Threat Assessment Report – Ethiopia

As one of the world’s ancient nation states, Ethiopia is the cornerstone of East Africa and an asset to the global powers. It is, however, seen as an authoritarian one-party society, which takes a toll on the country’s image, stability and attractiveness.

Ethiopia is in an unstable region with serious security and political stability issues. Relations between Ethiopia and Eritrea, formerly at war, remain tense. The instability in Somalia is a threat to neighboring countries, Ethiopia included. Tensions also persist between Ethiopia, Sudan and Egypt concerning the Grand Renaissance Dam.

Domestically, the continued presence of separatist and rebel movements, as well as dissension between Christians and Muslims, is a destabilizing factor. The Ethiopian People’s Revolutionary Democratic Front (EPRDF), which maintains its grip on the country, is likely to retain power until the next parliamentary elections in 2020.

Political stability and security are challenged by poverty, inequality, corruption, as well as ethnic and tribal divisions, which remain a significant source of friction.1

The business environment is very challenging. Corporate financial information is rarely available and often unreliable. The legal system makes debt collection very unpredictable. The institutional framework has serious weaknesses, and thus inter-company transactions can be very difficult to manage in highly risky environments.2

More favorable weather conditions will boost the damaged agricultural sector and the new Addis Ababa-Djibouti railway line — now open — will significantly improve trade and ease logistical constraints. However, if the ethnic minority government continues to oppress the opposition and the Oromo protests, it could have grave consequences for the economy. GDP is projected to grow by 7.2% in the 2017 fiscal year.