For months, the TPLF’s old guard and the interim regional government, led by Getachew Reda, have engaged in a blame game over the region’s botched recovery, marked by military defeats, what many claim to be “loss of territory”, and a breakdown in law and order. These tensions have roots in the discord that emerged in 2019 when the newly formed Prosperity Party, led by Prime Minister Abiy Ahmed embarked on a series of reforms that threatened the TPLF’s grip on power. Hostilities then ultimately led to a devastating war that claimed the lives of hundreds of thousands is what has come to be referred to as the “Tigray War”.

The Pretoria Peace Agreement was welcome news, as it ended the war. It also served as somewhat of a face-saving surrender for the TPLF, averting its total collapse, potentially leaving an unpredictable and perhaps even more dangerous power vacuum. Since then, however, internal frictions within the region’s long time ruling party have multiplied, with divisions deepening, especially after the Ethiopian Electoral Board refused to reinstate the TPLF, demanding its re-registration as a new political party.

Faced with diminishing prospects for regaining power, the TPLF’s old guard now appears to be relinquishing control of regional capital Mekelle to Getachew Reda’s interim administration, which is gaining support from key districts across central, eastern, and southern parts of the Tigray region, chiefly among the young.

Meanwhile, Debretsion Gebremichael, head of TPLF’s other more senior faction, seems to be consolidating power in Shire, the region’s second-largest city. Shire’s proximity to lucrative gold mines, currently under the control of TPLF warlords and generals aligned with Debretsion adds another layer of complexity to the situation.

Interim leader Getachew Reda accused his adversaries of engaging in the illicit gold trade. In a recent meeting with his supporters Getachew said, “Those who accuse me of falsehoods are involved in facilitating the export of gold from Tigray to the Gulf States via Eritrea” -— which has also relied on its own gold exports to finance itself despite years of Western sanctions. 

Before the war, licensed miners in Tigray sold gold to the National Bank of Ethiopia. Since the conflict began however, much of the region’s gold has been smuggled out. Other more urgent political priorities overshadowed the issue, but there is now growing concern the illicit trade may fuel yet another round of conflict. Any attempt by the interim administration, backed by the federal government to intervene could spark further violence due to the political nature of the mining interests.

As public dissatisfaction grows, pressure is building on the region’s government to utilize its resources to provide adequate services and to punish criminals. Many schools in the region remain shuttered. The vice chair of the Tigray Regional Board of Education reported that out of 2,492 schools ranging from kindergarten to high school, 1,835 are fully operational. However, approximately 500 schools are currently being used as arms depots and garrison to house the region’s large number of idled fighters. This despite nearly two years of relative peace. 

It is in this context the town of Shire emerged as a stronghold for the TPLF’s hardliners, as cadres continue trade blame for the region’s challenges and race to gather support for what appears to be another round of struggle, which so far has been limited to public rallies and heated public meetings organized by each side.

Considering the TPLF’s intolerant political culture and history of armed conflict, recent developments could trigger another wave of violence, especially since the disarmament, demobilization, and reintegration (DDR) of TPLF fighters has not been fully realized. The situation in Ethiopia’s Tigray region remains unstable, raising significant concerns about the possibility of renewed conflict, a scenario feared by many in the international community, particularly the peace deal signatories like the African Union and the United States.

The post Ethiopia: TPLF Hardliners Pushed Out of Regional Capital as Tensions Escalate in Tigray appeared first on Abren.

According to Egyptian authorities, the partnership among Cairo, Mogadishu, and Asmara is officially aimed at combating terrorism and securing Red Sea shipping, which has been disrupted by Houthi (Ansarullah) attacks from Yemen. These attacks target ships in “solidarity with Palestinians” amid the ongoing conflict in Gaza, significantly impacting maritime traffic through the Bab El-Mandeb strait.

Beneath the surface, however, the emerging relationship may also involve potential Egyptian mediation to address the longstanding conflict between Eritrea and the Tigray People’s Liberation Front (TPLF). Cairo will likely seek to provide support to dissenting factions of the TPLF via Eritrea to pressure the Ethiopian government, which has effectively completed the Grand Ethiopian Renaissance Dam (GERD)—a project Egypt views as a threat to its vital share of the Nile River’s water.

During the two-year war in the Tigray region, Egypt supplied logistics and weapons to the TPLF via secret flights, one of which was shot down in 2022. Ethiopia has consistently accused Egypt of undermining its stability by supporting anti-government factions for decades. Recently, Prime Minister Abiy Ahmed stated that “thousands of rebel groups were given assignments to impede the construction of the GERD.” Whether Asmara will allow itself to be used as a conduit for Cairo remains to be seen.

The potential rapprochement between Eritrea’s long-time ruler, Isaias Afwerki, and the TPLF leadership, once deemed implausible, is contributing to divisions in Tigray and threatening the relative peace in the region as various factions vie for power.

Historically, Egypt has played a crucial role in Eritrea’s political landscape. As early as 1960, Egypt supported the Eritrean independence movement, which eventually led to the rise of the current Eritrean regime. This historical involvement has established a complex relationship, with Eritrea often functioning as a client state of Egypt, seeking to intervene in Ethiopian affairs. The recent visit by Egyptian intelligence chief Gen Kamal Abbas and Foreign Minister Badr Abdelatty to Asmara underscores the rekindling of long-standing ties between the two nations.

Egypt’s collaboration with Eritrea is part of a broader strategy to counter Ethiopia’s growing influence in the Horn of Africa. By strengthening ties with Eritrea, Egypt aims to exert pressure on Addis Ababa and influence regional geopolitics. This move aligns with a series of engagements Egypt has pursued with other regional actors, including Djibouti, Sudan, and Somalia.

A recent military cooperation agreement between Egypt and Somalia further highlights this strategy. Under this deal, Egypt has airlifted arms, military hardware, and a limited number of military advisors to Somalia, which has heightened tensions with Ethiopia. The Ethiopian government has expressed strong objections, warning that these actions could destabilize the Horn of Africa, vowing to respond firmly. Arms supplies and other forms of assistance to the dysfunctional government of Somalia have consistently leaked to the Al Qaeda-linked Al Shabab terrorist group.

The historical context adds depth to the current dynamic. Eritrea’s independence from Ethiopia in 1993, following a prolonged civil war, has been marked by ongoing tension despite periods of peace. The 1998-2000 border war between Eritrea and Ethiopia left a legacy of mistrust that continues to influence their interactions today.

The initial brief period of positive relations following Eritrea’s independence in 1993 ultimately gave way to a shooting border war from 1998 to 2000. The 2018 rapprochement, which earned Prime Minister Abiy Ahmed a Nobel Peace Prize, was never formalized and lacked any legal basis. The honeymoon ended with the Pretoria Peace Agreement, which concluded what is now commonly referred to as the “Tigray War,” during which Eritrea backed the federal government of Ethiopia against an armed insurrection in the Tigray region.

Somalia’s ongoing dispute with Ethiopia over Somaliland further complicates the situation. Somalia has condemned Ethiopia’s recent agreement with Somaliland, which involves leasing its coastal territory for a Naval bases in exchange for potential recognition of Somaliland’s independence from Somalia, which views this agreement as a breach of its sovereignty and has threatened military action if Ethiopia and Somaliland proceed with their plans. On September 12, Ahmed Moalim Fiqi, the foreign minister of Somalia told Universal TV that ‘Somalia could choose to engage with armed rebels in Ethiopia if it wishes, noting that this option remains available.’

The heated rhetoric elicited a response from Nebiyu Tedla, Ethiopia’s deputy permanent representative to the African Union and the United Nations Economic Commission for Africa, who took issue with remarks from Somalia’s foreign minister. On X, he described it as “comical” to see al-Shabab affiliates masquerading as government officials, ineffective beyond the Banaadir region, engaging in empty nationalism fueled by narrow clan interests”.

Amid the ongoing cycle of horse trading and temporary alliances, the Horn of Africa continues to serve as battlefield for external powers. There is no clearer premonition of the potential disaster of proxy violence than the ongoing war in Sudan, which has displaced millions, alongside the persistent threat from militant groups like Al Shabab in Somalia. Egypt’s increasingly aggressive posture aims to contain Ethiopia and prevent it from establishing a naval presence near the strategic Bab El-Mandeb.

For its part, through the construction of the GERD, Addis Ababa has demonstrated resilience in achieving national objectives despite difficult circumstances. It remains troubling, however, that existing regional and international mechanisms for cooperation and dispute resolution have so far failed to address the growing rivalry between Egypt and Ethiopia.

The post Egypt’s Power Play: Using Horn of Africa States to Contain Ethiopia appeared first on Abren.

Ethiopians can observe that Egypt’s efforts in eastern Libya, Sudan, and especially Gaza have been ineffective despite an over-the-top posturing. Formal meetings further highlight that Egypt’s so-called “intervention” in Somalia was little more than grandstanding, because after all, no other nation is better suited to understand and navigate Somalia’s complex clan politics than Ethiopia, which has entrenched itself in the country for over twenty years. Already several powerful clans in regions, including Baykol, Hiraan, and Jubaland have denounced Mogadishu’s Hawiye clan for making a military pact with Egypt, thus increasing the chances for Somalia becoming a proxy battle ground.

Authorities in Mogadishu, grappling with territorial mismanagement, the Al-Shabaab insurgency, and regional pressures, might find some benefit in Egypt’s renewed engagement. However, people are aware that Egypt’s recent efforts in eastern Libya and Sudan indicate its primary aim is to apply pressure on Ethiopia vis-à-vis GERD, rather than genuinely expanding its influence to include Somalia. Furthermore, a hot war between Egypt and Ethiopia in Somalia is not in the cards, otherwise Egypt would need significantly more than just the ten thousand troops it plans to deploy, not to mention the logistical nightmare that presents.

Rather than deterring the MoU, the presence of Egyptian troops in the Horn of Africa seems to be accelerating Ethiopia’s increasingly revisionist stance vis-à-vis access to and from the sea. Djibouti’s recent willingness to provide Ethiopia with an expanded alternative trade outlet to the sea has had no bearing on Addis Ababa’s decision to take advantage of the opportunity for escalation. It just graduated thousands of Somaliland soldiers, appointed an ambassador to Hargeisa, while deploying more forces on the border with Somalia, and warning Mogadishu against seeking support from external powers. But it has also said through its foreign minister that the door for negotiations is always open. 

Somalia, despite its ongoing internal strife and geographical significance, remains distant from Egypt’s core interests compared to Ethiopia’s pressing regional ambitions. Ethiopia’s strategic move to secure access to the Gulf of Aden through Somaliland has notably increased its regional clout. This development, alongside its successful dam project, amplifies Ethiopia’s negotiating strength, especially in relation to Egypt’s attempts to exert regional influence.

Despite its own internal conflicts, Ethiopia’s enhanced diplomatic and military positioning allows it to challenge Egypt’s regional maneuvers more effectively now than at any time in recent history. While Egypt’s actions in Somalia might seem impressive on the surface, they are overshadowed by Ethiopia’s growing assertiveness and strategic advantages, including its control over the Nile’s flow and its military presence in Somalia. As such, Ethiopia is adeptly using the situation to strengthen its position by counterbalance Egypt’s efforts. Nevertheless, Egypt will continue to leverage Ethiopia’s internal rifts as well as hostile neighbors to exert more pressure on Addis Ababa.

The post Egypt’s Arrival in Somalia is About Posturing Rather Than Strategy appeared first on Abren.

Ethiopia has tremendous capacity in SAF production from Ethanol due to its large-scale sugar cane plantations, with over 4 million hectors of land under cultivation. In addition, the recently reorganized state-owned Ethiopian Sugar Industry Group(ESIG) owns a total of eight sugar mills that ran into financial problems from 2013 to 2018. ESIG was one of the most leveraged state-owned enterprises (SoE) in the country. The state has since restructured a large chunk of this debt overhang and is now soliciting bids for private investors. 

Ethiopian Investment Holdings, an entity that manages the country’s sovereign assets, has sought to invite foreign direct investment that fosters value addition in the country’s sugar sector. Satarem America seeks to leverage Ethiopia’s latent capacity in ethanol production and conversion to jet fuel. Crucially, the company will gain a guaranteed large customer in Ethiopian Airlines, which is eager to convert a portion of its fuel to the more sustainable SAF. Authorities in Ethiopia view this as a win-win market approach, one that also helps to reduce imported Jet fuel. 

Despite the promising MoU however, the Satarem’s capacity and strength are not easily discernible from public resources. Satarem lacks broad public coverage and detailed business information. As a niche market player, it may have limited visibility and confidentiality around its operations, financial health, and strategic plans. For a more accurate assessment of Satarem America’s capabilities, proper due diligence and direct engagement with the company or insights from industry experts would be necessary.

Mesfin Tasew, CEO of Ethiopian Airlines Group, expressed enthusiasm about the partnership with Satarem America Inc. He stated, “We are thrilled to collaborate with Satarem America Inc as we advance towards a greener and more sustainable future. Adopting Sustainable Aviation Fuel is more than just a business choice; it demonstrates our dedication to fighting climate change and investing in innovative solutions that foster a more sustainable aviation industry.”

This MoU comes on the heels of Ethiopia’s recently announced macroeconomic reforms, which promises to ease foreign exchange, rid long established economic distortions, and attract quality investment into the country.

The post Ethiopian Airlines Signs MoU With Satarem America to Produce Sustainable Aviation Fuel Locally appeared first on Abren.

1. Pricing and Economic Adjustments: For years, Ethiopian prices have factored in the parallel foreign exchange rate, which is more than double the official bank rate. Due to constrained hard currency, a significant number of importers have relied on the black-market exchange rate. Moreover, according the National Bank Governor, Mamo Miheretu, “consumer price index(CPI) indicates 18% of consumer items are imported, with most of these items already priced according to the parallel (black market) exchange rate”. Only fuel and fertilizer are imported at the official bank rate and these are subsidized by the state. Fears of runaway inflation are exaggerated.

This advance adjustment will mitigate potential shocks. Indeed, Ethiopia’s foreign currency peg is the mother of all economic distortions and its longevity has meant its impact has been long established in current prices.

2. Strategic Negotiations Without Austerity: Ethiopia’s Finance Ministry and National Bank have been meticulous in negotiating the terms of the IMF deal, managing to secure funding without agreeing to stringent austerity measures. Notably, civil servant wages are set to increase, and capital investments will be prioritized, highlighting a commitment to economic growth and stability. The patience and resilience of Ethiopian authorities to seek a good deal, particularly while facing external and internal economic shocks, including the covid pandemic, and domestic conflict is commendable.

3. Supportive Measures for Workers: Contrary to austerity, Ethiopia’s agreement includes provisions for wage support and subsidies on essential goods such as fuel and fertilizer. These measures are designed to provide a buffer during the transition period, shielding the population from severe economic strain. Perhaps most importantly, Ethiopia’s macroeconomic reform plan, supported by the IMF does not short capital investment projects such as hydroelectric dams, roads, and other infrastructure. This is is not a budget cutting plan. It is in fact nudging towards productive spending.

4. Debt Management Success: Ethiopia has made substantial progress in managing its national debt. Through successful negotiations with key sovereign debt holders, including China and the Paris Club, Ethiopia has navigated its debt challenges effectively, receiving a critical repayment holiday from partners, while selectively defaulting on its Eurobond obligations, a strategic move meant to highlight fairness and equal treatment of all creditors.

5. Supporting Import Substitution: Ethiopia has made strides in developing domestic production, particularly in wheat and other food items. This focus on import substitution has helped to moderate food inflation. There are initiatives to bolster manufacturing of consumer goods. Nonetheless the new macroeconomic reform plan does call for removal of import barriers on 38 previously restricted items. These include human hair, fully assembled personal cars, motorcycles, jewelry, processed food, and more. These items however do not overlap with the list of items marked for import substitution, which are mainly food items and commonly consumed pharmaceuticals.

6. Learning from Regional Experiences: Ethiopia has carefully studied the economic challenges faced by Kenya and Nigeria during their IMF engagements, drawing valuable lessons to avoid similar pitfalls. This proactive approach underscores the country’s commitment to applying learned insights to its own reform process. Indeed, the wise learn from the mistake of others. Ethiopia is a bit fortunate in that these cautionary tales presented themselves dramatically and in short order.

7. Geopolitical Leverage Through BRICS and Currency Swaps: Ethiopia’s recent entry into BRICS and its currency swap agreements with the UAE have enhanced its negotiating leverage. Because after all, economics and geopolitics are intertwined, especially in this fast-developing multipolar world order. In this regard, reports from Pakistan’s recent economic situation has served an important lesson.

8. Long-Term Loan Guarantees: Following the advice of renowned economist Jeffrey Sachs, who recently traveled to Addis Ababa in an advisory role, Ethiopia has successfully negotiated for long-term, relatively low-interest rate loan guarantee. This strategic move ensures more manageable debt servicing and financial stability. 

9. IMF’s Recalibrated Approach: Suffering a public relations setback by recent anti-austerity protests in Kenya, the IMF has sought a more balanced approach in Africa. This shift in the IMF’s stance, aimed at avoiding further backlash, has worked in Ethiopia’s favor, allowing the country to secure a more favorable deal. In this regard we must thank Kenya’s activists for putting the onus on wrongheaded economic reform agendas crafted in Washington.

Ethiopia’s IMF-supported macroeconomic reform appears to be backed by careful planning and strategic negotiations to address potential risks and incorporate lessons from regional experiences. This multifaceted approach has positioned Ethiopia to navigate its economic transition with greater resilience, distinguishing it from other recent cases on the continent.

On Monday, the International Monetary Fund (IMF) announced that Ethiopia has reached an agreement for a new financing program valued at $3.4 billion. In the months ahead Ethiopia is expected to receive up to $10.7 billion. As part of this deal, the central bank has floated the currency, a crucial measure to gain IMF support and advance a long-awaited debt restructuring.

Earlier today the World Bank committed a total of $16.6 billion to support the economic reform Agenda.

Facing high inflation, unemployment, and persistent foreign currency shortages, Ethiopia was long overdue for a serious economic overhaul. It is now imperative for the country to tackle corruption and implement the political reforms needed to cement consistent and sustainable economic development.

The post Ethiopia’s IMF Deal Avoids the Common Pitfalls of Austerity appeared first on Abren.

According to the State Department, Ambassador Hammer’s recent visit to Ethiopia for the African Union’s review of the Pretoria Agreement emphasized the importance of continued commitment to peace initiatives and accountability for past atrocities. 

Despite the unbroken peace agreement however, there continues to be challenges. These include the long-delayed disarmament, demobilization, and reintegration (DDR) of the Tigray People’s liberation Front (TPLF) rebel fighters, and the return of IDPs to contested territories between Amhara and Tigray regions. 

The letter of the Pretoria agreement excludes preconditions on DDR, explicitly stating, “the parties agree to finalize the overall disarmament of rebel combatants, including light arms within 30 days from the signing of this Agreement”. Furthermore, it adds, “the Federal Democratic Republic of Ethiopia has only one defense force”, meaning no other groups or political parties can garrison troops. 

Much as DDR is highlighted extensively in the peace agreement, the return of IDPs is also critical. Authorities in the Tigray region contend, IDPs are being prevented from returning by Amhara militia. However, in recent months the federal government as well as the Amhara regional administration say they ‘disbanded irregular forces in contested regions’, paving the way for the return of IDPs from Tigray. This has been a political minefield to navigate, especially given the rise of Amhara nationalism as it pertains to contested territories. The Fano insurrection in Amhara is partly motivated by suspicions of collusion between the Federal government and the TPLF. The delay in DDR for TPLF forces has served as an excuse for continued militancy in Amhara region. Nonetheless, in the past two months several thousand IDPs have return to Raya-Alamata, in addition to Tselemt. More are expected to return in the months ahead.

By procrastinating DDR, the TPLF continues to test the patience of the federal government. Now 22 months into the peace agreement, the group’s leader has come out to brag about the continued existence of a large fighting force. In a recent interview on Radio France Internationale, Debretsion Gebremichael, leader of the TPLF said, “We cannot disarm and demobilize while Eritrean and Amhara forces occupy out territory”. His party has not provided a clearly outlined document or map as evidence for this claim, however.  The AU observer mission has also failed to verify the claim.

Divisions within TPLF have recently fractured the organization. Withstanding internal feuds was much easier when the party was involved in an all-out war of “us vs them”, but now things are murky, particularly following the regional administration’s glaring failure to deliver on basic governance issues. The public has become frustrated. A recent announcement proclaimed stepped up efforts against rising crime and illegal mining, a good portion of which is the work of its very own commanders. If this cry for law enforcement is genuine, many believe it will mean the interim government and the cryptic TPLF party leadership are on a collision course. 

A clear line has emerged between those who support the interim regional administration led by Getachew Reda, and those behind TPLF’s old guard who still talk in the language of “struggle for liberation” and “democratic centralism”, putting the survival of the party ahead of the well-being of the region’s people. 

The federal government has maintained restraint despite provocative acts by authorities in Tigray. For instance, in June, returning IDPs in Alamata were accompanied by rabble-rousers, brandishing guns, and flying TPLF’s flag, in a deliberate attempt to stoke more tensions with Amhara neighbors. It elicited reactive protests by residents as well as some clashes. Thankfully the incident did not escalate into widespread communal violence. 

The move was deliberately designed to provoke. Behind closed doors the federal government is said to have provided stern warnings, however similar strategies of stoking tension are still ongoing. For instance, the TPLF is said to be calling up its cadres for a general convention, despite Ethiopia’s electoral commission prohibiting unregistered political parties from holding such events. It is to be recalled, similar disregard for election laws by organizing regional polls in September 2020 played a part in mounting apprehensions and eventual war in November of that year.

All of this could of course jeopardize the peace agreement, which brought back calm after two years of devastating war. Banks are open, air travel is normal, electric power is back up, and schools are open. This month high school seniors took their university entrance examinations. All of this bodes well, and is worth sustaining and building upon. This continued recovery of the Tigray region is what is most needed, but reckless and tragic political intrigues threaten to wreck things again. 

The post Ethiopia: Peace Agreement Threatened By Political Intrigue and Divisions in Tigray appeared first on Abren.

Rich countries worldwide have by enlarge adopted economic policies towards supporting and subsidizing domestic industries, yet they are pushing the international financial institutions such as the IMF to impose an outdated prescription of the “Washington Consensus” towards developing economies in Africa. Recent conversations among various debt distressed developing countries highlights this dissonance.

A majority of developing countries are currently debt distressed and the G20 common framework is failing them in a big way. This in turn is reversing years, if not decades of developmental gains made by the global south. It is also leading many to lose trust in global institutions such as the IMF and World Bank.

Speaking to the Guardian News, World Bank Chief Economist, Indermit Gill expressed skepticism about the global economy’s trajectory, particularly for low-income countries facing substantial debt burdens. He emphasized the detrimental impact of debt payments on essential sectors like healthcare and education, calling for sustainable solutions to alleviate financial strain.

Due to rising debt burdens, advocating austerity, and unbridled capitalism policies for developing nations is losing favor, particularly among developing countries. As a result, many now perceive traditional Western-led economic strategies as hypocritical.

During latest spring meetings in Washington, unbeknownst to the public, IMF & World Bank came under siege as leaders from the global south decried the hypocrisy of rich-country creditors demanding austerity from borrowers while running up huge debt loads and deficit financing themselves. Meanwhile, in Brussels, former European Central Bank president Mario Draghi advocated for an EU-wide industrial policy. This stands in stark contrast to EU policy recommendations given to countries in Africa for example.

In the United States, the Biden administration proposed tripling tariffs on China and addressing labor unions’ concerns regarding shipbuilding trade relief to counter Chinese state support, according to a recent report by the Financial Times. However, cross-border business continued as usual, with German Chancellor Olaf Scholz leading industrial leaders on a trip to Beijing for joint ventures, and US Commerce Secretary Gina Raimondo facilitating a $1.5 billion artificial intelligence investment in the United Arab Emirates by Microsoft.

Washington is increasingly adopting similar industrial policies it has criticized China for. It is also employing sovereign wealth to support American corporations like Intel, Microsoft, and Boeing, encouraging local production and global expansion. Additionally, the US is implementing stringent import restrictions, formalizing a “Buy American” policy. Ironically, these are all policies the West has discouraged poor countries from taking.

The disconnect between these economic policies and market realities underscores the ongoing struggle between long-term development goals and short-term profit maximization. While Draghi highlighted the detrimental effects of post-2008 austerity measures on domestic demand, prompting the EU’s pursuit of a new capital markets union, in Africa the same European institutions are pushing mostly the opposite.

In the US, there appears to be growing recognition of this. The inadequacy of free trade market proposals in addressing key issues such as climate change and infrastructure development is becoming clear, particularly in developing countries. The White House can no longer ignore concerns raised by the global south. Recently, Daleep Singh, the US deputy national security adviser for international economics, urged for increased utilization of America’s sovereign loan guarantee authority to help restructure loans provided to developing countries.

At an Oxfam panel, Adriana Abdenur highlighted the contradiction between rich countries advocating for industrial policy while imposing outdated prescriptions for developing nations. This is exactly what renowned South Korean economist Ha Joon Chang warned against in his best-selling book, Bad Samaritans, The Myth of Free Trade, and the Secret History of Capitalism.

The US is beginning to acknowledge this mismatch, with Deputy National Security Adviser Daleep Singh proposing initiatives to lower interest rates on developing countries and boost investment domestically. But more is needed from developed countries to help poor societies.

We are now at a pivotal moment in global economic policymaking, with no single country possessing all the answers, but still, stakeholders including the IMF and World Bank cling to outdated modes of thinking, risking further global economic disruption. As the world transitions to a new economic paradigm, the path forward remains uncertain but what is clear is that business as usual is not working anymore, and a serious shift in outlook is needed.

The post Africa decries hypocrisy of rich countries, as global economic paradigm-shift beckons. appeared first on Abren.

While most developed countries anticipate a slowdown in global inflation, Nigerians face a different reality. The seemingly endless economic woes in the country is being fueled by a persistent shortage of foreign exchange (FX) and a declining Naira. Stubborn structural problems in Nigeria’s economy have led this resource rich African country to lag relative to its potential. According to a recent Bloomberg report, “once Africa’s biggest economy, Nigeria has now slipped to fourth place”.

The devaluation of Nigeria’s currency at the behest of the IMF has worsened inflation, collapsing the Niara 31% a month later in January of 2024. More recently the loss in value is pushing consumer product manufacturers to close factories & exist the market as FX reserves dwindle further. Some economists argue bringing the Naira into alignment with its parallel market exchange rate was prematurely done, without adequate financial support for the central bank, which has the main responsibility of keeping a stable currency and inflation. 

This “double whammy” presents difficulties for multinational companies operating in Nigeria. Their fixed costs, often denominated in dollars, have become more expensive due to the weakened naira. This has the inherent outcome of restricting profit repatriation by multinational corporation operating in Nigeria.

The FX scarcity significantly impacts consumer goods companies like Nigerian Breweries, Unilever, PZ Cussons, and others. This situation casts a shadow on Nigeria’s previously promising image as a rising market due to its large population.

Several major consumer groups have scaled back operations or entirely exited the Nigerian market. Companies like Unilever have halted production of certain product lines, citing difficulties in competing with the current economic climate. Similarly, GSK, Bayer, Sanofi, and Procter & Gamble have all reduced their presence in Nigeria.

According to a recent report by the Financial Times. Procter & Gamble highlights the significant financial burden of restructuring its Nigerian operations due to “macroeconomic conditions.” Their CFO emphasizes the challenges of operating in a market with a weak local currency for a dollar-denominated company.

This situation underscores the complex relationship between foreign currency availability, inflation, and the viability of consumer goods production in Nigeria.

The currency devaluation of the Niara is a cautionary tale of poorly planned and executed devaluation and economic restructuring schemes proposed by the IMF in Africa. It has worsened rather than improved the situation. IMF economists contend these are unavoidable temporary pains that an economy must undergo to be truly competitive in the long run. 

Other countries in Africa have recently received financing from the IMF. Although each country is unique, many countries on the continent are debt distressed, with high inflation and facing shortages of FX reserves. This is a story that echoes right across Africa. But the fix recommended by the multilateral lenders has not been ideal. 

Alemayu Geda, an Ethiopian economist, whose country also faces a similar economic malaise argues, “where the export sector is underdeveloped and demand for imported goods is inelastic, devaluing the exchange rate rapidly will lead to a spike in prices on essential goods”. This is especially the case since Ethiopia’s state-owned enterprises (SoEs) get priority access to FX reserves, giving a handful of SOEs monopoly on key imports such as fuel and fertilizer. It has insulated consumers from erratic price spike, albeit at the cost of SoEs. A sudden free float would result in rapid inflation in crucial imports. Alemayehu recommends, “a dual exchange for remittance & nontraditional exports only as first step, if absolutely necessary”. 

Ethiopia’s sovereign debt per GDP is manageable and has been improving. Although other bilateral debt has increased of late, overall the country’s debt holders have become relatively more optimistic, as demonstrated by the surge in the country’s Eurobond. But FX reserves are extremely low, covering only one months of imports. Tax revenue is also dismal, thanks to decades of subpar tax collection. Although the authorities have embarked on a new “Home Grown Economic Plan” to invigorate, both the quality and quantity of exported goods, the country remains reliant on key imports that tie up most FX reserves. 

Critically needed long-term economic reform can be undermined by inadequate attention to real world outcomes of restructuring schemes, such as the one in Nigeria, which made thigs worse. Securing IMF financing may also require liberalization of the financial sector, continuing with the program to privatize public enterprises, and fostering improvements in the business environment. These textbook liberal policies regularly fall short of their intended outcome however, providing ample warning to the developing nations of Africa.

Following a recent visit, creditors have agreed to give Ethiopia until the end of June to reach an agreement with the IMF as staff ended their meeting in Addis Ababa. The critical time for decisions on Ethiopia’s debt restructure has arrived, as the funds spring meeting gets underway this week in Washington. The hotly debated item of currency devaluation will be on top of the agenda. It will be crucial to calibrate the financial support given to cushion the Birr to avoid the fate of the Niara and avoid an uncontrollable spike in inflation. 

The post Is Nigeria’s currency crisis a cautionary tale for Ethiopia? appeared first on Abren.

In December, Ethiopia chose to selectively default on its $1 billion Eurobond obligations, sighting the G20 framework, which reprieved the country from debt repayment responsibilities for two years. Authorities in Addis Ababa maintain that the default is therefore within the rules of treating all creditors equally as it missed a coupon payment on its Eurobond. European creditors were left ruing as a result. “The thing is, we have an international obligation to treat all creditors the same, and we cannot just pay our obligations on the Eurobond, and choose to ignore other creditors, that’s not how it works”—Said Finance Minister Ahmed Shide to local media. 

The economy faced significant headwinds due to the pandemic, internal political turmoil, and the war in Ukraine, all of which contributed to high inflation, a scarcity of foreign currency, and mounting repayments for external debts, which began to accumulate rapidly starting in the mid to late 2000s. However, these indicators have improved lately and the debt to GDP ratio continues to recover as growth picked up pace in 2023. IMF data indicates overall external debt has been decreasing.

Moreover, following an armed rebellion that erupted in the northern Tigray region on the 4^th of November, 2020, the E.U and U.S severed funding to the government in Addis Ababa, cutting off what was once Africa’s donor darling. Official development assistance (ODA), which the country has relied on historically, decreased by 40% between 2020 and 2022, hitting a ten-year low of USD 2.7 billion. Additionally, citing the Tigray conflict, the U.S suspended the African Growth and opportunity Act (AGOA), a preferential trade deal allowing select African states to import goods freely into the U.S market. Consequently, the shortage of foreign currency worsened, and foreign exchange reserves dwindled to USD 1 billion by June 2023, barely covering one month of imports.

In the latter half of 2023, the U.S and the E.U declared the reinstatement of Official Development Assistance (ODA) to Ethiopia, but nevertheless voiced apprehension over continued armed conflicts and stressed that their financial aid programs hinged on the fulfillment of the peace agreement. Therefore, any resurgence of conflicts could potentially delay the debt restructuring procedure as well, a condition the federal government would no doubt feel is onerous, given it cannot fully control a decision by warring sides to break peace agreements. Critics argues this policy has the consequence of undercutting the GoE while emboldening belligerents. 

For the time being the country’s authorities are under pressure by the IMF to restructure the economy, a move the government has resisted for years. The primary issue causing deadlock in negotiations is the depreciation of the Birr, a reform initiated as part of the previous IMF program in 2019 but terminated in 2021. Over many years, the National Bank of Ethiopia (NBE) has controlled the exchange rate, resulting in the Birr being significantly overvalued. As a consequence of the foreign exchange scarcity, the gap between the official rate and the parallel market rate has steadily widened, reaching nearly 100%

The GoE is concerned devaluation will worsen price inflation of key imported items, such as fertilizer, fuel, and pharmaceuticals. These are goods with highly inelastic demand, meaning consumers have no option but to continue to buy them even if prices soar, an outcome that will have dreadful consequences on households. Nonetheless, to reconcile the official and parallel exchange rates and to liberalize the foreign exchange system, NBE will likely need to devalue the currency. 

It’s estimated that approximately 35% of currency transactions are conducted on the parallel market due to restricted access to the dollar. Discussions between the Ethiopian government and the IMF are ongoing regarding the extent of this devaluation. However, a complete adjustment of the overvaluation would undoubtedly have a significant impact on inflation, which has already been very high, with consumer prices rising by over 25% year-on-year since June 2021. Devaluation is necessary, but the question is how to best minimize the inflationary impact it will bring.

If the foreign exchange market is opened, it needs to be done alongside changes to how the government manages money to control inflation better. Right now, the National Bank of Ethiopia tries to keep prices stable is by limiting how much banks can lend and reducing how much money the government gets directly from the central bank. But stopping direct payments to the government will be tough because the government needs a lot of money quickly and it’s struggling to get enough. 

According to the IMF, tax revenue has been declining relative to GDP from 15.6% in 2016 to just 8.5% in 2022, making it one of the lowest tax collection rates in sub-Saharan Africa. This is due to a narrow tax base and failure to collect taxes from an expanding economic activity. For example, farming, comprising more than 30% of GDP is not taxed. Until very recently property tax was not assessed either. But the government has been spending more money, so the gap between what it gets and what it spends has been getting bigger, reaching 4.1% of GDP in 2022. To make sure public financing has enough money to run things and show good will to the IMF, the government is looking for ways of getting more money coming in while also spending less on things like fuel subsidies and social payments, which made up more than half of what it spent in 2020.

More long-term reforms are being undertaken to consistently attract foreign investment and enhance external accounts. Securing IMF financing may also necessitate actions such as advancing the development and liberalization of the financial sector, continuing with the program to privatize public enterprises, and fostering improvements in the business environment. As expected, the government is stiffly resisting privatizing of key national champions such as Ethiopian Airlines, Ethiopian Electric Corp and Ethio-telecom, a policy stance that has popular support. But it has offered to sell off Ethiopian Sugar Corporation, which is debt distressed and failing to attract buyers.

The wild card remains how to calm political tensions which flare up into armed conflict, oftentimes ethnic in nature, reflecting the country’s identity based governing structure, which became entrenched in the 1990s under the previous government and festered even more in recent years. More than anything else, the country’s ambitious economic goals are threatened by these prevailing political fractures.

The post Ethiopia’s Eurobond Surges Amidst Favorable Financial Backing from World Bank appeared first on Abren.

In its official announcement, the World Bank stressed that PRIME aims to bolster and expand Ethiopia’s electricity grid, enhance the financial sustainability of the sector, and stimulate renewable energy production through private sector engagement. Anticipated to serve the entire Ethiopian populace throughout its lifespan, the initiative is geared towards addressing vital infrastructure requirements and facilitating new electricity connections.

While acknowledging Ethiopia’s strides in electrification endeavors over the past decade, the World Bank highlighted the government’s accomplishments in extending grid coverage to nearly 60% of towns and villages. Nevertheless, challenges persist, with an electricity shortfall impeding socio-economic progress and hindering access to opportunities for many individuals.

Wendy Hughes, World Bank Regional Director for Infrastructure in Eastern and Southern Africa, emphasized the necessity of adopting a medium-term strategy to confront structural and operational obstacles in transforming Ethiopia’s electricity sector. She emphasized that the partnership between the World Bank and Ethiopia over the next ten years aims to attract private investment and other development partners to bolster the country’s electrification objectives.

Similarly, Ousmane Dione, World Bank Country Director for Ethiopia, Eritrea, South Sudan, and Sudan, underscored the importance of PRIME in modernizing and fortifying Ethiopia’s power sector. The program is poised to significantly elevate the quality of electricity provision, amplify renewable energy output, and mobilize private investments to sustain the nation’s rapid electrification pace.

According to the International Energy Agency (IEA), Ethiopia presently depends significantly on hydropower. Proposals to elevate capacity to 13.5 GW by 2040 would position Ethiopia as the second-largest hydroelectricity producer in Africa.

Expanding electricity access to all and electrifying productive activities will result in a quintuple surge in generation, with an even more substantial increase in alternative current (AC). Solar photovoltaic (PV) and geothermal sources are projected to contribute to nearly 45% of the power mix by 2040.

Furthermore, PRIME is expected to bolster Ethiopia’s resilience to climate change by diversifying its energy mix and tapping into its abundant clean energy resources such as solar, wind, and geothermal power.

The Ethiopian Electric Utility and Ethiopia Electric Power, both wholly government-owned public enterprises dedicated to advancing sustainable energy development in the nation, will oversee the implementation of the PRIME project.

Despite this boost from the World Bank, Ethiopia needs to secure significantly more investment into its energy production and distribution sector to meet full potential. According to the IEA, approximately $100 billion will be required over the next 20 years to achieve maximum electrification.

The post World Bank Unveils $1.4 Billion Program To Modernize Ethiopia’s Energy Sector appeared first on Abren.

On Tuesday, the International Monetary Fund (IMF) concluded its visit to Ethiopia aimed at discussing IMF financial support to the east African country. However, no agreement was reached during the visit, leaving the East African nation without a commitment it had hoped to secure from its official international creditors. “The team made significant strides in determining the potential ways the IMF could assist the authorities’ economic program,” stated the IMF. Discussions are set to resume later this month during the IMF’s spring meeting in Washington to further explore the matter.

In December, Ethiopia chose to selectively default on its $1 billion Eurobond obligations, sighting the G20 framework, which reprieved the country from debt repayment responsibilities for two years. Authorities in Addis Ababa maintain that the default is therefore within the rules of treating all creditors equally as it missed a coupon payment on its Eurobond. European creditors were left ruing as a result. “The thing is, we have an international obligation to treat all creditors the same, and we cannot just pay our obligations on the Eurobond, and choose to ignore other creditors, that’s not how it works”—Said Finance Minister Ahmed Shide to local media. 

In recent years Ethiopia’s economy faced significant headwinds, firstly due to the pandemic, internal conflict, and the war in Ukraine, all of which contributed to high inflation, a scarcity of foreign currency, and mounting repayments for external debts, which began to accumulate rapidly starting in the mid to late 2000s. However, these indicators have improved lately and the debt to GDP ratio continues to recover as growth picked up. IMF data indicates overall external debt has been decreasing.

However, the Paris Club of developed creditor nations, excluding China, warned last year that Ethiopia’s agreement to suspend debt payments until 2025 might be invalidated if the country failed to secure an IMF loan by March 31. However, according to a Reuters report, “Ethiopia’s official international creditors are willing give the East African nation extra time until the end of June to wrap up talks on IMF support, a source close to Paris Club of creditors said on Wednesday”.

Ethiopia had previously reached a separate agreement with China to suspend debt repayment in 2023. Ethiopia has been without an IMF program since the expiration of its last lending arrangement with the fund in late 2022. According to Boston University, Chinese lenders had pledged over $14 billion in loans to the country between 2006 and 2022.

As of 2022, China has granted debt forgiveness for 23 interest-free loans across 23 countries. On the contrary, the proclivity of European or in general Western lenders to be fixated on unrealistic repayment schedules is a determent to both creditors’ institutions, and debtor countries in Africa. The proactive debt-service relief from China not only showcases a willingness to work collaboratively with debtor nations in Africa, but also contributes to strengthening diplomatic ties. 

More news is expected when the IMF reconvenes in Washington for its spring meeting this month.  Ethiopia’s loan request above its special drawing rights (SDR), and the difficult topic of upfront foreign exchange unification, which basically means bringing the Birr to equal its parallel exchange rate in the black market are some of the key hold ups so far.

Abren has obtained information that the IMF had earmarked a front-load disbursement of 30% of its initial fund amount to support currency unification, but there was likely disagreement from Ethiopian authorities, who sought a larger sum to cushion the Birr in case of devaluation. Given these scenarios, perhaps the total financial support being argued over is somewhere between $3 billion and 3.5 billion. But continued fund support pending review goes significantly above and beyond this figure in the years ahead. 

More related news from Abren

The post IMF concludes visit, as creditors give Ethiopia more time appeared first on Abren.

On New Year’s Day Ethiopia and Somaliland announced a Memorandum of Understanding (MoU). The specifics of the agreement are not fully disclosed, but the key points involve Somaliland obtaining a share in Ethiopian Airlines, Africa’s prized airline. In return, Ethiopia gains entry to the port of Berbera and secures land (with a 20km coastline) near the town of Lughaya for a naval base along the Gulf of Aden. There is a strong possibility that Ethiopia will ultimately acknowledge Somaliland as an independent sovereign state.

Somaliland gained its independence from Britain on June 26, 1960, was then recognized as such by 34 countries, including the U.K. Five days later, amid excitement and nationalist fervor, it proceeded to voluntarily merge with former Italian colony of Somalia on July 1, 1960. It would turn out to be fateful decision. As the smaller of the two in terms of population, Somaliland quickly found itself receiving dictates from Mogadishu, the capital of Somalia. The following 31 year of union were a dark period of tumult, eventually culminating in full blown war, whereby Somalia desperately tried to cling to Somaliland, causing tremendous suffering and scorn.

According to a recent article by Georgetown University Professor Ken Opalo “The unification and subsequent separation of Somaliland with Somalia has some similarity with that of Eritrea, which also peacefully entered union with Ethiopia in 1952. Somaliland also willingly entered union with the rest of Somalia in 1960, only to witness the violation of the terms of union shortly thereafter. Like Eritrea, Somaliland also leveraged a widespread civil war to claim its independence under circumstances that made it too challenging for the war-fatigued capital to resist. The key distinction lies in the fact that while Eritrea had a consenting government in Addis Ababa to facilitate its secession, the neo-founders of Somaliland in the late 1980s lacked a credible counterpart among the various warlords who battled the Siyad Barre regime and subsequently turned against each other after 1991.”

The eventual dissolution Somaliland’s union with Somalia could not be ratified by Mogadishu, which has been marred in a long saga of bad governance, corruption, and terrorism. However, neither was Somaliland’s brief union with Somalia ratified by their respective law makers. In any case given the root causes of the breakup that followed ratification matters less. Somalilanders have long emphasized their separate status from rump state Somalia. Their state is relatively calm, holding regular elections, issues a passport accepted in several countries, including the U.K, South Africa, Ethiopia, Saudi Arabia, France, Malaysia. Its close tie with neighboring Ethiopia has been a process spanning decades.

Notwithstanding Somaliland’s distinct history, revelation of the MoU ignited a diplomatic uproar by authorities in Somalia, which expressed intense displeasure and withdrew the ambassador from Addis Ababa. So far, a series of statements and declarations out of Mogadishu have not garnered an official response from Addis Ababa, although Somaliland called them “insincere” and “hysterical”.

With a GDP of nearly US$3.5 billion and a population of 5.7 million, Hargeisa stands to benefit significantly from a long-term economic deal centered around ports and logistics. In addition to the prospect of obtaining official recognition from Ethiopia, Somaliland is pursuing the port agreement for economic necessities. Nearly half of the government’s budget relies on revenue from trade taxes and port duties. However, it is expected that there will be opposition within the country to the deal, particularly on the domestic political front.

A Significant Move by Ethiopia

Ethiopia’s decision to eventually recognize Somaliland carries notable significance as it marks the first instance of a UN member state acknowledging Somaliland’s autonomous status since its self-proclaimed independence in May 1991, following the Somalia Civil War.

Despite establishing official contacts after declaring independence, including engagements with Ethiopia in strategic and infrastructural agreements, Somaliland’s international recognition has been constrained. Recognition by Ethiopia’s could enhance Somaliland’s legitimacy, foster economic cooperation, and establish diplomatic ties. Given its strategic location, if Somaliland garners recognition by a UN member state, the ripple effect might encourage other nations to follow suit, contributing to a broader acknowledgment of Somaliland’s sovereignty, albeit the extent of this impact hinges on the nature and scope of Ethiopia’s recognition.

In addition to Ethiopia, Somaliland has consulates services in key countries, including the United States, United Arab Emirates, United Kingdom, Kenya. If Ethiopia proceeds to fully recognize its neighbor as an independent state, then these other nations are likely to follow suite, an outcome that will tip the scale as far as the AU’s decision goes. For instance, the U.S has shown interest in Somaliland for military purposes. While the State Department’s rhetoric has been strategically ambiguous regarding Somaliland, overcrowding of military bases in Djibouti has become an issue for the Pentagon, “raising concerns about “strategic competition and potential risk of confrontation with China in Djibouti” and is exploring the viability of Somaliland as an alternative relocation point.

However, an underlying complexity lies in Somaliland’s lack of Mother State Permission from Somalia. This adds diplomatic controversy surrounding the principle of sovereignty, for the AU, which must contend with numerous claims for statehood across the continent. The AU does not want to be  seen to be encouraging balkanization of Africa, but the legal case for Somaliland is strong, a point discussed below.

President Mussa Bihi Abdi stated, “We functioned independently as Somaliland for three decades, despite the odds, but never got the recognition we deserved—We just needed one country to open that door, and its suiting for Ethiopia to be that nation”. He added, “The first to recognize Somaliland was always going to be the most difficult, after that there will certainly be others that follow”.

On January 6th, Somalia’s president Hassan Sheik Mohamud signed a law nullifying the MoU between the Gov’t of Ethiopia & Somaliland as illegal and void on grounds of protecting sovereignty and territorial integrity. But how Mogadishu intends to enforce this claim is not clear. As mentioned, Somaliland has been its own entity for thirty years and authorities in Somalia have had no say in that time. This power equation is unlikely to change anytime soon.

Ethiopian troops have been crucial to Somalia’s security. As part of The African Union Transition Mission in Somalia (ATMIS) They played a key role in defending against Al Shabab for years. It currently contributes about 5000 troops to the ATMIS.  Before the formation of ATMIS, Ethiopia was the leading country behind The African Union Mission in Somalia (AMISOM). Outside of this multilateral effort, Ethiopia also commands a significant force combating Al Shabab in Somalia. According to a 2020 Reuters report, “Ethiopia, which shares a long and porous border with Somalia, contributes around 4,000 of the 17,000 troops under the AU, and has around 15,000 additional soldiers in Somalia bilaterally: that is more than any other nation.”

The task of ATMIS slated to end in 2023 was extended at the request of Mogadishu, which needed the protection against increasing attacks by Al Shabab. Ethiopian National Defense Forces (ENDF) have overseen the most difficult sectors of Somalia, where Al Shabab has the strongest presence. These areas include sector 3, Bakool and Bay centered on the town of Baidoa. The withdrawal of these forces now scheduled for December 2024 could leave a security vacuum, in which Al Shabab will certainly take advantage of.

Now what?

On January 8, 2024, to shore up support, President Hassan Sheik Mohamud of Somalia traveled to Eritrea, where Somalian soldiers recently trained. He is also slated to travel to Egypt this week. This follows an earlier visit to Somalia by an Egyptian delegation. Furthermore, Somalia is seeking support from Qatar as well as the Arab league, of which it is a member state. Simultaneously military commanders of Somaliland and Ethiopia convened in Addis Ababa this week.

While most Somalilander’s look forward to the day where their country’s independence becomes officially recognized by the international community, there is some pushback to Ethiopia setting up a navy base in their territory, including by some of its officials. This month AP reported, “Somaliland’s defense minister resigns over deal to give Ethiopia access to the region’s coastline. The issue will certainly be hotly debated in the upcoming elections scheduled for November.

As the 2018 rapprochement between Eritrea and Ethiopia continues to fade, a new reality seems to be emerging in the Horn of Africa (HOA), one where Asmara and Addis Ababa become estranged again, Somaliland gains its vaunted recognition, and Sudan fractures into spheres of influence. While Ethiopia continues to grapple with insecurity. Never in recent memory has there been this level of tumult and geopolitical realignment in the strategic HOA.

It remains to be seen if Ethiopia will proceed to lobby AU member states on behalf of Somaliland at the upcoming 37^th regular session. There is a good case to be made based on a 2005 fact finding mission led by former deputy chairperson of the AU, which concluded, “Union between Somalia and Somaliland was never ratified and malfunctioned from 1960 to 1990, making Somaliland’s search for recognition historically unique and self-justified in African Political History.” The report adds by saying, “Objectively viewed, the case should not be linked to the notion of opening a pandora’s box, and as such the AU should find a special method of dealing with this outstanding case.”

As far as Ethiopian authorities are concerned their bid to diversify, and gain control of a seashore is more critical than ever. This fact became crystal clear in the past few years, whereby logistical bottlenecks and sabotage on country’s maritime trade became more frequent. For example, turbines imported for the Grand Ethiopian Renascence Dam were routinely held up throughout the past three years. Sensitive imports such as military equipment was frequency held in Djibouti, which as mentioned is brimming with foreign military bases.

For Somaliland, it is once in a generation opportunity to seal their nation’s fate among nations. It is also a means to economic revival. In that sense, the MoU is a masterstroke in diplomacy.

The delay in achieving full state recognition and UN membership for Somaliland has multifaceted impacts, restricting its diplomatic outreach and hindering its legitimacy on international political and developmental platforms, including within the UN itself. Despite these challenges, Ethiopia’s recognition represents a significant step in Somaliland’s prolonged pursuit of official statehood and a prominent role on the global stage. It could be a harbinger for an international acknowledgment of Somaliland’s de jure independent status.

The post Ethiopia: On Course to Recognizing Somaliland’s Statehood appeared first on Abren.