Ethiopia Overhauls Procurement Rules for State-Owned Enterprises with New Directive











ADDIS ABABA – The Ethiopian Ministry of Finance has officially released Directive 1070/2025, a sweeping new framework designed to modernize and standardize the procurement processes for all Federal Government Owned Enterprises (SOEs). The directive aims to boost efficiency, enhance transparency, and ensure greater value for money in a critical sector of the nation’s economy.

The new rules, signed by Finance Minister Ahmed Shide and dated May 2025, replace a fragmented system where individual SOEs operated under disparate, board-approved directives. The preamble of the new document acknowledges that the previous system contained “gaps and issues,” and that a harmonized, modern approach is necessary for these commercially-oriented enterprises that compete with the private sector.

“This is a critical step in transforming our state-owned enterprises into more competitive, agile, and accountable entities,” a statement from the Ministry could read. “By standardizing procedures and prioritizing value and sustainability, we are ensuring that public funds are utilized with maximum efficiency and impact.”

For domestic and international businesses seeking to supply goods and services to Ethiopia’s SOEs, the directive introduces several significant changes:

Key Highlights of the New Procurement Directive:

Emphasis on Modern Procurement Methods: The directive formally introduces and encourages modern approaches like Electronic Procurement, Framework Agreements for long-term supply, and Strategic Partnership Procurements. This signals a move away from purely traditional, paper-based tendering towards more efficient, relationship-based, and digital systems.

Sustainability and Ethics at the Forefront: In a major policy shift, the directive mandates the implementation of a Sustainable Procurement System. Bidders will now be evaluated on more than just the lowest price. The framework includes criteria such as Lifetime Cost Analysis, consideration for Environmental Protection, and the procurement’s Social and Economic Impact. This aligns Ethiopia’s public procurement with global best practices.

Heightened Transparency and Accountability: The directive introduces stringent measures to ensure fairness and combat corruption. These include detailed rules on Conflict of Interest for officials, clear guidelines on the Participation of Former Employees in bidding, and a robust Complaint and Appeal Procedure for aggrieved bidders. Furthermore, bidders may be required to disclose their ultimate “ownership benefactors,” increasing corporate transparency.

Clearer Rules of Engagement: The document provides explicit financial thresholds for different procurement methods, including National and International Open Bids, Restricted Tenders, and Requests for Quotation. It offers detailed qualification requirements for sectors like construction, providing greater predictability for contractors and suppliers.

Digitalization and Information Access: The directive mandates the public disclosure of procurement information, including contract awards, on the SOEs’ official websites. It also makes provisions for the use of electronic communication and reverse auctions, paving the way for a more digitized procurement landscape.

Initial reaction from the business community is expected to be one of cautious optimism. A clear, harmonized procurement system has long been requested by the private sector to reduce ambiguity and level the playing field.

The directive’s success will now depend on its thorough implementation across all federal SOEs. It represents a significant attempt by the government to align the operations of its key economic engines with modern, transparent, and market-driven principles, potentially unlocking new opportunities for competitive and compliant businesses.











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