Ethiopia is navigating a challenging global investment climate with cautious progress in its digital economy, according to the newly released World Investment Report 2025 by the United Nations Conference on Trade and Development (UNCTAD). The report, which analyzes international investment trends with a special focus on the digital sector, highlights both opportunities and persistent vulnerabilities for Ethiopia as it seeks to accelerate digital transformation and attract foreign capital.
The report paints a sobering picture for developing economies: “Global foreign direct investment fell by 11 per cent in 2024, to $1.5 trillion. Infrastructure investment is slowing. Industrial investment is under strain. And developing countries – those most in need – are being left behind,” writes UN Secretary-General António Guterres in the preface. Despite this, the digital economy stands out as a relative bright spot—though growth remains “highly uneven” and concentrated in a handful of countries.
For Ethiopia, the report notes that digital connectivity and investment are “essential to closing the digital divide,” but warns that “many structurally weak and vulnerable economies remain marginalized, constrained by inadequate digital infrastructure, limited digital skills and policy and regulatory uncertainty”. While more than $500 billion in greenfield investment in the digital economy has flowed to developing countries over the past five years, most of this capital has bypassed the least developed and landlocked nations, including Ethiopia.
The World Investment Report 2025 urges governments like Ethiopia’s to create “an enabling environment for sustainable investment in the digital economy.” It points to the need for integrated digital strategies that are connected to broader industrial and investment agendas, as well as improvements in data governance and regulatory frameworks. The report also highlights the catalytic role of development finance institutions and blended finance mechanisms in scaling up digital investment, especially for countries facing high borrowing costs and limited access to private capital.
Despite global headwinds, Ethiopia is recognized for its efforts to modernize its digital landscape and attract international partners. However, UNCTAD cautions that “gaps in data governance, poorly calibrated intellectual property frameworks that neither encourage innovation nor facilitate knowledge sharing, and fragmented regulatory regimes continue to hold back progress”.
The report concludes with a call to action for Ethiopia and its peers: “The digital transformation is not an inevitability—it is a choice. We must choose to make it inclusive. We must choose to make it sustainable. We must choose to ensure that the next chapter of investment does not simply digitize inequality but evens the playing field of our digital world”.
