Assess the Trend in Private Sector Development after 2018 Political Reform in Ethiopia

Abstract

This study investigates the dynamics of private sector development in Ethiopia following the 2018 political reform, using annual data from 2018 to 2024. By analyzing trends in total private investment projects, capital flows, and employment (both permanent and temporary), the research reveals significant year-to-year fluctuations in investment activities. The findings show that while certain years, such as 2021 and 2023, experienced notable rebounds in investment and job creation, these gains were often short-lived, with dramatic declines observed in 2020 and 2024. Time series analyses, including decomposition and autocorrelation methods, highlight the cyclical and unstable nature of investment patterns, influenced by economic shocks, policy shifts, and external uncertainties. The study also uncovers regional disparities, with Addis Ababa dominating private investment, followed by emerging regions like Afar and Amhara. Despite the declining number of investment projects, capital inflows and employment figures indicate a trend toward fewer but higher-impact projects. The research underscores the urgent need for stable policy frameworks and targeted regional strategies to foster sustainable, inclusive, and balanced private sector growth across Ethiopia.