Turning Policy into Practice: The Uneven Journey of Refugee Work Rights in Ethiopia

The World Bank and Princeton University study finds that Ethiopia’s progressive refugee work rights laws have expanded legal access to employment but remain poorly implemented due to weak coordination, limited awareness, and a highly informal economy. It urges practical reforms, like local incentives, mobility rights, and community engagement, to turn legal commitments into real economic opportunities for refugees.

The World Bank’s Development Research Group and Princeton University jointly authored “From Policy to Practice: Lessons from the Implementation of the Refugee Work Rights Policy in Ethiopia”. Written by Ana Maria Perez and Sandra V. Rozo, the paper explores how Ethiopia, Africa’s third-largest refugee-hosting nation, is attempting to turn its ambitious legal commitments on refugee work rights into tangible outcomes. Using administrative data, document reviews, and interviews with government and development partners, the study uncovers both progress and persistent barriers in extending economic rights to refugees.

Ethiopia’s Progressive Legal Journey

Ethiopia hosts over a million refugees and asylum seekers, mainly from South Sudan, Somalia, and Eritrea. Facing long-term displacement and dwindling resettlement options, the government has shifted from a humanitarian aid model toward a development-based approach centered on self-reliance. The 2019 Refugee Proclamation was groundbreaking; it granted refugees access to work, education, banking, and property ownership under Ethiopian law. However, early implementation faltered due to unclear procedures and poor coordination. The introduction of Directive No. 1019 in 2024 marked a turning point, providing detailed operational guidance, standardized forms, and defined institutional roles.

Following the new directive, over 12,000 permits were issued in 2024 alone, nearly half of all permits since 2019. Yet, most of these (73 percent) were residence permits, allowing limited participation in joint projects rather than full economic independence. Business licenses represented only 23 percent, and work permits just 4 percent, indicating that formal wage employment and entrepreneurship remain far from widespread among refugees.

Geography and the Limits of Opportunity

The report reveals a striking spatial imbalance. About three-quarters of refugees live in remote and underserved regions such as Gambela, Somali, Afar, and Benishangul-Gumuz, areas with limited formal job markets. Only eight percent reside in urban centers like Addis Ababa, where employment prospects are greater. Consequently, permit issuance mirrors these settlement patterns rather than economic potential. Gambela and Somali regions account for 68 percent of all permits but offer few productive opportunities, while Benishangul-Gumuz, with smaller camps and better mobility, boasts the highest take-up rate at 10.6 percent. This mismatch between refugee locations and labor market demand underscores the difficulty of achieving real inclusion within a geographically constrained system.

Why Implementation Still Falters

Despite strong laws, Ethiopia’s refugee work rights face practical barriers on both institutional and behavioral fronts. On the supply side, inter-agency coordination remains weak. Although a joint committee was established to link the Refugees and Returnees Service, the Ministry of Labor and Skills, and other bodies, coordination gaps and inconsistent regional procedures persist. Subnational offices often lack trained staff, digital tools, and clarity on how to process applications, leading to delays and discretionary practices. Refugees are sometimes required to present job offers before receiving permits, a paradox that makes entry into the labor market conditional on already being employed.

On the demand side, the highly informal nature of Ethiopia’s economy deters formalization. With more than 80 percent of the national workforce in informal jobs, many refugees see little benefit in obtaining legal permits that do not guarantee access to a stable income. Misconceptions that permits could lead to loss of humanitarian aid or resettlement eligibility further reduce participation. Procedural burdens, low literacy, and limited awareness about the 2024 Directive compound the problem, especially in remote camps where administrative support is scarce.

Policy Pathways Toward Real Inclusion

The authors propose four interconnected strategies to close the gap between policy and practice. First, they call for livelihood and area-based development programs that reflect the structure of Ethiopia’s informal economy, focusing on microenterprise support, access to finance, and gradual transitions from aid to self-reliance. Second, they recommend performance-based incentives for subnational governments, rewarding innovation and improved permit delivery with additional resources. Third, they argue for greater refugee mobility, allowing movement toward economic centers where jobs exist, to correct the mismatch between settlement locations and labor demand. Finally, they urge community-level engagement, empowering refugee leaders and local committees to raise awareness about rights, procedures, and the benefits of legal employment through trusted networks rather than top-down campaigns.

Bridging the De Jure–De Facto Divide

The study concludes that Ethiopia’s recognition of refugee work rights is one of Africa’s most forward-looking legal reforms, yet its impact is hampered by weak coordination, limited administrative capacity, and entrenched informality. The country’s challenge now lies not in crafting new laws but in operationalizing them effectively. As international aid declines, Ethiopia must adopt adaptive and cost-efficient strategies to sustain refugee livelihoods and strengthen host–refugee coexistence. The paper argues that with pragmatic local governance, stronger institutional collaboration, and inclusive economic planning, Ethiopia can transform its legal promises into genuine opportunities, setting a precedent for refugee integration across the continent.