Ethiopia’s National Entrepreneurship Development Policy: A Paradigm Shift in Economic Mindset

Ethiopia is at the precipice of a significant transformation in its economic landscape. In a bold move last week, the Council of Ministers unanimously approved the National Entrepreneurship Development Policy during its 52nd regular session. This new framework is strategically designed to challenge long-standing conventions about business, labor, and the state’s role in economic life.

The Birth of an Entrepreneurial State

Crafted by the Ministry of Labor and Skills in conjunction with the Entrepreneurship Development Institute (EDI), the policy signals a progressive shift toward what its creators term an “entrepreneurial state.” Instead of treating entrepreneurship as a niche activity confined to micro, small, and medium enterprises (MSMEs) or tech startups, this policy positions it as a governing principle. It is envisioned to permeate education, culture, public institutions, corporations, and everyday life.

For years, discussions surrounding enterprise in Ethiopia have frequently echoed concerns about access to finance and regulatory clarity. The new policy broadens this discourse, redefining entrepreneurship not just as profit-seeking ventures but as a holistic value-adding process. This includes identifying problems, generating innovative ideas, mobilizing resources, seizing opportunities, and taking calculated risks to improve products and services.

A New Definition of Entrepreneurship

“This definition fundamentally departs from Ethiopia’s traditional understanding,” says Boru Shena, Deputy CEO of EDI. Historically, entrepreneurship has been primarily viewed through the lens of ownership and profit-making. The new policy acknowledges that it has rendered significant segments of economic activity invisible, leaving public institutions, social enterprises, and informal innovators without recognition or support.

The framework introduces a lexicon that broadens the definition of entrepreneurship, encompassing five distinct categories: social entrepreneurship, corporate entrepreneurship, public entrepreneurship, everyday entrepreneurship, and high-growth startups. This fresh perspective endeavours to give voice and support to a variety of entrepreneurial endeavors that had previously been overlooked.

Education as a Cornerstone

Education stands out as a pivotal pillar in this transformative strategy. The policy aims to integrate entrepreneurship education from primary through higher education as part of the Entrepreneurship Competency Improvement Program. The focus is shifting from theoretical education to practical, hands-on, and interdisciplinary learning. This approach seeks to address issues such as instructor shortages and fragmentation of educational institutions.

Indigenous knowledge will not merely be regarded as cultural heritage but rather as a productive resource. Initiatives to enhance education delivery, strengthen training institutions, and integrate local knowledge into modern frameworks are fundamental components of the policy.

Cultivating an Entrepreneurial Culture

Linked closely to education is the imperative for cultural change. The policy acknowledges that prevailing social attitudes—such as risk aversion, stigma around failure, and narrow definitions of legitimate work—restrict entrepreneurial activity. To foster a more vibrant entrepreneurial spirit, the policy plans to create platforms for awareness, experience-sharing, and recognition systems showcasing public and everyday entrepreneurship.

Reforming Government Operations

In a significant inward-focused initiative, the policy examines productivity losses within government due to rigid procedures and a weak problem-solving culture. The Public Entrepreneurship Development Promotion Program aims to instill entrepreneurial thinking within civil service operations. Through training and collaborative frameworks, the policy seeks to redefine risk-taking as a governance tool rather than a bureaucratic flaw. This calls for government employees to adopt a founder’s mindset, encouraging innovation and flexibility.

Encouraging Corporate Entrepreneurship

The policy extends its goals to large organizations, recognizing corporate entrepreneurship as an underutilized engine of productivity. It aims to help established firms eliminate internal barriers to innovation, such as rigid hierarchies and poor incentive structures. Programs targeting leadership development and organizational culture are integral to encouraging these corporations to invest in experimentation and adopt adaptable operational frameworks.

Social entrepreneurship receives special attention, representing a commitment to inclusive growth. The policy strives to clarify the legal status of social enterprises, improve access to tailored funding sources, and reduce bureaucratic constraints. By acknowledging social enterprises as a unique category, the framework honors their dual role in service provision and job creation, steering clear of traditional commercial models.

Fostering a Startup Ecosystem

The framework identifies startups as beginner enterprises with high growth potential and innovation-driven objectives. Rather than acting as direct investors, the state aims to cultivate a robust ecosystem through the Startup Support Expansion Program. This initiative will focus on coordinating incubators and accelerators, enhancing market access, and diversifying financial opportunities, including alternative funding mechanisms.

Supporting Everyday Entrepreneurs

Crucially, the policy does not overlook informal entrepreneurs, recognizing their contribution to livelihoods and economic equity. The Everyday Entrepreneurship Development Support Promotion Program aims to assist these individuals without forcing their immediate transition to the formal sector. Strategies include simplified registration processes, awareness campaigns, and targeted incentives to help integrate these entrepreneurs into larger markets and trade platforms.

Implementation and Future Steps

The execution of this comprehensive policy will be overseen by the Ministry of Labor and Skills, with EDI managing day-to-day operations. Plans are in place to leverage government structures at the woreda level for national outreach. Although the policy has received approval, EDI is still incorporating public feedback gathered from consultations held in June 2025. This guiding framework will coexist with existing initiatives, including the Startup Proclamation and the Digital Ethiopia 2030 strategy.

Implementation timelines are not explicitly detailed in the policy, but EDI is already formulating a strategy with specific milestones in mind. Ultimately, the success of this ambitious vision lies in the capacity of Ethiopia’s institutions to internalize this transformative shift, fostering an entrepreneurial mindset across all layers of society.