How an Urban Program in Ethiopia Delivered More than a Million Jobs

What happens when a city's growth outpaces the capacity of its infrastructure and institutions? Ethiopia's cities are navigating this challenge as they experience one of the fastest economic and population growth rates in Africa.

By 2034, Ethiopia's urban population is projected to nearly triple, surging from 15 million in 2012 to over 42 million. This rapid growth presents significant challenges, particularly in terms of infrastructure, services, and employment. However, it also opens up opportunities-especially for job creation, as young people move to cities in search of work.

The Ethiopia Urban Institutional and Infrastructure Development Program (UIIDP) has played an important role in addressing these challenges head-on. Supported by over $850 million in funding from the World Bank's International Development Association (IDA), the Government of Ethiopia, and the French Development Agency (AFD), this program partnered with 117 urban local governments across the country to strengthen institutions and generate employment through infrastructure development.

Strengthening Local Institutions and Economies

At its core, the UIIDP concentrated on building the institutional capacities of urban local governments in Ethiopia. Through extensive training, the program equipped these local bodies with the essential skills and systems to plan, manage, and finance sustainable urban development.

As a result, 117 local governments established robust financial management systems, enhanced their governance procedures, and ensured timely audits. By improving financial management and revenue generation, cities gained greater financial independence and more direct control over their development.

The UIIDP also promoted a culture of inclusive governance. Through active public consultations, it significantly increased women's participation in decision-making processes. This led to a notable increase in women's representation in both expert and managerial roles within city administrations, fostering more equitable development.

Building Roads, Creating Jobs

A cornerstone of the UIIDP was its focus on generating employment through infrastructure development.

Between 2018 and 2024, the UIIDP financed the construction and rehabilitation of over 2,700 km of roads and the development of 2,700 hectares of serviced land. These initiatives-by enhancing urban mobility, increasing access to services, and supporting a more conducive business environment-contributed to the creation of 1.15 million jobs (915,000 temporary and 237,000 permanent), with women filling nearly half (49%) of these roles.

These improvements helped attract investments and nurture the growth of small and medium enterprises in Ethiopia. Improved roads and urban services made cities more functional, accessible, and appealing for small businesses and investors. Serviced land development also supported formal job opportunities, making it easier to for new businesses to establish themselves and tap into Ethiopia's expanding urban workforce.

Even amid serious disruptions-including the COVID-19 pandemic and regional conflicts in Tigray, Amhara, Afar and Oromia-the UIIDP continued to deliver. Flexible funding mechanisms and remote monitoring tools facilitated effective oversight and management, allowing the program to maintain progress in difficult circumstances. This resilience was critical in protecting both infrastructure improvements and the livelihoods tied to them.

Lessons for the Future

While rapid urbanization can strain housing, transport, and services, it can also be a powerful driver of economic opportunity. Ethiopia's experience with the UIIDP shows that when urban investment is linked closely with employment outcomes, multiple challenges can be addressed at once.

The UIIDP offers lessons not only in capacity strengthening and infrastructure development, but also in how urban programs can support inclusive job creation at a time when many countries are grappling with rapid urban growth and youth unemployment.

The approach may not solve every problem, but it represents a significant step toward more resilient, economically active cities-where growth is not just faster, but also shared more broadly among their citizens.