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Ethiopia has invested billions of dollars to build new dams, railways, roads, and industrial centers for more than 10 years. The goal has been to turn the primarily agricultural nation into a manufacturing powerhouse.
In 2017, the African nation had the fastest growing economy in the world. A year later, Prime Minister Abiy Ahmed took office and vowed to loosen state control over the economy.
But for the past two years, Ethiopia has faced several problems. These include ethnic clashes, floods, swarms of insects and coronavirus restrictions. The recent fighting, which began in early November, has led many international investors to become even more concerned about the country.
The rise of Ethiopia
When Bangladesh textile DBL company came to Ethiopia two years ago, the African nation was the bright new area of the garment industry. It had many workers and a government that wanted to bring in companies with tax exemptions and cheap loans.
Last month, as fighting continued in the northern Tigray region, the DBL compound was hit by an explosion that smashed the factory windows. “All we could do was pray out loud,” said Adbul Waseq, an official at the company, which makes clothes primarily for the Swedish clothing company H&M.
It is one of at least three foreign clothing manufacturers that have suspended operations in Tigray. “We could have died,” Waseq told Reuters.
Uncertain future
Any concern from investors could create problems for Ethiopia. The country’s manufacturing export boost is not yet generating enough foreign money to pay for its imports or keep up with rising debt costs.
Before the coronavirus health crisis, the International Monetary Fund (IMF) had warned that Ethiopia was at high risk of debt problems. But the Abiy government said Ethiopia was pushing for reforms that will help build a modern economy.
Ethiopia is a small textile producer with exports of just $ 94 million in 2016. By comparison, Vietnam had $ 29 billion and China had $ 253 billion in the same year, World Bank trade data showed.
Ethiopia’s main exports are agricultural, such as coffee, tea, spices, oilseeds, plants and flowers. But the country’s push toward the textile industry has been a sign of its hope to increase manufacturing.
As the fighting approached the regional capital of Tigray, Mekelle, textile companies began to close factories and withdraw workers. “It seemed that the conflict was approaching the city and our concern was that we could not leave,” Cristiano Frati told an Italian newspaper. Frati was evacuated from a factory run by the Italian company Calzedonia.
DBL has also removed its foreign workers from Ethiopia. “Everything has become uncertain,” said its director MA Jabbar. “When will the war end?”
Even before the recent conflict, sure companies had stopped providing support beyond Ethiopia’s northern Amhara area and the federal capital Addis Ababa.
An adviser working with foreign companies told Reuters: “Ethiopia is not a pretty picture right now.”
I am John Russell.
Ruma Paul, Anna Ringstrom and Joe Bavier reported on this story for Reuters. John Russell adapted it to learn English. Hai Do was the editor.
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Words in this story
swarm – n. a lot of insects moving together
textile – n. a fabric that is woven or knitted
evacuate – v. take (someone) out of a dangerous place
sure – n. an arrangement in which a person makes regular payments to a business and the business promises to pay money if the person is injured or killed, or to pay money equal to the value of something (such as a house or car) if it is damaged, lost, or stolen
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