IFC Welcomes Ethiopia’s Economic Reforms, Citing Stronger Foundations for Private Investment

Addis Ababa, September 17, 2026 (ENA) —The International Finance Corporation (IFC) has welcomed Ethiopia’s economic reform efforts, saying progress in the foreign-exchange market, international reserves and inflation is helping address some of the key constraints that previously discouraged private-sector investment.

Speaking exclusively to The Pulse of Africa, IFC Managing Director Makhtar Diop said Ethiopia had made significant progress in tackling economic challenges that had historically created uncertainty for investors.

Reflecting on his previous engagement with Ethiopia, Diop said three major constraints stood out: high inflation, foreign-exchange pressures and inadequate reserve levels.

According to Diop, these challenges directly affected the ability of businesses to operate and invest. Foreign-exchange shortages, for instance, made it difficult for companies to import essential goods and could create difficulties in repatriating profits.

He said Ethiopia has since taken steps to address these constraints, pointing particularly to the move toward a more flexible exchange-rate system, the rebuilding of foreign-exchange reserves and the reduction in inflation.

Diop noted that inflation, which had previously remained in double digits, has now fallen into single-digit territory at certain points, although it continues to fluctuate depending on economic conditions.

For private-sector investors, Diop explained, these developments are important because investment decisions depend heavily on economic predictability.

Diop said these fundamentals are critical for attracting private capital, emphasizing that investors need a degree of certainty before committing resources to a market.

He therefore credited the Ethiopian government for taking what he described as serious steps to address the economic constraints that had previously weighed on private-sector investment.

His assessment places Ethiopia’s ongoing economic reforms within a broader effort to create a more predictable environment for domestic and international businesses, with implications for investment, trade, infrastructure and private-sector-led growth across the country.

For Africa, the developments also highlight the importance of macroeconomic stability, access to foreign exchange and investment certainty in unlocking greater private-sector participation in the continent’s economic transformation.

Diop also highlighted opportunities in Ethiopia’s digital economy, tourism, aviation, infrastructure and renewable energy sectors, as well as the country’s potential to attract investment into housing.

During his 1–3 September visit to Ethiopia, IFC Managing Director Makhtar Diop met with Prime Minister Abiy Ahmed and other government officials to discuss economic reforms, private-sector investment and job creation.

On 3 September, Prime Minister Abiy oversaw the signing of a framework agreement between the National Bank of Ethiopia and the IFC to establish the country’s first mortgage refinance company. The proposed institution is expected to be capitalised at 100 billion birr, with the IFC contributing at least 200 million US dollars, supporting the government’s ambition to deliver 1.5 million homes over the next five years.

 

The IFC chief said expanding housing would also require greater participation from private developers and investment in skills and construction capacity.