ECUADOR: An Introduction to Corporate/Commercial
A Perfect Storm of Challenges and Opportunities in Ecuador’s Corporate/Commercial Landscape
Ecuador’s corporate and commercial landscape has faced a tumultuous year, shaped by a confluence of political, economic, and social factors. These developments have created both challenges and opportunities, setting the stage for significant changes in the years ahead.
Political dynamics: a new hope
The political scene in Ecuador has undergone a significant shift with the election of President Daniel Noboa in late 2023. Following the resignation of Guillermo Lasso, President Noboa assumed office during an interim period until new presidential elections were held in April 2025. Noboa was ratified as President of the Republic for the term 2025–2029 giving the country political stability and the opportunity for Noboa to develop his political plans. Political stability has been met positively by local and foreign investors, generating an uptick in investment and business since the start of 2025’s second semester.
One of the defining themes of recent presidencies has been the fight against organised crime. The proliferation of criminal activity has not only undermined security but also increased operational costs for businesses. Companies, particularly transnationals, have had to invest heavily in security measures and offer attractive packages to entice expatriates to relocate to Ecuador. Addressing crime has become a central issue in political discourse, with Noboa emphasising plans to enhance security and stabilise the business environment as part of his political plan.
Economic challenges: energy crisis and new tax regulations
Ecuador’s energy sector faced a critical test in 2024 due to the combined effects of global warming and inadequate investment in power generation infrastructure. The result was a power deficit crisis that necessitated daily blackouts in the final quarter of the year as the government struggled to ration energy supplies. Temporary relief came from power purchases from Colombia, but this measure is insufficient to ensure long-term energy stability. Looking ahead, ambitious energy projects are planned to restore the country’s self-sufficiency by 2026, with a focus on expanding capacity and diversifying energy sources.
Despite these challenges, the energy crisis has spurred legislative changes to encourage private sector investment in power generation. New initiatives aim to meet residential and industrial energy demands, presenting lucrative opportunities for investors in renewable energy, infrastructure, and related sectors.
On the other hand, the President has already submitted new policies aimed at pursuing his political agenda. His government is in the midst of launching a constitutional referendum poll mainly in order to strengthen its fight against organised crime, and has recently enacted a new law that levies retained dividends as part of its strategy to increase tax collection to reduce the current fiscal deficit. The government has also stated that it will carry out a substantial public restructuring in order to alleviate this fiscal deficit, including mass layoffs of public officials.
Investment climate: risks and rewards
Ecuador’s investment climate, while fraught with challenges, offers unique opportunities. The government has introduced regulatory reforms to attract foreign and local investment, leveraging the country’s stable rule of law and its use of the US dollar as the local currency. These factors make Ecuador an attractive destination for investors seeking to navigate global economic uncertainties.
The country’s risk profile, paradoxically, has drawn interest from investment banking and private equity firms. With traditional lenders raising interest rates, these firms are exploring alternative financing options, including structured investments and venture capital. This trend highlights the potential for innovative financial solutions to drive growth in Ecuador’s corporate sector.
Opportunities in mergers and acquisitions
Ecuador’s evolving economic landscape has created a dynamic environment for M&A. On one hand, businesses looking to divest are finding willing buyers among investors eager to capitalise on undervalued assets. On the other hand, strategic acquisitions are providing opportunities for companies to expand their market presence and gain a competitive edge.
The government’s commitment to fostering a favourable investment climate has further bolstered the M&A sector. Regulatory updates, combined with economic stabilisation measures, are expected to drive increased activity in this space, particularly in the energy, technology, and consumer goods industries.
Key sectors to watch
- Energy, oil and mining – the power deficit crisis has highlighted the urgent need for investment in energy infrastructure. Renewable energy projects, such as solar and wind, are gaining traction, with significant growth anticipated in the coming years. Also, the changes in the oil and mining ecosystems are putting pressure on several oil producers.
- Technology – digital transformation is becoming a priority for businesses and government institutions alike. Investments in fintech, e-commerce, and IT services are expected to accelerate, driven by a growing demand for innovative solutions.
- Agribusiness – Ecuador’s rich natural resources and strategic location make it a key player in the global agribusiness sector. Investment opportunities abound in areas such as sustainable farming, food processing, and export-oriented production.
- Real estate and infrastructure – urbanisation and population growth are fuelling demand for residential and commercial real estate, as well as infrastructure development. Investors are eyeing projects in transportation, logistics, and urban planning.