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On 1st of January 2024, Ethiopia has become a member of the BRICS community which can be seen by many as another shift from the dominance of the USA in the global politics towards a multipolar world. Together with Ethiopia, Egypt, Saudi Arabia, Iran and the United Arab Emirates joined the club making the South-South cooperation stronger and more visible.[1]
Inflation is a relatively normal thing in Ethiopia’s economy and growth of food prices has been usually associated with a number of factors including drought, governmental monetary policy, population growth, etc.[2] Current inflation can also be seen as a result of the war in Tigray, and subsequent conflict in Amhara and Oromo regions, combined with sanctions during the Tigray war, and multiple other aspects (such as high governmental spending on the military).
National Bank of Ethiopia released a statement in June 2023 that Ethiopia’s inflation has gone under 30 percent (29,3%) for the first time in two years[3] but the situation remains catastrophic for many families. The inflation creates tensions in the society so that an ordinary observer especially in Addis Ababa can see how the security situation has changed in last few years.
Robberies of all kinds have become a daily norm and rumours of kidnappings are widespread. These are things that Ethiopia has never been known for and it shows what kind of impact the war in Tigray had on security situation in the whole country, particularly in its militarization of all kind of state and non-state actors, which complicate already fragile social contract in the country. We talk primarily about the Fano militias in the Amhara region as well as OLF-Shene in many parts of Oromia. An ongoing conflict in both regions have created a situation in which it is almost impossible to travel freely inside the country and the only safe means of transportation remains the plane (multiple domestic flights connecting Addis Ababa with a large number of towns all across the country).
Ethiopian Electric Power, a big company in the country, has had an experience with the kidnappings as six of its employees were kidnapped in October 2023 and a total amount of 60 million birrs (roughly 1 million USD) demanded as ransom. As some analyses show, kidnapping may be a result of multiple factors depending on the agenda of the kidnapper. There might be several strategies, in each of those the financial factors (of course) plays a role but there may also be a tendency to create instability and chaos in a particular region. Although the Oromo Liberation Army (OLA) kept denying any involvement in the kidnappings, there is a popular belief in the affected areas that some of the cases of kidnappings are done by OLA.[4] Especially in the current unstable situation in Ethiopia, we may expect more of such incidents to happen.
Ethiopia has also a shortage of foreign currency, namely the US dollar. The difference between an official rate and an unofficial rate is massive, practically double as of January 2024. It is therefore no surprise that the government repeatedly continues (though unsuccessfully) with the crackdown on the black market areas in last years.[5]
In the meantime, prices of practically all commodities continue to rise. Just an example, a year ago, I was charged 200 birrs for a bajaj (a three wheel small taxi used in the Ethiopian countryside) to get from the Jimma airport to the hotel I stayed in. A year later the same journey was offered for 500, after bargaining for 400 hundred. And the same goes with prices of food both on the local markets as well as in restaurants. And the predictions are not positive either. The report of the World Food Program[6] shows that the Tigray region has not yet fully recovered from the conflict in 2020-2022 and the household capacity to produce and purchase food remains low.
Similar problems, related to conflict, drought as well as El Niňo effect have caused serious troubles in southern and southeastern parts of the country, plus in the Amhara region as well. Parts of Afar, Amhara, Tigray, Somali and Oromia regions have experienced enormous pressures on local societies due to the conflict, drought and low production. This necessarily leads to rural-urban migration and creates other problems with accommodating displaced persons into an urban environment, sanitation, health issues, etc.
Population pressure, food insecurity, and regional inequalities play a role in rural-urban migration. Such migration can, on the other hand, result in benefits for the household primarily via remittances. It has been documented that households receiving remittances do better in long-term perspective, also willing to invest in long-lasting goods than households without this migration background.[7] However, it does not change the crucial question regarding the future industrialization of the country.
The membership in BRICS can be seen for Ethiopia as a good sign, but the challenges and all kinds of threats (internal violence, poverty, conflicts, kidnappings, criminality, urban-rural inequalities) make it a little bit complicated for Ethiopia to regain the aureole of a progressively developing regional hegemon with the ambition to become a regional power. These challenges and threats require a deeper look.
[1] See e.g. https://efe.com/en/latest-news/2024-01-01/ethiopia-officially-joins-brics-group-of-emerging-economies/
[2] See e.g. Berhanu Kuma, Girma Gata (2023): Factors affecting food price inflation in Ethiopia: An autoregressive
distributed lag approach. Journal of Agriculture and Food Research 12 (2023) 100548.
[3] https://nbe.gov.et/nbe_news/press-release-monetary-policy-statement/
[4] See e.g. https://enactafrica.org/enact-observer/ethiopia-kidnappings-terrorism-transnational-organised-crime-or-banditry
[5] https://www.thereporterethiopia.com/27154/
[6] https://fews.net/east-africa/ethiopia/food-security-outlook/october-2023
[7] See gza et al., Determinants of rural-urban migration and its impact on migrant-sending households’ livelihood security in Gurage zone, EthiopiaCogent Social Sciences (2023), 9: 2190253
