The country’s growing tourism industry has also been hit, with tour operators reporting lost earnings of $7m in the weeks after the state of emergency was imposed in October. Western governments have lifted travel advisories for most of the country but people in the hospitality industry predict it will take time for visitors to return.
“We have some foreign tourists staying but far fewer than usual,” says the manager at an Addis Ababa hotel who asked not to be named. “And there are practically no western business travellers. The Chinese are still coming though.”
Roger Lee, chief executive of TAL, a Hong Kong-based company which produces clothes for brands such as Banana Republic, says despite the unrest, he would not be reversing the decision to open a factory in Hawassa, 275km south of Addis Ababa.
“It’s not the first time it’s happened in a country we work in,” he says, adding: “It’s very hard to find a developing country with no issues.”
The Ethiopian economy is still growing strongly — by 8 per cent this financial year according to official data. Although three percentage points lower than previously forecast it has come against the backdrop of a bad drought.
The International Monetary Fund also predicts continued robust growth, driven by an industrial base that is set to expand as more infrastructure and low-cost manufacturing, much of it financed by China, come on stream.
But there are also myriad worrying signs. The IMF warned in October that Ethiopia’s current account deficit, the amount by which imports exceed exports, “is not sustainable” at more than 10 per cent of gross domestic product for a second successive year. The resulting pressure on foreign exchange availability is adding to investors’ concerns.
David Cowan, Citi’s chief Africa economist, believes the reality is worse and questions an IMF prediction that foreign direct investment will be $4.45bn in 2016-17, nearly $1bn more than its previous estimate.
“I don’t see where the increase in FDI is going to come from,” he says. “I don’t see it from the multinationals, many of which are in a consolidating mode.”
Many are also pessimistic about how the country can create enough jobs when non-Ethiopians continue to be banned from investing in the banking, telecom and retail sectors.
“Successful economies have deep and diverse private sectors and Ethiopia’s just isn’t there,” said one investor, who asked not to be named. “It’s doing some things well but the gaps in its strategy — both economic and political — are glaring and I don’t see any inclination to address them.”