Ethiopia Moves to Lift Ban on Foreign Property Ownership in Bid to Boost Investment
Ethiopia is taking a significant step toward economic reform by moving to lift its decades-old law that bans foreigners from owning property.
In a bold move signaling Ethiopia’s ongoing shift toward market-driven reforms, the government is proposing a landmark change that would allow foreign nationals and companies to own property in the country for the first time in decades.
The reform, which still requires parliamentary approval, is part of Prime Minister Abiy Ahmed’s broader economic liberalization agenda aimed at attracting foreign direct investment (FDI) and enhancing property rights. If passed, it would reverse a key restriction dating back to the 1974 communist revolution, which enshrined state ownership of all land and barred non-Ethiopians from owning immovable property.
“This is a major departure from Ethiopia’s historical policies,” said Mirkarim Yakubov, an asset manager and investment advisor. “It sends a strong signal that Ethiopia is serious about reforming its investment climate, even though implementation and uptake will take time.”
Ethiopia has already made significant progress in drawing international investors. According to the United Nations Conference on Trade and Development (UNCTAD), the country attracted $3.26 billion in FDI in 2023—ranking it among the top five FDI destinations in Africa. Although this figure reflects a slight dip from 2022’s $3.67 billion, it still outperforms pre-pandemic levels and underscores the country’s growing economic appeal.
For decades, foreign investors have cited Ethiopia’s ban on property ownership as a major deterrent, alongside challenges such as limited infrastructure, foreign exchange restrictions, bureaucratic red tape, and high transaction costs. The proposed legal shift could help remove one of the final barriers to deeper international investment, particularly in sectors like real estate, hospitality, and manufacturing.
“This reform, if well-executed, could unlock new capital inflows, create jobs, and inject energy into the private sector,” said Yakubov. “But as always, the devil is in the details—how fast will the law pass, and how clear will the rules be for investors?”
The move is consistent with other liberalizing measures taken under Prime Minister Abiy, who has overseen privatization efforts, opened key sectors to foreign competition, and reduced state involvement in parts of the economy since coming to power in 2018. These steps have been widely praised by international financial institutions and development partners, though challenges remain.
But there remains concerns that without proper legal safeguards, foreign property ownership could also lead to social tensions or speculation in urban housing markets. Supporters argue that with the right regulations, it could stimulate construction, increase tax revenue, and strengthen Ethiopia’s integration into the global economy.
As the legislation moves toward parliamentary debate, investors are watching closely. While an immediate flood of capital is unlikely, experts agree the policy represents a significant turning point.
“It’s a smart move that fits into a larger, longer-term transformation,” said Yakubov. “Now it’s up to Ethiopia to follow through.”
If approved, the law could come into effect by late 2025, setting the stage for a new chapter in Ethiopia’s economic evolution.
