Ethiopia’s Construction Sector Set for Sustained 7.8% Growth Through 2029

Ethiopia’s construction industry is expected to maintain steady growth momentum over the next several years, supported by infrastructure investment, housing development, and energy sector expansion.

A recent industry analysis published by Research and Markets projects the sector to grow at an average annual rate of 7.8% from 2026 to 2029, following an estimated 9% expansion in 2025.

The outlook is supported by continued public capital spending, with the government allocating substantial resources toward transport networks, industrial zones, education, and healthcare infrastructure. Large-scale development projects typically stimulate demand for construction materials, engineering services, logistics, and long-term financing solutions.

Energy and urban development initiatives are also expected to contribute to sector growth. Expansion of electricity generation capacity, housing programs targeting the urban population’s needs, and ongoing industrial development plans are likely to sustain construction activity across the commercial, residential, and infrastructure segments.

Financial sector reform is another structural factor influencing the outlook. The policy decision by the National Bank of Ethiopia to open the banking industry to foreign investors is expected to improve access to development finance, strengthen capital flows, and support funding for large projects. Increased competition in the banking sector may also enhance lending capacity for long-term infrastructure and housing projects.

While the outlook is generally positive, the report notes several potential short-term hurdles that could impact project financing costs and execution. These challenges include foreign currency shortages, ongoing regional geopolitical instability, and limitations on energy exports.

Overall, the construction sector’s projected growth reflects Ethiopia’s continued focus on investment-led development, with the industry expected to play a central role in economic transformation over the forecast period.