A Transition at Work?
February 2021
A Transition at Work?
The ethnicization of Ethiopia’s informal sector
Jos Meester & Nancy Ezzeddine


The Ethiopian governing regime has defined poverty as the biggest threat to its survival since its inception, and has thus established a top-down developmental state model to drive economic growth that would legitimise its existence. While this model has sustained high GDP growth rates, Ethiopia faces a challenge translating such growth into improved livelihoods. The private sector is weakly developed, and job creation in Ethiopia’s urban centres has not kept pace with population growth or rural-urban migration. Employment in the informal economy has been key to an increasing number of individuals’ livelihoods, yet persistent poverty, inequality and marginalisation is also deepening grievances. The ethnically defined federalist system has created potentially powerful ethnic nationalist constituencies and aligned other previously cross-cutting political cleavages with existing ethnic divides, which result in potentially strong centrifugal forces. The Ethiopian state’s clientelistic approaches to political mobilisation and its claim to legitimacy based on economic growth have equally lost purchase in the face of persistent poverty and marginalisation. With political debate extending beyond previously formalised channels, ethnically based networks are gaining significance. While career perspectives in the formal sector have long been intertwined with the ethnically based political system, such dynamics are becoming increasingly pronounced in the informal sector. The demarcation of boundaries between ethnic groups is becoming more important in the informal sector. While this may help ethnic groupings secure their livelihoods by securing control over various economic sectors and locations, it has reduced inter-group cooperation by eroding cross-cutting social capital and has connected economic grievances with ethnic fault lines. As a result, political tensions between ethnic nationalist groupings increasingly engage substantial urban constituencies, allowing tensions to spill over and exacerbate the broader political strains across the country.

About the authors

Jos MeesterSenior Research Fellow at the Clingendael Institute’s Conflict Research Unit
Jos’s work focuses on the private sector in conflict-affected environments. He is particularly interested in supply chains spanning political divisions, as well as the close relationship of political and private-sector elites and its consequences for the stability of political power structures. Jos previously worked as a management consultant on supply chain management and market assessments in developed and developing economies.

Nancy EzzeddineResearch Fellow at the Clingendael Institute’s Conflict Research Unit
Nancy Ezzeddine is a Research Fellow at Clingendael's Conflict Research Unit. In this capacity she primarily contributes to the Levant research programme, seeking to identify the origins and functions of hybrid security arrangements and their influence on state performance and development. She seeks to track relationships based on overlapping economic interests, political power and security challenges. Nancy’s research is characterised by a mixed-methods approach involving both qualitative and quantitative analysis.

Photo credits

Addis Ababa, 26 November 2016
© David C94