Next Africa: Ethiopia’s Fall From Africa’s Darling to Pariah

Next Africa: Ethiopia’s Fall From Africa’s Darling to Pariah

By Antony Sguazzin, May 28, 2021

Welcome to Next Africa, a weekly newsletter of where the continent stands now — and where it’s going next.

It wasn’t long ago that Ethiopia was being hailed as an African economic miracle. That’s rapidly unraveling.

What happened?

(Bloomberg) — Prime Minister Abiy Ahmed’s decision to retaliate against political opponents in the northern Tigray region in November has locked him into an intractable civil war, Eritrean forces have been reluctant to leave Ethiopian territory and U.S. sanctions threaten to complicate a plan to roll out modern mobile telecommunication services across Africa’s second-most populous nation.

Abiy Ahmed.Photographer: MICHAEL TEWELDE/AFP

Adding to that is increasing pressure from Sudan and Egypt for Ethiopia to desist from filling a giant reservoir that they say will impede the flow of the Nile. The Grand Ethiopian Renaissance Dam was meant to transform the nation into a regional power producer. While trying to handle the crisis in Tigray, Abiy is facing community strife in other areas that threaten to tear apart a nation of more than 90 different ethnicities.

That’s quite a fall from grace for a man who in 2019 won a Nobel Peace Prize and was being hailed as one of Africa’s youngest and most progressive leaders.

What may particularly pain the 44-year-old is that his plans to transform the economy may be unraveling. Civil conflict and cross-border tensions are rarely a recipe for investment appetite.

While a Vodafone consortium bid of $850 million for a 15-year license to operate was successful, that offer is way off what the government expected to receive, and it postponed awarding a second license. A $500 million loan from the U.S. Development Finance Corp. in that bid may be under threat, along with funding for the government from the World Bank and International Monetary Fund because of the U.S. sanctions.

Still, with 112 million people, Ethiopia remains a tantalizing prospect for many investors. But Abiy is finding that economics may not trump politics.


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