Ethiopia has boldly embarked on a radical economic transformation. The recent liberalisation of the foreign exchange market, a cornerstone of broader reforms, has sent shockwaves through the nation. Questions abound as the Birr plummets and prices soar. Will this drastic shift unleash economic growth or plunge the country into deeper turmoil?

EBR’s Munir Shemsu dissects the complexities of Ethiopia’s economic overhaul. He delves into the government’s ambitious plans, the challenges businesses and individuals face, and the potential long-term implications. Is this a risky gamble or a strategic masterstroke?

The Need for Balancing Economic Interests With Rule of Law

Ethiopia’s proposed Asset Recovery Bill has sparked controversy. The bill grants broad powers to the government to seize assets suspected of being acquired through illegal activities, even without proven crimes. Critics fear the bill could be used to target political opponents and lacks sufficient due process protections. The retroactive application of the law is another primary concern. Legal experts, opposition parties, and even some public officials have raised concerns about the bill’s constitutionality. The lack of judicial oversight and the potential for abuse are significant risks experts raise. The Ethiopian government should carefully consider these concerns and prioritize upholding the rule of law. While asset forfeiture can be a tool to combat economic crime, strong safeguards are needed to prevent potential abuse. EBR’s Eden Teshome has spoken to experts and explored the experience of other countries to compile this report.

The Cost of Ethiopia’s Reliance on Foreign Contractors

Ethiopia has seen rapid industrial growth in recent years, facilitated by the construction of new industrial parks by Chinese multinational firms. While the government initially sought to involve local contractors in building these parks as part of a capacity-building initiative, the local firms needed help with infighting, delays, and poor-quality work. In contrast, the Chinese firms completed projects on time and with reasonable quality. As a result, the construction of significant infrastructure projects in Ethiopia, from industrial parks to government buildings, has increasingly been dominated by foreign contractors, especially Chinese ones. This reliance on foreign firms highlights the shortcomings of the local construction sector in Ethiopia, which has yet to demonstrate the expertise and reliability required for such large-scale, high-profile projects. However, this has its dents on the economy as the country spends meagre foreign currency on contractors, writes EBR’s Samuel Getachew.

Once lauded as Africa’s rising economic star, Ethiopia faces a persistent challenge: conflict. Over six years, the country has navigated a period of turbulence that has significantly impacted peace and security, posing a formidable obstacle for businesses operating within its borders. This article by EBR’s Samuel Getachew delves into the multifaceted impact of these conflicts, exploring the specific hurdles entrepreneurs face. Through consultations with business leaders and a comparative analysis of other countries’ experiences, the article proposes potential avenues for addressing these issues and fostering a more conducive environment for business growth.

Catering to Growing Demands, Values

Ethiopia, known for its diverse cultural and religious tapestry, has recently experienced a significant surge in demand for Halal products and services. This trend reflects a growing awareness of Halal principles, particularly within the country’s substantial Muslim population, estimated at around 34%, according to various studies.

This heightened awareness presents a significant market opportunity. Businesses increasingly recognise the demand for Halal-certified products, primarily focusing on food. However, the need for Halal-certified cosmetics, pharmaceuticals, and other goods is also emerging. This rise in Halal businesses presents exciting new avenues to boost exports, paving the way for increased investment and job creation.

However, the expansion of the Halal business sector needs some help. Ethiopia needs a robust national Halal certification system and a well-defined policy and legal framework. The infrastructure and logistics to create a truly enabling environment have yet to be fully established. These shortcomings hinder export performance and erode consumer trust.

Despite these hurdles, Ethiopia’s burgeoning Halal market holds immense potential. By addressing certification limitations and fostering adherence to Halal standards, Ethiopia can strategically position itself as a significant player in the global Halal industry. This article explores the proliferation of Halal businesses in Ethiopia, examining the driving forces behind this growth, the opportunities it presents, and the challenges it faces.

Globally, women still earn an average of 23% less than men, according to the International Labour Organization. This translates to significant financial losses for women throughout their careers, impacting their ability to save for retirement, purchase homes, and support their families. In Ethiopia, the situation is even starker, with women earning only around 63 cents for every birr (37% less than) men earn for similar works in urban and worse in rural. This disparity not only limits the economic security of women but also represents a missed opportunity for the nation’s economic development. Women constitute a significant portion of the workforce and their full economic potential remains unrealized due to this imbalance. EBR delves into the reasons why closing the gender pay gap is an urgent necessity, exploring its economic and social impacts, and outlining potential solutions to achieve a more equitable future.

Ethiopia’s booming real estate sector, boasting a remarkable 14Pct average annual growth over the past decade, faces a potential turning point. The recent implementation of a 14Pct credit cap by the National Bank of Ethiopia (NBE) has significantly impacted bank lending capacity, sending ripples through the industry. This article delves into the specific consequences of this policy, exploring its effects on key players and overall market dynamics, particularly in Addis Ababa.

Indeed, Real estate developers and individual sellers across Addis Ababa are grappling with a new reality. Despite price adjustments aimed at aligning with reduced buyer purchasing power, a noticeable struggle to attract buyers has emerged, while some developers are innovatively taking swift strategic moves to solve the looming financial gap in the sector. This shift can be attributed to the credit cap’s influence on loan availability, effectively limiting access to financing for potential buyers. EBR’s Eden Teshome sheds light on the multifaceted impact of the credit cap in the Real Estate sector.

Every year, Ethiopia imports billions of dollars’ worth of goods, an input for the manufacturing sector. The country now stands at a crossroads with a history of underdeveloped manufacturing due to past regimes. The concept of import substitution, replacing imported products with locally produced goods, presents a significant opportunity for businesspeople and investors. However, the path to success encounters challenges, particularly raw material shortages and forex scarcity. EBR’s Eden Teshome delves into the implications of these hurdles on Ethiopia’s industrial production and explores potential strategies to overcome them.

A Glimpse from Goldman Sachs Report

Goldman Sachs, a leading global investment banking firm, has made intriguing predictions of Ethiopia’s economy in their “Global Economics Paper: The Path to 2050.” While the exact details remain hazy, the report paints an optimistic picture of significant economic growth and transformation for the nation. Accordingly, in 2050, Ethiopia will have a USD 1.6 trillion economy, ahead of the USD1.4 trillion GDP of South Africa and Argentina. While it’s important to acknowledge the inherent uncertainties and treat any projections cautiously, Ethiopia has immense potential for economic growth and transformation in the coming decades. EBR’s Economic Research & Business Intelligence closely examines the report.

Unravelling the Potential of Supply Chain Finance in Ethiopia

The COVID-19 pandemic has presented significant challenges for the Ethiopian economy, affecting small and medium Enterprises (SMEs) more, while remittances declined and poverty levels worsened. While the Ethiopian government’s initiative to address these issues deserves credit, the potential of supply chain finance, a set of technology-based solutions that aim to lower financing costs and improve business efficiency for buyers and sellers, still needs to be explored. While the merits of embracing digital transformation, sustainability practices, and regional integration remain valid, Ethiopia can further employ the transformative power of supply chain finance to assist the private sector. EBR’s Nejat Ahmed explores.