Ethiopia’s Reforms Open Opportunities for Firms and People

STORY HIGHLIGHTS

• Ethiopia's economic reforms are delivering results, opening access to foreign exchange, stabilizing the financial system, and improving conditions for businesses to invest, grow, and create jobs.
• For firms across the country, improved access to foreign currency is easing a top constraint to production, business confidence, and more private investment.
• For the most vulnerable households, an expansion of social protection payments is providing a critical buffer, helping protect families from the costs of economic adjustment.
• These gains are set to go further, with support from a series of World Bank Group Development Policy Operations, deepening Ethiopia’s homegrown reforms, broadening economic opportunities, and building the resilience that people and businesses need to thrive in the long term.

Creating more and better jobs requires businesses to invest and grow. For years, however, businesses importing goods into Ethiopia faced a frustrating and costly uncertainty. Even with proper invoices and documentation, they could not reliably predict the customs value that would be assigned to their goods, or what they would ultimately owe. That unpredictability rippled across supply chains, made it harder to price products competitively, and undermined Ethiopia's appeal as a destination for trade and investment.

Ethiopia's customs valuation reform, supported through the World Bank's Development Policy Operations (DPOs), is changing that. By aligning valuation practices with international standards and increasing transparency in customs procedures, the reform is making trade more predictable for importers and exporters alike. It also advances Ethiopia's path toward World Trade Organization (WTO) accession, helping align customs procedures, fees, and trade facilitation measures with WTO rules and expectations. This milestone would open new doors for Ethiopian exporters in global markets.

This reform is one part of a broader government-led transformation. In July 2024, the Government of Ethiopia launched a comprehensive economic reform program to stabilize the economy, unlock private sector-led growth, and create more and better jobs. The World Bank's DPO series has assisted this journey, supporting a sequence of government-led measures to improve macroeconomic stability, financial sector governance, trade and customs reform, private sector competitiveness, social protection, and human capital.

For firms, the impact has been tangible. In Bishoftu town, JoyTech harvests flowers, herbs, and vegetables for export, but years of foreign currency shortages made it hard to import seeds, fertilizers, and food-grade packaging. At its worst, the company was in “survival mode,” prioritizing only essential imports and pausing investments in new technology.

“When the forex (FX) shortage was ongoing, it was very stressful,” says Bisrat Haileselassie, Chief Operating Officer at JoyTech. “When the reform was introduced, it was a big relief.”

The July 2024 FX reform has helped JoyTech restart investments and resume work with smallholder farmers on seed access and seedling development. The company employs 1,400 workers, 80 percent of them women and young people, and can now plan for growth.

"We can now plan future investments," Bisrat says. "We have hope and confidence as an investor."

Reliability is especially critical for companies exporting fresh produce, where food safety, packaging, and on-time delivery are non-negotiable. Disruptions not only affect productivity but can erode buyer confidence and Ethiopia's hard-won reputation as an exporter.

Alongside customs valuation reform, the DPO series supports a wider set of trade-enabling measures, including improving trade finance, reducing logistics barriers, and strengthening the competitive environment for firms operating in regional and global markets. For businesses operating on tight delivery schedules, these reforms can determine whether an order is fulfilled on time or lost to a competitor.

Access to finance has long been another binding constraint for Ethiopian businesses. Strengthening the capacity of the Commercial Bank of Ethiopia (CBE), Ethiopia's largest financial institution, to expand lending to private firms has been a central part of the reform agenda.

The DPO series supported reforms to help rebalance CBE's portfolio toward more productive private sector lending. These reforms, combined with recapitalization support provided through complementary World Bank financial sector engagement, have strengthened the bank's financial position and created more room for private firms to access the credit they need to invest and grow. For businesses like JoyTech, foreign exchange access and bank credit work together. Firms need imported inputs, but they also need financing to invest, expand, and hire.

Together, stronger financial sector governance and more reliable access to foreign currency are laying the groundwork for a more dynamic private sector, one where firms have access to the inputs and financing they need to grow, create jobs, and compete in regional and global markets.

As reforms create more space for businesses to grow, they also need to ensure that people are not left behind. Social protection and economic inclusion are central to the reform program and to the DPO series supporting it.

Early in the reform process, expanded safety net payments helped vulnerable households manage the adjustment pressures that come with macroeconomic transition. The government has reinforced this commitment in a concrete way, steadily increasing its own share of funding for social assistance, reducing dependence on external financing, and signaling a durable, nationally owned commitment to protecting the most vulnerable. This shift in the funding mix points toward a safety net that can outlast any individual donor program and grow with Ethiopia's economy.

Since then, the DPO-supported agenda has gone further, encompassing easier access to digital payments, reduced upfront electricity connection fees for low-income households, revived school grants, stronger nutrition measures, and reforms to develop agricultural and carbon markets that can benefit some of the poorest communities in the country.

That commitment shows up in practice through the Productive Safety Net Program, which is helping households not just weather the transition but build a stronger foundation for the future. Livelihoods grants, financial literacy training, and business management support are giving people the tools to grow their incomes. School grants are helping keep children, particularly girls, in school by easing the financial pressures that might otherwise force families to make difficult choices.

In Ethiopia's Somali region, Munna used a livelihoods grant to grow her small vegetable business into a shop and invest in farming. Her story reflects the broader ambition behind the reform program, that its benefits reach not only firms and investors, but also workers, women, and families striving to build more secure and dignified lives.

The World Bank's engagement on Ethiopia's reform program has unfolded through a series of three Development Policy Operations, each building on the last. Together, they have accompanied a government-led sequence of measures spanning macroeconomic stability, financial sector governance, trade and customs reform, private sector competitiveness, social protection, and human capital. Rather than representing distinct phases, the three operations tell a single story of a government committed to structural reform, and a World Bank partnership designed to support, deepen, and sustain it.

This third operation, the Inclusive Growth Development Policy Operation, will continue to advance this agenda, supporting reforms to strengthen financial intermediation, expand private sector participation, improve trade finance and logistics, and enhance social resilience and inclusion. Building on these foundations, it also connects Ethiopia's reform program to two major World Bank Group initiatives, Mission 300 and AgriConnect, that extend its reach and deepen its impact.

It will contribute to Mission 300 by supporting more affordable connections and greater private participation in the energy sector, helping raise Ethiopia's access rate from 44 percent toward 50 percent by 2027. It will equally contribute to AgriConnect by strengthening agricultural input markets, improving value chain linkages, and expanding market opportunities for smallholder farmers and agribusinesses at both the domestic and regional levels, opening new pathways to income and resilience for communities across the country.

Taken together, these operations reflect a clear and consistent commitment: to measure reform not only by milestones, but also by what it makes possible for people. More jobs, better services, stronger support for vulnerable households, and expanded opportunities for women, youth, entrepreneurs, and businesses across Ethiopia.

As Ethiopia continues on its reform path, the DPO series is helping translate macroeconomic stabilization into practical gains, creating a more open, competitive, and inclusive economy where every Ethiopian has an opportunity to thrive.

Ethiopia's customs valuation reform, supported through the World Bank's Development Policy Operations (DPOs), is changing that. By aligning valuation practices with international standards and increasing transparency in customs procedures, the reform is making trade more predictable for importers and exporters alike. It also advances Ethiopia's path toward World Trade Organization (WTO) accession, helping align customs procedures, fees, and trade facilitation measures with WTO rules and expectations. This milestone would open new doors for Ethiopian exporters in global markets.

This reform is one part of a broader government-led transformation. In July 2024, the Government of Ethiopia launched a comprehensive economic reform program to stabilize the economy, unlock private sector-led growth, and create more and better jobs. The World Bank's DPO series has assisted this journey, supporting a sequence of government-led measures to improve macroeconomic stability, financial sector governance, trade and customs reform, private sector competitiveness, social protection, and human capital.

For firms, the impact has been tangible. In Bishoftu town, JoyTech harvests flowers, herbs, and vegetables for export, but years of foreign currency shortages made it hard to import seeds, fertilizers, and food-grade packaging. At its worst, the company was in “survival mode,” prioritizing only essential imports and pausing investments in new technology.

“When the forex (FX) shortage was ongoing, it was very stressful,” says Bisrat Haileselassie, Chief Operating Officer at JoyTech. “When the reform was introduced, it was a big relief.”

The July 2024 FX reform has helped JoyTech restart investments and resume work with smallholder farmers on seed access and seedling development. The company employs 1,400 workers, 80 percent of them women and young people, and can now plan for growth.

"We can now plan future investments," Bisrat says. "We have hope and confidence as an investor."

Reliability is especially critical for companies exporting fresh produce, where food safety, packaging, and on-time delivery are non-negotiable. Disruptions not only affect productivity but can erode buyer confidence and Ethiopia's hard-won reputation as an exporter.

Alongside customs valuation reform, the DPO series supports a wider set of trade-enabling measures, including improving trade finance, reducing logistics barriers, and strengthening the competitive environment for firms operating in regional and global markets. For businesses operating on tight delivery schedules, these reforms can determine whether an order is fulfilled on time or lost to a competitor.

Access to finance has long been another binding constraint for Ethiopian businesses. Strengthening the capacity of the Commercial Bank of Ethiopia (CBE), Ethiopia's largest financial institution, to expand lending to private firms has been a central part of the reform agenda.

The DPO series supported reforms to help rebalance CBE's portfolio toward more productive private sector lending. These reforms, combined with recapitalization support provided through complementary World Bank financial sector engagement, have strengthened the bank's financial position and created more room for private firms to access the credit they need to invest and grow. For businesses like JoyTech, foreign exchange access and bank credit work together. Firms need imported inputs, but they also need financing to invest, expand, and hire.

Together, stronger financial sector governance and more reliable access to foreign currency are laying the groundwork for a more dynamic private sector, one where firms have access to the inputs and financing they need to grow, create jobs, and compete in regional and global markets.

As reforms create more space for businesses to grow, they also need to ensure that people are not left behind. Social protection and economic inclusion are central to the reform program and to the DPO series supporting it.

Early in the reform process, expanded safety net payments helped vulnerable households manage the adjustment pressures that come with macroeconomic transition. The government has reinforced this commitment in a concrete way, steadily increasing its own share of funding for social assistance, reducing dependence on external financing, and signaling a durable, nationally owned commitment to protecting the most vulnerable. This shift in the funding mix points toward a safety net that can outlast any individual donor program and grow with Ethiopia's economy.

Since then, the DPO-supported agenda has gone further, encompassing easier access to digital payments, reduced upfront electricity connection fees for low-income households, revived school grants, stronger nutrition measures, and reforms to develop agricultural and carbon markets that can benefit some of the poorest communities in the country.

That commitment shows up in practice through the Productive Safety Net Program, which is helping households not just weather the transition but build a stronger foundation for the future. Livelihoods grants, financial literacy training, and business management support are giving people the tools to grow their incomes. School grants are helping keep children, particularly girls, in school by easing the financial pressures that might otherwise force families to make difficult choices.

In Ethiopia's Somali region, Munna used a livelihoods grant to grow her small vegetable business into a shop and invest in farming. Her story reflects the broader ambition behind the reform program, that its benefits reach not only firms and investors, but also workers, women, and families striving to build more secure and dignified lives.

The World Bank's engagement on Ethiopia's reform program has unfolded through a series of three Development Policy Operations, each building on the last. Together, they have accompanied a government-led sequence of measures spanning macroeconomic stability, financial sector governance, trade and customs reform, private sector competitiveness, social protection, and human capital. Rather than representing distinct phases, the three operations tell a single story of a government committed to structural reform, and a World Bank partnership designed to support, deepen, and sustain it.

This third operation, the Inclusive Growth Development Policy Operation, will continue to advance this agenda, supporting reforms to strengthen financial intermediation, expand private sector participation, improve trade finance and logistics, and enhance social resilience and inclusion. Building on these foundations, it also connects Ethiopia's reform program to two major World Bank Group initiatives, Mission 300 and AgriConnect, that extend its reach and deepen its impact.

It will contribute to Mission 300 by supporting more affordable connections and greater private participation in the energy sector, helping raise Ethiopia's access rate from 44 percent toward 50 percent by 2027. It will equally contribute to AgriConnect by strengthening agricultural input markets, improving value chain linkages, and expanding market opportunities for smallholder farmers and agribusinesses at both the domestic and regional levels, opening new pathways to income and resilience for communities across the country.

Taken together, these operations reflect a clear and consistent commitment: to measure reform not only by milestones, but also by what it makes possible for people. More jobs, better services, stronger support for vulnerable households, and expanded opportunities for women, youth, entrepreneurs, and businesses across Ethiopia.

As Ethiopia continues on its reform path, the DPO series is helping translate macroeconomic stabilization into practical gains, creating a more open, competitive, and inclusive economy where every Ethiopian has an opportunity to thrive.