December 28, 2024
Ethiopia’s development model is showing signs of strain as weak institutions and human capital constraints hold back economic transformation, threatening its ambitions to compete with more dynamic East African economies.
A United Nations Conference on Trade and Development (UNCTAD) report released on December 23, 2024 shows Africa’s second-most populous nation ranking 169th globally in productive capacity, well behind regional peers Kenya and Rwanda, despite decades of public investment in infrastructure and industry.
The findings from the UNCTAD come as Prime Minister Abiy Ahmed’s government open up the county’s key sectors, including banking, and introduce several reforms targeted at building a market-led an economy.
Ethiopia scored just 30.5 out of 100 on UNCTAD’s Productive Capacities Index, compared with Kenya’s 37.8 and Rwanda’s 37.1, reflecting deep-rooted structural challenges:
Manufacturing contributes only 5.3 percent to GDP despite years of industrial policy, while Two-thirds of the workforce remains in agriculture.
Exports stay concentrated in traditional commodities. Education system fails to meet labor market needs.
The country’s much-touted growth plans- averaging over nine percent annually – but failed to generate broader economic modernization.
UNCTAD calls for comprehensive reforms emphasizing institutional strengthening and human capital development. The recommendations include improving policy implementation and governance, modernizing education and skills training, expanding technology access and building climate resilience.
But implementing such reforms could prove challenging amid political tensions, internal conflicts and economic pressures. Inflation remain in double digits while trade deficit remain high.
(BirrMetrics)
Ethiopia’s bid to rejoin AGOA falls short, again, as US maintains suspension in latest announcement
Ethiopia’s bid to rejoin the African Growth and Opportunity Act (AGOA) has once again fell short as the Office of the United States Trade Representative (USTR) maintained Ethiopia in the list of suspended countries in its latest announcement on 21 December.
The announcement confirmed that the list of African countries eligible for AGOA will remain unchanged for the upcoming fiscal year, preserving the agreement’s benefits for 32 eligible African countries.
Despite discussions by American trade officials in July to explore potential amendments to AGOA, the latest decision leaves Ethiopia’s suspension intact. Initially excluded due to the two years brutal war in the Tigray region and the rampant human rights violations that ensued, Ethiopia’s repeated efforts to regain AGOA eligibility have yet to succeed, marking another setback in its bid to rejoin the trade program.
Ethiopia’s latest efforts to rejoin the program when President Taye (then Foreign Minister) called for the restoration of Ethiopia’s status, urging the Biden administration to reconsider its decision.
President Joe Biden signed an executive order in November 2021 removing Ethiopia from AGOA following the escalation of the war, which started a year earlier in November 2020, and witnessed “gross violations of internationally recognized human rights.”
The decision had led to several foreign companies operating in Ethiopia’s industrial parks closing shops and leaving Ethiopia, as they had primarily targeted Ethiopia due to its eligibility for AGOA.
Ethiopia lamented the decision as “misguided” and said it “fails to take into account the commitment of the Government of the United States to value the wellbeing of ordinary citizens.” Ethiopia also argued the decision affects “the livelihoods of more than 200.000 low-income families mostly, women who have got nothing to do with the conflict.” In the announcement, Sam Michel, USTR Spokesperson, said that “based on the results of the annual African Growth and Opportunity Act (AGOA) eligibility review, which included a public hearing in July that was chaired by the Office of the United States Trade Representative, President Biden has determined to maintain AGOA benefits for each country currently eligible under the program. Therefore, the list of eligible and ineligible countries will remain unchanged for 2025.”
(AS)
World Bank staff question Ethiopia debt assessment reached with IMF, memo shows
Some World Bank staff have criticized an assessment of Ethiopia’s finances conducted with the International Monetary Fund, questioning whether the analysis that underpins the country’s debt restructuring may be “faulty”.
In an internal paper seen by Reuters, World Bank consultant Brian Pinto and its chief economist Indermit Gill assess the Debt Sustainability Analysis (DSA), dated July and prepared by the IMF and staff of the International Development Association (IDA), the World Bank’s fund for poorest nations.
The authors suggest that based on the DSA, Ethiopia is facing a short-term liquidity crunch, and not a long-term solvency issue, a point of contention between the government and holders of its USD one billion international bond that is in default.
“We found that the bondholders have interpreted the DSA correctly, but the DSA itself may be faulty,” Pinto and Gill wrote in the paper from earlier this month. “The disagreements about Ethiopia’s debt sustainability will be repeated as other countries become debt distressed.”
Asked about the paper, a World Bank spokesperson said: “We generally don’t comment on internal deliberations between the World Bank and the IMF, or any of our partner institutions.”
Ethiopian State Finance Minister Eyob Tekalign told Reuters IMF and World Bank teams had just revisited the DSA as part of the latest review of the Fund’s loan program and there had been no major change to the position.
A spokesperson for the IMF confirmed its staff visited Ethiopia in November for the second review of the Fund’s loan program, adding that each review includes an update to the DSA, without elaborating on its contents. The spokesperson did not comment on the memo.
Pinto and Gill did not respond to a request for comment.
Bondholders and Ethiopian officials have been in a tense standoff. At the heart of the debate is whether Ethiopia – as bondholders argue – faces a liquidity crunch, which could be addressed by rescheduling debt, or whether it has longer-term solvency problems that require debt writedowns known as haircuts.
The DSA said that some export-related indicators pointed to both liquidity and solvency pressures.
In October, Eyob told Reuters that writedowns were unavoidable and the DSA showed a solvency issue. Investors, in rejecting the assessment, have also slammed a government proposal that indicates an 18 percent haircut.
The comments In the paper suggest some World Bank staff sympathize with bondholders’ views.
“Based on the July 2024 DSA, Ethiopia should be trying to find ways to lengthen debt maturity and increase exports to address its liquidity problem, not asking bondholders to take a haircut,” Pinto and Gill wrote.
The report gives credence to years of complaints by the private sector over the DSAs and the levels of debt that countries can manage – and thus what amount lenders must write off when a country defaults.
Ethiopia became Africa’s third country to default on its international bonds in as many years in December 2023. Despite the relatively small size of its bond debt – compared with Zambia’s USD three billion and Ghana’s USD 13 billion – progress on restructuring has been slow and tangled in controversy.
IMF funding is often the sole financial lifeline available to countries in a debt crunch, and key to unlocking other financing sources – including World Bank backing – with delays in debt reworks adding yet more pressure on government finances, companies and populations.
Pinto and Gill have argued, opens new tab for some time for a change to the Debt Sustainability Framework for low-income nations, designed to inform borrowing decisions by poor countries.
The framework requires regular joint World Bank and Fund DSAs which analyze a country’s debt burden and vulnerabilities over the coming decade.
“It is hard not to conclude that Bank-Fund DSAs for Ethiopia have not provided accurate information to markets, nor perhaps to the Ethiopian government,” the authors said.
(Reuters)
NCAA Sanctions Ethiopian Airlines, Air Peace, Aero, Others
The Nigerian Civil Aviation Authority (NCAA) has announced sanctions against five airlines for breaching the rights of air passengers.
The NCAA initiated the enforcement action against the five airlines (two international and three domestic operators) for violations of Part 19 of the NCAA regulations.
The airlines violated NCAA rules, including not paying refunds within the stipulated time frame, not responding to the NCAA’s directives, missing luggage, manhandled luggage, short-landed baggage, and delayed and cancelled flights.
The director of public affairs and consumer protection (NCAA), Michael Achimugu disclosed this while speaking to journalists at the corporate headquarters of the Authority in Abuja on Tuesday.
While Achimugu did not disclose the airlines affected by the sanctions, sources close to the Authority disclosed that they are Ethiopian Airways, Royal Maroc Airlines, Arik Air, Aero Contractors, and Air Peace.
He said that although airlines are not always responsible for flight disruptions, NCAA regulations stipulate actions that airlines must take during disruptions and the failure to comply attracts various sanctions.
The Authority had recently warned that it would initiate sanctions if airlines fail to pay refunds within the stipulated time frame of 14 days for online ticket purchases and immediate cash refunds for tickets purchased by cash.
The incessant disruptions this yuletide has caused a surge in passengers’ complaints about delays and cancellations. Achimugu defended the airlines for most of the cancellations.
“We all know this is harmattan season, so there is poor visibility. Flights must get cancelled. This is force majeure, and the airlines do not owe passengers anything in those instances. The enforcement we are initiating today is on cases where the airline is deemed to have been at fault. More will come,” he explained.
Achimugu also assured that the Authority would summon the chief executive officers of all airlines this week to discuss flight disruptions and regulatory breaches.
(Leadership.ng)
Luban – Mozi College Marks New Chapter in Sino-Ethiopian Collaboration
The unveiling ceremony for Sinoma International Ethiopia Luban – Mozi College was held at the Ethiopian subsidiary of Sinoma International Engineering Co., Ltd. Zhang Yaru, Secretary of the Party Branch of the Sino-German Technology Department at Jinan Vocational College, and Meng Jiangtao, General Manager of Sinoma International’s Ethiopian subsidiary, jointly unveiled the college.
The college, Ethiopia’s first Luban – Mozi College, represents the collaboration between Sinoma International’s Ethiopian subsidiary and five Shandong vocational colleges, led by Jinan Vocational College. Named after Luban, symbolizing craftsmanship, and Mozi, representing wisdom, the initiative aims to foster technological exchange and cooperation between China and Ethiopia. It seeks to honor ancient Chinese craftsmanship while advancing modern technological innovation.
Speaking at the event, Meng Jiangtao reaffirmed the company’s commitment to the college’s success. He pledged full support for its courses, including Chinese language and skills training, to further strengthen Sino-Ethiopian ties in technology and culture.
Zhang Yaru extended her congratulations, emphasizing that the college represents a significant step in supporting the “One Belt, One Road” initiative. She highlighted its role as a platform for nurturing local talent equipped with both technical skills and cultural knowledge.
During the ceremony, Jinan Vocational College presented the Ethiopian subsidiary with “Direct to Chinese” teaching materials and handcrafted fans made by Chinese students, symbolizing cross-cultural exchange.
Following the event, the Luban – Mozi College faculty began offering Chinese language and technical training for local employees. These courses aim to enhance professional skills, broaden international perspectives, and equip participants with the tools needed for Ethiopia’s evolving industrial landscape.
Moving forward, Sinoma International plans to deepen its collaboration with educational institutions to build a robust pipeline of talent, supporting the company’s high-quality development and fostering stronger Sino-Ethiopian partnerships.
(Reporter)
BYD forays into Ethiopian market
BYD made its official debut in the Ethiopian market via a brand launch event in Addis Ababa, in collaboration with local distributor MOENCO, a subsidiary of the Inchcape PLC, a London-based company specializing in global distribution & retail services for premium and luxury automotive sectors.
During the event, BYD introduced five pure electric models, ranging from compact sedans to SUVs, including the BYD SEAGULL and the BYD TANG EV, catering to the diverse mobility needs of Ethiopian consumers. In addition, BYD unveiled its after-sales service center and showroom, offering local customers comprehensive and one-stop services.
Ramy Yao, BYD’s Sales Director for Africa, remarked, “Our entry into the Ethiopian market signifies a pivotal step in BYD’s expansion in East Africa. Ethiopia’s vision for electrification resonates with BYD’s objectives. Leveraging MOENCO’s extensive sales network and professional after-sales team, we are confident in propelling electric mobility forward in Ethiopia.”
Francis Agbonlahor, General Manager of Inchcape Africa, expressed, “We are excited to inaugurate a new BYD showroom in Ethiopia, marking the beginning of our brand partnership with BYD. The strategic alliance between MOENCO and BYD represents a significant milestone in the advancement of the Ethiopian automotive industry.”
To date, BYD has expanded its presence to 13 countries and regions across Africa, promoting the continent’s transition to green energy.
(Gasgoo)
TDAP hosts webinar to explore opportunities in Ethiopian auto, engineering goods market
The International Markets Development Division (Africa Desk) of the Trade Development Authority of Pakistan (TDAP), in collaboration with the Minister Trade & Investment in Ethiopia, successfully hosted a webinar titled “Explore the Ethiopian Market – Auto Parts and Other Engineering Goods.”
This event is part of a series of initiatives aimed at increasing awareness about trade opportunities in Ethiopia and encouraging Pakistani businesses to participate in the upcoming fifth Pakistan-Africa Trade Development Conference and Single Country Exhibition, scheduled to be held in Addis Ababa, Ethiopia, from May 14–16, 2025.
The webinar drew significant participation, with around 40 attendees from various sectors of the auto and engineering industries in both countries. Mian Atif Shareef, Ambassador of Pakistan to Ethiopia, graced the event as the chief guest.
In his address, he emphasized the need to strengthen bilateral trade ties and encouraged Pakistani companies to actively participate in the upcoming trade conference and exhibition to explore new market opportunities.
Basit Saleem Shah, Minister Trade & Investment in Ethiopia, provided an in-depth overview of Pakistan-Ethiopia trade relations and market dynamics. He highlighted the immense trade potential for Pakistani businesses in Ethiopia and neighboring East African markets, including Djibouti, Kenya, Nigeria, Somalia, South Sudan, Tanzania, Uganda, and Rwanda.
The webinar also featured contributions from prominent trade representatives: Adeela Younis, Trade & Investment Counsellor in Kenya, highlighted trade opportunities in Kenya and collaboration potential with Pakistani businesses. Samnoon Basra, Trade & Investment Attaché in Nigeria, discussed Pakistan-Nigeria trade relations and growth areas.
Ibrahim Khalid Tawab, Honorary Consul General of Ethiopia in Pakistan, shared his experiences of leading business delegations to Ethiopia.
Hundaol Fikadu, General Manager of EL Auto Engineering & Trading PLC, presented opportunities in Ethiopia’s engineering goods market. Representatives from Yasart Engineering, including Endris Mohammad, Arefeanye Tadesse, and Yohannes Mulu, offered valuable insights for Pakistani exporters. Umar Abdullah, CEO of Takbeer Die & Costing and Vice Chairman of Pakistan International Business Trade Industry & Commerce, shared his successful ventures in Ethiopia.
Muhammad Umar, a Pakistani entrepreneur in Ethiopia’s auto rickshaw and spare parts sector, shared practical insights on local market dynamics.
Samra, representing Ethiopian Automotive Industries, emphasized the untapped potential of Ethiopia’s automotive sector for Pakistani exporters.
This webinar marks another milestone in Pakistan’s proactive engagement with African markets under the “Look Africa Policy.”
TDAP remains committed to fostering trade partnerships and promoting Pakistani products in Africa, contributing to the diversification and expansion of Pakistan’s export portfolio
(Pakistan Observer)