This paper examines the early implementation of Ethiopia’s refugee work rights policy. Ethiopia is Africa’s third-largest refugee-hosting country, with over one million refugees drawn primarily from South Sudan (41 percent), Somalia (33 percent), and Eritrea (17 percent). Most live in protracted situations, with families often remaining for five years or more. Most refugees (75 percent) live in 27 camps concentrated in remote border regions including Gambela, Somali, Benishangul-Gumuz, and Afar, while only 8 percent live in urban areas such as Addis Ababa.
In recent years, Ethiopia has shifted from a purely humanitarian, camp-based model toward a development-focused approach that grants refugees rights to work, own businesses, and access services. The 2019 Refugee Proclamation No. 1110 marked a turning point by broadening refugees’ legal rights to include access to work under specified conditions, education and health services, a driver’s license, banking and financial services, and the acquisition and transfer of property on the most favorable terms accorded to foreign nationals. To implement these rights, Directive No. 02 outlined three economic opportunity pathways for refugees: (1) wage-earning employment requiring a work permit; (2) self-employment requiring a business license; and (3) joint projects requiring a residence permit. The 2024 Directive No. 1019 replaced the 2019 Directive No. 02 and introduced more detailed operational guidance to address early implementation challenges.
The paper employs a mixed-methods approach, combining analysis of legal texts and technical documents with quantitative and qualitative data collection. The legal review covers the 2019 Refugee Proclamation and the 2024 Directive No. 1019, situating the permit system within the broader evolution of Ethiopia’s refugee policy framework. The qualitative component draws on 12 semi-structured interviews conducted in mid-2025 with key stakeholders from the World Bank, academic institutions, the Refugees and Returnees Service (RRS), and UNHCR. The quantitative analysis draws on administrative data from the RRS covering permit issuance records from 2019 through April 2025. These records document the number and type of permits issued disaggregated by region and year, and are used to assess take-up rates relative to the working-age refugee population.
Main findings:
- As of April 2025, 28,842 permits had been issued since 2019, with issuance accelerating markedly following the 2024 Directive. Over 12,000 permits were issued in 2024 alone, representing 43 percent of the cumulative total issued across the entire period since the policy was introduced.
- Residence permits dominate the permit landscape, while work permits remain rare. Of all permits issued, 73 percent are residence permits, 23 percent are business licenses, and only 4 percent are work permits, indicating that entrepreneurship and formal wage employment are still limited.
- Permit issuance is geographically concentrated, with nearly 68 percent of all permits issued in the Gambela and Somali regions. This distribution broadly mirrors existing refugee settlement patterns rather than reflecting differential economic demand across regions.
- Despite recent acceleration, overall take-up of permits remains very low, with only 5.2 percent of the working-age refugee population holding any permit. This gap between the legal entitlement and actual uptake reflects persistent barriers to accessing the permit system.
- Take-up rates vary considerably across regions, ranging from 10.6 percent in Benishangul-Gumuz to 2.6 percent in Addis Ababa and 3.2 percent in Afar. These differences suggest that demand for permits is influenced not only by refugee population size but also by the local economic conditions, availability of formal employment, and the perceived costs and benefits of formalization.
- On the supply side, institutional fragmentation and subnational capacity gaps constrain implementation. The paper documents: (a) limited inter-agency coordination between the RRS, the Ministry of Labor and Skills (MoLS), the Ethiopian Investment Commission, the Ministry of Trade and Regional Integration (MoTRI), and the Ministry of Revenue (MoR); (b) operational capacity gaps at the sub-national level including lack of tools, staffing, and training required to process permit applications reliably; (c) limited procedural clarity and low awareness of the 2024 directive among key actors, including employers; and (d) permit requirements that may unintentionally limit access.
- On the demand side, high labor market informality reduces refugees’ perceived value of formal permits. The paper documents: (1) high levels of informality—over 80 percent of workers in Ethiopia are employed in the informal sector—reducing the perceived value of formal permits; (2) fear of losing humanitarian assistance deters many refugees from seeking permits—approximately 78 percent of in-camp refugees rely on humanitarian aid—and many perceive obtaining a permit as a signal of self-reliance that could jeopardize their access to that support; (3) administrative requirements—including multiple documents and the need for a job offer prior to obtaining a work permit—discourage permit applications; and (4) low awareness of legal rights and steps to apply for permits.
The paper concludes that while Ethiopia has established a landmark legal framework for refugee work rights, its practical impact has been constrained by institutional fragmentation, operational capacity shortfalls, and weak demand-side incentives, compounded by broader structural factors, including a predominantly informal economy and entrenched humanitarian governance models. The authors argue that in the context of shrinking humanitarian aid, closing the gap between de jure rights and de facto labor market inclusion will require adaptive, cost-effective, and context-appropriate solutions.
The authors identify four policy options. Livelihood and area-based economic development programs should be expanded and better tailored to labor market realities, prioritizing self-employment and informal-to-formal transitions over narrowly wage-focused interventions, and allowing refugees to retain some humanitarian assistance for a transitional period after obtaining permits to reduce the deterrent effect of potential aid loss. Performance-based incentives should be introduced for subnational governments, with regions that meet permit issuance targets or demonstrate service delivery innovation receiving technical or financial support. Refugee mobility to economic zones should be enabled by gradually transitioning toward a more flexible legal and administrative regime that allows refugees to move to economic centers, better aligning their locations with labor market opportunities while addressing low permit take-up and concentrated settlement patterns. Finally, local community leaders should be engaged as trusted messengers to increase awareness of legal rights, address misinformation, and build confidence in formal processes among both refugee and host communities.