Swedish furniture giant IKEA opened a purchasing office in Ethiopia last year. However, it closed it down in September after shelving plans to source from the country due to the political and social situation, Covid-19 and changes to the cotton market in Africa, the company told Reuters.
Meanwhile, Coca-Cola Beverages Africa, a bottling partner of the Coca-Cola Company, told Reuters that the fighting in Tigray, which accounts for about 20% of its sales volumes in Ethiopia, had halted business there.
That comes on the heels of delays in the construction of two new bottling plants — part of a $300 million five-year investment plan announced last year — due to the pandemic and an excise tax increase.
'FEW WAYS OUT'
With the fall of Mekelle at the end of last month, Abiy declared victory over Tigray's former ruling party (TPLF).
“The swift, decisive, and determined completion of the active phase of the military operation means any lingering concerns about political uncertainty by the investment community will be effectively settled,” Abiy's adviser Mamo said.
The TPLF has vowed to fight on.
For the government, there is little margin for error. Ethiopia's external debt has ballooned five-fold over the past decade as the government borrowed heavily — notably from China — to pay for infrastructure and industrial parks.
Foreign direct investment inflows, meanwhile, have declined steadily since a 2016 peak of more than $4 billion, slipping to about $500 million for the first quarter of this fiscal year.
Inflation is hovering about 20%.
“There are very few ways out of this. They aren't going to get more money from the IMF. They can't go to the markets. Their best bet is a global economic recovery next year,” said Menzi Ndhlovu, senior country and political risk analyst at Signal Risk, an Africa-focused business consultancy.
Still, Ethiopia passed a landmark investment law earlier this year and implemented currency reforms.
And the government is pushing ahead its plans to open up the telecommunications sector. It opened tendering for two new telecoms licences at the end of November and plans to sell off a minority stake in state-owned Ethio Telecom.
Sources after the process, which should provide the beleaguered economy with a hefty injection of dollars, said interested companies were not deterred by the current unrest.
But for now, Ethiopia's grand manufacturing dreams have been dealt a setback.
“Who will go there in this situation?” asked DBL's Waseq, who has returned to Bangladesh. “No-one.”