New Hope: Ethiopia's Bold Move Grants Refugees the Right to Work

In a bustling marketplace on the outskirts of Addis Ababa, Lula Maygag Guray’s food stall hums with activity. The smell of injera and samosa draws a crowd each day. However, ever since she arrived in Ethiopia, Lula has run her business informally because she did not have the right to work as a refugee.  

“I took refuge in Ethiopia in 2018. Since 2019, I have been making and selling samosas and injera in my neighborhood to provide for my family, but I’ve been doing this informally since refugees did not have the right to work in the country. I welcome the recent announcement that we can work in the country,” said Lula Maygag Guray, a Somalian refugee who has lived in Ethiopia for six years. 

For refugees like Lula, the Ethiopian government’s recent decision to grant refugees the legal right to work is more than just a policy shift—it’s a lifeline. For years she operated her small business with a sense of uncertainty and anxiety, knowing well that the informal nature of her work left her vulnerable. The fear of being shutdown or penalized weighed heavily, making it difficult for her to plan or expand her efforts to support her family. But with this landmark decision, those fears are fading.

Ethiopia: A Leader in Refugee Hosting

After years of operating in the shadows of the informal economy, refugees like Lula now have the chance to openly participate in the workforce, start businesses and secure a more stable future. This decision is set to transform the lives of over 800,000 refugees in Ethiopia, a country long recognized for its open-door policy, but now taking a bold step toward economic inclusion.

In collaboration with the World Bank under the Economic Opportunities Program (EOP), Ethiopia’s landmark decision is not only about survival, but about unlocking potential. It means the chance to provide opportunities for small businesses like that of Lula’s to thrive legally, contributing to her family’s future and to the local economy. For the country, it signals a new chapter in how refugees are viewed—not as dependents, but as valuable contributors to the nation’s growth.

The Economic Opportunities Program: Catalyst for Change

Recognizing the need for more sustainable ways to support refugees, the World Bank partnered with the Ethiopian government in 2018 to launch the Economic Opportunities Program. This innovative program, supported by a US$202 million IDA financing package, aimed to create economic opportunities for both Ethiopians and refugees in an environmentally and socially sustainable way.

The EOP has helped Ethiopia implement its global commitments to include refugees in the economy. Its primary focus has been on policy and legal reforms to create a win-win situation for both refugees and host communities. In fact, it has helped the World Bank implement many refugee-host community focused projects across Ethiopia.

The Bank also facilitates coordination between different stakeholders and shares knowledge globally, so other countries can make better refugee policies. Through its collaborations with key institutions like United Nations High Commissioner for Refugees (UNHCR), German Corporation for International Cooperation (GIZ), and Foreign, Commonwealth & Development Office (FCDO,) the World Bank uses its expertise and resources to make interventions more impactful.

The New Directive: Unlocking Economic Inclusion

This directive represents the culmination of years of hard work and collaboration to operationalize the government’s policy as articulated in its new Refugees Proclamation. It provides the operational details for refugees to access formal employment, establish their own businesses, benefit from development projects, and contribute to the local economy. It unlocks the last frontier in achieving comprehensive economic inclusion for refugees in Ethiopia.

“It is more than just a policy document; it's a statement of values, a commitment to human dignity, and a recognition of the potential that exists within refugee communities,” says Senidu Fanuel, Private Sector Specialist. As implementation moves forward, there is an opportunity to not only improve the lives of hundreds of thousands of refugees in Ethiopia but also to reshape global thinking on refugee hosting and integration.”

Impact and Opportunities

Indeed, the implications will be huge. Ethiopia is tapping into a wealth of human capital by letting refugees work legally and start businesses. The skills, experiences, and entrepreneurial spirit of refugees can boost local economies.

For instance, many Eritrean refugees in Ethiopia have a high level of education and formal work experience. Including them in the labor market could help fill skill gaps. Similarly, Somali refugees often have strong trading networks that could boost cross-border trade.

In addition, as the country develops its manufacturing sector and industrial parks, refugees could provide a valuable workforce. The model is similar to what’s worked in Jordan, where refugees have become integral to the garment industry.

Global Implications

Ethiopia's progress in refugee economic inclusion has implications far beyond its borders. In a world grappling with protracted refugee situations, Ethiopia's approach offers valuable lessons. By providing the right policies and support, the country is proving that refugees can become contributors, and not a burden. It aligns closely with the Global Compact on Refugees and the Comprehensive Refugee Response Framework (CRRF), which Ethiopia was one of the first countries to adopt. 

Looking Ahead

For Ethiopia this is the beginning of a new chapter. But clearly a giant leap forward has been taken. 

The road ahead will undoubtedly have challenges, but with continued collaboration between the Ethiopian government, the World Bank, other development partners, and refugees and host communities themselves, there is potential to create a model of refugee inclusion that benefits all.

It's a moment to celebrate, but also to take action. It’s time to turn these legal provisions into economic opportunities and better livelihoods. The World Bank stands ready to support Ethiopia in this crucial endeavor, and to share the lessons learned.

Story by Senidu Fanuel, Senior Private Sector Specialist and Alejandro Espinosa-Wang, Senior Economist at the World Bank.