EBR130 – Page 2 – Ethiopian Business Review

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.

Will Trade Liberalization, Local Production Uplift Consumers or Overwhelm Domestic Businesses?

The recent policy change in Ethiopia regarding industrial parks and trade liberalisation presents opportunities and challenges for businesses and consumers in the country. By allowing companies in the industrial parks to sell up to 50% of their produce locally and opening retail/wholesale sectors to foreign participation, policymakers aim to boost domestic production, increase competition, and stabilise market prices amidst persistent inflationary pressures. However, the implementation and impact of these measures remain to be seen. EBR’s Eden Teshome has spoken to key stakeholders – manufacturers and consumers – to understand how these policy shifts will likely reshape Ethiopia’s economic landscape.

The Evolution of Corporate Governance in Ethiopian Banks

Recently, the National Bank of Ethiopia (NBE) has issued a series of directives about the banking industry. These include directives such as “Requirements for Persons with Significant Influence in a Bank” and “Bank Corporate Governance.” One area that gained attention for reform is bank corporate governance. Deficient corporate governance practices in the banking industry have required repeated NBE interventions. In the past year alone, the controversies around Nib Bank and Amhara Bank and the subsequent NBE interventions indicate the situation.

The National Bank of Ethiopia’s (NBE) latest report reveals encouraging progress in the fight against inflation. In April 2024, the country witnessed a significant decrease in inflation rates compared to previous years. Year-on-year inflation fell to 23.3%, marking a substantial ten percentage point decline from the prior year. While food inflation remains relatively high at 27.0%, non-food inflation has experienced a remarkable drop to 18.0%. Many attribute the decline to the slowdown in money supply growth. The report suggests that inflationary pressures will continue moderating, with a projected year-on-year inflation rate of approximately 20% by June 2024. These developments signal positive strides in Ethiopia’s efforts to achieve macroeconomic stability, EBR’s Eden Teshome reports.

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Beyond Efficiency

The Cost of Ethiopia’s Reliance on Foreign Contractors

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Will Trade Liberalization, Local Production Uplift Consumers or Overwhelm Domestic Businesses?

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The Evolution of Corporate Governance in Ethiopian Banks

From Crisis to Control Ethiopia’s Inflation Story