Ethiopia has made impressive stridesalong its developmental path. Job creation is now thecritical development challenge, raising the importance ofthe private sector agenda. After more than a decade ofsustained public sector-led growth, the government isrevising its growth strategy to allow for a much greaterrole for the private sector in driving growth and jobcreation. Broadening the base for job creation beyond lightmanufacturing toward a wider range of high productivityagricultural and services activities will help to overcomethe uneven spatial distribution of manufacturing jobs acrossthe country. Ethiopia has a number of advantages that it canleverage to attract the investment needed for job creation.These include rapidly improving transport and energyinfrastructure, low labor costs, a large and growingdomestic market, cheap power, an ideal climate, andpreferential market access to the European Union, the UnitedStates, and other major markets. The purpose of the Ethiopiacountry private sector diagnostic (CPSD) is to support thetransition to a private sector- driven growth model thatadvances the country’s development objectives and, inparticular, delivers the necessary jobs. It identifiesinvestment opportunities that can materialize in the shortterm, and the reforms that are needed to enable theseopportunities to emerge. It also discusses how specificactions by the public sector, in collaboration with theprivate sector, in filling gaps in public investment,reforming business regulations and trade policy, addressingmarket failures, and enhancing the efficiency of keybackbone services and sectors, while tackling genderinequalities, can fully unleash the potential of privatesector investment.
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