Ethiopia unveils 80% local participation plan to reduce reliance on foreign contractors

Ethiopia is setting its sights on becoming a regional construction powerhouse, unveiling an ambitious plan to increase the share of domestic contractors capable of competing for international projects from 33% to 80% over the next decade.

• Ethiopia plans to increase domestic contractors’ share in international project bids from 33% to 80% within ten years.
• The strategy aims to reduce dependence on foreign firms and empower local companies in Africa’s infrastructure market.
• Currently, only about a third of Ethiopian contractors meet the standards for international tenders; the government targets 55% capability in the medium term.
• Challenges for local firms include limited financing, equipment shortages, and difficulties with international project requirements.

The initiative forms part of the government’s broader strategy to strengthen local capacity, reduce reliance on foreign firms, and position Ethiopian companies to capture opportunities in Africa’s rapidly expanding infrastructure market.

According to officials from the Ministry of Urban and Infrastructure, only about one-third of Ethiopia’s licensed contractors and consultants currently possess the technical, financial, and operational capabilities required to successfully bid for international tenders.

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Authorities aim to raise that figure to 55% in the medium term before reaching the 80% target.

The move comes at a time when African countries are expected to invest hundreds of billions of dollars in roads, railways, energy projects, housing developments, and industrial infrastructure over the coming decades.

Ethiopia hopes its construction firms will secure a greater share of that spending, transforming the sector into a source of export revenue and employment.

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For years, foreign companies – particularly Chinese contractors, have played a dominant role in Ethiopia’s infrastructure development.

Many of the country’s flagship projects, including railways, highways, industrial parks, and public buildings, have been delivered by overseas firms with access to larger financing pools, advanced technology, and extensive project management experience.

However, Ethiopian authorities increasingly view the development of local construction champions as essential to retaining more economic value within the country.

By building stronger domestic firms, the government hopes to reduce capital outflows while creating companies capable of competing for contracts across East Africa and beyond.

Industry experts note that local contractors continue to face significant challenges, including limited access to financing, equipment shortages, foreign exchange constraints, and difficulties meeting the strict prequalification requirements of internationally funded projects. Addressing these barriers is expected to form a key component of the government’s strategy.

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The contractor participation target also aligns with Ethiopia’s wider industrial ambitions.

The government has previously outlined plans to boost local production of construction materials and expand domestic involvement in major infrastructure projects as part of efforts to reduce import dependence and strengthen the country’s manufacturing base.

If successful, the initiative could mark a significant shift in Ethiopia’s construction industry – from serving primarily domestic needs to competing for major infrastructure contracts across Africa and beyond.

This would also help create a new generation of internationally competitive Ethiopian firms and position Ethiopia as an exporter of construction expertise rather than just a recipient of foreign-built infrastructure.