Why Ethiopia: The real and the more interesting answers

While awaiting my visa approval in the States (see previous post), I figured I’d take a moment to answer one of the most common question I’ve received when telling people about my next move: “Why Ethiopia?”

Ethiopia is in East Africa, bordered by Somalia to the East, Kenya to the South and Sudan to the west

To be honest, I didn’t really choose Ethiopia. It was more the first solid opportunity that fit. 

The program that I’m doing (TechnoServe) matches people to its on-going projects based on a number of factors: namely skillset, experience, and language/geographic preference. TechnoServe (more to come on them in a later post) has presence across developing markets in a wide variety of industries. When I was accepted into the pool of candidates, I’d listed Africa as my geographic preference since my Spanish is not business-proficient enough for South/Central America and I’d recently visited southeast Asia. The coffee project in Ethiopia (more to come on that in a later post) was simply the first opportunity that came up that matched my background (finance) and my geographic preference. It also was a convenient continuation of my coffee experience (first with cooperatives in Ecuador and secondly with a roasting cooperative in Chicago), so it just seemed right.

But that answer does not make for a good or interesting blog post…The more interesting reasons why Ethiopia excites me only arose after I’d already accepted the role and began researching the country more:

Ethiopia is at a critical inflection point in its development due to converging trends (political, economic, and demographic), which all make it a very exciting time to move to the country.

Warning: The remainder of this post is relatively lengthy (posts will inevitably be shorter when I have less time). It also represents my somewhat well-researched, but certainly initial understanding of key trends in the country.

Political

To understand the important political inflection-point that Ethiopia faces, it is important to have a small dose of historical context. For anyone familiar with global politics, this may not be too informative. But it was all news to me as I researched the country. Consider this a “Ethiopian Politics 101”, with undoubtedly more detail and nuance [and corrections] to come as I learn more on the ground.

For starters, Ethiopia is the only country that was not colonized by Europeans during the 19th and 20th centuries – a fact that Ethiopians take significant pride in. This doesn’t mean that Europeans never tried though. Italy twice tried to invade the country (1895 and 1935), and did have partial rule over the country from 1935-1941. Some key dates:

  • 1928 – 1974: Emperor Haile Selassie, the key figure in modern Ethiopian history, ruled the country from 1928 (King in 1928, Emperor in 1930) until a military coup in 1974. 
  • 1974-1991: The military coup of 1974 installed communist rule [known as The Derg]. The initially popular regime ultimately fell out of favor during a period which is now called “The Red Terror” when famine killed thousands and political opponents were jailed or killed. To oversimplify, the Horn of Africa was commonly viewed as a pawn used by Cold War powers (Ethiopia by the East, Somalia by the West).
  • 1991-2018: After years of fighting and political unrest, the Ethiopian People’s Revolutionary Democratic Front overthrew the Derg. A new constitution in 1993 established ethnic federalist democracy and divides Ethiopia into ethnically-based states (Ethiopia has 80 government-recognized ethnic groups). During this time, Ethiopia was largely controlled by the Tigray minority group which maintained power through several controversial elections.
  • 2018-2019: Amidst civil unrest and strong opposition, the ruling prime minister abruptly steps down in an attempt to stabilize the state of politics and is replaced by Abiy Ahmed (one of Time Magazine’s 100 Most Influential People). Abiy, a young (Africa’s youngest head of state) and well-educated leader, placed emphasis on driving towards unity and stability in the country.
Abiy Ayed’s appointment and subsequent reforms generate optimism for democracy in Ethiopia (Photo by YONAS TADESSE / AFP) (Photo credit should read YONAS TADESSE/AFP/Getty Images)

Under Abiy’s leadership Ethiopia has experienced significant political reforms driving towards a freer democracy. In the last year, the country has made progress towards making peace with neighboring Eritrea, freeing of political prisoners, increasing freedom of press, and increasing access to government (for women and minority ethnic groups). However, the increased openness in the country has allowed for increased criticism. The rapid pace of reforms have de-stabilized parts of the country by allowing for such criticisms to be in the open. The result of this has been increased ethnic conflict and significant internal displacement. In the last year, nearly 3m Ethiopians have been displaced– a 4-fold increase over the previous year, the largest displacement globally, and the 4th-largest globally since 2008.

Recent internal displacement has created political unrest

Many Western eyes are on Ethiopia as the country drives towards critical elections in 2020. If the government is able to keep conflicts at bay, maintain stability, and hold a peaceful election, the country could prove to be a model for democracy throughout the region. However, the government may have to tighten its control in order to maintain stability if conflicts prove to be too disruptive, which would be a significant step back for the potential of democracy in the country.

Being able to witness some of the lead-up to the 2020 elections and be in the country at such a pivotal moment will be a once-in-a-lifetime opportunity.

Economic

Ethiopia has come a long ways since Michael Jackson wrote “We Are the World” in 1985 to support famine and poverty relief in the country. Since 2002, Ethiopia has experienced steady and consistent economic growth between 8% and 12% annually, becoming Africa’s fastest growing economy last year.

This growth has been in-part fueled by foreign aid investment (first from the US and more recently from China), government spending, and growing urbanization. The start of recent economic expansion is not coincidental. Following 9/11, the United States significantly ramped up its aid to Ethiopia with an aim of stabilizing the country to prevent the spread of radical Islam in the region (especially given Ethiopia’s proximity to and history with Somalia). China’s recent investments in the region have been mostly rooted in an interest in establishing influence and developing diplomatic relationships across the continent during a time when US aid is waning. 

Despite significant investment from foreign governments, private foreign investment has largely overlooked Ethiopia flowing primarily into neighboring Kenya. For a number of reasons, Ethiopia consistently ranks towards the bottom of the World Bank’s Ease of Doing Business Index, which has made it hard to capture private investment. Addressing these issues (such as consistent access to electricity or internet and ease/cost of transportation) will be crucial in helping Ethiopia tapping into private capital sources.

Government spending on infrastructure (mostly transportation and telecom) and government-led manufacturing projects make up a significant portion of recent economic growth. Urbanization (fueled by government infrastructure spending) has also resulted in expansion in the services industry, largely through tourism. Reliance on government spending to fuel growth contributes to an underdeveloped private sector with limited competitiveness. Finding ways to provide access to credit / capital for microenterprises will be critical to continue economic expansion.

Significant economic growth has helped reduce poverty rates and improve living conditions for many, but there remains opportunity to ensure growth continues increase quality of life throughout the country. To paraphrase from a colleague, hunger (and extreme poverty) is not widespread in Ethiopia, but a significant portion of the population remains very poor. For example, roughly half of the rural populations lives on less than $2/day and Ethiopia’s garment workers were recently listed as the lowest paid globally earning as little as $26/month.

It will be exciting to experience a country during a period of such tremendous growth with further potential to accelerate its growth. It will be further rewarding to hopefully support that development in a way that intentionally aims at ensuring that continued GDP growth translates directly to poverty reduction and equitably improves lives.

Demographic

Amidst the political and economic environment, Ethiopia has experienced significant growth in its youth population. Similar to many developing countries where poverty rates are declining, death rates have decreased (both among youth and adults) while birth rates have yet to decrease at the same rate. The result is both a population boom and a decreasing median age for the country. 

Because Ethiopia’s development has been so sudden and so recent, the country is now one of the fastest growing by population and one of the youngest countries in the region. Roughly 70% of the ~100m Ethiopian population is under the age of 30 and the median age in the country is 18 years old.

The large and growing youth population creates both a challenge and an opportunity. On the one hand, the large youth population represents a significant number of mouths to feed, children to educate, and young adults to employ. But if managed appropriately, the youth population has significant potential to transform the country and accelerate development. Ethiopia appears to be on solid track to tapping into the potential of the youth population, but still has a ways to go.

For starters, the educational attainment of young Ethiopians is far greater than previous generations. The educational enrollment rate of elementary-aged children in the country has grown from 3% in 1961 to 29% in 1981 and a promising 86% in 2015. While still not only serving 15% of the population, the higher education system has also rapidly expanded. The country has gone from only 2 universities in the countryin 2000 to 42 universities today.

Though Ethiopia is doing a commendable job of training youth to participate in the workforce, the economy is not providing enough jobs to employ the ~1 million youths that are entering the workforce every year. The increasing youth unemployment rates have forced many to leave the country and have fed some of the recent civil unrest. Having a role to help promote economic develop to harness the youth population will be exciting.

As these trends converge, you can start to see the excitement and optimism that many have for the country. If managed effectively, there is tremendous potential for Ethiopia to establish a stable, functional democracy that paves the way for the country to leverage its growing and increasingly educated workforce to drive continued economic expansion. Living and working in the country at this moment presents a unique opportunity to experience first-hand both the optimism for achieving the potential and the fragility of that potential.

Categories Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close