How the financial crisis affects Ethiopia

The BBC sub-editor picked an angle, with the headline Prudence pays off in Ethiopia and the teaser:

With the financial turmoil affecting many of the world’s economies, Elizabeth Blunt in Addis Ababa considers how Ethiopia and other parts of Africa may escape the worst of the credit crisis.

But that headline does not seem to be consistent with the rest of the article which goes more like this:

Over the past few years, Ethiopia has been having something of a boom of its own, and Addis Ababa is littered with building sites.

But a lot of these ambitious construction projects seem to have got stuck halfway. Some may have run out of cement, but others, even more of them, have probably run out of money.

… In all of this, the only money coming in from outside that is a significant flow in most African countries might be remittances from workers overseas.

I think the financial difficulties might hit Ethiopia, and other African countries, pretty hard; especially if remittances dry up, investment (such as it is) falters, and rich countries become more protectionist and less likely to give aid.

3 thoughts on “How the financial crisis affects Ethiopia”

  1. The Ethiopian Economy is one of the least monetised in the world with over 85% of the population having little access to banking and financial services.

    From this perspective it might appear that Ethiopia has little to fear from the current global crisis. In addressing the Parliament on the matter, the PM argued “In general, we don’t expect drastic effects on our economy, our financial structure is not as liberalized as those of affected countries and the economy is not intertwined to Western economies to face a crisis,”.

    However, Ethiopia relies on the outside world to finance many of its development programmes, which comes in a form of aid or investment. Therefore, the crisis is likely to reduce the flow of aid and investment. The Ethiopian Electric Power Corporation has indicated that its investment plans will severely affected due to the crisis (www.ethiopiareporter.com).

    Secondly, the remittance is also likely to be affected as Ethiopians leaving abroad feel the pinch.

    So, Ethiopia is not isolated after all!

    Thank you.

  2. what Ato teshome is said true. but what we observe here today is different. yesturday i wetnees the opening of water tanal project for Gibe II hidro electic station and Gibe III project, it is unbeliveable. it is one indication of EFDE government commetiment to solve currebt electric problem of the nation. there is high financial crise indication, like banks are out of exchange because of low export because of world financial crise. i wish the government also do some thing to change this problem.

  3. I have been reading points forwarded and the case with Ethiopian Electric corporation is so difficult to discuss about. Because at current situation it has been said that Ethiopia is moving to the Industrilation world and some changes have been seen like different factories, industries and companies related with manufacturing are increasing in number. this should have been considered and expected by the government that they need high power than existed. but nothing have been done and palnned. this is a devastating effect to the future of ethiopia.

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