AfDB promotes private investment opportunities in Ethiopia

Over the past decade, Ethiopia has gradually shifted away from an economic model dominated by public investment and state-owned enterprises, placing greater emphasis on private sector participation.

The African Development Bank (AfDB) has stepped up efforts to support Ethiopia's transition towards a private sector-led economy by engaging businesses on financing opportunities and investment support available through the Bank.

In partnership with Ethiopia's Ministry of Finance and with support from the Ethiopian Investment Commission (EIC), the Bank recently hosted an information dialogue in Addis Ababa, bringing together business leaders, financial institutions and industry associations to discuss access to development finance and the role of private investment in driving economic growth.

Supporting Ethiopia's economic transition

Over the past decade, Ethiopia has gradually shifted away from an economic model dominated by public investment and state-owned enterprises, placing greater emphasis on private sector participation.

Nathaniel Agola, the AfDB's Chief Country Economist for Ethiopia, said private businesses will play a central role in achieving the country's long-term development goals. He noted that limited access to affordable financing remains one of the biggest obstacles facing Ethiopian companies, making closer cooperation between the Bank and the private sector increasingly important.

Representing the Ministry of Finance, Berhanu Anbesa said the Government recognises the private sector as a key driver of sustainable growth, innovation, job creation and economic diversification.

Businesses learn about financing options

During the event, AfDB East Africa Regional Lead for Non-Sovereign Operations Sylvie Mahieu presented the Bank's range of financing products designed to support private investment.

The session covered loans, equity and quasi-equity investments, partial risk and partial credit guarantees, trade finance instruments and technical assistance that can help businesses expand operations, develop infrastructure and invest in agro-industrial projects.

Business representatives and microfinance institutions welcomed the opportunity to engage directly with the Bank, although many raised concerns about the minimum capital requirements needed to qualify for direct financing. AfDB officials explained the differences between corporate financing and project financing and encouraged companies to strengthen project preparation with professional transaction advisory services to improve access to international funding.

Long history of private sector support

Participants called for more regular information sessions to help businesses better understand the Bank's financing requirements and prepare stronger investment proposals.

The AfDB has supported Ethiopia's private sector for many years, including helping establish the country's Public-Private Partnership framework in 2015, financing projects such as Derba Cement and Ethiopian Airlines' fleet expansion in 2016, and providing trade finance facilities to Dashen Bank and Awash Bank in 2025.

The Bank's Country Strategy Paper 2023–2027 places private sector development at the centre of its work in Ethiopia, recognising governance reforms, stronger financial systems and improved infrastructure as essential for attracting investment.

AfDB currently finances 27 projects worth about US$1.3 billion in Ethiopia. While public sector operations account for 93 per cent of the portfolio, the Bank says it is placing increasing emphasis on private sector and non-sovereign investments to support the country's evolving development strategy.