In a significant shift in Ethiopia’s public procurement landscape, the just ended fiscal year witnessed the implementation of sweeping legal reforms that consolidate procurement power within the executive arm of government—sparking growing concerns over transparency, due diligence, and political capture of state contracts.
At the heart of the debate is the Procurement and Property Administration Directive, ratified just last month.
While the directive aims to modernize and digitize the country’s procurement system, it has also loosened key oversight mechanisms, empowering ministers and, in some cases, the Office of the Prime Minister, to directly approve exceptional or “special” procurements—once the exclusive purview of the Public Procurement and Property Authority (PPPA).
Despite this, the ECWC was awarded the contract for a new 11.7 billion Birr project this month.
The directive allows public institutions to bypass open bidding procedures in “exceptional circumstances,” provided “compelling reasons exist” and standard methods are deemed unworkable. In such cases, “the Minister of the respective Public Body may grant special permission”, according to the directive.
Critics warn that this centralization of authority, particularly under the Prime Ministerand the cabinet, opens the door to politicized decision-making, undermining competitive tendering and creating space for patronage.
“This isn’t just about speeding up procurement,” said a seasoned engineer who fears the directive could grant competitors in the construction industry an unfair advantage. “It’s about shifting control away from independent oversight and toward a handful of powerful offices.”
Under the newly enacted law, federal procurement can take place through one of four methods: open tendering, selective tendering, limited bidding, and direct procurement. A fifth modality—special procurement—is allowed under “exceptional” circumstances.
Previously, such exceptions required vetting and approval by the PPPA based on documented evidence. Now, ministers have the power to approve special procurements for their respective institutions. And in the case of federal bodies directly accountable to the Prime Minister—such as intelligence agencies and certain strategic enterprises—the decision-making power rests with the head of the executive organ.
This move has raised red flags among anti-corruption experts and other observers.
“What’s the point of a procurement proclamation if exceptions can be authorized by the very offices executing the contracts?” asked a prominent political opposition figure who spoke to The Reporter on condition of anonymity. “You are legalizing discretion.”
A System under Strain
The Office of the Federal Auditor General has repeatedly criticized how public bodies exploit the exception clause. Its most recent performance audit found “widespread misuse” of the special procurement route and accused several federal institutions of bypassing competitive bidding altogether. In many cases, the rationale for exception was not substantiated, nor was the pricing independently verified.
The report presented to Parliament highlighted the financial, performance and legal audit findings of audits of the accounts of ministries and other federal agencies for the 2023/24 fiscal. It exposed significant financial irregularities and mismanagement across various federal institutions.
Key findings include substantial purchases made without following proper procurement procedures, the existence of substantial amounts of unpaid receivables, unreconciled payments, and unsubstantiated expenditures, totaling billions of Birr, and irregularities in procurement processes.
The report also revealed that a tiny percentage of mismanaged public funds were recovered on the basis of its recommendations from the previous year, underscoring the need to ramp up the efforts in this regard. Even more alarming is the revelation that some of its staff was subjected to threats and harassment while doing their job.
“Even when PPPA was in charge, we had issues,” said a procurement expert. “Now with ministers and the PM’s office taking over, it’s even harder to trace accountability. The documentation, the reasoning, the technical due diligence—it’s all weakened.”
The expert alleges that requests for special procurement were often filed without legal justification, while some institutions failed to respond to PPPA requests for clarification. Now that ministers hold final authority, there is even less incentive to respond.
The Ministry of Finance’s digital procurement platform, the e-GP system, indicates that there are 169 active tenders as of this week, while its database contains information about more than 33,600 tenders previously awarded.
However, insiders suggest that a growing share of high-value contracts—especially in security, infrastructure, and ICT—are being awarded outside the e-GP system, through direct or special procurement channels.
“The numbers on e-GP may look healthy,” said the engineer, “but that’s only the visible side. The big-ticket contracts are often handled off-system—by political directive.”
The politicization of procurement has long become a constant grievance of the construction sector.
Observers note an increase in politically sensitive projects—such as large-scale event logistics, contracts, and tech deployments—being awarded without open competition. Several high-profile cases in the 2024/25 fiscal year have already drawn public criticism for alleged favoritism toward companies perceived as close to the ruling coalition or individual cabinet members.
While The Reporter could not independently verify individual cases due to a lack of public disclosure; multiple sources confirmed that complaints have been echoing regarding awards in the construction sector.
“The public procurement framework is becoming less about value for money and more about consolidating loyalty,” said an industry insider.
Earlier this month private and state-owned developers signed contracts valued at 67 billion Birr for the construction of more than 4,100 housing units in Addis Ababa under the ‘Chaka Housing Development Project’.
The venture agreement, which includes the construction of the controversial ‘New Palace’ on a hilltop flanking the capital’s northeast, is part of a broader 72 billion Birr housing initiative under a public-private partnership (PPP) between the Ministry of Finance and various real estate companies.
A statement released following the signing details that 4,175 housing units will be constructed as part of the Chaka Housing Development Project.
The project will be implemented through a 70/30 financing arrangement and will involve several developers, including ICE Housing Development Consortium PLC, Ovid Real Estate, the state-owned Ethiopian Construction Works Corporation (ECWC), and other private companies, according to government statements.
The housing units will lie on 24 hectares of land, with a total cost of 67 billion Birr.
During a ceremony marking the agreement, Abebe Gebrehiwot, head of the Public-Private Partnership Department at the Ministry of Finance, elaborated on the criteria used to select the housing development companies.
“The government invited 11 companies to express interest, and six were selected based on technical, financial, and legal evaluations,” he said. “We selected developers based on their past experience with similar projects, financial capacity, and compliance with required standards.”
According to Abebe, 14 housing development projects have been planned under the Chaka housing project initiative, with three already awarded and the remaining 11 to be allocated in the future.
Among the awarded developers is the Ethiopian Construction Works Corporation (ECWC), a state-owned enterprise that has faced criticism for delays in past projects.
In response to questions about ECWC’s selection, Abebe said: “The institution previously completed eight residential buildings at a cost of over 800 million Birr. It was selected for this project due to its experience and because it is partnering with other private housing developers.”
Documents obtained by The Reporter indicate that the Ethiopian Construction Works Corporation (ECWC) has been weighed down by more than a dozen suspended or cancelled projects over the past three years.
Among these is the construction of a 65-kilometer road linking Alaba in the Central Ethiopia Regional State with Wato in Oromia, which had been plagued with delays and cost overruns.
The Ethiopian Engineering Corporation (EEC), another state-owned enterprise serving as the consultant for the beleaguered road project, claims the contractor has finalized less than a fifth of the roadwork despite taking more than double the amount of time specified in its contract. The project was contracted out by the Ethiopian Roads Administration.
A letter from AbebelignMekuria, deputy CEO at EEC, states that no less than 50 notices relating to the delays, as well as traffic management and emergency works, and two in-person meetings have failed to spur the Corporation to pick up the pace.
The letter notes that ECWC had previously cited cement and fuel shortages, a lack of manpower, and the unavailability of construction equipment for its tardiness. However, a team sent to the project site by ECC found that most of the equipment and labor force had been sitting idle for an extended period of time. Drainage works have partially resumed, but the lack of masons meant the contractor was only able to finalize 10 meters a day.
EEC’s letter revealed that as of the end of September 2024, the contractor had registered less than 20 percent progress on the project, while more than 124 percent of the time allotted for the work had elapsed.
At the time ECWC representatives told The Reporter that the contractor was working to the best of its ability.
“We understand the public outcry for the quick completion of the project. We want the same thing,” said one rep, speaking anonymously.
He indicated the project is being carried out at a loss, and claimed the pace of work had picked up, while denying reports of manpower, cement, or fuel shortages. He attributed the delays to right-of-way issues.
On the other hand, documents indicate that this 65-kilometer road is not an exception to the string of troubled projects that have placed the Corporation under public scrutiny in recent years.
The Addis Ababa City Design and Construction Bureau, Ethiopian Roads Authority, and the Ministry of Defense are also among the government institutions that have been forced to issue complaints about the Corporation’s performance and quality over the past five years, with most complaints arising in the last fiscal year.
Despite this, the ECWC was awarded the contract for a new 11.7 billion Birr project this month, and the Corporation is also being considered as a frontrunner for accolades from the Ethiopian Quality Awards Organization, run by Addis Ababa University and Walta Media and Communication.
Nonetheless, an officer at ECWC dismisses any claims of favoritism.
On the other hand, outcries from private contractors are highlighted in a 2025 report published by the US Trade Representative.
The National Trade Estimate cited Ethiopia’s “lack of transparency in major tenders” and “frequent use of exception clauses” as key barriers to doing business.
“Some Ethiopian government tenders are open to foreign participation and tender announcements are usually public, but many major procurements do not go through a transparent tendering process,” reads the report.
According to the document, obstacles to foreign participation in government procurement tenders include complicated and inadequately established procedures, repeated cancellation of published requests for proposals, capacity gaps on the part of procurement agencies, delays in decision-making, lack of public information, and corruption.
While the PPPA has pushed forward the rollout of e-GP to improve transparency, it faces systemic limitations. The platform lacks integration with tax, banking, and customs databases, making cross-verification of suppliers and contract execution nearly impossible, according to industry stakeholders.
“The procurement system is digital, yes—but it’s an island,” said a contractor. “There’s no real-time data from tax authorities, no enforcement integration with banks or customs. It’s a digital façade.”
The lack of integration is especially troubling in light of Ethiopia’s growing fiscal pressures. With an external debt burden of USD 30 billion and dwindling foreign exchange reserves, ensuring that public contracts deliver maximum return has never been more urgent.
A Procurement Appeals Board created through previous legislation is designed to review challenges related to procurement decisions that may cause loss or injury to tenderers. However, its independence and enforcement power remain untested. Moreover, the PPPA’s role has been relegated largely to advisory and training functions.
Legal commentators argue that meaningful reform must include reinstating PPPA’s authority over exceptional procurements and mandating public disclosure of all awarded contracts—including those approved by ministers and the PM’s office.
“The danger is not just corruption, but a gradual hollowing out of institutions,” warned an expert. “When procurement becomes politicized, it distorts markets, crowds out honest contractors, and ultimately raises costs for taxpayers.”
To rebuild trust and effectiveness, experts recommend several urgent steps:
Requiring all exception approvals to be published with justification; mandating independent audits of special procurements; fully integrating the e-GP system with other government data platforms; and empowering the Appeals Board.
For now, Ethiopia’s procurement regime stands at a crossroads. Will the reforms usher in a more efficient and modernized system—or entrench a culture of executive overreach and favoritism? As the new fiscal year unfolds, the answer may lie not in the laws passed, but in how power is exercised behind closed doors.
