Geography

The Federal Democratic Republic of Ethiopia is the 10th largest country in Africa with a land surface of 1,104,300 sq.km. The country is located in the Horn of Africa. Ethiopia lies completely within the tropical latitudes and is relatively compact, with similar north-south and east-west dimensions. The capital is Addis Ababa, located almost at the centre of the country. Ethiopia is the largest and most populated country in the Horn of Africa. With the 1993 secession of Eritrea, its former province along the Red Sea, Ethiopia became landlocked. It is bordered on the north and northeast by Eritrea, on the east by Djibouti and Somalia, on the south by Kenya, and on the west and southwest by Sudan.

Ethiopia is divided into 9 regional states (Afar; Amhara; Benishangul-Gumuz; Gambela; Harari; Oromia; Somali; Southern Nations, Nationalities and People; Tigray) and 2 chartered cities (Addis Ababa; Dire Dawa).

Its topography ranges from deserts along its eastern border, the Choke and Mandebo mountains ranges in its central core, and tropical forests in the southern reaches. Ethiopia is dominated by a vast highland complex of mountains, plateaus and lakes, all divided by the Great Rift Valley that’s surrounded by lowlands and steppes.

The climate of Ethiopia varies mainly according to elevation. The tropical zone below approximately 1,800 m (approximately 6,000 ft) has an average annual temperature of about 27°C (about 80°F) and receives less than about 500 mm (about 20 in) of rain annually. The subtropical zone, which includes most of the highland plateau and is between about 1,800 and 2,400 m (about 6,000 and 8,000 ft) in elevation, has an average temperature of about 22°C (about 72°F) with an annual rainfall ranging from about 500 to 1,500 mm (about 20 to 60 in). Above approximately 2,400 m (approximately 8,000 ft) is a temperate zone with an average temperature of about 16°C (about 61°F) and an annual rainfall between about 1,300 and 1,800 mm (about 50 and 70 in). The principal rainy season occurs between mid-June and mid- September, followed by a dry season that may be interrupted in February or March by a short rainy season.

History

Ethiopia is the oldest independent Country in Africa with 3000 years of independence and is credited with being the origin of mankind. Ethiopia is one of the oldest in the world. Herodotus, the Greek historian of the fifth century B.C. describes ancient Ethiopia in his writings. The Old Testament of the Bible records the Queen of Sheba’s visit to Jerusalem. According to legend, Menelik I, the son of King Solomon and the Queen of Sheba, founded the Ethiopian Empire. Missionaries from Egypt and Syria introduced Christianity in the fourth century A.D. Following the rise of Islam in the seventh century, Ethiopia was gradually cut off from European Christendom. The Portuguese established contact with Ethiopia in 1493, primarily to strengthen their influence over the Indian Ocean and to convert Ethiopia to Roman Catholicism. There followed a century of conflict between pro- and anti-Catholic factions, resulting in the expulsion of all foreign missionaries in the 1630s.

Under the Emperors Theodore II (1855-68), Johannes IV (1872-89), and Menelik II (1889-1913), the kingdom was consolidated and began to emerge from its medieval isolation. When Menelik II died, his grandson, Lij Iyassu, succeeded to the throne but soon lost support because of his Muslim ties. The Christian nobility deposed him in 1916, and Menelik’s daughter, Zewditu, was made empress. Her cousin, Ras Tafari Makonnen (1892-1975), was made regent and successor to the throne. In 1930, after the empress died, the regent, adopting the throne name Haile Selassie, was crowned emperor. His reign was interrupted in 1936 when Italian Fascist forces invaded and occupied Ethiopia. The emperor was forced into exile in England despite his plea to the League of Nations for intervention. Five years later, British and Ethiopian forces defeated the Italians, and the emperor returned to the throne.

After a period of civil unrest, which began in February 1974, the aging Haile Selassie I was deposed on September 12, 1974, and a provisional administrative council of soldiers, known as the Derg (“committee”) seized power from the emperor and installed a socialist Government. Lt. Col. Mengistu Haile Mariam assumed power as head of state and Derg chairman. Mengistu’s years in office were marked by an authoritarian Government and the country’s militarization, financed by the Soviet Union and the Eastern Bloc, and assisted by Cuba. Communism was officially adopted during the late 1970s and early 1980s with the promulgation of a Soviet-style constitution, Politburo, and the creation of the Workers’ Party of Ethiopia (WPE).

In July 1977, Somalia attacked across the Ogaden Desert in pursuit of its irredentist claims to the ethnic Somali areas of Ethiopia. Ethiopian forces were driven back deep inside their own frontier but, with the assistance of a Soviet airlift of arms and Cuban combat forces, they stemmed the attack. The major Somali regular units were forced out of the Ogaden in March 1978. In 1989, the Tigrayan People’s Liberation Front (TPLF) merged with other ethnically based opposition movements to form the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF). In May 1991, EPRDF forces advanced on Addis Ababa. Mengistu fled the country for asylum in Zimbabwe.

In July 1991, the EPRDF, the Oromo Liberation Front (OLF), and others established the Transitional Government of Ethiopia (TGE) which was comprised of an 87-member Council of Representatives and guided by a national charter that functioned as a transitional constitution. In June 1992 the OLF withdrew from the Government; in March 1993, members of the Southern Ethiopia Peoples’ Democratic Coalition left the Government. In May 1991, the Eritrean People’s Liberation Front (EPLF) assumed control of Eritrea and established a provisional Government. Eritrea was with Ethiopia’s consent declared independent on April 27, and the United States recognized its independence on April 28, 1993. In Ethiopia, President Meles Zenawi and members of the TGE pledged to oversee the formation of a multi-party democracy. The election for a 547-member constituent assembly was held in June 1994, and this assembly adopted the constitution of the Federal Democratic Republic of Ethiopia in December 1994. The elections for Ethiopia’s first popularly chosen national parliament and regional legislatures were held in May and June 1995.

In May 1998, Eritrean forces attacked part of the Ethiopia-Eritrea border region, seizing some Ethiopian-controlled territory. The strike spurred a two-year war between the neighboring states that cost over 100,000 lives. Ethiopian and Eritrean leaders signed an Agreement on Cessation of Hostilities on June 18, 2000 and a peace agreement, known as the Algiers Agreement, on December 12, 2000. The agreements called for an end to the hostilities, a 25-kilometer-wide Temporary Security Zone along the Ethiopia-Eritrea border, the establishment of a United Nations peacekeeping force. The United Nations Mission to Eritrea and Ethiopia (UNMEE) was established in September 2000.

In May 2005 elections, opposition parties greatly increased the number of seats they held in the legislature. The EPRDF remained in power but with less of a majority. Accusations of fraud, as well as the final outcome of the elections, led to protests and demonstrations in Addis Ababa. In May 2006 the EPRDF reached an agreement with the two primary opposition political parties, which then took their seats in the legislature. General elections were held in May 2010. With the memories of the protests that followed the 2005 general elections still fresh in the minds of many Ethiopians, the political climate prior to the 2010 elections was somewhat subdued. The EPRDF was overwhelmingly victorious in securing the majority of legislative seats, allowing Meles to remain prime minister. International observers deemed the electoral process to be organized and largely peaceful overall.

Meles died on August 20, 2012, while he was abroad for medical treatment. He was succeeded by the deputy prime minister and minister of foreign affairs, Hailemariam Desalegn. The next year saw the regularly scheduled end of Girma’s second presidential term. On October 7, 2013, the parliament elected veteran diplomat Mulatu Teshome Wirtu to succeed him. Prior to his election as president, Mulatu had served as ambassador to Turkey since 2006. He also had held other ambassadorships and ministerial posts as well.

The ruling EPRDF and its affiliates won every legislative seat in the May 2015 election, and on October 5 Hailemariam was unanimously re-elected prime minister by the lower legislative house. In early 2018 the Government released thousands of prisoners. The moves were intended to ease tensions and allow for political dialogue between the Government and the opposition. Those events were followed by the resignation of Hailemariam, which he announced on February 15, 2018; he agreed to stay on until a new prime minister could be appointed. The ruling EPRDF selected a successor to Hailemariam in late March. Abiy Ahmed, of the Oromo ethnic group, was first elected as chair of the ruling coalition on March 27. Abiy was the first Oromo to hold the position of prime minister, and it was hoped that his ascent to the post would help calm the ongoing tensions between that group and the Government.

In the months after his inauguration, Abiy quickly made efforts to fulfil his vows. Domestically, thousands more political prisoners were pardoned and released. The Government lifted its latest state of emergency ahead of schedule, on June 5. On the economic front, Abiy announced that the Government would allow for some degree of privatization of some state-owned industries, in an effort to encourage domestic and foreign investment and to spur economic growth. The new developments as well as the pace at which they were unveiled surprised Ethiopians and the international community alike. On June 5 Abiy announced that Ethiopia would finally honour the terms of the 2000 peace agreement that was meant to end its war with Eritrea; those terms included accepting and implementing the 2002 ruling that demarcated the border between the two countries. That announcement led to several diplomatic overtures. The two agreed to reopen their borders and re-establish ties between the two countries in the areas of diplomacy, trade, communications, and transportation. They also aired a joint statement on July 9 announcing that the state of war that had existed between their two countries for 20 years had come to an end.

In October 2018 Abiy formed a new cabinet, with women for half of the positions, providing the country with its first gender-balanced cabinet. Later that month President Mulatu resigned before the end of his six-year term, paving the way for a new president to be selected by lawmakers. On October 25 the parliament elected Sahle-Work Zewde to succeed him; she was sworn in the same day, becoming the first woman to serve as president of Ethiopia. Sahle-Work was an accomplished diplomat who had served as an ambassador for Ethiopia and had held several positions with the United Nations.

Political landscape

The Government of Ethiopia is a federal parliamentary republic, whereby the Prime Minister is the head of Government. Executive power is exercised by the Government while legislative power is vested in the Parliament. The Judiciary is independent of the executive and the legislature.

The president of Ethiopia is elected by the House of Peoples’ Representatives for a six-year term. The prime minister is chosen by the parliament. The prime minister is designated by the party in power following legislative elections. The Council of Ministers, according to the constitution adopted in 1995, is comprised by the Prime Minister, the Deputy Prime Ministers, various Ministers and other members as determined and approved by the House of Peoples’ Representatives. At the current time, this includes the 20 members of Council of Ministers.

The Federal Parliamentary Assembly has two chambers: the Council of People’s Representatives with 547 members, elected for five-year terms in single-seat constituencies; and the Council of the Federation with 110 members, one for each nationality, and one additional representative for each one million of its population, designated by the regional councils, which may elect them themselves or through popular elections.

Demography

Ethiopia carries a large demographic weight in Africa with an estimated 108 m inhabitants in 2018 and a forecast of c. +2,3% annual growth rate. It is the 2nd most populated country in Africa and 13th in the world. Over the last 25 years, the country has experienced a steady growth of its population with +60 m of inhabitants at a stronger pace than the rest of the continent. A similar momentum is forecasted in the coming years (+2,3% p.a., expected to reach 140 m by 2030). Ethiopia also has a significant diaspora (~2 m overall), with the majority living in the US fueling voice and data flows with abroad countries.

 

Ethiopia has barely started its urban transition with 80% of its population living in rural areas across a large country that has few urban centers. Around 5% of the population live in agglomerations of more than 300 k inhabitants. The largest urban area is Addis Ababa with 3,352 k inhabitants. The significant surface area (>1 million km², 27th in the world), which implies that a large share of the population resides several hours away from an urban center and core network infrastructure.

Having initiated its demographic transition, Ethiopia working age population is increasing fast and is already beyond 50 m. As many sub-Saharan countries, a large majority of the population is below the age of 30 (70%) as well as a high dependency ratio (82 per 100[1]). The life expectancy is increasing fast, rising from 47,1 years in 1990 to 65,9 in 2017. The forecasts show positive future growth prospects in the long run with an increasing working age population (>55%) ready to adopt telecoms services.

 

[1] Ratio of population aged 0-14 and 65+ per 100 population 15-64 (working age population)

Economic overview

Ethiopia’s economy is very dynamic vs. other regional countries, with a GDP of USD 80.6 bn in 2017 (+15.2% CAGR since 2010) still heavily relying on agriculture but strongly driven by industry growth. Its GDP per capita has been steadily growing (+7.0% CAGR since 2010 to reach USD 550 in 2017), yet under regional and Sub-Saharan Africa average. After a recent break in the decade-long increase in FDI[1] (USD 4 bn in 2016), Ethiopia should enjoy a strong interest from investors in the next years. Trade is expected to play a stronger role in the economy, with the objective to reduce a strong deficit.

According to the IMF, Ethiopia has overtaken Kenya to become the largest economy in east Africa. The economy is supported by a continued recovery from droughts and export expansion as new manufacturing facilities and infrastructure come online. Growth prospects are promising, supported by private investment, the completion of several infrastructure projects and rising productivity in new industries. Indeed, Ethiopia is hoping to become a new manufacturing hub as the costs of labor-intensive manufacturers in Asia rise. However, the country’s crucial agricultural sector remains vulnerable to climatic shocks. Major hydropower projects (including the largest in Africa) will allow Ethiopia to triple its generation capacity. A new rail link to the port of Djibouti will also lower Ethiopia’s high transportation costs. There are mineral reserves, mainly copper, potash, gold and platinum, but these have not yet been exploited.

 

[1] Foreign Direct Investments

Miscellaneous:

  • In the UNDP’s 2017 Human Development Index Report (HDI), Ethiopia was ranked 173 out of 189 countries. The national poverty rate is estimated to be 29,6% (2014)
  • The official currency is the Ethiopian Birr (ETB), with an exchange rate of 25 ETB per US dollar for 2017
  • Inflation rate stood at 9,9% in 2017
  • The unemployment rate has stood consistently at ~5% in 2017-2018
  • Ethiopia is not a member of the World Trade Organization yet but is currently going through the membership process

Transport and power infrastructure

Ethiopia road system is a core part of the country infrastructure. During the brief Italian occupation of 1935–41, highways linking Addis Ababa to the provinces were opened up, and after World War II the Imperial Highway Authority opened new feeder roads to isolated localities. Road construction and maintenance slowed during the periods of conflict in the 1980s and ’90s. In 1997 the Government embarked on an ambitious long-term road-development program and in the following decades constructed new roads and made repairs to the country’s existing road network.

With the 1994 secession of Eritrea, Ethiopia lost direct access to the Red Sea ports of Aseb and Mitsiwa. This loss placed greater importance on the Djibouti–Addis Ababa railway, which was originally built between 1897 and 1917 by a French company and was jointly operated by the Governments of Djibouti and Ethiopia. The railway’s limited functionality had curtailed passenger and freight traffic until finally, by late 2010, trains had stopped traveling on any part of it. In the following years a new electrified rail line was constructed along the route of the old track; it was completed in 2016. The rail line, which was capable of handling cargo trains at speeds of up to 75 miles (120 km) per hour and passenger trains at up to 100 miles (160 km) per hour, substantially reduced the travel time between Djibouti city and Addis Ababa. The construction of the railway was part of a long-term plan by the Ethiopian Government to create an expansive rail network across the country. A light-rail mass transit system in Addis Ababa was completed in 2015.

Ethiopia’s air transport system has enjoyed a significant success in Africa. There are numerous airports located throughout the country. The internal network of Ethiopian Airlines (EA), a state-owned but independently operated carrier, is well developed, connecting major cities and locations of tourist interest. Its international network provides excellent service to destinations throughout the world. Bole International Airport, near Addis Ababa, serves EA and other international airlines and is also an acknowledged centre for pilot training and aircraft maintenance.

Ethiopia has abundant renewable energy resources and has the potential to generate over 60,000 megawatts (MW) of electric power from hydroelectric, wind, solar and geothermal sources. As a result of Ethiopia’s rapid GDP growth over the previous decade, demand for electricity has been steadily increasing. Despite Ethiopia’s huge energy potential, the country is experiencing energy shortages as it struggles to serve a population of over 100 million people and meet growing electricity demand which is forecast to grow by approximately 30% per year.

Ethiopia’s Growth and Transformation Plan (GTP) outlines a 15-year plan with three 5-year phases to transform Ethiopia from a developing country to a middle-income country by 2025. Under GTP I (2010-2015), the goal was to increase the installed generation capacity from 2,000 MW to 10,000 MW primarily through hydro power projects. With some of those projects still under construction, the country currently has approximately 4,500 MW of installed generation capacity. Under GTP II (2015-2020) the goal is to increase installed generation capacity by an additional 5,000 MW by 2022. Ethiopia Electric Power (EEP) is charged with maintaining more than fourteen hydropower and three wind power plants located in different parts of the country.

The Government of Ethiopia has focused on the construction and expansion of various power generating projects to deliver reliable electricity. Approximately 90% of the installed generation capacity is from hydropower while the remaining 8% and 2% is from wind and thermal sources respectively. The hydro dominated systems have been severely affected by drought, and the Government of Ethiopia (GOE) is now diversifying the generation mix with other sources such as solar, wind and geothermal that will result in a more climate-resilient power system.

The Metahara solar independent power producer (IPP) project is expected to generate 100 MW following approval of the implementation agreement (IA) by the Ethiopian Government during the second half of 2018. Enel Power, an Italian company, will operate the project. The Government of Ethiopia is also working with the private sector to implement the Corbetti and Tulu Moye geothermal projects with over 1,000 MW of combined generation capacity.

The Grand Ethiopian Renaissance Dam (GERD), expected to be the largest dam in Africa and to generate 6,450 MW of electricity at full capacity, is reportedly 62% completed. Ethiopia exports electricity to Djibouti (up to 100 MW) and to Sudan (up to 100 MW) and has concluded power export deals with Kenya and South Sudan. Construction of an Ethio-Kenya-Tanzania transmission line is expected to be completed in 2019. Ethiopia has plans to export up to 400 MW of electricity to Kenya and 400 MW to Tanzania.

Tourism

Ethiopia’s Travel & Tourism economy grew by 48.6% in 2018, the largest of any country in the world, according to the World Travel & Tourism Council’s (WTTC) annual review of the economic impact and social importance of the sector released in March 2019. The sector supported 2.2 million jobs and contributed $7.4 billion to Ethiopia’s economy, an increase of $2.2 billion in 2017. This was driven mainly by international visitor spending, to the country’s improved connectivity as a regional transport hub and to recent visa deregulation policies. The sector now represents 9.4% of Ethiopia’s total economy.

The performance can be explained by the development of Addis Ababa as a dynamic and growing regional hub with frequent and reliable air connections over the world. The country can count on its natural, cultural and historical tourist attractions, including many UNESCO-registered heritages such as the majestic obelisks of Axum, the rock-hewn churches of Lalibela and the historic fortified town of Harar. They have been driving an influx of tourists from far and wide. As the land where mankind, coffee, and the Blue Nile trace their roots, Ethiopia has always been an attractive destination for holidaymakers.