The challenges and opportunities with Ethiopia's digital transformation

Launched in July 2020, Ethiopia's Digital Transformation Strategy aims to harness technology to drive economic growth, citizen engagement, and improved quality of life. While the past three years have seen progress, a closer look reveals a digital landscape with promising developments and significant challenges to address.

Ethiopia boasts a large population exceeding 128 million, a large proportion of which are young people. This youthful demographic presents a tremendous opportunity, with over 26 million Ethiopians enrolled in education. By harnessing the power of digital development, Ethiopia can equip this young generation with the skills necessary for future jobs, fostering innovation and driving inclusive economic growth across the nation.

Over the past three years, Ethiopia has made strides in building its digital foundations.

Internet usage has surged, with users exceeding 36 million in 2023. However, this impressive growth still translates to only about 35% of the population. Despite this gap, initiatives like digital IDs and mobile payments are laying a solid groundwork for a thriving digital ecosystem. Ethiopia's high mobile phone penetration rate, with over 40 million mobile accounts, further highlights the potential for digital inclusion.

But several hurdles remain to bring an inclusive digital transformation across Ethiopia. The current landscape lacks platforms designed explicitly for Ethiopians living in rural areas. There are, for example, only a few e-commerce platforms tailored to local products produced in rural areas and to support agricultural practices.

A significant proportion of the population lacks the digital skills needed to navigate the online world. This digital divide excludes many from accessing the benefits of digital growth. While major cities boast improved connectivity, rural areas, where most Ethiopians live, often struggle with limited internet access. This creates a significant barrier to inclusion, hindering equitable participation in the digital economy. Furthermore, the lack of electric power in many rural areas makes relying solely on commercial power for digital transformation a challenge.

While mobile phone penetration is high, the functionality of these devices for rural populations is often limited to voice communications. A restricted number of use cases are tailored to their specific needs and challenges.

To unlock the true potential of digital transformation, Ethiopia must prioritize e-government services, e-commerce platforms designed for local products and digital tools for health and education that can empower citizens, businesses and institutions. Ethiopia must also work on expanding internet access, particularly in rural areas, which is critical for inclusive participation. Most importantly, comprehensive skilling, reskilling, and digital literacy training programmes must be designed to equip the population, especially the youth, with the necessary skills to navigate the digital world confidently. The country must also expand mobile use cases by developing and promoting mobile applications that cater to the specific needs of rural populations.

By confronting these challenges head-on, Ethiopia can unlock the full potential of its digital transformation journey. Recognizing the critical role of collaboration, the Ethiopian government seeks partnerships with experienced organizations. Ethiopia has partnered with the EDISON Lighthouse Countries network as part of this initiative to help bridge its digital divide. This collaborative approach will accelerate the development of essential infrastructure, transformative platforms and crucial skilling and reskilling programmes. Ultimately, by working together, Ethiopia can create a truly inclusive digital economy that empowers all its citizens.