Persistent political instability
In 2019, the prestigious Swedish Academy awarded the Nobel Peace Prize to Abiy Amhed, among other things for his reconciliation work with Eritrea, which resulted in the signing of an armistice, but also for his role as national reconciler, first with the Oromo minority, then between the ethnic groups that clash locally in several regions of the country. But his medal was obviously tarnished by the war in Tigray, which broke out in November 2020, in particular because of the atrocities committed by the regular army allied to the Eritrean army and the Amhara Fano militia, who perpetrated serial murders and rapes to the point of speaking of a Tigrayan genocide. The armistice was finally signed in Pretoria between the Ethiopian federal government and the Tigray rebel authorities on November 2, 2022. Today, Abyi Ahmed is still at the head of the ship, while his desire to disarm the ethnic militias of each region has led to new upheavals in Amhara, where the powerful Fano are unwilling to lay down their arms.
Chronic famine and food insecurity
The war in Tigray, home to 6 million people, has caused as many deaths by gunshot as by starvation. Today, the situation is tense, with humanitarian NGOs trying to make up for the chronic lack of food for 5.5 million people, particularly refugees. In addition, on a national scale, the fragmentation of land into small plots, demographic pressure (over 116 million people) and its consequences on the environment, and the State's retention of land ownership partly explain the situation. The government has embarked on a vast, albeit controversial, program to relocate landless populations to under-exploited fertile regions. Despite considerable water resources, access to drinking water remains erratic outside the major cities.
Agriculture vital to the country
Occupying 70% of the workforce, compared with 85% previously, agriculture contributes just under a third of GDP. Despite a wide diversity of crops, including cotton, cereals, oilseeds, fruit, vegetables, spices and flowers, agricultural production is dominated in terms of profitability by coffee, which is the main export (35%) and provides a livelihood for 12% of the population. Although not officially encouraged, the cultivation of khat is the country's second-largest export, and accounts for a significant and growing share of agricultural revenues.
Considered a veritable breadbasket in Africa, Ethiopia is still struggling to feed its own population and develop its agricultural exports. A poor, underfunded agricultural policy explains the underdevelopment of Ethiopian agriculture. Almost all cultivated land belongs to smallholders for whom mechanization is inappropriate. These plots, traditionally tilled with oxen and ploughs, can only provide subsistence production, creating dramatic situations in the event of unfavorable weather conditions. What's more, despite government subsidies, the use of fertilizers is still confidential and little land is irrigated.
Livestock facing unprecedented drought
The other wealth of Ethiopia's primary sector is its considerable livestock population. With around 30 million head of cattle, 25 million head of sheep and 20 million head of goats, plus millions of donkeys and camels used mainly for transport, Ethiopia is the continent's leading livestock producer. Many semi-nomadic peoples are inveterate pastoralists. However, the country's semi-arid zones have experienced unprecedented drought in recent years as a result of global warming. Nearly 340,000 people are affected in the Omo Valley.
Worrying deforestation
In rural areas, people still rely on traditional sources of energy, such as animal dung, but also wood and charcoal, whose over-exploitation is one of the reasons for deforestation. Properly managed, forest resources could provide a significant source of income, but given the alarming state of the world's forests, conservation and reforestation are the top priorities. The exploitation of fossil fuels, as well as better use of the formidable hydroelectric and geothermal potential, would be able to meet the ever-growing energy needs of a country devoid of oil resources.
The "African Tiger" holds its own economically
Ethiopia's industrial sector, which includes cut flowers, food, beverages and textiles, is very dynamic (20% of GDP) but employs only 7% of the working population, in contrast to the service sector, which now employs 40% of the working population (and represents as much in GDP). To revitalize the industrial sector, damaged by over fifteen years of Marxist management, the government has embarked on a vast privatization plan and attracted numerous international companies, notably Chinese. The leather sector is booming, and major textile brands are not hesitating to set up shop in the country. Until the war in Tigray, tourism helped boost the tertiary sector. Despite these initial successes, Ethiopia's economy is still very fragile, all the more so since the Covid-19 crisis in 2020 was followed by the war in Tigray from 2020 to 2022, and the country is currently experiencing turbulence in Amharic. The country's GDP, which is growing by almost 10% a year, will reach US$ 1,098 per capita in 2022, compared with US$ 361 in 2010. It remains to be seen whether this growth will benefit only the emerging middle class (20% of the population) or begin to affect the poorest, who make up the majority.
Midroc, the Al-Amoudi empire
Ask any Ethiopian who the richest man in the country is, and you're sure to get the answer Al-Amoudi. This Ethiopian-Saudi entrepreneur has taken advantage of the government's vast economic liberalization program over the past fifteen years. Today at the head of a veritable empire, Sheikh Mohammed Al-Amoudi has invested in sectors as diverse as construction, services, textile production, gold mining and agriculture, and has made the Addis Ababa Sheraton one of the most luxurious hotels on the continent, the emblem of his prestigious success. In addition to his personal industrial and business career, he is known for his generosity, expressed in his involvement in numerous charities and urban renewal projects.
Textiles, the spearhead of industry
Ethiopia has become "the world's new workshop" since the arrival of British retailers Tesco and George, but especially since the installation of the world's No. 2 clothing company, H&M, which has produced many items in Ethiopia. The result of a hypervolontarist policy that has just led to Ethiopia joining the Brics in 2023. The government's aim is to make textiles and clothing the spearhead of the country's economic development. The country's largest factory, Ayka Addis Textile, the Ethiopian subsidiary of the Istanbul-based Ayka Tekstil Group, is running at full capacity in the Addis Ababa suburb of Alem Gema. At between €50 and €60 a month, an employee now costs ten times less than in China. What's more, the country has 10,000 hectares of organic cotton production, sold to a major German distributor. Ethiopia also intends to make the most of its leather production, since with 72 million head of cattle, it has the largest herd in Africa.
Diversified export resources
Long under-exploited, Ethiopia's subsoil, which includes deposits of gold, tantalum, iron, lignite, tin, copper, nickel and potassium, is becoming one of the country's great riches. The mining sector is booming and is expected to account for 10% of GDP in the next few years (compared with 4% at present). Salt, mined in the north-east of the country, also contributes to the national economy. Coffee remains one of the pillars of the Ethiopian economy. Efforts in recent years have paid off, with increased Arabica production (500,000 t) boosting export earnings. Other products export well: oilseeds, khat, cereals, leather, gold and livestock. Horticulture and spice production are also encouraged. Imports mainly concern oil, agricultural and industrial capital goods, automobiles, fertilizers and pharmaceuticals, cereals and textiles.
Cut flowers: a global business
What's more, in just a few years Ethiopia has become the world's fourth-largest producer of cut flowers, behind Ecuador, Colombia and Kenya. The horticultural sector has become the country's fifth-largest source of revenue. Roses exported to Europe (notably the Netherlands, Germany, Belgium and Norway) brought in $350 million in 2022. What's more, companies are buying up land here to cultivate their own flower crops. The business is highly profitable, and Ethiopia's proximity to Europe makes it almost as competitive as Kenya. So when you see roses being sold on the street in France, chances are they come from Ethiopia!
Hydraulic dams, the energy solution
Estimated at 45,000 MW, the second largest on the continent after Congo-Kinshasa, Ethiopia's hydroelectric potential is the driving force behind the country's industrial development, as it aims to become Africa's leading exporter. Ethiopia already exports part of its electricity production to Djibouti, and in the long term would like to export to Kenya and South Sudan. To this end, 9 billion euros have been earmarked for the construction of two dams: the Grand Ethiopian Renaissance Dam (one of the world's largest at 5,250 MW) on the Blue Nile, and Gigel Gibe III (1,870 MW) on the Omo. Added to this is the construction of 8,000 km of power lines to mesh the country, giving it an electrical generation capacity of 4,228 MW, compared with 378 MW in 1991! These pharaonic dams created controversy (population displacements). The Renaissance dam is causing diplomatic clashes with the countries downstream (Egypt and Sudan), but it has to be said that before it, sharing was unbalanced in favor of these countries, which should enable a compromise to be reached in the long term.
Well-developed infrastructure despite difficult terrain
In a country whose geography is unfavorable to transport, roads are a national strategy. The main asphalt roads, which are severely tested during the rainy seasons, are the subject of a costly maintenance policy supported by major foreign companies, most of them Chinese at present. Ethiopian Airlines, the national airline, is very efficient and serves more than fifteen cities throughout the country. The post office, which operates solely in the form of P.O. boxes, is quite efficient. Cell phone coverage is constantly expanding. The Internet, which is attracting a great deal of interest here, is well established, but still suffers from slow connections. The government has agreed to significantly reduce inequality and poverty, devoting 70% of public spending to social programs.
Transportation as a strategy for economic development
The new rail link between Djibouti and Ethiopia was completed in 2017, relieving road transport of 3,500 t of goods per year to Djibouti and the Red Sea. It offers Ethiopia, which is undergoing rapid economic expansion, rapid access to the sea, which is strategic for imports/exports (90% arrive via this port), particularly for trade with China. In fact, it was China's main partner that financed the $4 billion project via Exim Bank and carried out the work via the China Civil engineering Construction Corporation (CCCC), as is the case throughout the country. Another ambitious project is a $470 million electric urban tramway in Addis Ababa, 85% financed by China. A first in sub-Saharan Africa! The first two north-south and east-west lines of the Addis Ababa Light Railway were inaugurated in 2015, enabling more than 60,000 Ethiopians to travel around the capital.
Tourism at half-mast due to political instability
With its unique natural and cultural heritage, Ethiopia has undeniable assets to make it one of Africa's top tourist destinations. After long suffering from a tarnished image (authoritarian regimes, famines, civil war, strained relations with neighboring countries), the country has seen a surge in tourism, unfortunately wiped out by the war in Tigray from 2020 to 2022. The Omo valley and its tribes, and Harar in the east, continue to attract a few tourists, but the Amhara country, which was still a safe bet with Lalibela, Gondar and Lake Tana, is now seeing its tourist sites deserted by the new tensions that have been playing out in these territories since March 2023.
