A Sustainable Future: Ethiopia’s LED Pilot for Economic Growth and Resilience

The Kebri Beyah LED pilot by the World Bank, Ethiopian government, and development partners introduced a coordinated, community-driven economic model to enhance livelihoods, financial inclusion, and market access in Ethiopia’s refugee-hosting regions. By strengthening public-private partnerships, value chains, and institutional capacity, the project created a scalable blueprint for sustainable economic growth and refugee integration.

The Ethiopia Local Economic Development (LED) Pilot Report, developed by the World Bank in collaboration with the Ministry of Agriculture, Development Management International (DMI), the United Nations High Commissioner for Refugees (UNHCR), and the Refugees and Returnees Services (RRS), introduces a groundbreaking approach to economic development in Ethiopia’s refugee-hosting regions. Despite Ethiopia’s remarkable progress in poverty reduction since 1995, economic challenges persist, especially in areas with large refugee populations. Traditional interventions have been short-term, project-based, and fragmented, failing to create long-lasting economic ecosystems. The LED pilot aims to replace this fragmented model with a coordinated, community-driven strategy that enhances economic growth, strengthens partnerships, and builds local institutional capacity.

Revitalizing Kebri Beyah: A Hub for Economic Potential

Kebri Beyah Woreda, located in Ethiopia’s Somali region, was selected as the pilot site due to its historical significance as Ethiopia’s oldest refugee settlement, its strategic location near regional trade routes, and its untapped economic potential. The pilot, running from February 2023 to December 2024, introduced a multi-stakeholder Local Coordination Committee (LCC) to bring together government agencies, private enterprises, financial institutions, and community organizations. The LED platform aimed to improve the business environment, strengthen value chains, and enhance access to finance, particularly for women and youth entrepreneurs. The project identified key economic sectors, with livestock, poultry, and agriculture emerging as the most promising industries for job creation and sustainable income growth.

One of the pilot’s standout initiatives was its focus on camels as an economic asset. Recognized for their resilience and high market demand, camels offer multiple opportunities, including milk production, meat processing, and cross-border trade. However, limited veterinary services, poor market infrastructure, and lack of financial support hindered the sector’s growth. The LED pilot introduced targeted interventions to expand veterinary care, improve feed supply chains, and connect camel farmers to national and international markets. Similarly, the poultry sector was identified as a high-potential industry, particularly for women and young entrepreneurs, leading to the implementation of farmer training programs, microfinance access, and cooperative partnerships to boost poultry production and ensure stable market demand.

Empowering Communities Through Financial Inclusion

One of the major challenges in Ethiopia’s economic development is limited access to finance, particularly for small-scale entrepreneurs, refugees, and marginalized communities. To bridge this gap, the LED pilot introduced financial inclusion initiatives in partnership with institutions such as Shabelle Bank and Sahal Microfinance Institution. These financial institutions provided tailored microloans, savings programs, and financial literacy training, empowering local businesses to expand their operations. Digital financial solutions were also introduced to simplify transactions and increase accessibility to banking services, allowing entrepreneurs in remote areas to manage their businesses more efficiently.

Women and youth were at the center of financial inclusion efforts. Many female-led businesses in livestock, agriculture, and trade were supported through dedicated training programs and business mentorship. The LED strategy also prioritized public-private partnerships (PPPs) to attract investment and encourage market-driven solutions. By aligning private sector engagement with community-driven initiatives, the pilot ensured sustainable financial ecosystems that extended beyond donor-funded projects.

From Strategy to Action: Building a Sustainable Future

A key success of the pilot was the development and adoption of the Kebri Beyah LED strategy, which outlined a five-year plan for economic transformation. This strategy, shaped by stakeholder consultations, workshops, and market research, provided a roadmap for enhancing local businesses, increasing job opportunities, and fostering market linkages. Unlike traditional development models, which often end when funding runs out, the LED strategy was designed to be self-sustaining through long-term government ownership and integration into Ethiopia’s national economic framework.

Capacity-building was a central component of the pilot. Local government officials, business leaders, and community members participated in hands-on training workshops to develop skills in business management, financial planning, and strategic resource allocation. These sessions ensured that woreda officials had the tools to continue LED initiatives beyond the pilot phase. The pilot also focused on monitoring and evaluation, using digital data collection tools to track progress and refine interventions in real time.

While the pilot achieved significant milestones, it also faced challenges such as limited economic data, coordination difficulties, and financial constraints. These challenges highlighted the importance of integrating LED initiatives into Ethiopia’s national planning and budgeting systems, ensuring that resources are allocated for long-term sustainability. By embedding LED principles into existing regional and federal policies, the pilot laid the groundwork for expanding its impact across Ethiopia.

Scaling the Model: The Future of LED in Ethiopia

The success of the Kebri Beyah LED pilot provides a scalable blueprint for economic development across other Ethiopian woredas. Moving forward, replication efforts must extend beyond refugee communities to include internally displaced populations and marginalized groups. Strengthening value chain integration in livestock, agriculture, and trade will be critical to unlocking new economic opportunities and promoting sustainability. Additionally, leveraging digital solutions for market intelligence, financial transactions, and knowledge sharing will further accelerate economic growth.

The LED pilot also aligns with Ethiopia’s 2023 Global Refugee Forum pledges, which commit to transforming refugee camps into self-sustaining urban settlements. By integrating refugees into local value chains, expanding cross-border trade opportunities, and improving access to finance, the pilot contributes to Ethiopia’s broader goal of self-reliance and economic resilience for displaced populations. The inclusion of UNHCR and RRS in the LED platform ensures that refugee needs are considered in policy-making, fostering a more cohesive approach to economic integration.

With strong institutional backing from the Ministry of Finance, the Ministry of Planning and Development, and international development partners such as UNDP, GIZ, and the World Bank, Ethiopia has the potential to scale this model nationwide. By transitioning from short-term aid to long-term economic strategies, the LED framework can transform refugee-hosting regions into dynamic economic hubs, driving inclusive and sustainable development. The Kebri Beyah LED pilot stands as a testament to the power of coordinated economic planning, proving that strategic partnerships, financial inclusion, and community-driven solutions can unlock Ethiopia’s full economic potential.