The private sector is under unprecedented scrutiny as federal trade officials launch one of its most extensive enforcement drives in recent memory. Framed as a response to rampant non-compliance, the crackdown has already swept up nearly half a million businesses across the country, igniting concerns among businesses, economists, and business associations.

A recent announcement by officials of the Ministry of Trade & Regional Integration (MTRI), under Kassahun Gofe, revealed that approximately one in every six traders was found to be breaking rules, with more than 480,000 businesses facing administrative and legal penalties. The moves mark a fresh effort by the government to impose order in a market often beset by shifting regulations, rising costs, and falling consumer demand.

The Ministry’s findings were made public at the Ethiopian Quality Award Organisation’s “Quality Village,” a symbolic backdrop on Megenagna Ring Road, where the new data revealed both the scale of the problem and the authorities' desire to be seen acting decisively. The Ministry's inspectors claim that 15pc of registered businesses were not following the rules after recent inspections. Penalties ranged from warnings to outright licence cancellations.

In total, 285,323 businesses received forewarning letters, 171,095 were closed and sealed, while 2,965 lost their trade licences altogether.

The capital serves as a case in point for the current turbulence in the trading environment. In the city, officials cancelled almost 30pc of the licences in circulation. While more than 99,000 new licences were issued in the past year, over 37,000 were cancelled, evident signs of an unstable and fast-changing retail environment. Contraband remains a serious concern for trade officials in Addis Abeba, especially around essentials like cooking oil and fuel.

During the recent crackdown, authorities reported recovering 8.6 million Br worth of contraband goods. Enforcement officers also claim to have found more than 36,000 businesses trading illegally, with nearly half of them failing to renew their licences.

The realities behind these numbers come into focus in stories like that of Kalkidan Feleke, a young businesswoman who started selling shirts, tote bags and trousers online a year ago. Digital platforms like TikTok and Telegram offered her an affordable way to break into the business, but she soon realised customers still want to see products in person.

“I rented a shelf for 2,000 Br in a shop," she told Fortune. "That way, I avoid the burden I might face at the early stage of the business.”

For Kalkidan, the costs of going fully legal are still out of reach. Near Megenagna, a small space she wanted to rent was 30,000 Br a month.

“Given that the nature of my business is not daily consumption, I prefer to collect capital gradually before considering a full shop," said Kalkidan. "It's been five months since I rented a shelf for display.”

VAT, taxes and soaring rental prices make it nearly impossible for small traders like her to go fully above board from day one.

However, business leaders say the challenges extend beyond simply complying with the law.

According to Sebsib Abafira, president of the Ethiopian Chamber of Commerce & Sectoral Association, the authorities should build awareness before stepping up enforcement. The Chamber, he said, does not defend those engaged in illicit activities, and is working to train auditors and accountants about the new tax rules. But he is also critical of the pace of reforms.

“The traders have less knowledge about how tax works,” Sebsib told Fortune. “Our role is to create awareness and provide training for our members.”