Digital Ethiopia 2025: Progress, Challenges, and the Road Ahead

Two months into the Covid-19 pandemic, as the world locked down, Ethiopia’s government made a high-stakes bet on a digital future. The Council of Ministers approved an ambitious national plan, “Digital Ethiopia 2025,” a comprehensive strategy to catapult the agrarian economy into the digital age.

It rested on four pillars: infrastructure, enabling systems, applications, and the broader ecosystem, to be realized through digital pathways in agriculture, manufacturing, IT-enabled services, and tourism.

Each pillar was broken down into objectives ranging from short-term goals, like telecom sector liberalization within 18 months, to five-year aims such as building a robust e-commerce ecosystem.

Over the past half-decade, the Digital Ethiopia strategy has served as a blueprint for projects across both the public and private sectors. Nearly 900 government services have been digitized. More than 3,000 digital firms have been licensed by the Ethiopian Communications Authority. And mobile money users , almost nonexistent in 2020, have now edged close to 60 million.

Digital financial services have seen especially rapid growth, with electronic transactions outnumbering cash in some banks. Considerable progress has also been made in digital identification, with the Fayda ID advancing from concept to enrolling over 24 million Ethiopians.

Five months ago, Prime Minister Abiy Ahmed (PhD) declared the first strategy complete and announced a new Digital 2030 plan. Officials from the Ministry of Innovation and Technology and the National Digital Council echoed that sentiment, with support already pledged from the European Union, which is helping draft the e-Government Strategy and Business Enterprise Architecture 2025–2030.

As the rollout of the new strategy approaches, reflecting on the successes and shortcomings of the past five years might offer valuable insight. 

The Foundation: Power and Connectivity

Progress in any digital transformation depends on the strength of its underlying infrastructure. Electricity and internet connectivity are sine qua non for any digital leap.

Since the launch of the first Digital Ethiopia strategy, aided by the entrance of a second telecom operator which ended a 126-year monopoly, 3G coverage has expanded by 50 percent, while 4G access has grown eightfold. Around 47 million data and internet users were reported in 2025 by Ethio Telecom, up from 26 million five years back. While Safaricom's network amassed 7.1 million active mobile data users by July of this year. Yet affordability remains the largest obstacle to mobile internet adoption, even as network coverage extended to more than 90 percent of the population and rates have dropped.

Electricity, however, remains an all too rare a luxury for many. Despite growth in power generation, only about 55 percent of Ethiopians have access to electricity. The Ethiopian Electric Utility, the state-owned power retailer, served roughly 5 million households last year, 90% of them in urban areas.

The inauguration of the Grand Ethiopian Renaissance Dam (GERD) last month nearly doubled the nation’s generation capacity, but transmission infrastructure remains a bottleneck. To address the imbalance, the government has begun phasing out electricity subsidies, a move intended to bolster the utility’s financial capacity in the long run.

Infrastructure limitations continue to constrain most other digital objectives. E-governance, financial inclusion, and industrial automation all rely on stable energy and connectivity. Even so, the past five years have seen notable progress in IT-enabled services, particularly in the financial sector.

A Financial Services Boom

When the Digital Ethiopia strategy was first introduced, digital finance was an afterthought in the country’s banking system. Two decades after the state-owned Commercial Bank of Ethiopia (CBE) installed its first ATMs, the machines were still largely confined to Addis Ababa and offered little interoperability.

Today, that picture is changing. The number of ATMs has grown by more than 85% to roughly 12,000, while point-of-sale (PoS) machines have nearly doubled to over 20,000 in the five-year period. Still, nearly 60 percent of ATMs and 77 percent of PoS devices remain clustered in the capital by the end of last year.

The strategy’s clearest success lies in mobile-based financial services. The approval of the Payment Instrument Issuers’ Directive in 2020 opened the door for telecom operators like Ethio Telecom, whose mobile money platform, telebirr, has facilitated over 4.9 trillion Birr in transactions and disbursed 25 billion birr in microloans in less than four years. Kenya’s Safaricom has since entered the market, intensifying competition, though Ethio Telecom still dominates.

Even in the absence of a mature instant national payment infrastructure, transactions via digital channels surged by 129% last fiscal year, reaching 9.7 trillion Birr. The rise of private operators such as Chapa, Santimpay, and Arifpay, spurred by more flexible regulations, has accelerated the momentum.

“Fintech has been the most successful pillar of our strategy,” said Selamyihun Adeferes, innovation development CEO at the Ministry of Innovation and Technology. The ministry, he added, is now developing a Digital 2030 Strategy to set even more ambitious targets.

Yet inclusion remains a stubborn challenge. The 2025 Global Findex shows only a modest increase, from 46 to 49 percent, in the share of adults with bank accounts. Most digital transactions are still concentrated in payments and transfers. Digital insurance, lending, and investment products are nascent, hampered by the absence of a digital lending law and mounting nonperforming loans.

A handful of operators dominate key market segments, driving up fees and leaving rural areas underserved. Limited transparency and uneven service quality highlight a broader concern that Ethiopia’s digital finance ecosystem has grown fast, but not necessarily deep.

Digitizing the State, Identity and Commerce

To formalize the economy, simplify business, and boost tax collection, the Digital Ethiopia strategy prioritized digital interactions among government, businesses, and citizens.

Central to this effort is the Fayda Digital ID, which Prime Minister Abiy has called the country’s second-most important national project after GERD. Bolstered by a $350 million World Bank package and a new project office, the initiative aims to identify a population in which roughly 40 percent lack formal documentation.

The ID, incorporating biometric data, is now required to access many public and financial services. More than 24 million Ethiopians have already been registered. Private companies are also beginning to integrate Fayda authentication into their own digital systems.

For Bahru Zeynu, founder and CEO of Africom Technologies, the project marks a turning point. “Several critical challenges can be addressed now,” he told Shega. “It’s a plan that has been around for years.”

However, the CEO who was part of the team that worked to bring Aliexpress into Ethiopia through the Digital Transformation Association, believes a lot more needs to be done for lasting digital change. He pointed to the uneven playing field for telecom operators and the protracted rollout of channels for international payments, a bottleneck that has prevented AliExpress from fully entering Ethiopia. 

“Over half of transactions are now digital, but the youth can’t even pay for an online subscription using local channels,” Bahru said.

He recommends expanded capacity-building programs in STEM fields for government and educational institutions to leverage the latest advances in technology. The CEO also cited the lack of inclusivity in rural areas and failure to foster a vibrant e-commerce as a critical shortcoming during the implementation of the first Digital Ethiopia strategy.

While informal vendor channels continue to proliferate across social media, a robust e-commerce ecosystem remains far out of reach. Several Ethiopian e-commerce startups have struggled to scale, hampered by tax complications, weak logistics, and regulatory uncertainty. A recent survey of 80 local platforms found that nearly 60% made less than $10,000 annually. The recent entrance of Ethio-Telecom into the e-commerce sector has presented yet another challenge to the handful of startups that have managed to survive.

While the Digital Ethiopia strategy aimed to create a more business-friendly environment through technology, its results have varied widely across sectors. Major initiatives include a national business portal aggregating services from 10 agencies, automated business licensing via e-trade, and a digital immigration document filing system. Last year, the Prime Minister inaugurated the most ambitious of these projects: Mesob, a one-stop center providing integrated access to 41 federal services.

Although nearly all federal agencies have launched digital portals, users frequently encounter broken links, 404 errors, and malfunctioning pages. Limited follow-up, poor maintenance, and delayed updates have left many of these sites barely functional after their highly publicized launches. Such shortcomings could have serious consequences, particularly as the government expands the rollout of its e-court system.

The Unfulfilled Promise of Ag-Tech

Agriculture was envisioned as the first digitally enabled pathway toward prosperity. It laid out two clear opportunities to harness: building a national agriculture platform and incentivizing Ag-tech entrepreneurs. Spearheaded by the Agricultural Transformation Institute, a digital agriculture roadmap was launched last year with goals outlining solutions for data-driven farming, advisory services, and AgTech innovation.

ATI’s hotline now serves around 7 million farmers according to the Institute, while tools like the Farmer Profile Project and Agriculture Investment Mapping (AIM) platform aim to improve planning and resource allocation.

Yet the impact on productivity remains limited. Declining soil fertility, pest outbreaks, erratic rainfall, and financing shortages persist. Seed production meets only half of demand, and despite agriculture employing three-quarters of Ethiopians, about 10.5 million still rely on food aid.

Support for ag-tech entrepreneurs has also been limited. Samson Alemu, a co-founder of Thur Biotech, which makes organic fertilizer, said that while there has been progress, a lack of awareness and coordinated support hinders growth.

 “There is a lot we could do in terms of import substitution regarding fertilizer and helping recover damaged soil,” he told Shega.

While agricultural production has consistently increased at close to 5% during the implementation of the Digital Ethiopia strategy, it would be tough to find any meaningful correlation. Mechanization remains low despite tax incentives for imports, seed availability remains a major constraint, and rain-fed cereal agriculture continues to account for nearly 75% of production.

A Nascent Startup Ecosystem

The strategy envisioned a vibrant private sector led by innovators. For years, however, Ethiopian startups were treated no differently from other businesses, often clashing with tax and customs authorities over the nature of technology business. In one high-profile incident, the CEO of WebSprix, an IT solutions company, was detained for seven months over tax evasion charges stemming from software imports. The charges were all dropped following an intervention from the Ministry of Finance.

A recent change offers hope: the ratification of a startup proclamation designed to provide tailored support and a nuanced regulatory lens.

“It was a bold and much-appreciated move,” said Nebiyou Yirga, general manager of the Ethiopian Association of Startup Ecosystem. He believes the law could unlock crucial support if implemented effectively.

Yet, a web of deeper structural challenge remains. The ICT sector contributes just about 2% of GDP while adoption for most apps and platforms is limited to urban areas. Digital literacy campaigns like the 5 million coders initiative have had underwhelming success so far despite a concerted push by the state.

Abreham Tekeste, a developer behind the Keziyas Platform, which guides users through government services, said digital literacy is “abysmally low.”

“Most users are untrustworthy of technology without a human intermediary,” he said.

Even as mobile networks and e-services proliferate, low levels of digital literacy appear to be constraining adoption and meaningful engagement.

As Ethiopia prepares its Digital 2030 strategy, the legacy of its first five-year plan is a nation at a digital crossroads. The foundations have been decisively laid: millions are now connected, financial transactions have been revolutionized, and a digital identity system is taking root. Yet the path ahead must now confront the harder, less glamorous work of inclusion, ensuring that the farmer in the rural lowlands has as much access to the digital economy as the entrepreneur in Addis Ababa. The success of the next chapter will depend not just on ambitious targets, but on building a truly national grid, both electrical and digital, that can power a more equitable and sustainable transformation for all.