Ethiopia's Shift in SOEs from Managing Risks to Unlocking Opportunities Maximizing Economic Growth: WB

Addis Ababa, April 7, 2026 (ENA) —Ethiopia is increasingly shifting its focus from managing risks to unlocking opportunities in the reform of state-owned enterprises (SOEs), aiming to better utilize public assets to drive economic growth and job creation, according to the World Bank Group.

The World Bank noted that in the first nine months of the 2024/2025 fiscal year alone, SOEs paid 600 million USD in taxes and 120 million USD in dividends, easing pressure on the national budget and helping finance key public services.

It stated that a 2021 World Bank review found that revenues and net worth rose for 41 federal SOEs from 2013 to 2019, but profitability fell.

Accordingly, many SOEs were unable to sustain themselves financially and relied heavily on government support. Weak financial reporting and limited oversight also made it difficult to assess risks and performance across the sector.

However, recent reforms have brought notable improvements, with most federally owned enterprises now producing timely financial statements, undergoing external audits, and disclosing their results.

Regular performance reviews have also been introduced to strengthen accountability and guide investment decisions.

The progress, the World Bank stated, reflects sustained and deliberate reform efforts supported by the World Bank Group since 2019 through the Ethiopia Reform Support Multi-Donor Trust Fund.

Through this support, the Ministry of Finance established the country’s first comprehensive database of state-owned enterprises, providing policymakers with a consolidated view of revenues, expenditures, liabilities, and associated risks.

An SOE Oversight Directorate has also been created to monitor performance and manage fiscal exposure, replacing fragmented reporting systems with a more coordinated and data-driven approach.

Institutional reforms, including the introduction of a privatization law and the establishment of Ethiopian Investment Holdings, have further strengthened governance and improved the management of public assets.

A new legal framework also requires SOEs to adopt international financial reporting standards and ensure professional and independent management.

The World Bank noted that improvements are also being observed at the enterprise level, with some companies turning around their performance and others restructuring to better support private sector participation.

According to the World Bank Group, the reforms are contributing to broader economic outcomes, including job creation, expansion of services, and increased investment across key sectors.

Importantly, these reforms are shaping Ethiopia’s jobs outlook. Better managed and more financially stable enterprises are now able to expand their services and invest in new areas, while also creating space for skills development and new employment across key sectors of the economy.

World Bank Division Director for Eritrea, Ethiopia, South Sudan, and Sudan, Maryam Salim, 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.''

The reforms have additionally expanded to asset management, introducing standardized systems for valuing and utilizing public assets more effectively.

The World Bank emphasized that Ethiopia’s experience demonstrates how strengthening governance and transparency in state-owned enterprises can transform them into drivers of economic growth and development.