The number of federally registered business licenses in Ethiopia plummeted by more than 80 percent last year, reversing a decade of exponential growth and leaving the country with a little more than 100,000 licensed businesses.
The fifth edition of the Labor Market Intelligence report compiled by experts at the Ministry of Labor and Skills indicates that more than 470,000 licenses across all sectors and size categories fell out of the official register in 2024.
“The uniformity of the 2025 decline across all size categories suggests a systemic cause such as regulatory changes in licensing, macroeconomic constraints, tightened access to credit, or an administrative cleanup of inactive licenses rather than a sector-specific slowdown,” reads the document.
From The Reporter Magazine
Since regional trade bureaus also authorize business license registration, the total figure does not include those registered or revoked at the regional bureau level but at the Ministry of Trade and regional Integrations.
Officials suggest a number of potential causes for the shocking decline, but the Labor Ministry’s document neither pinpoints the specific factors and the recommendations.
However, the numbers paint a startling picture of the Ethiopian economy, which had come a long way since 2012, when the number of registered business establishments stood at 5,200. By 2018, the number had surpassed 100,000 and eventually climbed to nearly 585,000 by 2024.
From The Reporter Magazine
The decade-long expansion was driven primarily by micro-enterprises (businesses having less than 100,000 Birr in capital), which accounted for more than 70 percent of total registrations.
The number of small enterprises (capital below one million Birr), medium enterprises (below 20 million Birr), and large enterprises (above 20 million Birr) also grew significantly during this period.
However, none of the categories were exempt from the intense contraction of 2025.
More than 360,000 micro enterprises closed their doors last year. So did nearly 90,000 small enterprises and more than 23,000 medium enterprises. The number of large enterprises, of which there were only 289 registered in 2012, fell by nearly 86 percent to under 800, according to the Ministry’s report.
It notes the contraction affected all sectors proportionally.
The number of registered trade, service, logistics and transportation, construction, and ICT establishments all fell by around 80 percent last year, while nearly 13,500 registered agricultural businesses ceased to exist on official registers.
Officials note the unemployment risks involved.
“The sharp decline in registrations could significantly impact job creation, especially for low-barrier micro and small enterprises,” reads the report.
It highlights “uneven” distribution in business registration across regions.
Oromia, Amhara, and Addis Ababa remain the leading regions in terms of the number of business establishments, together accounting for nearly two-thirds of all businesses registered nationwide. The capital continues to account for the largest proportion of large enterprises.
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