Ethiopia is accelerating a major transformation in its state-owned enterprises (SOEs), shifting from a focus on risk management to unlocking economic opportunities, according to the World Bank Group.
The transition is already showing tangible results. In the first nine months of the 2024/2025 fiscal year, federal SOEs contributed 600 million USD in taxes and 120 million USD in dividends, providing critical support to the national budget and easing pressure on public finances.
Related articles
Despite earlier growth in revenue and net worth between 2013 and 2019, a 2021 World Bank review found that profitability among 41 federal SOEs declined. Many enterprises struggled to remain financially sustainable, relying heavily on government support amid weak financial reporting and limited oversight.
Recent reforms, however, are reversing that trend. Most SOEs now produce timely financial statements, undergo external audits, and disclose their results, significantly improving transparency. The introduction of regular performance reviews has also strengthened accountability and informed better investment decisions.
These improvements stem from sustained reform efforts backed by the World Bank since 2019 through the Ethiopia Reform Support Multi-Donor Trust Fund. A key milestone has been the Ministry of Finance’s creation of the country’s first comprehensive SOE database, offering policymakers a consolidated view of revenues, liabilities, and fiscal risks.
Institutional changes have further reinforced governance. The establishment of an SOE Oversight Directorate has replaced fragmented reporting systems with a more coordinated, data-driven approach. Additionally, reforms such as the privatization law and the formation of Ethiopian Investment Holdings are enhancing the management of public assets.
At the enterprise level, the impact is becoming more visible. Some SOEs are turning around their performance, while others are restructuring to enable greater private sector participation. The adoption of international financial reporting standards and professional management practices is also contributing to stronger operational efficiency.
According to the World Bank, these reforms are feeding into broader economic gains, including job creation, service expansion, and increased investment across key sectors. Better-managed enterprises are now positioned to grow sustainably while opening up opportunities for skills development and employment.
“Ethiopia’s progress in modernizing its SOE sector demonstrates what is possible when strong government leadership is paired with targeted support,” said Maryam Salim. “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 also extended to asset management, introducing standardized systems to better value and utilize public assets. The World Bank emphasized that Ethiopia’s experience highlights how improved governance and transparency can transform SOEs into engines of economic growth and development.
