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Category: Economic Impact

devex: EU development chief calls for united response on Ethiopia

Posted on by Sami Mulaw

The European Union’s top representative for development aid said Tuesday that the bloc needs to “plan very carefully” when it comes to Ethiopia, as Brussels continues to withhold funding from the government over the conflict in the country’s North. In December, the European Commission postponed €88 million in planned budget support payments, with officials saying they could not give one euro to the government of Prime Minister Abiy Ahmed until unimpeded humanitarian access is granted to the Tigray region, among other conditions.

Jutta Urpilainen, EU commissioner for international partnerships, told reporters Tuesday that another five budget support payments, together worth €100 million ($120 million), are due in 2021.

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Bloomberg: Ethiopia Will Approach Private Creditors Only as Last Resort

Posted on by Tech Support

Yields on the Horn of African country’s $1 billion of Eurobonds due in December 2024 fell for the first time in four days, sending prices higher. Rates dropped 65 basis points to 8.49% by 12:47 p.m. in London. Yields on the notes soared to nine-month highs after the government’s announcement on Jan. 29 that it wants to restructure external debt under a Group of 20 program.

While the Finance Ministry said earlier this month it may seek talks with private lenders such as bondholders or commercial banks after negotiations with government and public-sector agencies are completed, many investors have continued to offload the securities amid the uncertainty of the potential outcome.

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Sesame shortage hits commodity market

Posted on by Eyasu Berhe

The conflict in Tigray region, one of the largest producers of sesame in Ethiopia, also resulted in the supply gap. “Producers of sesame in the region have not been able to sell their items to exporters because of a supply disruption as a result of the fighting in the region,” said head of corporate communications of the Exchange during the session.

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Ethiopia is the New Frontier in Garment Manufacturing, but Ethnic Conflict Stands to Hinder its Growth

Posted on by Eyasu Berhe

But for the past two months, violent conflict in Ethiopia’s northern Tigray region fueled by ethnic power politics has threatened the country’s stability.’ ‘The scale of the conflict could scare off foreign investment in the country’s garment industry, a sector that is hugely important to Ethiopia, as it is aimed to propel its agricultural economy toward a more prosperous future built on providing clothing to consumers in the West.’ ‘In addition to this already-strained business context, the report we published points to what we saw as the greatest challenge of all: ethnic tensions. In Hawassa, for instance, ethnic tension erupted in July 2019 and caused disruptions to the industrial park. The new conflict in Ethiopia’s Tigray region could be the tipping point for foreign investors in the garment industry.’

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End of the peak season that never was

Posted on by Eyasu Berhe

“Even though there has been a considerable increase in the number of visitors after we reopened tourist sites with the necessary precaution, the trend did not linger as the fighting in Tigray broke out shortly after. With international media outlets reporting the war in Ethiopia and embassies issuing travel alert, bookings by tourists plummeted since the beginning of the fighting,” said Sileshi Girma, Director-General of Tourism Ethiopia – a federal government body tasked to market Ethiopia’s tourist attraction sites and heritages.

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Breakingviews – Ethiopia piles war risk on shaky economy

Posted on by Eyasu Berhe

“Another risk is the reaction from donors such as the World Bank. Aid made up nearly a quarter of government revenue last year, according to South African consultancy NKC. If funding is withdrawn because of the conflict, the budget deficit would balloon to over 30% of GDP, even before taking into account any extra military spending.”

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Facing War, Virus and Locusts, Ethiopia’s Once-Golden Economy Loses Its Luster

Posted on by Eyasu Berhe

For the past decade Ethiopia has boasted of one of the world’s fastest-growing economies, welcoming billions of dollars in foreign direct investment from the U.S. and China and lifting more than 20 million people out of poverty.

Now, a monthlong civil war, coronavirus lockdowns and historic locust infestations have left the once-golden economy stumbling, as it grapples with one of Africa’s most perilous debt loads, soaring inflation and the risk of a protracted insurgency.

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Ethiopia’s Economy in 2021

Posted on by Eyasu Berhe

“Investment, be it local or foreign, is unthinkable in 2021 as investor confidence has been eroded due to political uncertainty, a situation which may lead to an increase in unemployment rate and disruption of local supply chains that may result in a high inflationary pressure. So if the country becomes stable, it will be a year of a slight recovery from the crisis that we faced so far, but the chance of that happening is also very low as there is no end in sight for the political crisis,”

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The biggest casualty of Ethiopia’s brewing conflict will be its people, then its economy

Posted on by Eyasu Berhe

Ethiopia’s prime minister Abiy Ahmed is under pressure to end the conflict with its northern state of Tigray as the regional dispute gets closer to spiraling into a full-blown civil war which would impact millions of ordinary Ethiopians and devastate an economy which has regularly been hailed as one of the world’s fastest-growing over the last decade.

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