Context
Ethiopia is in the process of transitioning from a state-controlled economic model to a more liberal, market-oriented system. Through this shift, the country is aiming to promote private sector-led growth, create jobs and drive economic transformation.
Initial progress has been made, including the stabilisation of the exchange rate regime and improved access to foreign currency. However, Ethiopian companies continue to face challenges such as bureaucratic obstacles, limited access to finance, and increasing global competition. At the same time, internal conflicts and global crises lead to rising costs, disrupted supply chains and constrained economic growth.
Objective
Ethiopia’s private sector is more competitive and resilient as a result of the transition towards a market-oriented economy.
Approach
Starting with the private sector, the project applies a bottom-up approach that addresses key challenges faced by enterprises and links them with systemic reform efforts. To this end, the project is focusing on:
- Enterprise Development: The project is supporting larger, growth-oriented companies and innovative start-ups by helping them to optimise processes, enhance the quality of their products or services, and improve their access to markets and finance. This advances economic transformation across the country.
- Business environment: The project is improving the regulatory environment within the tax and customs administrations, as well as at the National Bank of Ethiopia. This simplifies reforms and procedures and helps to create a business-friendly environment.
- Strengthening resilience: The project is supporting, especially women-led micro, small and medium-sized enterprises (MSMEs) in (post-)conflict regions by providing coaching and training, and by improving their creditworthiness. In doing so, it stabilises the business foundations of these companies, enhances their resilience and secures jobs.
Last update: March 2026
