Chinese investors boost their presence in Ethiopia

Chinese companies took the lead by inking investment accords worth $10.5 billion at Invest in Ethiopia 2026, an event co-organized by the Ethiopian government that brought global investors, policymakers and business leaders under one roof in the vibrant city of Addis Ababa in March.

The agreements, ranging from green ammonia production to electrical equipment manufacturing, underscore the growing footprint of Chinese investment in Ethiopia, particularly in strategic sectors such as renewable energy, manufacturing and heavy industry.

Out of more than a dozen renowned companies expressing interest in Ethiopia, seven — including two Chinese companies — will invest a combined $13.1 billion. This investment is expected to create jobs, boost exports and reduce import dependency.

This year's event has enabled key investors, particularly from China, to deepen their engagement in Ethiopia's expanding investment landscape.

China's role in Ethiopia's investment drive can be understood from two key perspectives.

The first is its direct financial investment in sectors that enhance Ethiopia's export capacity. A notable example is Huajian Group's shoe manufacturing plant at the Eastern Industrial Park, which has created thousands of jobs and produces around 15,000 pairs of shoes daily. Many similar factories have emerged, boosting exports while also filling gaps in the domestic market.

The second is China's role in building critical infrastructure that supports investment. Most foreign investors seek an enabling environment that guarantees efficient operations and reliable returns, including access to skilled labor, sustainable energy and efficient logistics. In this regard, China has played a significant role in supporting Ethiopia's ambition to become a premier investment destination in Africa. From expressways and railways to industrial parks and special economic zones, China's contribution stands out.

For years, China has been Ethiopia's largest source of investment and trading partner, and Chinese companies have been contributors to some of Ethiopia's most important infrastructure projects.

A prominent example is the 752-kilometer, Chinese-built Addis Ababa-Djibouti Railway, which links landlocked Ethiopia with Djibouti. Since its inauguration in 2018, the railway has transported over 12 million metric tons of cargo, reducing Ethiopia's logistics costs by 30 percent. In addition, projects such as the Adama Wind Power Project and the Hawassa Industrial Park have directly created over 50,000 jobs for locals.

China's involvement in Ethiopia's mega projects continues to yield mutual benefits. Recently, Dangote Group signed a $4.2 billion, 25-year natural gas agreement with China's GCL Group to power a large urea fertilizer plant in Ethiopia. The plant — constructed at a cost of $2.5 billion — is a joint venture with Ethiopian Investment Holdings, which has a 40 percent stake.

Once the plant becomes operational, Ethiopia is expected to become self-sufficient in urea fertilizer production. The plant is projected to produce 3 million tons annually, exceeding domestic demand and enabling exports to East Africa and beyond, helping to bolster food security in Africa.

Ethiopia's investment climate has become increasingly attractive for several reasons. The country's homegrown economic reform program, along with strong partnerships with long-standing partners such as China, has significantly contributed to this progress.

The reforms have expanded Ethiopia's investment landscape, enabling broad-based economic growth while opening new frontiers for investors. Key advantages include a rapidly growing consumer base, a young and skilled labor force, a market-based foreign exchange system, improved access to clean energy, expanding digital infrastructure and enhanced transportation networks. In addition, the development of industrial parks and free trade zones located near major trade corridors further strengthens investment potential.

The government remains committed to improving the investment environment through enhanced service delivery, infrastructure expansion and stronger public-private partnerships.

Meanwhile, trusted partners such as China continue to play a crucial role in laying the foundation for Ethiopia to attract greater global investment. The expansion of critical infrastructure remains central to scaling up both the volume and quality of investments.

Moreover, Ethiopia offers a strategic geographic advantage. The ever-expanding Ethiopian Airlines network connects the country to global markets efficiently. Goods and services can reach major destinations worldwide within a day. For instance, flights from Addis Ababa take approximately 11 hours to Beijing in China, less than 18 hours to New York, under 14 hours to Sao Paulo in Brazil, less than four hours to the Middle East, and around eight hours to London in the United Kingdom. With multiple passenger and cargo flights operating daily, Addis Ababa is increasingly becoming an attractive investment destination for international partners.

Ethiopia today seeks institutional investors capable of delivering a tangible impact — whether through export growth, job creation or industrial transformation. In this regard, the enduring Ethiopia-China partnership remains a key pillar supporting the country's ambition to become a leading investment destination in Africa.

The author is former editor-in-chief of The Ethiopian Herald.

The views do not necessarily reflect those of China Daily.