Despite this progress, the main weakness remains the depth of local capital: significant investments into young companies still come largely from foreign funds or diaspora syndicates, and the near‑absence of domestic venture‑capital firms limits the ability to finance later‑stage growth rounds. Founders interviewed also stress that the scarcity of local exit channels makes building domestic pools of liquidity critical, so as not to rely solely on trade sales to foreign acquirers. This lack of internal financial intermediation contrasts with the growing sophistication of the product landscape.

Financial reforms and capital markets: a turning point not yet completed

Institutionally, the National Bank of Ethiopia revised its payments directive twice in 2024, while the Ethiopian Securities Exchange, launched in January 2025, is beginning to signal to banks, pension funds and entrepreneurs that growth equities are becoming a legitimate asset class.

A dedicated start‑up proclamation has been under consultation since 2025, with the ambition of clarifying tax incentives, equity‑participation rules and foreign‑exchange conditions for investors, even though capital‑control procedures are still widely described by founders as slow and bureaucratic.

The same World Bank document points out that the partial privatisation of Ethio telecom, once seen as a trigger for building a local shareholder base, has not progressed as initially planned, although an eventual stock‑market listing remains on the authorities’ agenda.

What investors are watching: payments, talent and market depth

Investors active in Addis Ababa tend to focus on three main fault lines: the ease of repatriating foreign currency, the retention of engineering talent in a world of global remote work, and the ability of capital‑market reforms to channel domestic savings into growth equities.

Authorities are betting on continued expansion of digital payments, led by telebirr and M‑Pesa, to formalise the economy and generate transaction‑data assets seen as critical for the next generation of Fintech. At the same time, backers of the Addis Ababa ICT park and private hubs are betting on Ethiopian engineers’ ability to move up the value chain in AI and cloud services, positioning the country as an exporter of high‑value technology services. How fast these bets pay off will depend on whether the constraint of shallow local capital is effectively addressed.

Key takeaways

• Ethiopia combines rapidly expanding digital infrastructure and a strong engineering base but still depends on foreign capital to fund start‑up growth.
• Ethio telecom, through its “Next Horizon: Digital & Beyond 2028” strategy and telebirr platform, dominates digital inclusion, while Safaricom Ethiopia brings targeted competition in data and some financial‑services niches.
• Fintechs such as Kacha, Kifiya and Gebeya show that the country can produce sector champions, provided larger growth rounds can be financed.
• The launch of the Ethiopian Securities Exchange and the National Bank of Ethiopia’s reforms to the payments framework are key milestones, but implementation remains incomplete.
• The coming quarters will be decisive: if capital‑market depth improves, Ethiopia can emerge as a leading sub‑regional tech hub rather than a large but persistently under‑funded ecosystem.

Source: Capmad