Ethiopia’s two-billion-birr Startup Act, valued at approximately $36 million, was unanimously approved by the Council of Ministers on June 5, 2025. It now moves to the House of People’s Representatives, with parliamentary approval expected by mid-July. So, what does this mean for the country’s tech and innovation ecosystem? Bernard Laurendeau, Founder of Enkopa Lab, joins CNBC Africa’s Tabitha Muthoni to explore the implications.

The Startup Act, valued at approximately $36 million, received unanimous approval from Ethiopia's Council of Ministers.

This legislation is poised to transform the startup ecosystem by enhancing economic freedoms and simplifying investment processes.

Ethiopian Investment Holdings is expected to play a pivotal role in de-risking investments and fostering cooperation between the public and private sectors.

The legislation directly addresses and mitigates initial skepticism from policymakers about potential tax revenue impacts.

Ethiopia’s strategy incorporates best practices from other countries’ startup legislation, with an emphasis on effective implementation.

Parliamentary review is expected by mid-July. Regional and international investor interest is anticipated to grow significantly once the Act is passed.

In a major step toward innovation and economic reform, Ethiopia’s Council of Ministers has approved the landmark $2 billion birr Startup Act. With parliamentary review on the horizon, this development underscores Ethiopia’s commitment to building a vibrant startup ecosystem and accelerating entrepreneurial growth.

Bernard Laurendeau, founder of MCOA, joined the conversation from Tokyo, offering insights on how this legislation could reshape investor confidence. After five years of planning, the approval of the Act marks a turning point for economic freedom and entrepreneurship in Ethiopia.

“Entrepreneurs globally are the foundation of job creation and market development,” Laurendeau stated. “This new legislative framework supports economic liberty and enterprise growth—something our ecosystem has long needed.”

The passage of the Act has sparked enthusiasm among a wide range of stakeholders, including policymakers, startups, and civil society. Previously fragmented, Ethiopia’s startup scene is now positioned to attract both venture capital and diaspora investment, thanks to clearer regulatory pathways.

A key feature of the Act is its support for public sector engagement in the startup space, primarily through Ethiopian Investment Holdings (EIH), the 34th largest sovereign wealth fund globally. EIH aims to complement private investment by reducing risks rather than competing with entrepreneurs.

Laurendeau addressed earlier concerns about lost tax revenue, noting that the Act focuses on a small number of highly innovative startups. These "Indiana Jones-type" entrepreneurs are expected to deliver meaningful long-term economic returns.

When compared with other countries in Africa, Ethiopia’s proactive approach gives it a competitive edge. “We studied successful global models and adapted best practices to build what we hope will be one of the most effective Startup Acts on the continent,” Laurendeau said.

A top priority moving forward is forming a competent oversight committee that can guide startups using regulatory tools such as sandboxes and official startup labels.

As Ethiopia awaits final parliamentary approval, anticipation is growing among both domestic and foreign stakeholders. International investors are watching closely, ready to enter newly liberalized markets and participate in the country’s economic growth story.

Aligned with Ethiopia’s broader economic reforms, the Startup Act arrives at a pivotal moment. It brings together opportunity, preparation, and momentum—positioning Ethiopia for a potential transformation of its innovation landscape.

The country now stands at the cusp of an economic renaissance, fueled by clear policy direction and collective ambition. The Startup Act is more than legislation—it’s a symbol of Ethiopia’s next chapter in entrepreneurship, innovation, and global engagement.

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