For decades, a battle has been waged against Ethiopia’s shrinking forests. A combination of land conversion, illegal logging, and unsustainable farming practices has stripped vast areas of tree cover, pushing rural communities deeper into poverty and leaving the country increasingly vulnerable to climate shocks.

Now, a new initiative is betting that a different approach—one that treats forests as an economic engine rather than an environmental casualty—could significantly contribute to ongoing work aimed at changing the trajectory.

The "Sustainable Private Sector Engagement in Developing Inclusive Forest Products Markets in Ethiopia" intervention is an ambitious attempt to rewrite the rules. Instead of viewing forests as a resource to be exploited or protected in isolation, it aims to make them central to the country’s economy.

The idea: bring in the private sector, create green jobs, and put sustainable forestry at the heart of Ethiopia’s development strategy.

A High-Stakes Gamble on Green Growth
The stakes are enormous. If successful, the intervention could provide decent work for at least 70,000 rural and peri-urban Ethiopians—most of them women and youth—while increasing the forestry sector’s contribution to the national economy. It would also serve as a model for balancing economic growth with biodiversity conservation in one of the most climate-vulnerable regions in the world.

This approach builds on past successes. Between 2017 and 2022, a $14.3 million investment from Sweden helped Ethiopia reimagine its forestry sector. The results were striking: 24,000 hectares of new productive forests, 173,000 hectares of restored land, and over 51,000 jobs created—almost half of them for women. Farmers gained access to financing, forestry-based businesses flourished, and modern forestry practices replaced outdated seasonal tree-planting efforts.

A Green Partnership
Dr. Motuma Tolera, Deputy Director General of the Ethiopian Forestry Development in the Ministry of Agriculture noted, “This exciting and transformative project aims to develop a sustainable market system for forest products in Ethiopia [building on] the solid foundation laid by the two previous forestry projects that have made significant achievements and align with the other existing projects and initiatives."

UNDP's Deputy Resident Representative for Programmes, Ms Charu Bist agrees, reflecting, "One of the most profound impacts of the partnership between EFD, SIDA and UNDP has been capacity building. Over 653 development agents have received specialized forestry training, equipping them to lead local initiatives. "

Mr. Girum Bahri, representing the Embassy of Sweden, explained that in 2023, the Swedish government began reforming its international development assistance. As a result, a new overarching policy is in place under the motto “Development Assistance for a New Era- Freedom, Empowerment, and Sustainable Growth.” The new policy has seven thematic priorities and several of these priorities align with the objectives of this new forest intervention for Ethiopia.

A Battle for Ethiopia’s Forests—And Its Future
The project's kickoff meeting, held on 10th February 2025, brought together these stakeholders to align on the path forward, ironing out details on project planning, budgeting, and implementation strategies. UNDP, which has played a central role in designing the initiative, will continue to provide technical support to ensure its success.

The next phase is very ambitious, with a hybrid strategy that combines Market Systems Development (MSD)—which focuses on creating self-sustaining, pro-poor forest product markets—with direct support for policies and institutions that encourage private sector investment.

But the challenges remain formidable. Market systems are notoriously difficult to reform, and private sector engagement in forestry has historically been weak. Many rural communities still depend on small-scale, subsistence farming and traditional wood-based livelihoods, making large-scale economic shifts difficult to implement. Corruption, weak governance, and policy bottlenecks add further complexity.

Despite these hurdles, Ethiopia is pressing ahead. The initiative aligns with Ethiopia’s National Long-Term Low Emission Development Strategy, which aims to decouple economic growth from environmental degradation. It also complements Sweden’s Development Cooperation Strategy for Ethiopia (2022-2026), which prioritizes sustainable development, poverty reduction, and gender equality.

The plan is bold: strengthen institutional capacity, develop sustainable value chains, create employment, and enhance biodiversity conservation—all while ensuring forests remain intact.

The approach relies on the Adopt-Adapt-Expand-Respond (AAER) framework, designed to make market interventions self-sustaining over time.

Who Stands to Benefit?
For smallholder farmers, sustainable forestry could offer a lifeline. By providing access to value-added forestry markets—such as timber, bamboo, and non-timber forest products—the initiative aims to lift thousands out of poverty. The intervention is also focused on job creation, particularly for women and young people, in areas where employment opportunities have been scarce.

And then there’s the environmental case. Ethiopia has already attracted an additional $35 million from Norway under the REDD+ Investment Program, scaling up efforts to protect and restore forests across 35 districts. If the new initiative succeeds, it could serve as a model for other African nations struggling to balance development with conservation.

The Road Ahead
Success will depend on buy-in from multiple stakeholders, including government agencies, international donors, and the private sector. Key players such as the Ethiopian Forestry Development (EFD), Swedish University of Agricultural Sciences (SLU), CIFOR, UNDP, and the iDE are already on board.

Ultimately, the question remains: Can Ethiopia turn its forests into a sustainable economic powerhouse without compromising its natural heritage? The answer will shape the country’s development trajectory for decades to come.

For now, all eyes are on the ground, where communities, businesses, policymakers and development partners like UNDP and SIDA are betting that Ethiopia’s forests can do more than survive—they can thrive with the private sector.