Ethiopia can now be paid in and out of more easily than at any time in the past decade, but a buyer still has to plan for three things the market cannot yet guarantee: a connection that the state can switch off, a data law that expects local storage, and a currency regime that is still being loosened step by step. The country is worth the work for specific uses, mainly mobile payments, digital identity and public-sector digital projects. For routine outsourced software work, the evidence is thinner.
This guide goes constraint by constraint and gives the workaround where one exists. It is general information, not legal or financial advice. Where we read a legal text, we read a mirror copy rather than the official Negarit Gazette, and we say so.
Key takeaways
- The internet can be cut by the state: Access Now counts at least 30 Ethiopian shutdowns since 2016, and NetBlocks reported a disruption in the north on 25 September 2026.
- The February 2026 foreign-exchange notice lets service exporters keep 100% of export proceeds in retention accounts, which matters directly for outsourcing contracts.
- Proclamation 1321/2024 requires locally collected personal data to be stored on a server in Ethiopia (Article 22), with a 72-hour breach notice (Article 43).
- Payments and ID are the strongest parts of the digital story: Safaricom passed 15M active subscribers and Fayda reached 47.8M enrolments by July 2026.
Constraint 1: the network can go dark
Access Now's 2026 elections watch page states that Ethiopia has had at least 30 shutdowns since 2016, the most in Africa. Its 2023 statement records mobile internet blocked in Amhara from April 2023 and a Tigray shutdown that lasted more than two years during the civil war. Its 2025 report, published 31 March 2026, counts 30 shutdowns in 15 African countries in 2025 across the continent, so Ethiopia is one of several and not the only one.
The most recent item is weeks old. On 25 September 2026, NetBlocks reported a "subnational internet disruption in northern Ethiopia" matching reports of a telecoms blackout in Tigray, as carried by Reuters. Fighting between federal and Tigrayan forces was reported that week. Reuters wrote that the cause "was not immediately clear". We do not know whether the disruption continues.
Workarounds that hold up: ask where delivery teams sit, since the reported blocks were regional, and favour sites outside Tigray and Amhara; keep a second connectivity path (a different operator's SIM plus fixed line); and write a service-interruption clause that names regional or national shutdowns explicitly. A vendor based in or reliant on staff in Tigray or Amhara carries a different risk from one in the capital.
Our reading: the shutdown risk is real but geographically uneven. The counterargument is that a national election or a new conflict can change the map within days, so a contract should be tested against a full national blackout, not the last one.
Constraint 2: foreign exchange
Ethiopia's central bank, the National Bank of Ethiopia (NBE), moved to a market-based exchange rate under Directive FXD/01/2024, within an IMF programme. The IMF's four-year, US$3.4 billion Extended Credit Facility was approved on 29 July 2024. Its press release of 3 June 2026 reports a staff-level agreement on the fifth review (the IMF Board was reported to have completed that review in early July 2026, so check the IMF for the current disbursement figures), and still calls for the country to "enhance the functioning and transparency of the foreign exchange market". That is the IMF saying the market is not finished.
On 11 February 2026 the NBE issued a public notice relaxing parts of the directive:
| Change | Wording in the notice | |---|---| | Service exporters | May hold 100% of export proceeds in a retention account | | Individuals | Outbound remittance not higher than USD 3,000 | | Investors | May remit net profit or dividends abroad, handled by banks | | Exchange bureaus | Cash holding limit raised to 25% |
For a European buyer paying an Ethiopian software or services firm, the first row matters most: the vendor can keep euros or dollars in an account rather than converting them at once. Older reports of a mandatory conversion share for exporters exist, but we could not confirm the current rule, so ask the vendor what applies to its account.
Workaround: pay milestone invoices into a foreign-currency account the vendor holds in Ethiopia, state the currency in the contract, and require the vendor's bank letter confirming the account type. Do not assume profit repatriation is instant; banks handle approval and documents are needed.
Constraint 3: the data law says "store it here"
Proclamation 1321/2024 sets up the Ethiopian Communications Authority as supervisor. Reading an English mirror of the text, which ends "Done at Addis Abeba, this 24th day of July 2024". Article 33(1) requires registration before processing personal data. Articles 20 and 21 set conditions for cross-border transfer, such as an adequacy finding, explicit consent or necessity, and the Authority may prohibit, suspend or condition transfers. Article 22(1) provides for "storage, on a server or data center located in Ethiopia, of personal data collected or obtained locally". Article 22(2) lets the Authority designate "critical personal data" to be processed only in Ethiopia, and Article 22(3) requires prior approval for cross-border transfer of sensitive data. Article 43 requires breach notification to the Authority within 72 hours. Article 60 allows administrative fines up to four per cent of worldwide turnover for an institution, or for offences involving sensitive data or minors.
CIPIT at Strathmore University separately describes the localisation rule and the Authority's role, which supports the reading. We could not verify implementing regulations or whether the registration regime is fully operating, and the text is a mirror. A European company that processes Ethiopian residents' data should have local counsel read the official gazette version.
Workaround: keep a local copy of data collected in Ethiopia and use the European system for processed or aggregated output; get written clarity on what "collected locally" means for your product before building the architecture.
Constraint 4: power
The Ethiopian Electric Power utility told The Reporter in August 2025 that it would sign no new crypto-mining contracts, that licences had been suspended since February 2024, that miners paid 3.14 US cents per kWh, and that about 15 million households lack grid power (The Reporter). The first two items show that the grid is a limited resource that the state allocates. We left out two generation-capacity figures for the Grand Ethiopian Renaissance Dam because our sources disagree.
For buyers, plan for backup power at any delivery site, ask for outage logs, and treat the data-centre claims in investor brochures as unverified until you see certificates.
What is working: payments, identity and mobile
The positive evidence is solid and mostly from operators.
Safaricom Ethiopia says it has passed 15 million 90-day-active subscribers, with around 60% population coverage and over 3,500 sites, in a release of 3 September 2026. Its financial-year-2026 results, on the same page, give 5.2 million M-PESA customers. These are operator-reported figures.
EthSwitch, the national payment switch, processed 287.4 million interoperable transactions worth Birr 741.1 billion in fiscal 2024/25, with person-to-person transfers (128.3 million) overtaking ATM withdrawals (119.3 million), per Capital Ethiopia.
Biometric Update reported 47.8 million Fayda digital IDs as of 27 July 2026, with Ethio Telecom enrolling 32 million, and 9.35 million cards printed. The same article reports Telebirr processed 2.61 billion transactions in Ethio Telecom's 2025/26 year. Shega reported in December 2025 that the NBE set an 8 April 2026 deadline for using Fayda in banking; we did not confirm what happened at that date.
Digital Ethiopia 2030 sets targets, not results. State Minister Muluken Kere said the programme aims for a 12% GDP contribution from the digital economy, 5,000 new startups and one million digital jobs by 2030, per the Ethiopian News Agency. A startup law, reported by Launchbase Africa in July 2025, defines a startup as under three years old with revenue below five million birr and reserves 5% of ICT tenders for startups. We did not read the proclamation itself.
One context number, with a caution: DataReportal estimates 29.5 million internet users, or 21.7% of the population, for early 2026, but other sources use different definitions and give higher counts, so do not rely on either alone for sizing a market.
Buyer guidance
- Match use to strength. The evidence points to payments, digital ID and government digital work. Fintech vendors are a natural fit; call-centre or offshore development claims need staff and uptime proof.
- Check the network risk by location. Ask where staff sit, which operators they use, and what happens during a shutdown.
- Write the currency terms. State invoice currency, the type of account receiving funds, and who bears conversion risk.
- Read the data article first. Under Proclamation 1321/2024, ask where data is stored, whether the vendor has registered with the Authority, and how a 72-hour breach notice would work.
- Language and time. Amharic is the federal working language and English is used in business; Ethiopia is on East Africa Time, UTC+3, one hour ahead of Central European Summer Time and two ahead of Central European winter time.
- Shortlist, then verify. The Ethiopia country page and the directory list companies and basic profile details, but licences, staff numbers and security certificates need checking directly; Find a partner can help build the first list.
Frequently asked questions
Is Ethiopia's birr freely convertible? No. The NBE moved to a market-based rate in 2024, but the IMF in June 2026 still asked for better functioning and transparency of the market, and some limits remain, such as the USD 3,000 outbound remittance cap for individuals.
Does Ethiopia have a data protection law? Yes. Proclamation 1321/2024 was signed on 24 July 2024 and creates a regulator, registration, breach notice and a local-storage rule. Check that your lawyer reads the gazette version and any implementing rules.
Can European firms rely on mobile-money services in Ethiopia? Telebirr and M-PESA both report millions of users (see above, operator figures). We did not find a primary source on cross-border use, so confirm what the NBE allows before building a payment flow.
How often has Ethiopia cut the internet? Access Now says at least 30 times since 2016, and NetBlocks reported a regional disruption on 25 September 2026.
Sources
- IMF, Press release 26/183
- National Bank of Ethiopia, public notice of 11 February 2026
- Safaricom Ethiopia, five-year release
- Proclamation 1321/2024, English text on mirror
- CIPIT, Strathmore University, analysis
- Access Now, 2026 elections watch and 2023 statement
- Reuters via TimesLive, northern Ethiopia disruption
- Capital Ethiopia, EthSwitch results
- Biometric Update, Fayda enrolment
- Launchbase Africa, Startup act
- The Reporter Ethiopia, EEP on crypto mining
- Ethiopian News Agency via allAfrica, Digital Ethiopia 2030
- DataReportal, Digital 2026: Ethiopia
- Shega, Fayda in banking