In Ethiopia’s competitive job market, recent research by the International Growth Center (IGC) suggests that being well-liked in your community may be more important than qualifications. A study mapping social networks in local kebeles revealed that job opportunities often favor popular individuals over the most skilled candidates, a trend that could be detrimental to productivity.

Tewodros Mekonnen, a senior economist at IGC, explained to Capital that one of their key findings highlighted how social connections dominate hiring practices. “We mapped kebele residents in Addis Ababa who knew each other and created job opportunities,” he noted. “Most recommended candidates were well-liked in their community, not necessarily the most qualified.”

The researcher, who was a PhD candidate at the University of Oxford at the time, found that Ethiopian workers tend to rely more on social networks than on hiring professionals with the necessary skills.

 Consequently, individuals who are popular in their community have a higher chance of securing a job than those who are genuinely qualified. This social network-based recruitment practice often excludes skilled workers, ultimately lowering productivity.

Tewodros mentioned that IGC has conducted around 30 studies related to the labor market.

He pointed out that the establishment of industry parks marked a significant turning point in the nation’s development when IGC began its operations in Ethiopia nearly 13 years ago.

“Labour turnover was one of the main issues at industry parks at the time,” he added, noting that the benefits offered by jobs in these parks were often unsatisfactory for workers.

A study on this issue found that 70% of workers left their jobs within three months, leading to efficiency problems. “One of our studies proposed a retention bonus incentive for employees who stayed longer, which really helped manufacturers and addressed the issue,” he said.

Another intriguing finding from IGC’s research concerns skills mismatch. The main conclusion of this experimental study was that many job seekers are unaware of their greatest strengths.

For instance, someone may believe that language skills are their strongest asset, while in reality, collaboration may be their true strength. Additionally, job seekers often lack knowledge about what employers are looking for during the hiring process.

The report indicated that most job seekers think companies prioritize technical proficiency and intelligence. However, employers tend to favor behavioral traits such as honesty, teamwork, and communication skills.

Tewodros noted that, according to an IGC-backed report, while technological skills and education are highly sought after in the market, the system predominantly produces accountants.

“The key to addressing these two issues lies in closing the information gap. Therefore, a labor market information system has been established to facilitate interaction between employers and job seekers,” he explained, adding that a skill assessment mechanism should also be developed to meet employer demands.

Internships and apprenticeships are crucial components of education. While 40% of candidates possess experience, a staggering 80% of job vacancies require experienced workers.

To bridge the gap between the supply of and demand for experienced labor, internships and apprenticeships have been proposed as viable solutions.

In an interview with Capital, Tewodros remarked, “We have provided studies that will contribute to policy-making.”

The International Growth Centre (IGC) is an international research initiative that delivers evidence-based policy recommendations to developing countries to foster sustainable economic growth. Founded in 2008 through a collaboration between the University of Oxford and the London School of Economics, the IGC has formed a significant partnership with Ethiopia.

To address key economic challenges—such as industrialization, export competitiveness, agricultural productivity, rural transformation, urban infrastructure, housing affordability, fiscal policy, and domestic revenue mobilization—the center collaborates with Ethiopian institutions, researchers, and policymakers.

Recently, the IGC has focused on macroeconomic policy research, providing essential insights for the government’s macroeconomic reform efforts.

Heineken Ethiopia has announced a new 33 million birr initiative aimed at improving the livelihoods of vulnerable households in Kilinto and Koye Feche through animal fattening and food processing activities. The project, implemented in partnership with Mahibere Hiwot for Social Development (MSD), will directly benefit 75 households-30 in Kilinto and 45 in Koye Feche-by promoting sustainable income generation and small-scale agribusiness.

The beneficiaries will engage in various activities including animal fattening, dairy farming, cattle rearing, poultry farming, and food processing-sectors critical to local food security and economic resilience. The project provides livestock, feed, veterinary services, and technical training to equip participants with the skills needed to build sustainable businesses.

Speaking at the launch ceremony, Bart de Keninck, Managing Director of Heineken Ethiopia, emphasized the transformative potential of livestock farming for rural and peri-urban communities. “This project will significantly improve the living conditions of these households,” he said, pledging continued support through technical training, market linkages, and sustainable management practices to ensure long-term success.

Special attention has been given to empowering women, female-headed households, and people with disabilities, identified through a collaborative selection process involving Heineken, MSD, community members, and local government officials.

The initiative also aims to strengthen social cohesion and nurture local entrepreneurship. By fostering economic empowerment at the grassroots level, Heineken Ethiopia demonstrates its commitment to sustainable and inclusive community development, aligning with its global “Brewing a Better World” sustainability agenda.

Key stakeholders present at the handover included MSD Founder and Executive Director Tilaye Gizachew, Heineken Ethiopia’s Sustainability and Government Affairs Manager Fekadu Bashah, and Kenean Gezahige, CEO of Akaki Kality Woreda 09.

Experts in Ethiopia’s livestock sector have raised serious concerns over the rising prevalence of counterfeit letters of credit (LCs) and the lack of adequate insurance coverage, warning that these issues threaten the country’s rapidly growing livestock export industry. The sector, which contributes 19 percent to Ethiopia’s GDP and 45 percent of its agricultural GDP, faces significant challenges in sustaining export growth due to financial insecurity and operational risks.

Industry leaders point to an increasing number of dubious LCs in importing countries, particularly in the Middle East-Ethiopia’s key livestock market-and the absence of affordable, comprehensive insurance for live animals during transit. These problems, they say, could undermine the sector’s long-term stability and economic potential.

The Ethiopian government aims to generate $127 million from livestock exports this fiscal year, having already achieved about $63 million in the first nine months. While this reflects progress compared to previous years, experts argue that the current earnings fall short of Ethiopia’s vast livestock potential.

The Ethiopian Livestock Exporters Association (ELEA) has been vocal about the mounting financial and operational pressures on exporters. Hayder Kemal, a board member of ELEA, expressed frustration with shifting payment terms, noting that many buyers now prefer cash against documents (CAD) over letters of credit, which traditionally offer more secure payment guarantees.

“More buyers insist on CAD payments, and we are also seeing an increase in fake letters of credit that lack proper verification or contain misleading assurances,” Hayder said. These fraudulent LCs, which mimic legitimate financial instruments issued by reputable international banks, pose serious risks to exporters.

Regarding insurance, Hayder highlighted the persistent shortage of affordable insurance options tailored for live animal exports. He called for sustained government support and resources to develop accessible insurance schemes that can protect exporters and animals alike.

These concerns were voiced at the 2nd COMESA Institutions Awareness Forum and the 6th COMESA Business Fair and Conference held in Addis Ababa on May 6, 2025. The event brought together government officials, private sector representatives, export agencies, development partners, and other stakeholders.

Hope Murera, Managing Director and CEO of ZEP-RE, a regional reinsurer, reinforced the importance of insurance in safeguarding livestock trade. She noted positive developments in shifting from national to regional livestock insurance programs, which aim to spread risk more broadly. However, she stressed that ongoing government backing and collaboration with regional bodies like COMESA are essential to address challenges, including illegal cross-border trade activities.

Ethiopia’s livestock export sector remains a vital economic driver, involving farmers, traders, cooperatives, and exporters. Yet, experts warn that poor coordination and communication among these actors hinder the sector’s effectiveness and growth.

According to recent data, Ethiopia has exported 12,500 metric tons of livestock this year, with the United Arab Emirates accounting for 45 percent of sales. Notably, Ethiopia began transporting livestock by freight train to Djibouti last year, marking a significant logistical advancement.

India has reiterated its commitment to expanding multifaceted cooperation with Ethiopia, positioning the East African nation as a pivotal partner in its South-South diplomacy and continental outreach. The renewed pledge comes amid a period of dynamic change in both countries’ global roles and a shared vision for inclusive development and prosperity.

During a high-level forum hosted by the Indian Embassy in Addis Ababa, India’s Ambassador to Ethiopia and Permanent Representative to the African Union, Anil Kumar Rai, underscored the enduring strength of Indo-Ethiopian relations. “India and Ethiopia enjoy a time-tested relationship built on mutual respect and understanding,” Ambassador Rai stated, highlighting the historical ties and shared interests that have defined the partnership for decades.

Ambassador Rai outlined India’s intention to elevate bilateral relations across economic, cultural, and strategic domains. “We are determined to strengthen existing partnerships, support Ethiopia’s development priorities, and cultivate joint prosperity through deeper engagement,” he said, noting Ethiopia’s growing influence on the African continent both economically and diplomatically.

A key example of this evolving partnership is India’s early and vocal support for Ethiopia’s accession to BRICS, the influential bloc of emerging economies. “We were among the first countries to support Ethiopia’s bid to join BRICS, and today Ethiopia is a member. This is not only a diplomatic milestone but also a strategic move to boost Ethiopia’s trade diplomacy with emerging global powers,” Rai noted.

On the economic front, India stands as Ethiopia’s second-largest trading partner and a major source of foreign direct investment. Bilateral trade reached nearly $2.8 billion in 2022, with over 600 Indian companies operating in Ethiopia across sectors such as manufacturing, pharmaceuticals, agriculture, and technology. Ambassador Rai praised Ethiopia’s ongoing macroeconomic reforms and urban infrastructure drive, describing them as key enablers for attracting further investment: “The government’s approach to urban development-creating modern infrastructure-offers rapid returns by monetizing the value of upgraded city land,” he observed, pointing to manufacturing as a key growth sector.

The ambassador also announced the recent finalization of a defense cooperation agreement between India and Ethiopia, marking a new era in bilateral security collaboration. Additional agreements are being negotiated in education, technology, and capacity building, reflecting the broadening scope of the partnership.

India’s outreach to Ethiopia is part of a larger commitment to fostering sustainable, inclusive development across Africa. The engagement aligns with India’s evolving role in multilateral forums and its emphasis on mutual growth through South-South cooperation, as seen in joint initiatives within the United Nations and the Non-Aligned Movement.

Education and human capital development remain central to the relationship. Ambassador Rai emphasized the importance of leveraging Ethiopia’s young population and robust infrastructure, with India sharing its experience in skills development and digital public infrastructure. The two countries recently signed a memorandum of understanding on digital public infrastructure, and ongoing educational exchanges continue to nurture people-to-people ties.

Cultural links are also flourishing. The reopening of the Ethiopian Cultural Center in India later this year and recent participation by Ethiopian artists in major Indian festivals highlight the vibrancy of cultural exchange.