Tesfa Tadesse
Managing Partner at TAY Authorized Accountants & Auditors
Accounting for change in Ethiopia
August 20, 2026
Ethiopia’s rapid economic and financial transformation shows little sign of slowing. As the country opens more sectors to foreign investment, strengthens its financial infrastructure and modernises its regulatory environment, its progress is attracting growing attention across Africa. Tesfa Tadesse, Managing Partner of TAY Audit Service LLP, spoke to the International Accounting Bulletin about what these changes mean for Ethiopia’s accountancy profession. Click here to access the article in full, or read our summary below.
Transforming Ethiopia’s accountancy profession
Ethiopia is emerging as one of Africa’s most closely watched economies. Economic reform, infrastructure investment and market liberalisation have helped make it one of the continent’s fastest-growing economies, with other African countries increasingly looking to its experience as a potential model.
For the accounting profession, rapid economic change has highlighted the need for stronger institutions and more qualified professionals. A major step came with the launch of the Ethiopian Institute of Certified Public Accountants (ETiCPA) in December 2025.
The institute is intended to strengthen professional skills, provide domestic routes to internationally recognised accounting qualifications and support the adoption of global financial reporting and auditing standards. Ethiopia currently has around 250 certified accountants, compared with approximately 45,000 in Kenya and 60,000 in Nigeria, creating significant demand for qualified professionals.
Tesfa commented on the important transition taking place within Ethiopia’s accountancy profession and the significance of ETiCPA’s establishment. While the institute remains at an early stage, it has focused on developing governance structures, staffing, membership registration, training platforms and professional policies. It has also begun registering founding members and introduced an Accounting Technician Qualification pathway.
ETiCPA should also support Ethiopia’s participation in the African Continental Free Trade Area (AfCFTA) by developing more internationally recognised Ethiopian accounting professionals and reducing reliance on foreign expertise.
Tax and regulatory reform
Tax reform is progressing alongside changes to the profession. Ethiopia has introduced quarterly advance income tax payments for large taxpayers as the government targets one trillion birr (USD$7.1 billion) in tax revenue.
The measures form part of efforts to increase the tax-to-GDP ratio by one percentage point annually, reaching 11% within four years. Ethiopia’s ratio stood at 7.5% in 2023, below the 13%–16% reported in Kenya, Rwanda and Uganda.
The amended tax regime also introduces an alternative minimum tax, extends taxation to the digital economy and adjusts income tax thresholds for the first time in more than a decade.
Tesfa also commented on the strengthening of regulatory oversight. The Accounting and Auditing Board of Ethiopia (AABE) has been reviewing audit firms and enforcing compliance with ISQM 1 and ISQM 2, encouraging firms to formalise quality-management systems and improve audit documentation.
AABE has also published a draft roadmap for the phased adoption of IFRS S1 and IFRS S2, potentially creating new opportunities in sustainability and climate-related reporting. Reporting entities are increasingly expected to file audited financial statements with AABE before submitting them to tax authorities, banks and other regulators.
Demand for accounting and audit services is consequently growing, driven by bank lending requirements, tenders, tax matters, shareholder expectations and emerging capital-market needs.
Tesfa highlighted fee pressure as an ongoing challenge, particularly where practitioners compete heavily on price. This can increase the risk of low-balling and place pressure on audit quality, reinforcing the importance of effective regulatory oversight.
New investment opportunities
The launch of the Ethiopian Securities Exchange, prospective listings by banks and other institutions, and the opening of additional sectors to overseas investors should create further demand for audit, IFRS reporting, valuation, due diligence, governance, tax and advisory services.
Tesfa also commented on the potential for greater collaboration and consolidation among accounting firms. Although consolidation remains limited, increasing regulatory demands, quality-management requirements, technology costs and talent shortages could encourage firms to collaborate, merge, specialise or join international networks.
Investor interest in the wider region is also rising. East Africa attracted USD$4.1 billion in investment between 2021 and 2025, supported by capital-market reforms, improved governance and foreign-exchange liberalisation. Kenya remains the largest destination, but investors are increasingly exploring frontier markets including Ethiopia, Tanzania and Rwanda.
Ethiopia has accelerated this trend by opening more of its economy to foreign participation. Directive No. 1082/2025 allows overseas investors into several sectors previously reserved for domestic businesses.
Foreign investors can now participate directly in exports of strategic commodities including raw coffee, oilseeds, pulses, hides and skins, forest products, poultry and livestock. Most import activities have also been opened, while foreign investors can enter the retail sector for the first time, subject to specific conditions.
A model for African reform?
The pace of change presents challenges for businesses trying to keep up with new rules, but Ethiopia’s combination of economic liberalisation and infrastructure development is increasingly attracting attention elsewhere in Africa.
Gaby Asare Otchere-Darko, executive chairman of the Africa Prosperity Network, has highlighted Ethiopia’s progress in industrialisation and infrastructure while calling for continued liberalisation in telecommunications, banking and financial technology.
Digital transformation is another major component. The Digital Ethiopia 2030 Strategy puts digital sovereignty at the centre of the country’s plans, including the development of a sovereign national cloud and stronger domestic control over Ethiopian data and digital infrastructure.
For accounting firms, these reforms create both pressure and opportunity. Greater regulation, international reporting requirements, capital-market development and foreign investment will require firms to improve skills, technology and quality management.
If Ethiopia can successfully implement its financial reforms while building the professional capacity needed to support them, local accounting firms should be well positioned to benefit as the country’s economic influence continues to grow.
