Ethiopia

In-depth country-focused analysis on Ethiopia's economic, political and operational risk environment, complemented by detailed sector insight

Ethiopia

Our comprehensive assessment of Ethiopia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Ethiopia, as well as the latest industry developments that could impact Ethiopia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Ethiopia before your competitors.

Country Risk

Ethiopia Country Risk

BMI View:

  • Ethiopia will remain one of the highest growth economies in Africa over 2016 and 2017 as the state drives large-scale investment in the economy. We expect the government's continued investment into improving infrastructure and the agricultural sector will provide opportunities for the population to become increasingly engaged in the economy.

  • We expect monetary policy in Ethiopia to remain loose over the year ahead as the National Bank of Ethiopia increases money available for lending to the government. Furthermore, we do not expect the National Bank of Ethiopia to devalue the currency given the risk associated with a pass through to inflation.

  • The Ethiopian government will drive up capital expenditure in the next two years in line with its ambitious budget announced in 2015. Ethiopia's budget deficit will rise to a peak of 3.1% of GDP over the next two years as the...

Ethiopia Operational Risk Coverage (5)

Ethiopia Operational Risk

BMI View:

BMI View: Investors face a high degree of threat from Ethiopia's internal crime environment, which reflects elevated crime rates and the low police force capability. Foreign investors and expatriates are likely to be targeted for criminal activities, from which businesses have limited protection due to the lack of an effective police force and high levels of endemic corruption. A growing security threat stems from the re-emergence of political violence and instability, which has potential to spread throughout the country and disrupt business operations, discourage tourism and hinder infrastructural development. These threats are heightened by the regional instability in the Horn of Africa and the significant threat of interstate conflict and attacks from international terrorist groups. However, these risks are partially counterbalanced by the...

Ethiopia Operational Risk

BMI View:

BMI View: Ethiopia's burdensome and expensive trade procedures and the high risks of congestion and delays due to heavy reliance on few motorways and a single rail route significantly increase logistical costs for businesses. While fuel and electricity prices in Ethiopia are low, firms are vulnerable to power shortages due to the country's reliance on hydropower and poor transmission and distribution infrastructure. Businesses will face additional costs associated with a poor access to water resources and low internet speeds and penetration. Ethiopia receives a score of 30.6 out of 100 for Logistics Risk, ranking the country 29th out of 48 states in SSA.

The most significant logistical challenge for businesses in Ethiopia stems from its expensive and cumbersome trade procedures, a...

Ethiopia Operational Risk

BMI View:

BMI View: Ethiopia's large working-age population and low labour costs have attracted significant investor attention, particularly given the country's manufacturing potential. However, a lack of technical and advanced skills among the labour force, high employee rotation and poor access to health care increases operational risks for businesses. Labour costs will therefore be heightened by the need to train employees and recruit foreign workers, as well as due to...

Ethiopia Operational Risk

BMI View:

BMI View: The main risks to Ethiopia's positive growth outlook include restricted access to credit for businesses, an over-reliance on government investment and threats to the agricultural sector, which dominates Ethiopian exports. Ethiopia's government is strongly committed to improving the operating environment to attract foreign investment, which will provide investors with more favourable incentives than in neighbouring countries, especially for the manufacturing sector. Currently, businesses face considerable operational risks, which are heightened by corruption. Ethiopia receives a score of 33.5 out of 100 for Trade and Investment Risk, ranking 26th out of 48 countries in...

Ethiopia Operational Risk

BMI View:

Ethiopia is one of the most attractive markets in Sub-Saharan Africa on account of its promising economic outlook, large pool of available labour and abundant natural resources. Nonetheless, the country is currently operating well below capacity on account of a crumbling internal transport network, poor infrastructure, restricted access to credit, over-reliance on government investment and foreign aid, a largely unskilled labour pool, pervasive corruption and a heightened political risk profile. In addition, there has been a considerable increase in security risks due to regional insecurity in the Horn of Africa, aggressive rebel factions, growing terrorism threats and a concomitant heavy-handed crackdown on dissent and opposition-led insurgencies. Investors also face a high degree of threat from Ethiopia's internal crime and security environment, which reflects elevated crime rates and the low police force capability. Ethiopia scores a low 36.1 out of 100...

Ethiopia Industry Coverage (3)

Agribusiness

Ethiopia Agribusiness

BMI View:

BMI View: Production prospects look broadly favourable for Ethiopian agriculture over the long term. This will largely be due to more investment in the sector, along with higher incomes contributing to consumption growth. We believe the sugar sector has the most potential, as investments in new sugar refineries will make sugar one of the few reliable agricultural exports over the forecast period. In terms of grains, the country's food security will remain in a precarious situation due to recent droughts linked to El Nino. Moreover, even with recent multinational interest in the country's farmland, Ethiopia is most likely to remain a...

Infrastructure

Ethiopia Infrastructure

BMI View:

BMI View : Ethiopia will record the highest growth in Sub-Saharan Africa over our forecast period, growing at an annual average rate of 10.7% in real terms between 2016 and 2025. This strong growth will be bolstered by significant government spending on key infrastructure and substantial foreign direct investment flows, directed towards improved transport infrastructure, increased power generation and non-residential building. Nominal industry value will continue to rise, cementing Ethiopia's position as the largest infrastructure market in East Africa.

Latest Updates And Structural Trends

  • We forecast industry growth to reach 18...

Telecommunications

Ethiopia Telecommunications

BMI View:

BMI View: The Q1 2016 East Africa report analyses the latest industry, regulatory and macroeconomic developments within the telecommunications markets in Burundi, Ethiopia, Malawi, Rwanda, South Sudan and Sudan. These six markets are characterised by several challenging business dynamics, including low consumer spending power, high infrastructure costs, large rural populations with poor access and, some cases, politically volatile environments. Limited competition in several of these markets, along with unfavourable fiscal regimes, creates considerable downside risks to market growth. 3G and 4G subscriber penetration rates, as well as their share of total mobile subscriber bases, are expected to remain among the lowest in the world for the foreseeable future.

3G And 4G Subscribers to Increase Share of Total Mobile Market
East Africa Mobile Market Forecasts
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Latest Ethiopia Articles

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  • In this first instalment of a region-wide look at Sub-Saharan Africa's bala...

Latest Ethiopia Blogs

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  • The buzz around East African geothermal energy has been increasing in recen...

Latest Ethiopia Podcasts

  • Electrification rates in Sub-Saharan Africa are the lowest in the worl...

  • Africa's telecommunications sector has grown by leaps and bounds in re...

  • The increasingly important economic relationship between Asia and Sub-...

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