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AFRICA – Over the past decade, Ethiopia has gradually shifted from a development model driven largely by public investment and state-owned enterprises towards one that places greater emphasis on private sector participation.
To support the transition, the bank group, in collaboration with the ministry of finance and with the support of the Ethiopian Investment Commission (EIC), recently organised an Information Dialogue Session in Addis Ababa with representatives from Ethiopia’s private sector to enhance awareness of the bank’s financial instruments and explore opportunities for increased private sector participation in the country’s economic transformation.
The event brought together private sector representatives, financial institutions, and business associations to discuss financing opportunities, investment challenges, and the Bank’s evolving support to Ethiopia’s private sector-led development agenda.
Opening the session, Nathaniel Agola, chief country economist at the bank group, emphasised the bank’s strong belief that private sector engagement is essential to achieving Ethiopia’s growth ambitions. He noted that the bank’s approach aligns closely with the government’s ongoing development model transition.
“Access to affordable and suitable financing remains a significant challenge for many businesses in Ethiopia and thus this forum is important for bridging information gaps and fostering stronger collaboration between the Bank and private sector actors in Ethiopia,” he said.
Representing the ministry of finance, Berhanu Anbesa, head of the International Financial Institutions Cooperation Division, described the bank group as one of Ethiopia’s most strategic development partners.
“The government of Ethiopia has made a decisive shift from a public sector-led approach toward a private sector-led growth strategy because we recognise the role of the private sector as a key driver of sustainable economic growth, innovation, job creation, and economic diversification,” Anbesa said.
Sylvie Mahieu, the East Africa Regional Lead for Non-Sovereign Operations, led a technical session on the Bank Group’s financial instruments available for the private sector. She highlighted financing solutions designed to support private investments, business expansion, infrastructure development, trade finance, and agro-industrialisation initiatives.
The session provided details about loan options, equity and quasi-equity investments, guarantees (partial risk guarantees and partial credit guarantees), trade finance instruments and technical assistance.
Private sector participants and representatives of microfinance institutions raised questions and shared perspectives on the opportunities and challenges associated with accessing development finance. A recurring concern was the minimum capital thresholds often required for direct access to AfDB financing. They cited, as an example, the capital base requirement, which, they said, may be difficult for many Ethiopian businesses seeking direct financing. Bank representatives explained various categories of financing, including the distinction between corporate versus and project financing. While corporate lending typically focuses on a company’s financial performance over time, project financing generally relies on project assets and associated investments as part of the security structure.
Mahieu encouraged businesses to seek professional transaction advisory support to improve their readiness for engaging with international financiers and structuring bankable projects.
Participants welcomed the initiative and encouraged the Bank and its partners to organise more such forums, noting that regular knowledge-sharing sessions would help businesses better understand the Bank’s financing requirements and improve their readiness to access funding.
The bank’s historical support to the private sector in Ethiopia
The African Development Bank Group has supported Ethiopia’s current private sector-driven development model through sovereign reforms and direct private sector investments. The bank’s Ethiopia Country Strategy Paper 2023-2027 places private sector development at the centre, recognising stronger governance, improved financial systems and quality infrastructure as critical foundations for private investment.
While private sector investments constitute roughly seven percent of the bank group’s current portfolio in Ethiopia, the bank group has been a longstanding backer of the country’s private sector.
The bank group supported the establishment of the country’s Public-Private Partnership framework in 2015, financed landmark private sector projects such as Derba Cement, Ethiopian Airlines fleet expansion in 2016, and trade finance facilities for financial institutions including Dashen Bank and Awash Bank in 2025.
The bank group currently finances 27 projects in Ethiopia valued at approximately $1.3 billion. While 93 percent of the portfolio consists of public sector operations, the bank group is increasingly prioritising non-sovereign and private sector operations in line with Ethiopia’s private sector-led development agenda.
