Ethiopia’s population has reached an estimated 135.3 million, according to the latest data from the 2025 World Population Report released by the United Nations Population Fund (UNFPA). This milestone comes at a critical moment as the country prepares to adopt a new National Population Policy, marking three decades since the first policy was put in place in 1985.

The Ministry of Planning and Development, leading the policy revision process, explains that the updated policy will reflect Ethiopia’s current demographic realities and socio-economic conditions. It aims to harmonize with the nation’s development commitments and align with the global Sustainable Development Goals (SDGs) framework, positioning Ethiopia to better address the challenges and opportunities of its growing population.

Speaking about the progress since the adoption of the initial population policy, Habtamu Getachew, CEO of Population and Development Affairs at the Ministry, highlighted significant developments over the past 30 years. “The national poverty rate has fallen from 45.5% at the start of the policy to 19% today,” he reported. “In addition, infant and child mortality rates have improved considerably, contraceptive use has expanded, and education and other key socio-economic indicators have shown steady gains.” These advances underscore the importance of recalibrating population strategies to sustain and deepen development outcomes.

The policy revision follows a meticulous and multi-stage process. Initially, a thorough review of the implementation outcomes of the original policy was conducted. This assessment considered the structural changes and demographic shifts Ethiopia has experienced, as well as ongoing challenges. Four thematic documents were then prepared by the Technical Working Committee currently spearheading the new policy’s development. These documents cover an analysis of the country’s demographic and social governance status, a review of sectoral policies and their efficacy, a survey of international best practices in population policy, and recommendations for more effective policy frameworks. The drafts have been submitted to senior officials for feedback and further direction.

The unveiling of these details coincided with a high-profile forum held to launch the UNFPA’s 2025 World Population Report, titled “The Real Fertility Crisis: The Pursuit of Reproductive Agency in a Changing World.” The event, attended by government representatives, development partners, civil society actors, youth groups, and academia, emphasized the ongoing global struggle with reproductive rights and access.

Taiwo Oluyomi, Deputy Representative of UNFPA in Ethiopia, highlighted the forum’s emphasis on sexual and reproductive health and rights, gender equality, and evidence-based policymaking. She explained that Ethiopia stands at a pivotal juncture, buoyed by a large youth population that could serve as a “demographic dividend” if investments are made in health, education, and rights for all citizens.

“Ethiopia possesses a demographic opportunity that can catalyze sustainable development and improve lives,” Oluyomi said. “But this requires deliberate policies, ongoing investment, and the empowerment of young people — whose voices and leadership are truly inspirational.” UNFPA acknowledged the critical role played by governmental bodies, the diplomatic community, the private sector, civil society organizations, and especially youth-led groups in advancing reproductive health and population goals.

According to the World Population Report and corroborated by data from Worldometer, Ethiopia’s population continues to grow rapidly. The country maintains a high fertility rate—estimated at 3.81 children per woman in 2025—with a median age of just over 19 years. Urbanization rates remain moderate at approximately 22.5%, reflecting Ethiopia’s predominantly rural demographic profile. Population density has risen alongside this growth, reaching an average of 135 persons per square kilometer.

Projections indicate that Ethiopia’s population could surpass 170 million by 2035 and approach 225 million by 2050. This expanding population presents both opportunities and challenges—necessitating policies that support sustainable economic growth, education, healthcare, employment, and environmental management.

Ethiopia’s move to revise its national population policy after 30 years aligns with broader regional and global trends. Countries are recalibrating population frameworks to better meet contemporary realities shaped by changing fertility patterns, migration dynamics, and socio-economic shifts. The new policy aims to address gaps identified in the past while fostering a conducive environment for demographic dividends through inclusive development.

The Ministry of Planning and Development has committed to finalizing the updated population policy within the next two years, embedding it within the country’s longer-term development plans, including Ethiopia’s Ten Years Perspective Development Plan and the SDGs agenda.

The Ethiopian business community is witnessing a brewing institutional upheaval as two conflicting draft proclamations regarding the structure of Chambers of Commerce stir debate among government bodies, private sector actors, and regional chambers alike. At the center of the dispute is a fundamental question facing Ethiopia’s commercial and industrial sectors: should the long-standing, unified Chamber system persist, or be divided into separate entities to serve the manufacturing industry and the broader trade sector distinctly?

The Ministry of Industry has formally submitted a letter to the Prime Minister’s Office requesting immediate approval of its draft proclamation to establish an industrial council focused exclusively on the manufacturing sector. This move follows the rejection of a previously proposed draft by the Ministry of Trade and Regional Integration concerning the establishment of chambers of commerce, which was opposed by the Chambers of Commerce and Sectoral Associations.

If the Ministry of Industry’s draft is approved, the consequences could be far-reaching. The current Chambers of Commerce, which unify trade and industrial sectors under one institutional roof, could be split into two separate councils — one for commerce and trade, and another for industry. Such a split would affect the very makeup, membership, and management of assets of these chambers, including their considerable fixed and movable property and financial holdings. There are growing concerns that the division could lead to the fragmentation of resources and power bases long held by the unified chambers.

The Proclamation on the Establishment of Chambers of Commerce, approved in 2003 and currently in force, has faced criticism for emphasizing support to the broad business sector while allegedly sidelining the manufacturing segment. While the Ministry of Trade and Regional Integration reportedly agrees that a combined decree governing both trade and industry chambers is desirable, the Ministry of Industry insists on a dedicated industrial council aimed at enhancing the competitiveness of the manufacturing industry — a sector it deems crucial for Ethiopia’s development trajectory.

Should the separation materialize, not only would the Ethiopian Chamber of Commerce and the Ethiopian Industry Council be distinct entities, but so would their regional and city-level counterparts, necessitating a renaming and reorganization of these local chapters.

The process of drafting these two competing bills has not been inclusive; reports indicate several regional and city chambers of commerce and sectoral associations did not participate in the consultations. There is also uncertainty about the legal trajectory of the draft proclamations — whether they will be jointly considered by the Council of Ministers, or independently reviewed by the House of People’s Representatives.

In a letter delivered to the Prime Minister’s Office, the Ministry of Industry underscored the urgency of approving its draft proclamation on the establishment of industrial councils and professional associations to accelerate manufacturing sector growth. The Ministry highlighted that it originally submitted this draft on November 3, 2024, following all legal procedures.

According to the letter, the Ministry of Justice was slated to facilitate joint consultations between the Prime Minister’s Office and the Ministry of Trade and Regional Integration on February 17, 2025, but was unable to do so due to the absence of clear directives from the Prime Minister’s Office as of February 25, 2025. The Ministry further attached reference letters from the Ethiopian National Council of Sectoral Associations dated February 8, 2024, and June 17, 2025, which both warned about the potential negative impacts on the manufacturing sector of delaying approval of the draft proclamation.

The Ministry of Industry emphasized that this draft aligns with national economic policies and initiatives by seeking to integrate and empower private sector actors in manufacturing for sustainable growth. Approval is seen as a necessary step to eliminate conflicts of interest that currently arise between domestic manufacturers and traders under the existing unified chamber structure.

Abebayehu Girma, Vice President of the Ethiopian Chamber of Commerce and Sectoral Association, offered a pragmatic perspective on the ongoing debate. He stated that his concern is less about whether one or two proclamations govern the chambers, and more about understanding why the current proclamation has not been approved.

Abebayehu detailed the historical origins of the current proclamation, referencing how the 2003 proclamation (No. 341/2003) was crafted to unify oversight of commerce and industry under a single ministry. However, after nearly two decades, changes in the government’s ministerial structure — particularly the 2022 split of the Ministry of Trade and Industry into two separate ministries — have complicated this arrangement.

He recounted how disputes over the governance structure intensified when the Ministry of Industry sought to draft its own decree to establish a dedicated chamber for manufacturers, citing problems of poor coordination and conflicts of interest. According to Abebayehu, the differing visions have led to confusion and rivalry: “They (industry and trade sectors) are building, but instead of cooperating, each views the other as an adversary. This is not a view held by a few individuals but reflects widespread concerns.”

While acknowledging that the current chamber proclamation is outdated and ineffective in representing sector-specific needs, Abebayehu warned of potential institutional conflict should the draft lead to separate chambers without resolving underlying tensions. He advocates for amending the existing law to better serve both trade and manufacturing interests within a single, cohesive framework.

Abebayehu also lamented that the government has yet to fully comply with international conventions on inclusive governance, pointing out that many industry voices remain unheard in the legislative impasse. He indicated that while he personally would prefer a unified chamber law, he would not oppose separate proclamations if they address past problems fairly and deliver clear lines of authority.

He attributed part of the delay in approving legislation to resistance from both industry factions and certain leaders within the Chamber of Commerce, citing disagreements over control and representation. He also disclosed attempts to bring the issue to the Prime Minister’s Office, noting a lack of clarity over the government’s stance on the matter.

The Ministry of Trade and Regional Integration reportedly prefers a single “Chamber of Commerce Establishment Proclamation,” while the Ministry of Industry advocates for a separate “Establishment of Chambers of Industry Proclamation.” Approximately a year and a half ago, the Prime Minister’s Office had agreed that a decree benefiting both sectors and the broader economy was necessary and feasible.

Recently, the Prime Minister himself addressed representatives of Ethiopia’s business community, ordering that the division between trade and industry chambers be resolved immediately. Following this directive, the Ministry of Trade and Regional Integration convened board members of key associations on July 7, 2025, presenting the draft proclamation to the Council of Ministers for decision. However, implementation remains stalled due to administrative and possibly political reasons.

The Ministry of Industry’s letter insists that the proclamation be issued expeditiously, arguing the delay hampers the country’s industrial growth ambitions and creates unnecessary conflicts between merchants and manufacturers.

The potential split of Ethiopia’s Chambers of Commerce and Industry represents a critical moment for the nation’s private sector governance. How this institutional restructuring unfolds could influence business operations, public-private cooperation, and industrial policy implementation for years to come.

The private sector, as well as government officials, now await a definitive resolution — either a unified law that balances the needs of commerce and manufacturing or a formal division that creates distinct institutions empowered and resourced to serve their respective sectors effectively.

Despite strong advocacy from various experts and the Ethiopian Capital Market Authority (ECMA) to reduce income tax deductions on bonds and shares to revitalize the securities market, the new income tax proclamation remains largely unchanged, offering only a moderate tax rate.

Since its establishment, the ECMA has consistently lobbied government officials to alleviate the tax burden on share and bond transactions outlined in the proclamation.

The previous  proclamation, last amended in 2016, treats bond and share transfers as taxable transactions similar to fixed assets. Article 59.1, titled ‘Gains on Disposal of Certain Investment Assets,’ mandates that individuals profiting from the sale of immovable assets, shares, or bonds must pay income tax.

Article 59.2 classifies taxable assets into two categories: Class A, taxed at 15% and comprising immovable assets like buildings, and Class B, which includes bonds and shares and is taxed at 30%, as specified in Article 59.7.

The proposed amendment, currently under review by the Parliament’s Plan, Budget, and Finance Standing Committee, aims to eliminate the distinction between Class A and Class B, establishing a uniform tax rate of 15% for all transactions.

Experts note that this change effectively reduces the tax on bond and share sales from the previous 30%. Additionally, Sub-Article 3 of the new law clearly outlines the formula for calculating tax deductions, enhancing transparency.

As Ethiopia prepared to launch its long-awaited secondary market, stakeholders, including the ECMA, urged the government to amend tax laws to create a more favorable environment.

The market, which began operations last week, has led experts to advocate for tax policies that support growth in this emerging financial sector.

Experts emphasized the need for tax frameworks that enable innovative financial instruments, such as collective investment schemes, to transition from theoretical concepts to practical implementation.

“In many countries, funds benefit from pass-through taxation to avoid double taxation. Ethiopia should adopt similar measures to eliminate these barriers,” they stated.

They pointed out that the previous income tax proclamation offers no incentives for the fund market, especially for transactions involving shares and bonds.

To establish the securities exchange as a strong alternative financing channel, experts urged the government to introduce targeted tax incentives.

“Capital raised through the secondary market typically supports economic development, such as funding new projects or business expansions. By providing tax incentives, the government can encourage investor participation and empower issuers to secure capital for their ambitious investment plans,” they explained.

Experts emphasized that the existing income tax proclamation, along with related regulations and directives, imposes significant tax burdens on income derived from investments in shares and bonds, in stark contrast to the lighter taxation on fixed property transactions.

“To foster a vibrant capital market and stimulate investment, revising the previous proclamation is essential,” experts told Capital.

They praised the new proclamation for aligning the tax rate on shares and bonds with that of fixed assets, a change expected to attract more investors to the capital market. However, they expressed a desire for an even lower tax rate for bonds and shares compared to Class A taxable assets.

“Persistent tax disparities may drive potential investors toward fixed assets, which offer limited economic benefits for the nation,” the experts cautioned.

They argued that equalizing tax rates would yield two significant benefits: it would create strong incentives for investors to engage in the capital market while also stabilizing the overheated fixed asset market and reducing inflationary pressures.

To further enhance market stability, reduce speculative activities, and direct capital toward the Ethiopian Securities Exchange (ESX), experts recommend that the government consider raising the income tax rate on transactions involving immovable assets compared to securities. This policy shift would encourage cash-holding investors to participate in the ESX, fostering a more dynamic and productive investment environment.

Last week, the highly anticipated ESX began operations, marking a crucial milestone. In the current budget year, the government expects to raise funds through this innovative platform while facilitating the trading of additional shares.

Other Key Reforms

The government introduced a bold new tax proclamation aimed at expanding revenue, reducing tax avoidance, and modernizing the nation’s tax system. This law, which will replace provisions of Proclamation No. 979/2016, includes significant reforms such as an Alternative Minimum Tax (AMT), increased Withholding Tax (WHT) rates, a simplified presumptive tax regime, and adjustments to the personal income tax schedule.

A central feature of the reform is the introduction of a 2.5% AMT on gross income for businesses whose regular profit tax liability is below 2% of their gross income. This measure targets companies reporting low profits to ensure they contribute a baseline level of tax, addressing tax avoidance and aligning with Ethiopia’s goal of strengthening its revenue base.

The proclamation significantly raises WHT rates, particularly for non-residents and transactions in the digital economy. Non-resident entertainers, teams, or service providers—such as those offering satellite TV, digital services, or transmission via cable, radio, optical fiber, or the internet—will now face a 15% WHT on their gross Ethiopian-sourced income, up from the previous 10%. No expense deductions will be permitted, ensuring higher revenue retention.

Non-resident companies operating through a permanent establishment in Ethiopia will also incur a new 15% WHT on profits repatriated to their home countries, a provision designed to retain more revenue within Ethiopia. Similarly, dividend income paid to non-residents will now be taxed at 15%, increased from 10%, although dividends remain untaxed at the corporate level to encourage reinvestment.

The new law specifically targets income from satellite TV, internet, and similar services provided by non-residents, taxing them at 15% on gross income. This replaces potentially lower or less clearly defined rates under the previous proclamation.

Royalty income for non-residents through a permanent establishment will continue to be subject to a 10% WHT on gross payments, while residents will pay 10% for general royalties and 5% for royalties from cultural or traditional works, maintaining or slightly adjusting previous rates. Notably, the previous 5% royalty WHT for both residents and non-residents has been increased for non-residents in certain situations.

Non-residents providing technical services, such as engineering, legal, financial, IT, or architectural services, for more than 91 days in a tax year will be deemed to have a taxable presence in Ethiopia. These services will be subject to a 15% WHT and applicable income tax rates, strengthening compliance for foreign service providers.