埃塞俄比亚联邦民主共和国2027-2036财年国家伙伴关系框架

Document ofThe World Bank Group FOR OFFICIAL USE ONLY Report No.CPF0000018 INTERNATIONAL DEVELOPMENT ASSOCIATION ANDINTERNATIONAL FINANCE CORPORATION ANDMULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA FOR THE PERIOD FY27-FY36 [P501383] Ethiopia, Eritrea, South Sudan and Sudan Country Management UnitEastern and Southern Africa Region, The World Bank Ethiopia, Malawi & ZambiaAfrica Regional Vice-Presidency, The International Finance Corporation The Multilateral Investment Guarantee Agency COUNTRY PARTNERSHIP FRAMEWORKFORETHIOPIA FY27–36Building StrongFoundations forMore andBetterJobs Ethiopia’s next chapter matters for Africa and beyond.As the continent’s second most populouscountry and a major economy in the Horn of Africa,its transition toward a more competitive, private-investment-led growth model will shapejob creation, trade, connectivity, and stability far beyond itsborders.The opportunities created by the African Continental Free Trade Area (AfCFTA) reinforce thatrole. Strong air connectivity across Africa, substantial renewable energy potential, expanding transmissionnetworks, and a strategic position in regional logistics give Ethiopia the foundations to become a strongerplatform for commerce and investment if reforms enable firms to compete and grow. This World Bank Group (WBG) Country Partnership Framework (CPF) supports Ethiopia’stransition toward private sector-led growth that expands productive employment and buildsresilience.Over the past two decades, Ethiopiahas been oneof Africa’s fastest-growing economies,withper capitagross domestic product (GDP)growthaveragingnearly6.2percent between 2004 and2024.Resilient growth, despite multiple domestic and global shocks,reducedpoverty andsupported largeexpansions ininfrastructure and basic services,but it relied heavily on state-led public investment anddidnot generatesufficientprivate investment andproductiveemployment, leading to a slowdown in growthsince 2019as public finances declined and private investment could not substitute.Recent shockshighlighted the need to rebalance the sources of growth toward a more dynamic and resilient private sector. ThisCPF focuses onEthiopia’s central challenge:creatingprivate sector jobsat scale.Anchored inEthiopia’s development vision,the CPFsupports the country’s aspirations for inclusive,private sector-ledgrowth and is closely aligned with the Home-Grown Economic Reform Agenda (HGER 2.0) and theTen-Year Development Plan (2021–2030).Abouttwomillion people enter the labor market each year,butformal employment growthistoo weak to absorb them.Withstronger private investment, firm entry,and firm expansion, Ethiopiacanaccelerate poverty reduction, absorb a fast-growing workforce, reducefragility,andmake reformsdeliver for households through higher incomes and better living standards.Aten-year framework is appropriategiventhescale of this challenge andambitionof Ethiopia’stransitiongoals. Itwillallowfor the rightsequencingof investments, policies, and institutional reforms. The countryis at a turning point.The renewed macroeconomic reforms launched in July 2024 mark ashift toward a more market-oriented framework.Exchange rate reform, together withsteps to reducedirected credit,strengthenmonetary policy transmission, and restore market-based price signals, isbeginning to improve conditions for private investment.But macroeconomic stabilization alone will notbe enough. Ethiopia still needs the business-enabling reforms required to raise returns to investment andlabor, including more predictable access to foreign exchange, stronger competition, better trade andlogistics, more reliable energy, deeper financial intermediation, and a regulatory environment that firmscan trust. Their benefits will also depend on where growth occurs. If reform, infrastructure, and marketaccess remain concentrated, spatial disparities willpersist,and the employment gains from transition willbe narrower and less durable. Early improvements in foreign exchange markets, export performance,andcreditor engagementshow that thereformsare beginning to take hold, though implementation remains atan earlystageand the transition will take time. Ethiopia’stransition is unfolding in a more difficult context.Conflict, climate stress, and renewedexternal volatility linked to thecurrentconflict in the Middle East are increasing pressure on Ethiopia’s economy and institutions. As a fuel-importing economy with limited buffers, Ethiopia is exposed to higherenergy and freight costs, rising food and fertilizer prices, tighter financial conditions, and potentialdisruptions to trade, services, and remittance flows. Poverty is estimated at 39 percent1,internaldisplacement remains a challenge and public finances are under pressure. Human capital outcomes remaina challenge:Foundational learning is low;skills formation is limited;undernutrition persists;and accessto qualitybasic serv