Ethiopia’s image suffered immensely following the 1984 famine which claimed millions of lives. By 1998, the country hadn’t escaped its troubles, and it seemed more challenges were ahead. The destructive conflict with Eritrea around this period wrecked the economy, resulting in mass poverty by 2000.
The East African nation heavily depends on agriculture and is arguably the largest coffee producer in Africa. The country’s commitment to rebuild and eliminate poverty is in fact bearing fruit. Between 2005 and 2011 poverty fell sharply from 44 percent to 30 percent due to continuous growth. Its progress was particularly driven by government subsidies in agriculture accompanied by efforts to diversify the economy. As a result, manufacturing, construction and tourism industries have attracted investments over the years.
State-owned companies have been key players in the economy. However, the country is gradually shifting towards a market led economy and has privatised several state-owned enterprises. The finance sector remains restricted to non-natives – there’s been little progress to liberalise it. Evidently, consistent political and social reforms have contributed to the unprecedented growth – perhaps speeding up economic reforms should be a priority to ease forex shortages. Without addressing the forex issue many companies could suffer or even stall growth.
Ethiopia has progressed significantly but remains a low income country. The country’s growth typically averaged 9.9% per year between 2007 and 2018, according to the World Bank. Making it the fastest growing economy in the continent followed by Ivory Coast and Rwanda. Ethiopia’s outlook has been optimistic so far and if the government persist with reforms poverty will decline rapidly. Although the government is on the right path, there’s still a long way to go.