Ethiopia recorded an increase in capital inflows during the Ethiopian fiscal year 2023/24, even as officials acknowledged unresolved macroeconomic pressures that continue to affect the investment climate, according to the Annual Development Cooperation Report released by the Ministry of Finance on Friday.

The report shows that foreign direct investment reached 3.9 billion US dollars during the year, a rise of 14 percent. It also states that the share of Official Development Assistance in capital formation declined to 6.72 percent, down from 11.69 percent a year earlier. The ministry said the shift reflects greater domestic participation in financing capital projects.

Officials noted that the Homegrown Economic Reform agenda is intended to rebalance the roles of the public and private sectors to encourage investment. They added that several macroeconomic challenges remain and require continued attention to strengthen predictability for investors.

The second phase of the reform programme, HGER 2.0, aims to address these constraints through measures designed to support macroeconomic stability, attract private capital, and improve fiscal sustainability. The government said the reforms align with the Ten-Year Development Plan, which targets structural transformation and expanded private sector engagement across the economy.