Since 2019, Ethiopia has undertaken a comprehensive reform program to modernize its state-owned enterprises (SOEs), supported by the World Bank. This effort established the country’s first SOE database, strengthened oversight, and updated the legal and governance framework. As a result, SOEs have shifted from relying on public funds to generating revenue, contributing ETB 117 billion (around $720 million) to the national budget in just nine months through taxes and dividends. These resources help fund salaries, electricity, and public services while easing pressure on the budget.
Before these reforms, many SOEs were unprofitable, lacked audited accounts, and operated without clear financial information. Decisions were made without reliable data, losses were absorbed by the government, and risks were poorly understood. The reform agenda aimed to provide a clear understanding of assets, improve management, and hold SOEs accountable, ensuring fiscal risk was monitored and controlled.
Today, most federally owned enterprises produce timely financial statements, undergo external audits, and disclose their results publicly. Portfolio reviews track performance, set targets, and guide investment decisions. Improved governance and financial stability have enabled SOEs to expand services, invest in new areas, and support skills development, creating new employment opportunities across key sectors.
Institutional reforms have been central to the transformation. A new privatization law introduced in 2020 increased transparency and reduced discretionary decision-making. The establishment of Ethiopian Investment Holdings in 2021 created a sovereign holding company to manage state assets strategically. New SOE laws introduced professional, independent boards, required adoption of international financial reporting standards, and clarified public service obligations.
Operational reforms within enterprises have delivered tangible results. Ethio Post transitioned from losses to strong performance, while the Ethiopian Trading Business Corporation restructured to remove barriers for private sector participation. Performance reviews and defined targets linked operational decisions to measurable outcomes. Selected enterprises were assessed for potential capital market listing, attracting private investment while reinforcing transparency and discipline.
Asset management has also improved, with systematic valuation of land, equipment, and other holdings. Ethiopia introduced its first Asset Management Guideline for SOEs, standardizing how public assets are recorded and used in decision-making. Collectively, these reforms are enhancing financial performance and reshaping how public assets contribute to economic growth.
The modernization of Ethiopia’s SOEs has transformed them from fiscal burdens into engines of job creation, market development, and private sector engagement. The focus has shifted from managing risk to unlocking opportunities, ensuring public wealth supports growth, investment, and better employment outcomes for Ethiopians.
