Ethiopian Business ReviewEthiopia’s landlocked status has long constrained its economic growth and regional influence. While direct access to the sea offers undeniable benefits, achieving it remains a complex geopolitical puzzle. Direct access to the seaport brings enormous economic benefits for Ethiopia. It strengthens a nation’s regional and international standing, granting it a voice in maritime affairs and potentially boosting cooperation with other coastal countries and superpowers.
Will it Rain Relief or Ruin?
Ethiopia’s debt is undoubtedly mounting. Although the debt to GDP ratio has shown some signs of decline, the debt in actual figure is increasing.
The IMF and other economic institutions project that Ethiopia’s debt-to-GDP ratio will increase in the near term, potentially reaching 50Pct by 2024. Some analysts believe Ethiopia can manage its debt burden sustainably, while others express concerns about the potential debt crisis, which is already looming as the country missed a USD33 million Eurobond coupon payment on December 5. The default on the Eurobond coupon marks a challenging economic phase for Ethiopia. This development comes amidst internal conflicts, high public debt, and ongoing discussions with the IMF for a potential financial bailout and debt restructuring with G-20 countries.
Ethiopia’s digital transformation aims to overcome structural barriers to inclusive prosperity, alleviate macroeconomic imbalances and emphasise sectorial priorities. The government has indicated the private sector’s crucial role in realising the full potential of digital transformation.
By the beginning of March 2023, the State of Oromia had officially launched the operations of a new city- named Sheger. Having its main office in Addis Ababa, Sheger City brings together 12 sub-cities, districts, and 40 rural kebeles. Sebeta, Burayu, Legatafo, Lededadi, Sululta, and Gelan towns surrounding Addis Ababa from all directions are now parts of the newly formed city.
After months and months of military showdowns between the Government of Ethiopia (GoE) and the Tigray People’s Liberation Front (TPLF), a war broke out in October 2020. Ever since that first shot was fired that historically unfortunate night, hundreds of thousands of people have lost their lives, while millions have been displaced.
Talking about how blessed Ethiopia is with natural, historical, and cultural assets has almost become cliched. It wouldn’t be newsworthy if someone pointed out how this lovely nation of ours hasn’t been able to effectively capitalize on these riches. Before 2019, Ethiopia’s tourist sector had experienced consistent growth, but not always to the full extent of its potential.
Prime Minister Abiy Ahmed made a name for himself as an African reformer because of the successive policy changes he introduced to liberalize one of Africa’s closed economies. The licensing of the second telecom operator, Safaricom, which ended Ethiopia’s 127 years of telecom monopoly, has indeed sent a strong signal about Ethiopia’s commitment to build a digital economy.
Since the founding of the first bank in the early 20th century, the banking sector had witnessed the heavy-handed interventions of the government. Since NBE started functioning as a central bank as stipulated in Proclamation No. 206 in 1964 this role of the government has continued.
Despite the lack of independence, the central bank has had relative competence in the way its governors execute their duties. There have also been proclamations that limit the government’s excessive interventions and borrowing. These restrictions enabled the bank to control inflation and other economic anomalies. However, the restrictions were lifted in 2008. Since then, inflation has become a major nuisance in the economy, among others.
Since the start of the war between the Government of Ethiopia (GoE) and the Tigray People’s Liberation Front (TPLF) in November 2020, the relationship between the USA and Ethiopia has strained. Ever since, Washington has been throwing every punch at its disposal at Abiy Ahmed’s administration.
Following the tensions, public figures and government officials have repeatedly downplayed the importance of maintaining good ties with Washington. Public protests demeaning the US and its actions quickly became common, organized by city and state administrations. It was an exercise in futility considering the irreplaceable role the US plays as Ethiopia’s single largest humanitarian donor and development partner.
Ever since protests began in the State of Oromia back in 2013, Ethiopia has hardly been able to breathe the air of peace. Then, the protests intensified following discontent among the youth claiming the expansion of Addis Ababa into the State of Oromia was detrimental and unfair to farmers in the area. Later, the protests expanded as the youth in the State of Amhara joined the demonstrations.
