Ethiopia has taken a step to integrate refugees and asylum seekers into its formal economy with a new directive aimed at unlocking employment opportunities for over a million displaced individuals. The directive grants refugees the right to engage in diverse commercial activities, including agriculture, industry, and small enterprises, while restrictions remain on sectors such as border trade, security, and government jobs.

Issued under the 2019 Refugee Proclamation, the directive was signed by Teyiba Hassen, Director General of the Refugees & Returnees Service (RRS), and has been welcomed by international humanitarian organisations as a vital measure to support refugee self-reliance. It sets a clear framework to implement the right to work, which has long been promised under Ethiopia’s refugee policies.

To participate in the labour market, refugees must obtain a work permit from the Ministry of Labor & Skills. The annual renewable permit requires the submission of a personal history form, an identification document from the RRS, and a photograph. According to Dejene Bekele, head of employment promotion at the Ministry, over 8,000 refugees secured work permits in the past fiscal year. He pointed out that work permit issuance has been delegated to the RRS due to the Ministry’s limited branch access near refugee camps.

Ethiopia is currently home to over 1.1 million refugees and asylum seekers, primarily from South Sudan, Somalia, and Eritrea, making it the third-largest refugee-hosting country in Africa. Gambela Regional State hosts the largest portion at 37pc, followed by the Somali Region at 33pc, and the Benishangul-Gumuz Region at 10pc.

The recently launched National ID program has extended its services to refugees, improving their access to national services. This initiative began in Addis Abeba, with Ethiopia pledging to incorporate 814,000 refugees into the system during the 2023 Global Refugee Forum.

“These will grant access to government-directed services,” Teyiba said, underscoring the significance of this inclusion for refugee populations.

However, Hassen Shamseddin, head of legal services at RRS, accentuated that the directive’s implementation remains limited to refugee camps. He further noted that around 77pc of Ethiopia’s refugee population still lives in camps, often in remote areas with limited amenities.

In a bid to protect the local labour market, the directive restricts refugees from working in more than one sector.

“Allowing refugees to work across multiple sectors could overwhelm the national workforce,” Hassen said. He also pointed out that many refugees had been working informally, often without legal recognition, contributing to local economies in a limited capacity.

"By formalising their businesses, they can now contribute to tax revenues," Hassen told Fortune, underscoring the broader economic implications of integrating refugees into the formal workforce.