Ethiopia’s forest product market system tells a story of untapped potential. Rapidly growing demand from urban expansion and energy needs is largely met by informal actors, while limited supply, weak value chains and low levels of industrialization continue to constrain the sector. With stronger value chains and deeper private sector engagement, the forest economy has the potential to become a powerful driver of green growth, job creation and sustainable development.

Addressing both the challenge and the opportunity is at the core of a project on Sustainable Private Sector Engagement in Developing Inclusive Forest Products Markets in Ethiopia. Since its launch in 2025, the project has focused on tackling key constraints in the sector, including limited skills development, inadequate access to finance, weak market linkages and low levels of private sector investment. Partners also highlighted that the recruitment of technical experts and targeted Market Systems Development training has strengthened implementation capacity and equipped stakeholders with practical tools to support sustainable market growth.

To unlock market potential, the project is working with skills development institutions to pilot tailored training programmes aligned with sector needs. It is also facilitating access to finance and markets, while strengthening private sector participation to mobilize investment across forest product value chains. At the same time, the project is generating evidence from implementation and promoting broader market participation to achieve scale and sustainability.

A key milestone has been the launch of two integrated business support pathways designed to stimulate enterprise growth. The incubation pathway focuses on start-ups, women, youth, unemployed individuals and informal operators, nurturing new businesses and expanding entrepreneurship opportunities. The acceleration pathway supports growth-constrained enterprises, including women and youth-led MSMEs and cooperatives, to improve productivity, expand operations and enhance competitiveness.

To date, the project has reached 5,659 participants across six regions and multiple forest product subsectors, with women representing 47 percent of beneficiaries. Most participants are engaged in honey production and marketing, followed by roundwood, seedling production, gum and resin value chains, and briquette production. The presence of 241 MSMEs and 38 cooperatives highlights strong foundations for scaling impact through targeted business development support.

Efforts to strengthen market access are also advancing through new commercial partnerships. In the roundwood subsector, collaboration with Abyssinica Wood Processing Trading, a subsidiary of DMC Real Estate and Fiberboard Manufacturing Plc, is expected to create new opportunities for sustainable market access and business growth.

Another important milestone is the development of the SPSF Challenge Fund, which will support private sector engagement, promote technology adoption, strengthen market linkages and build capacity. The fund will operate through three financing windows, providing grants ranging from USD 10,000 to USD 30,000 to start-ups, cooperatives, MSMEs, established enterprises and lead firms.

Despite growing demand and resource potential, private sector participation remains limited, and investment gaps persist. To inform future interventions, the project conducted a comprehensive subsector analysis covering supply and demand dynamics, market opportunities and constraints, trade trends and geospatial mapping of value chains. The findings highlight emerging opportunities linked to Ethiopia’s Homegrown Economic Reform agenda, while reinforcing the need for market-oriented reforms and stronger private sector engagement to reduce import dependence, stimulate local industries and create sustainable jobs.

As implementation moves into the next phase, partners reaffirm their commitment to advancing inclusive market systems that create opportunities for women, youth, cooperatives and private enterprises. An annual review meeting held on 28 May 2026 brought together government institutions, implementing and development partners to assess progress, address challenges and strengthen collaboration. The meeting concluded with a shared commitment to accelerate implementation, scale innovative solutions and unlock the full potential of Ethiopia’s forest product markets to deliver long-term economic and environmental benefits, including the creation of 60,000 green jobs.

About the project

The Sustainable Private Sector Engagement in Developing Inclusive Forest Products Markets in Ethiopia (SPSF) project (2025 - 2027) is funded by the Swedish International Development Cooperation Agency (Sida) with a contribution of SEK 55 million and co-financed by the United Nations Development Programme (UNDP) with USD 1 million. The project is implemented by the Ethiopian Forestry Development (EFD) in partnership with CIFOR - Center for International Forestry Research (CIFOR), iDE Ethiopia , and the SLU - Swedish University of Agricultural Sciences. #greenjobs #forest

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