Why Some Ethiopian Startups are on the Move to Rwanda

When one health-tech startup founder first heard about the launch of Teniente, a state-backed health-tech and pharmacy inventory management platform, he thought it had to be a false rumor. After making a few phone calls to friends in the industry, he learned that the app was not only real but had already onboarded nearly all pharmacies in the capital and over 130 hospitals just a few weeks after its rollout. It was a scale that a startup like his could only fantasize about.

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“What shocked me most was that it launched without any feedback from private operators already in the sector,” he told Shega.

For the founder, who had sold his house and car to fund his health-tech ambitions, the announcement was the straw that broke the camel's back. While remaining unimpressed by the technical offering of the new state-backed platform, he could not foresee any private startup competing for market share with an app backed by the Prime Minister’s Office.

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“It is so demoralizing,” he says. “The government could have sought out partnerships with the private sector, but it appears to have decided to kill private innovation in the health tech sector.”

The founder has decided to look elsewhere on the continent to realize his entrepreneurial goals. He has locked in on Rwanda as his likely destination. But he is far from alone in eyeing the nation, often referred to as the Land of a Thousand Hills. 

Several founders of Ethiopian tech startups are considering the idea. Many prefer not to speak on the record. Others are already making moves quietly, without public announcements.

Shega has identified nearly a dozen startups that are on the move to Rwanda and has spoken with half of them, who say they are planning to expand or relocate there.

Most pointed to a slew of incentives offered by Rwanda and a growing list of frustrations piling up in their home operations, including tax burdens, unpredictable policy changes, and infrastructure shortages, in contrast to subsidies, tax write-offs, and funding opportunities.

“They Made Me Feel Needed”

Samson Alemu, co-founder and CEO of Thur Bio Tech, experienced this contrast firsthand. Established three years ago, the startup has been producing organic fertilizer, which can treat acidity and increase harvests. Despite having early traction and winning awards from competitions like the Ayute Africa Challenge, alongside support from USAID, it has struggled to scale significantly

In the company’s early days, officials from Rwanda’s Ministry of Agriculture approached him at the Ayute Africa Challenge. “The Rwandan minister himself came to me,” Samson recalled to Shega. They were scouting for startups that could be encouraged to operate in Rwanda.

After visiting Kigali, Samson was asked whether he could replicate his operations there. He agreed.

“What shocked me was how the system makes you feel like you are needed,” he said. According to Samson, government offices processed legal requirements swiftly, often while he was still working remotely from Ethiopia. “I was just following up,” he said.

According to Samson, the Rwandan government provided him with land access and even found him collateral-free financial support with the lowest interest rate from one of the local microfinance institutions. In Ethiopia, his experience has been starkly different. “You can have a brilliant idea and still be short of finance, and on top of that, officials want additional incentives,” he says. “The system makes you feel like an outsider,” he laughed.

These sentiments are widely shared.

Speaking anonymously, the founder of one of Ethiopia’s major online grocery platforms told Shega that their troubles began at the Ethiopian Investment Commission (EIC). After lobbying a foreign investor for months, the deal collapsed amid protracted bureaucratic procedures.

“They were still working with paper files,” the founder said with disappointment. “We were told to find our documents ourselves.” The investor later suggested relocating the company to Rwanda. “He loved the idea,” the founder said. “But he made it clear he would not invest here.”

In early 2025, the EIC itself came under intense scrutiny after appearing before parliament following damning findings by the Federal Auditor General.

According to the audit, over the past 26 years, the commission issued 18,559 investment licenses, yet only about 24 percent of projects became operational. More than 9,000 licenses were revoked, often without clear justification. The report cited weak monitoring of capital requirements, poor enforcement of duty-free privileges, and failure to track job creation, technology transfer, or project progress.

Stalled projects, unresolved land disputes, tax conflicts, supply-chain disruptions, and coordination failures across government agencies have all contributed to declining investor confidence.

Ethiopia is often described as one of Africa’s most promising startup markets. With more than 120 million people, a rapidly growing youth population, and expanding digital adoption, the fundamentals appear strong.

Yet for founders on the ground, the reality is far harsher. Policy uncertainty, infrastructure costs, weak institutional support, and limited ecosystem awareness beyond Addis Ababa continue to constrain growth. Increasingly, these pressures are pushing talent and capital toward more predictable environments elsewhere on the continent.

Ethiopia’s first Startup Proclamation marked an important shift by formally recognizing startups as a distinct economic category. It was a long-overdue attempt to move beyond fragmented support and create a tailored legal framework for innovation-driven en