Look ye yonder, Ethiopia is the next frontier of trade, and economic hub

Ethiopia, Africa’s second most populous country after Nigeria, has suffered military rule, civil war and catastrophic famine over the past half-century. But in recent years, it has emerged as a major power in the Horn of Africa with rapid economic growth and increasing strategic importance under Prime Minister Abiy Ahmed.

In June 2017, Ethiopia topped the emerging markets and developing economies in the “World Bank Global Economic Prospects Report”, which named it as the second fastest-growing economy on annual percentage change in gross domestic product (GDP).

Ethiopia is poised to continue its impressive socioeconomic march. With infrastructure development plans, it’s investing in itself, creating structures, roads and transport systems necessary for growth.

Its economic capacity is undeniable. As reported by the federal government, their Growth and Transformation Plan (GTP I) left them with substantial GDP, infrastructure and social growth. Now implementing their GTP II, Ethiopia is putting in place developmental goals aimed at growing them into “a low middle-income country by 2025”.

Investment opportunities

Ethiopia is an emerging country with vast investment opportunities including agriculture and horticulture, tourism, textiles and leather, energy production, mining and construction materials. Its steadily rising GDP reflects economic growth. Its market potential has been fuelled by a large, budding consumer base — its population exceeds 100 million — and their prime location. Bole International Airport is a busy hub anchored by Ethiopian Airlines, an African airline, and Star Alliance partner. Perhaps the most interesting thing about the airport is that they allow foreigners to go through immigration first.

There is a greater opportunity for multinationals to see Ethiopia as the new frontier for investment. The big question would be whether local companies will cede ground, especially to firms with the potential of shoving them out of the market. There would also be the question of whether the government would still allow a liberal market in the face of stiff competition from foreign companies.

Kenyan franchises seem keener to explore the virgin market, going by the activities at Safaricom, Equity Bank and KCB Bank. Their arrival in Ethiopia will certainly boost investment and trading opportunities in the region. This is already discounting American, European and Asian interests in Ethiopia.

It would be an opportunity missed if Kenyan firms didn’t show an interest in Ethiopia. Other than telephony and financial firms, others should also come in, now that Lamu Port is already up and running

There is this bit of how long a honeymoon should take and what happens if it ends prematurely. Everything that now goes on in Ethiopia will last for as long as the political situation is checked and is favourable.

 Political instability will remain high in Ethiopia into the future, given the civil conflict in Tigray region and the much delayed elections. The implication of this is that prospects of political stability in Ethiopia remain grim in the short term as the government faces mounting challenges.

Power strategy

Increased security concerns will definitely limit foreign investments and constrain growth in the short term. The UAE’s soft power strategy to reinforce stability and strengthen economic opportunities is a welcoming gesture to the region. The Rift Valley cuts Ethiopia through the middle, but River Nile seems to cut off Ethiopia from its neighbours and would-be greatest business partners.

Egypt and Sudan will seek to leverage mounting challenges Ethiopia faces to negotiate a binding pact, but one that won’t happen in the immediate future. It, therefore, remains to be seen if the World Bank’s upturn projections will come to pass. After all, Ethiopia is Africa’s seventh biggest economy.

In my previous two trips to Ethiopia, I can attest to many changes. It is a beautiful country with social people but noticeably deeply reserved and conservative, unpredictably, who shyly mince their words when they talk about the political affairs of their country and perhaps this is something attributable to their culture — a sharp contrast to our country where almost everyone talks politics from sunrise to sunset.

[email protected].