Ethiopia’s Reform of State-Owned Enterprises Shifts Them from Fiscal Burden to Engine of Growth and Jobs — World Bank

Addis Ababa, April 7, 2026 (FMC) — A landmark transformation of Ethiopia’s state-owned enterprises (SOEs) has turned entities that once relied on government support into major contributors to the public budget and emerging drivers of jobs and economic expansion, according to a new feature published Thursday by the World Bank.

In the first nine months of the 2024-25 fiscal year, Ethiopia’s federal SOEs paid a combined ETB 117 billion (about $720 million) in taxes and dividends to the national government. This marked a decisive shift from years in which many of the same enterprises were dependent on public funds and sometimes failed to produce audited financial results.

The inflows helped fund public services, salaries, and electricity provision, easing pressure on the national budget and freeing resources for priority programs.

These gains follow a comprehensive reform program supported since 2019, which aimed to overhaul how public assets are managed. Until recently, a World Bank review found that although the revenues and net worth of 41 federal SOEs had risen from 2013 to 2019, many were not profitable, lacked audited accounts, and operated with outdated financial systems — leaving Ethiopia’s government without a reliable picture of its own holdings.

To address this, Ethiopia established its first SOE database, strengthened portfolio oversight through an SOE Oversight Directorate, and introduced regular performance reviews to set targets and guide decision-making.

“These reforms are shaping Ethiopia’s jobs outlook,” the World Bank noted, saying that more financially stable enterprises are now expanding services, investing in new areas, and creating opportunities for skills development and employment.

Highlighting the broader impact of the reforms, Maryam Salim, World Bank Division Director for Eritrea, Ethiopia, South Sudan, and Sudan, said: “Ethiopia’s progress in modernizing its SOE sector demonstrates what is possible when strong government leadership is paired with targeted support. By strengthening governance and aligning public assets with development goals, the country is opening new pathways for job creation and private sector-led growth.”

Key legal and institutional changes reinforced the reform agenda. A 2020 privatization law clarified procedures for transparency and reduced discretionary decision-making. In 2021, the government created Ethiopian Investment Holdings (EIH), the country’s first sovereign holding company, to manage commercial SOE assets strategically. A new SOE law also mandated professional and independent boards, international financial reporting standards, and annual audited financial statements. It strengthened the Ministry of Finance’s oversight role and established clearer frameworks for public service obligations.

Reforms within the enterprises themselves are producing tangible results. Ethio Post, historically a loss-making service with audit backlogs, has emerged as one of the stronger performers in the sector. At the same time, the Ethiopian Trading Business Corporation has restructured to remove barriers limiting private sector engagement in agribusiness.

The World Bank also highlights steps to prepare selected SOEs for potential capital market listings, aimed at attracting private investment and reinforcing operational discipline. Ethiopia has begun systematically assessing SOE-held land, equipment, and other assets as part of a first-of-its-kind Asset Management Guideline, further improving how public wealth is recorded and leveraged.

The Bank’s assessment frames Ethiopia’s SOE transformation as a shift from managing fiscal risks to unlocking economic opportunities, with stronger, more transparent enterprises positioned as catalysts for growth, private sector participation, and job creation across key sectors of the economy. As reforms deepen, state-owned enterprises are becoming integral not only to fiscal stability but also to broader efforts to expand services, stimulate markets, and support employment in a rapidly evolving national economy.