Addis Ababa Reclassifies Low-Capital Traders Under E-Informal System

The Addis Ababa City Administration has redefined the scope of informal businesses, announcing that traders with capital below ETB 200,000 will now be classified under the “e-informal” business category.

This new directive outlined by Habiba Mohammed, Head of the City’s Trade Bureau represents a significant policy shift. Previously, under a 2017 directive, only traders with capital under ETB 10,000 fell into the e-informal classification. 

The revised threshold, now twenty times higher, is part of a broader effort to bring more micro-businesses into a structured framework.

E-informal businesses are defined as those lacking permanent business premises, operating with annually renewable licenses, and not fully integrated into the tax system. “The goal is to better monitor and support low-capital traders while also paving a pathway into the formal economy,” said Habiba.

The new regulation also imposes a two-year operational limit for traders classified under the e-informal category. Once their capital reaches ETB 200,000, they are required to transition to the formal business system and comply with associated regulations, including permanent licensing and tax registration.

Habiba further explained that the e-informal business structure is divided into two types: those operating from fixed locations and mobile vendors working on city streets. For the latter group, specific working days and hours will now be enforced to manage public space usage more effectively.

This regulatory update comes as part of the city’s broader initiative to modernize its business environment, expand the tax base, and provide tailored support to the informal sector, which plays a vital role in job creation and urban economic activity.