In a rare show of consensus, Ethiopia’s Council of Ministers has unanimously approved the long-awaited Startup Act (officially, Startup Proclamation) — a policy initiative so belated it’s old enough to have its own pitch deck. The move marks a significant, if overdue, step toward codifying support for the country’s fledgling tech ecosystem, which has long operated in legal grey zones and under financial duress.
The draft legislation — Ethiopia’s version of a “Startup Act” — now heads to the House of People’s Representatives for final debate and ratification, expected by mid-July. If passed, the law will come into force 15 days after its publication in the Federal Negarit Gazeta. Entrepreneurs who meet the criteria will then have a 90-day window to register and retroactively claim benefits — assuming, of course, they’re still around.
The Promise of Policy
Structured by a task force led by the Ministry of Innovation and Technology, the bill defines a startup as a tech-based enterprise younger than three years with annual revenue below 5 million birr (roughly $38,000 at today’s rate). On paper, the law offers an attractive buffet of perks: a five-year corporate tax holiday, customs exemptions on imported capital goods, lower withholding tax for angel investors, and preferential access to public procurement.
It also proposes the establishment of an Ethiopian Startup Fund (ESF), seeded with 2 billion birr (about $36 million), intended to dispense seed grants and low-interest loans. Accredited incubators would receive co-financing of up to 30% of project costs, and public universities would be required to allocate at least 2% of their research budgets to collaborations with certified startups — a provision that will undoubtedly thrill departments still trying to buy printers.
The law goes further, mandating that major state-owned enterprises — think Ethio Telecom, Ethiopian Electric Power, and Commercial Bank of Ethiopia — must pilot at least one proof-of-concept with a startup per fiscal year. It also sets aside 5% of government ICT procurement for eligible firms. In theory, this positions the state as an active participant in fostering innovation; in practice, it might just force bureaucracies to answer their email.
Central to the law is the creation of a one-stop “Startup Desk” under the Ethiopian Investment Commission (EIC). This desk would issue certificates, maintain a startup registry, and liaise with regional governments. There’s also a sandbox provision allowing fintechs and telecom startups to pilot products under relaxed regulatory oversight — provided they don’t scare regulators too much.
The law even seeks to nudge academia and enterprise closer together, a relationship that has often resembled a long-distance arrangement with poor WiFi. By making universities commit resources to startups and embedding startup policy within national innovation goals, the act could spark long-overdue collaboration — assuming faculties can get past the paperwork.
A Long, Slow March to the Starting Line
The irony is not lost on Ethiopia’s tech entrepreneurs, many of whom have built ventures with duct tape, donor grants, and informal angel networks — all while waiting for a policy that was first mooted in 2020. In the intervening years, regional neighbors like Senegal, Nigeria, and Tunisia have rolled out full-fledged startup acts and attracted international capital with the kind of regulatory clarity that Ethiopia is only now proposing.
Ethiopia’s startup scene, rich in talent, population and ambition, has meanwhile been constrained by currency shortages, ambiguous tax rules, and a policy environment that oscillates between cautious optimism and procedural inertia.
“Every few months we were told it’s coming ‘soon,” an Ethiopian founder, who asked not to be named for fear of being victimized, told Launch Base Africa. “Eventually we stopped asking.”
Still, there’s a sense — cautious, qualified, but real — that this time may be different. Prime Minister Abiy Ahmed’s administration has repeatedly emphasized private-sector job creation as a national priority. Over 70% of Ethiopians are under the age of 30, and tech is increasingly seen not just as a buzzword, but as a lifeline for economic transformation.
The Bottom Line
The Startup Proclamation’s passage by the Council of Ministers is a political endorsement with symbolic weight. But as any Ethiopian entrepreneur will tell you, symbolism doesn’t pay rent. The real test will come in the law’s implementation: whether agencies coordinate, whether the Startup Desk gets teeth (and budget), and whether startups can actually access the funds, benefits, and sandbox spaces they’ve been promised. Nigeria’s Startup Act offers a good example for this argument — now gathering dust, with scattered and incoherent implementation
The new law may not be perfect — exchange rate distortions alone suggest it’s already a little behind the curve — but it’s the most coherent attempt yet to align the state with the startup sector. After five years of delays, deferrals, and draft rewrites, the policy train has finally left the station. Whether it’s headed toward meaningful change or another round of bureaucratic back-and-forth is still unclear.
For now, Ethiopia’s tech founders are watching, waiting — and quietly updating their pitch decks to fit under the 5 million birr limit.