Buying Land In Ethiopia As A Foreigner (Pros & Cons)

Ethiopia has had its problems, but recently there have been signs of positive change. So, what are the pros and cons of buying land in Ethiopia as a foreigner?

When you think of Ethiopia, you may think of war, famine, and intense poverty, however, there is more to this complex and diverse corner of the world than what may only be seen at the surface. Ethiopia has had a seriously complex history over the centuries and due to internal strife between dozens of ethnic groups, the country’s development has lagged behind. However, that is not the case anymore. The IMF year after year has declared Ethiopia as one of the world’s fast-growing economies. This may present some lucrative investment opportunities for those looking to make an investment in a developing economy.

Some of the pros of buying land in Ethiopia as a foreigner include inexpensive land leases, lower labor costs, and access to some of the best land in the world for growing coffee and oil seeds and for raising cattle. Some of the cons include a lack of infrastructure to transport goods and conflict.

If you are a foreigner looking to invest in a land purchase in Ethiopia for growing coffee, or maybe you would like to invest in some high-density real estate in Addis Ababa, there are many things that you may want to know before buying a plane ticket on your quest to find the property that fits your needs. First, did you know that no one in Ethiopia owns the land? Instead, families, individuals, and corporations need to lease the property from the government. So, how long are the leases? How do you qualify for a lease? Can you transfer leases from own entity to another? These are the types of things that you will need to know before you make your investment decision.

Let us take a look at some of these requirements for being a foreign property leaseholder in Ethiopia as well as some of the advantages and disadvantages of choosing Ethiopia as a place to invest in land and property.

‍How to become eligible to lease land from the government

The first thing to understand about Ethiopia is that citizens and foreigners cannot own land. The land instead is leased to an entity through the government for a period of time. It is up to the leaseholder to decide whether or not to renew the lease at the end of the allotted time or they can choose to transfer the lease ownership to another entity. Leases can be transferred between people also at any time during the lease period as long as all the correct procedures are followed and the government approves it.

As a foreigner, the first thing you will need to do is acquire an investor license from the government. To get an investor license, you will have to demonstrate that you have a minimum capital investment of $200,000. If you plan to go into a partnership with an Ethiopian citizen, then only a minimum capital investment of $150,000 needs to be demonstrated. If you do not first acquire this license, the chances that anyone will discuss a property with you are minimal at best.

Once you have an investor license, then you are free to negotiate with private or government leaseholders. The minimum land lease is typically 99 years, however, different regions will have their own maximum lease times and therefore it may be in your best interest to hire an attorney to help you through the entire process once you have acquired your investor license and you are officially registered with the government.

What kind of properties is available for lease in Ethiopia?

Ethiopia is currently going under a large transformation as there have been large investments by the government in infrastructure, education, and economic development. IT, healthcare, tourism, and industry have also been part of the focus of the government when it comes to investing in making a newer more prosperous country for its citizens. Because of this wide approach, there are opportunities for foreigners to invest in agricultural, residential, industrial, and commercial spaces in Ethiopia.

Agricultural

Of course, one of the first investment opportunities that someone may think of when it comes to Ethiopia is in the agricultural sector. Both private and public farmland in the country is available for outside investors who are looking to develop a coffee farm and grow seeds to make many sought-after oils and other agricultural products that are known to thrive in the Ethiopian countryside.

Also, investing in land to raise cattle may be another agricultural investment that a foreigner could profit from. The beef industry is strong in Ethiopia and a lot of the infrastructure needed for the supply chain to get beef from farm to table is already in place. The beef industry supply chain is constantly being updated to accommodate the expanding industry that is so vital to the economy. In 2020, it was estimated that Ethiopia produced a total of 918,564 tonnes of beef.

Residential

The overwhelming majority of the population in Ethiopia is of working age. This means that many people have migrated to urban areas to work in IT, factories, the service industry, tourism, and everything in between. With the urban areas consistently growing in population, residential opportunities become a potential investment opportunity that should not be overlooked.

Industrial

The industrial sector is booming, and at the same time, the government in Ethiopia is extremely focused on this sector, particularly because of the fact that it has such a large population in the workforce. Industry can provide the jobs needed to make sure that every Ethiopian can find work and sustain themselves and their family. Economic opportunity for a large workforce population is critical to maintaining stability in the country.

Additionally, because of the vast agricultural capabilities that Ethiopia contains, a strong industrial sector is critical to ensure that the agricultural products are properly processed and can get to market. This includes canning facilities, bottling plants, slaughterhouses, and more. All of these types of agricultural support factories offer an excellent investment opportunity.

Commercial

As the population grows and becomes more educated, Ethiopia is also growing in the commercial sector. Whether these are IT startups, investment firms, or hotels and restaurants to support tourism and international commerce, commercial real estate is quickly expanding. There already is a booming IT culture in Addis Ababa that is putting it on the map as one of the most vibrant and progressive cities on the entire African continent.

What are the pros and cons of investing in Ethiopia?

Like living anywhere in the world, there are pros and cons. Ethiopia has had a bad reputation in the past due to its history and political turmoil, extreme poverty, and famines, however, much is changing and the future is looking bright for the country each day.

Pros

Low cost of living

The cost of living in Ethiopia is much lower than in most places in the world. This is great for young investors looking to keep costs minimal as they build their businesses. Also, in recent years, Addis Ababa has become a hub for digital nomads and tech startups looking to work online and live a comfortable lifestyle while exploring Ethiopian life. On average, the cost of living in Ethiopia is approximately 41% lower than the average cost of living in the United States.

Plenty of investment opportunities

As discussed before, Ethiopia has much to offer as they are year after year named one of the fastest growing economies in the entire world. It is not uncommon for GDP to grow well over 10% year after year. Because of this, investment is needed to keep up with the growth. This demand can be quite lucrative for someone who wants to get in early.

Cons

Infrastructure

One of the main problems that Ethiopia faces is its infrastructure is struggling to keep up with its economic expansion. This can make it hard for businesses to get their goods and services to the people who need them.

Also, internet infrastructure can be quite terrible or non-existent for many parts of the country. Improvements are continuously being made as the government has been making large investments, but the progress again is lagging behind the demand.

Last, health care is improving, but it still needs a lot of work when it comes to modernization and access to medical technology for hospitals around the country, especially the rural areas.