The World Bank has approved US$200 million in financing for a new phase of Ethiopia’s flagship social protection initiative aimed at supporting vulnerable households and strengthening livelihoods across the country.
The funding will support the sixth phase of the Productive Safety Net Program (PSNP 6), a long-running programme designed to improve food security, create jobs and build resilience among poor communities.
The World Bank said the initiative will help families meet immediate needs while enabling them to develop more sustainable sources of income.
Under the new phase, around 700,000 people are expected to receive support to create or expand small businesses, through practical skills training, mentoring and basic financial assistance.
“The PSNP 6 will help families meet their immediate needs and build resilience by enabling them to access better and more sustainable jobs, create community assets and invest in human capital,” said Maryam Salim, the World Bank’s director for Ethiopia, Eritrea, South Sudan and Sudan.
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The programme also aims to address long-term development challenges such as childhood malnutrition and climate vulnerability by supporting community-based projects and strengthening household income opportunities.
Ethiopia continues to face major social and economic pressures despite relatively strong economic growth.
The country recorded 8.1 percent economic growth in the 2023/2024 fiscal year, but widespread poverty persists. The World Bank estimates Ethiopia’s gross national income per capita at around US$1,020, placing it among the world’s lower-income economies.
Economic challenges have been compounded by a range of social pressures including political and ethnic tensions, humanitarian crises and persistent inequality.
Frequent droughts, rising food prices and limited employment opportunities have further strained household incomes, making it difficult for many families to meet basic needs.
The Productive Safety Net Program has been one of Ethiopia’s central tools for tackling food insecurity and rural poverty.
Through public works and livelihood support, communities participating in the programme have helped restore degraded land, conserve water resources and rehabilitate local infrastructure.
Projects carried out under earlier phases have included the construction and rehabilitation of schools, early childhood development centres and health clinics, as well as environmental restoration initiatives aimed at improving agricultural productivity.
The programme has also promoted income-generating activities by helping households diversify their livelihoods and build small enterprises.
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Since its launch, the safety net programme has supported millions of food-insecure households across Ethiopia and has become one of Africa’s largest social protection initiatives.
The Ethiopian government has also adopted a broader national social protection policy aimed at strengthening systems that shield citizens from economic shocks and social vulnerability.
By combining short-term assistance with longer-term livelihood support, policymakers hope the programme will help communities become more self-reliant while improving food security and resilience to climate-related shocks.
The new financing from the World Bank is expected to expand these efforts as Ethiopia continues to grapple with poverty, environmental pressures and the need to create more employment opportunities for its rapidly growing population.
