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Ethiopia’s Emerging Market

It’s hard to believe that horse and buggies are still a common mode of transportation in one of the world’s top five fastest growing countries. As if Ethiopia has one foot in the present and one foot in the past, the juxtaposition of a booming skyline and age-old way of transportation highlights just how rapid the country’s growth has been – and continues to be. The Embassy of Ethiopia in Washington is a useful resource on the country’s opportunities.
In June 2017, Ethiopia made it to the top of the list of emerging markets and developing economies in the World Bank Global Economic Prospects Report. In fact, the World Bank named Ethiopia as the second fastest-growing economy after calculating its annual percentage change in gross domestic product (GDP).
Ethiopia is poised to continue its impressive socio-economic progress. With infrastructure development plans in place, Ethiopia is investing in itself – creating structures, roads, and transportation systems necessary for growth to take place.
Ethopia Blog GraphicWhile there is no stock market and foreign ownership restrictions are in place, there are expected changes in the restrictions and the introduction of a stock exchange as a logical next phase. According to the African Development Bank Group – a development financial institution – Ethiopia is planning to spend nearly $90 million strengthening its network of roads. From the perspective of farmers in rural parts of the country, this new system will make it easier to transport their goods to larger marketplaces, and in addition, to other countries. For other industries, the roadways will also create new business opportunities as well. We traveled on some of the new modern highways and saw the same type of development growth adjoining these you would see in the US when new roads are built.

Ethopia Blog Graphic
Ethiopian Honorary Counsel (Houston) Gezahgen Kebede, energetic and knowledgeable bellman, and Rob Scharar on the balcony of the Presidential Suite in the Marriott Executive Suites Addis.

Ethiopia’s economic capacity is undeniable. As reported by the Federal Democratic Republic of Ethiopia, their Growth and Transformation Plan (GTPI) left them with substantial GDP, infrastructure, and social growth. Now implementing their Second Growth and Transformation Plan (GTPII), Ethiopia is putting in place developmental goals aimed to grow them into “a low middle-income country by 2025.” In part, the plan sets goals for sustainable growth; but, it also lists improving production quality, modernizing industry sectors, and expanding exports as other goals, all bolstering their economy.

What Does Ethiopia’s Growing Economy Mean for Investors

Ethiopia is an emerging country with vast investment opportunities including agriculture and horticulture, tourism, textiles and leather, energy production, mining, and construction materials. Their steadily rising GDP reflects the country’s economic growth. Furthermore, Ethiopia’s market potential has been fueled by a large, budding consumer base – Ethiopia’s population exceeds 100 million – and their prime location in the “Horn of Africa”. The Addis Ababa International Airport is a busy hub anchored by Ethiopian Airlines, an African airline, and Star Alliance partner.
Ethopia Blog Graphic
U.S. investors can allocate funds to this region in an effort to benefit from emerging African economies and growing consumerism. Commonwealth Funds’ Africa Fund strives to capture this investment opportunity the continent has to offer. To learn more about the Fund and its investment objectives, please visit our Africa Fund page.