Ethiopia

With about 135.9 million people (2025), Ethiopia is the second most populous nation in Africa after Nigeria, and one of the fastest-growing economies in the region, with a GDP growth rate of  9.2% growth in FY2024/25. However, it also remains one of the poorest, with a per capita GDP of $979.

Read More

Read Less

Ethiopia's state-led development model improved infrastructure and living standards. Outcomes include expanding access to nearby potable water to 60 million more people, doubling electricity access, and a 64% increase in child vaccinations. Between 2004 and 2016, these advances helped reduce the poverty rate from 39% to 24%, but the model relied on overvalued currency, unsustainable debt, and regulations that limited private investment. The approach hurt competitiveness, fueled inflation, and drained resources. It did not boost productivity enough to transform the economy or provide jobs for 1.8 million new job seekers annually, and poverty increased from 27 to 32% (2016-2021).

Human capital levels have stayed low, and 70% of the workforce depends on agriculture. Global trade integration remains limited, and growing budget constraints reduced social and capital spending. Multiple crises (war in Ukraine, Tigray conflict, droughts, economic imbalances) led to a debt default in 2023. Living standards deteriorated further amid double-digit inflation, and the Tigray conflict displaced 3 million people, resulting in large humanitarian and reconstruction needs ($20 billion). About 15 million people are still reliant on food aid.

The government embarked on comprehensive macroeconomic reform in July 2024, shifting to market-determined exchange rates, removing selected current account restrictions, and introducing a new interest-rate based monetary policy framework. Reforms are supported by IMF and World Bank financing, and G-20 debt relief. While the official and parallel exchange rate spread has narrowed from over 100%, it has persisted at around 15% with occasional spikes with remaining market inefficiencies, including surrender requirement on exporters incentivizing continued use of the parallel market. Ethiopia needs to sustain reforms to translate economic improvements into tangible benefits for people: higher earnings, more productive jobs, and better public services.

Read More

Read Less

The World Bank has a strong, longstanding partnership with Ethiopia, working together to advance the country’s vision for sustainable growth and inclusive development. Progress in job creation and improved governance will be needed to ensure that growth is equitable across society. Achieving these objectives will require sustaining macroeconomic and structural reforms to reduce the state’s dominance of the economy, increasing trade integration, and expanding opportunities for private sector growth and job creation. Also needed, reducing the incidence of conflict, not least as the related displacement, loss of livelihoods, and human capital amplifies vulnerability to climate and other shocks that Ethiopia is exposed to. Also key is addressing food insecurity, which is growing due to adverse weather events, reliance on rainfed agriculture, locust invasion, conflict, and global conditions leading to inflation of food prices. The country’s growing workforce (roughly 2 million people reaching working age per year) puts pressure on the absorption capacity of the labor market, and necessitates improving current jobs, while creating sufficient new jobs.

Ethiopia faces growing risks to its development due to climate change, as highlighted in the 2024 Ethiopia Country Climate and Development Report (CCDR). Annual average losses to gross domestic product (GDP) are expected to range between 1-1.5% of GDP and rise to 5% by the 2040s, potentially pushing millions more Ethiopians into poverty (press release).

The analysis also points to opportunities for growth and increasing prosperity from climate-informed development policies. Ethiopia can shift from being a net importer of agricultural commodities to generating surpluses of as much as 20% (relative to domestic demand), with climate change, especially under potentially warmer and wetter conditions, increasing these surpluses to 25%.

Read More

Read Less

The World Bank Group (WBG) supports Ethiopia in advancing a market‑oriented economic transformation that anchors macroeconomic stability, unlocks private sector–led job creation, and strengthens human capital and resilience. Guided by the government’s Home‑Grown Economic Reform Agenda and Ten‑Year Development Plan, the engagement focuses on restoring macroeconomic credibility, opening markets to competitive private investment, expanding opportunities in high‑potential sectors such as agribusiness and manufacturing, and improving foundational learning, health, and nutrition outcomes. Across all areas, the program will emphasize climate and conflict resilience, gender equality, and fiscally sustainable infrastructure to ensure that reforms translate into broad‑based, durable improvements in livelihoods nationwide.

As of March 23, 2026, the World Bank portfolio consists of 43 operations (34 national, 9 regional) with commitments of $15.82 billion, ($12.5 billion IDA, $2.4 billion regional integration, and $0.93 billion trust funds). Project areas include agriculture, sustainable land management, healthcare, education, water, and sanitation, energy, transportation, digital development, and trade logistics.

IDA is the largest provider of development assistance, with financial support and evidence-based analytics and advisory services to enhance decision-making and policy implementation. Since FY 2015, IDA has committed over $25 billion, driving structural transformation and improving living standards.

IFC’s portfolio is $371 million (February 28, 2026), covering a range of sectors including manufacturing, agribusiness, digital connectivity, renewable energy, hospitality, healthcare, and financial services, while its advisory portfolio is $41.4 million. IFC’s engagement in Ethiopia centers on job creation, mobilizing private capital, and strengthening private sector growth through integrated upstream, advisory, and investment solutions.

MIGA  - As of February 28, 2026, the WBG Guarantee Platform, housed at MIGA, has an active exposure of $1.03 billion in Ethiopia ranking it as the twelfth largest host in MIGA’s global portfolio and third in Africa and highlighting the country’s strategic importance to the Platform. This exposure covers five projects in telecommunications and manufacturing. MIGA has also supported the Trade and Development Bank, of which Ethiopia is a member, through guarantees that have enabled the mobilization of $747 million in commercial financing to expand trade finance across member countries. Under the WBG Guarantee Platform, MIGA will deepen collaboration across the Group to de-risk foreign investment and focus on projects that reflect the Platforms core objectives to scale impact, mobilize private capital, support climate-aligned investments, and drive economic growth and job creation.

Read More

Read Less

The Urban Productive Safety Net & Jobs Project improves incomes of the urban poor and enhances labor market inclusion for disadvantaged youth, including refugees and host communities. The project is in 88 cities, reaching 2.4 million people, and provided employment to 1.1 million urban poor, including 334,481 people who received training and grants to expand/start small enterprises and 59,865 youth who participated in apprenticeships.

The East Africa Skills for Transformation & Regional Integration Project ($177 million) is strengthening quality and relevance of technical and vocational education and training (TVET), supporting Regional Flagship TVET Institutes, which serve as Centers of Excellence in priority areas. Through upgraded training facilities and curricula, and strong industry partnerships, the project improves the quality of training, strengthens institutional sustainability, and promotes collaboration in skills development and integration across East Africa.

The Strengthen Adaptative Safety Net Project ($1.1 billion) supports the government’s rural Productive Safety Net Program from which 8 million people benefit. 6.8 million people received short-term employment in public works activities, enabling them to earn a living while enhancing their communities’ climate change adaptation and resilience. 1.45 million people opened bank accounts for the first time and 790,000 received training in life, business skills, and enterprise development, a cash grant, and credit services.

The OWNP Consolidated WASH Account Project (Phase II, $596.3 million) plays a catalytic role in financing, with IDA $300 million attracting $203.3 million from development partners and leveraging $93 million from the government. To date, 2.76 million people were provided with improved water supply services, 6.25 million people with improved sanitation, and 2,740 kebeles were declared Open Defecation Free (ODF). 677 schools and 1,137 Health Facilities were provided with the full WASH Package.

Read More

Read Less

The Ethiopia Socioeconomic Dashboards allow users to access official household survey data at the regional level to analyze socio-economic outcomes across the country in a nuanced way to inform program design and monitoring.

Open Dashboard

Read More

Read Less