Ethiopia and the World Bank have signed an additional financing agreement worth US$250 million to support urban safety nets and job creation, officials said.
The deal, signed virtually by State Minister of Finance Semereta Sewasew and World Bank Country Director Maryam Salim, will expand the ongoing Urban Productive Safety Net and Jobs Project. The ministry said the additional financing will allow the government to intensify efforts to improve incomes for the urban poor and enhance labor market inclusion for women and youth.
“This additional financing will enable the Government of Ethiopia to strengthen social protection for vulnerable urban households and foster economic opportunities for youth and women,” the Ministry of Finance said in a statement.
The project will fund labor-intensive public works, livelihood grants, and targeted support for vulnerable households. It also aims to promote youth employment in line with Ethiopia’s national job creation plan and extend benefits to include refugees and host communities in selected localities.
Officials said the programme will also reinforce social assistance systems through cash transfers and services aimed at social and economic reintegration. The measures are expected to provide a safety net for households facing income shocks while creating sustainable pathways to employment.
The World Bank, one of Ethiopia’s largest sources of development finance, provides more than $2 billion in highly concessional funding annually through the International Development Association (IDA). The agency has supported a range of programmes in Ethiopia, including infrastructure, health, education, and social protection initiatives.
“This financing reflects the World Bank’s commitment to supporting inclusive growth and poverty reduction in urban areas, where many vulnerable populations reside,” Salim said in a statement. She highlighted the importance of combining social protection with economic opportunities to foster long-term resilience.
The Urban Productive Safety Net and Jobs Project, launched in previous years with IDA funding, has already created employment opportunities for thousands of low-income households through public works, small business grants, and skills development programmes. The additional $250 million tranche is expected to expand coverage and deepen impact in high-density urban areas.
Ethiopia faces rising urbanization, with more citizens migrating to cities in search of work and basic services. According to government data, youth unemployment and underemployment remain significant challenges, particularly among women and displaced populations. Social protection programmes have been central to mitigating poverty and ensuring equitable access to services amid these demographic pressures.
The ministry said the project aligns with the government’s broader policy goals to strengthen labor market participation, improve social assistance delivery, and foster sustainable livelihoods in urban settings. By combining direct cash transfers with labor-intensive programs, authorities hope to both alleviate immediate poverty and equip participants with skills and experience for longer-term employment.
Observers note that additional financing from multilateral institutions like the World Bank is vital for Ethiopia’s urban development strategy, especially as the country continues to balance macroeconomic challenges with ambitious social and infrastructure programmes.
The agreement follows the Bank’s approval of the additional financing last month and is part of Ethiopia’s ongoing efforts to leverage concessional financing to boost economic opportunities, reduce poverty, and improve social welfare for its rapidly growing urban population.
