Ethnic Unrest Threatens to Derail Ethiopia’s Boom: QuickTake Q&A

For a decade, Ethiopia has been lauded as an economic success story and a bastion of stability in the tumultuous Horn of Africa region. That status is now under threat as an outbreak of ethnic unrest is met with a government crackdown.

1. What sparked the conflict?

Protests erupted last year in Oromia, the nation’s most populated region, which surrounds the capital, Addis Ababa. The trigger was a plan, since put on hold by the government, for the integrated development of the capital and surrounding areas of Oromia. The Oromo have long complained of state repression and harassment. Violent clashes have taken place involving the nation’s two largest ethnic communities, the Oromo and Amhara, and businesses have been attacked. Security forces have killed more than 700 people since the unrest began, according to a Brussels-based human rights group. 

2. What does the government say?

Authorities accuse “foreign elements” of orchestrating the strife. On Oct. 9, Prime Minister Hailemariam Desalegn’s administration declared a six-month state of emergency that it says is needed to restore law and order.

3. What’s behind the ethnic tensions?

One of the only African countries to avoid European colonization and the continent’s oldest nation state, Ethiopia was an absolute monarchy until the 1974 socialist revolution that deposed Emperor Haile Selassie. The country has been a multi-ethnic federation since 1991, when an alliance of rebels overthrew a military regime. Government opponents say the state is dominated by leaders from the Tigray People’s Liberation Front, which led the insurgency. Tigrayans make up about 6 percent of the population of about 100 million people. The Oromo and Amhara groups, which together account for more than 60 percent, complain of economic and political marginalization in an authoritarian system. Opposition parties won just one seat in Ethiopia’s 547-member federal parliament in 2010 elections and none last year.

4. What are the economic implications?

Investors have been drawn to Ethiopia by its cheap labor and electricity, and perceived political stability. That is now in question. Businesses targeted by protests include cement companies owned by Africa’s richest man, Aliko Dangote, and Saudi investor Mohammed al-Amoudi. Unilever NV, Diageo Plc and Hennes & Mauritz AB (H&M) are among the companies with operations in Ethiopia, and the Grand Ethiopian Renaissance Dam, Africa’s biggest hydropower project, is being built by Italy’s Salini Impregilo SpA

5. Is this affecting the economy already?

Ethiopia’s $66 billion economy has been expanding as much as 10.3 percent annually over recent years, according to the International Monetary Fund, though growth dipped to 6.5 percent last year amid a serious drought. Political-risk analysts expect the crisis to reduce the amount of foreign direct investment into the country.

6. What are the security implications?

Ethiopia is a key U.S. ally, and further unrest could threaten regional stability. Ethiopia hosts the headquarters of the African Union and has troops in neighboring Somalia fighting militants linked to al-Qaeda. It also has peacekeepers in Sudan and South Sudan. The U.S. and other wealthy countries provide more than $3 billion a year in grants and concessional loans for development projects and social services.

The Reference Shelf

  • A story on Ethiopia’s six-month state of emergency.
  • A story on how attacks are undercutting Ethiopia’s appeal to foreign investors.
  • A QuickTake explainer on worldwide droughts and water conflicts.
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