By Samuel Getachew
ADDIS ABABA - After a brutal civil war lasting two years, Ethiopia’s government has been scrambling to rebuild its once booming economy with appeals to international donors and investors. But instead of turning the corner and focusing on revival, Prime Minister Abiy Ahmed, 2020’s Nobel Peace prize winner, finds himself stuck in the middle of another dangerous, emotionally-draining ethnic battle with yet another formidable regional adversary in Amhara.
This week Ethiopia’s finance minister Ahmed Shide called on investors to help raise $20 billion as part of a wider recovery plan to revive the country’s crippled economy and rebuild its damaged infrastructure. But instead, with the outbreak of skirmishes then full-fledged conflict between federal forces and Amhara’s Fano militia since November 2022, Ethiopia has taken a big blow to one of its most economically important regions.
Companies like Safaricom, which has been rolling out its M-Pesa mobile money service nationally since the start of the year, have had to curtail operations in the province. The government has declared a state of emergency and suspended internet services. Meanwhile, the international flower trade has had to suspend exports from the region. So far the local investment bureau estimates that more than $45 million of damage has been done with more than 3,000 jobs lost as the economy has slowed since the regional skirmishes took hold last November.
Amhara administrators have told local press they estimate it will cost nearly half a trillion birr ($9.5 billion) to rebuild war-ravaged areas in a region that has contributed more than a fifth of national GDP in recent years.
“Investment in Amhara was already struggling from the previous conflict with many assets looted and destroyed,” said a regional investor, who asked not to be named due to sensitivities around the ongoing conflict. “Everyone remains in a suspended state of mind not knowing what to do with fear of more unrest coming down the road.”
SAMUEL’S VIEW
It seemed like only a few years ago that Ethiopia was one of the fastest growing economies in the world. It was remarkable for a country with Africa’s second largest population of over 125 million people. That rapid economic growth brought international players who helped develop key investment across the country at industrial parks and local factories.
But now most foreign investors in the Amhara region are being impacted as a result of the recurring conflicts, including European breweries such as Bavaria, which was temporarily forced to halt production, and various Chinese manufacturers located inside the Hawassa industrial park in the Sidama region.
This follows the loss of tariff-free access under the United States’ Africa Growth and Opportunity Act (AGOA) preferences, withdrawn last year due to suspected human rights abuses during northern Ethiopia’s conflict.
With the growing influence of international investors in Ethiopia’s economy over the last decade of rapid growth, it is notable that there are now significant concerns about the volatility of the country. Many will likely take their chances elsewhere in the region.
Most of those impacted during the current conflict are international businesses such as flower growers from the Netherlands who helped the region create thousands of jobs and bring much needed hard currency to Ethiopia.
It will likely take several years for Ethiopia’s economy to fully recover from these spasms of conflict and in that time a decade of development and progress would have been squandered.
