- Ethiopia is one of the largest countries in Africa
- The US has a long diplomatic relation with Ethiopia dating 1903
- Ethiopia is building a hydroelectric dam that will generate 5,000 megawatts of electricity
Ethiopia economy is one of Africa’s fastest-growing economies with a GDP projected to trend around US$ 112 billion, representing at least 0.10 per cent of the world economy. Thus, US-Ethiopia relations have presented rather effective diplomatic potential for one of the populous nation in the region.
The East African nation has made noteworthy and tremendous economic improvements which have seen the nation’s GDP per capita rise from US$162 in 2005 to US$790 in 2018, an average annual growth rate of more than 14 per cent, according to information from the US Department of State.
Ethiopia with its rich history has recorded substantial economic strides over the past decade, and the United States of America (USA) is one of the nation’s close development partners.
Even after a year of conflict, Ethiopia which is Africa’s second-most populous country, has the potential to expand its economy. The African Development Bank (AfDB) notes that the current domestic conflicts might influence low investor confidence.
In terms of partnerships, the US has become a vital organ in forging the nation’s economy and peace. While Ethiopia battles with the aftermath of its conflicts, the US, via President Joe Biden’s administration, is working on capitalizing on the positive trends according to Council on Foreign Relations (CFR).
The US has become a pivotal nation in aiding most of Africa’s development strategies, from East to Southern Africa. To keep up with China which has edged out the fading superpower, the US has strengthened its foot within the continent for decades to improve the welfare of its people and sectors ranging from trade, investment, technology, education, accountability and markets.
The US volume of the trade-in with Africa has grown 300 per cent in the last decade, outperforming the global average (196 per cent), according to a US based think-tank, Brookings.
As Africa ascends towards 2050, where it will be holding an estimated US$16.12 trillion of combined consumer and business spending and hosting more than 2 billion people, analyzing US partnership with Africa’s top performers is essential.
US and Ethiopia ties
Ethiopia and the US have forged their partnership within diplomatic relations for decades. Since 1903 the two nations have maintained their relationship despite government transitions and present domestic challenges.
According to the US Department of State, the relations are rather complex yet vital, fenced around four primary goals. Protecting American citizens, strengthening democratic institutions and expanding human rights, spurring broad-based economic growth, promoting development, and advancing regional peace and security.
The US-Ethiopia relations are rooted in development initiatives. Ethiopia has access to the US government’s largest and most complex assistance programmes.
Over the past few years, Ethiopia has demonstrated strong social and economic development. The latter can be traced to Ethiopian Airlines reinforcing Africa’s competence in aviation and making serious progress on Sustainable Development Goal (SDG) number two –Zero Hunger.
Ethiopia economy is eyeing to achieve its middle-income status by 2025—hence this mission is shaping policies, institutional arrangements and investment strategies that open up room for action and attention (Relief Web).
The US Department of State argued that the US is the “largest bilateral contributor to humanitarian needs and provides an annual average of over half a billion dollars for that purpose alone”.
Further on that line, the relationship has proved to be much more essential and crucial to the welfare of the second-most populous country in Africa. In 2019, at least 8.2 million people in Ethiopia required emergency assistance, as around 8 million Ethiopians face food insecurity issues.
Ethiopia has a long history of food insecurity, but its unwavering efforts stand to eliminate the humanitarian threat. The nation has not only fought to reduce poverty but expanding investment in essential social services provision.
On the latter, the World Food Programme (WFP) noted that an estimated 20.4 million people in Ethiopia need food support.
Climate change, domestic turmoil, dependence on rain fed agriculture and land tenure disputes contribute to the detriment of food security in the nation. However, the fiver year Growth and Transformation Plan targeting improvement by 2050, stand to revitalize the nation’s welfare base.
The US assists African governments, including Ethiopia, facilitate preparedness, response, and recovery from large-scale emergencies and disasters by reducing dependence on donors (US Department of State).
Over four years, from 2016 to 2020—the US has demonstrated its commitment to Ethiopia by providing more than US$4.2 billion in development and humanitarian assistance.
Going down the bilateral economic relations, Ethiopia and the US have seeded their partnership with hefty sums of financial support.
To be fair, it is rather vital to consider the countless efforts made by Ethiopia to uplift its economy. Despite being landlocked, it has leveraged its diplomatic relations with Djibouti to use the main port effectively for two decades to access international trade (World Bank).
We can’t ignore the vast achievement made by Ethiopia on public infrastructure and industry and service sector revitalization.
With the latter on board, Ethiopia’s road to achieving a lower-middle-income status by 2025 might be possible if current political hardships don’t undermine her achievement.
The Covid-19 pandemic hindered African economies, including Ethiopia’s, slowing down the real GDP in both financial years—2019/2020 and 2020/2021.
The US supports Ethiopia’s efforts to enhance its business climate and investment structures that attract investors towards an even playing field and forge a strong entrepreneurship culture.
“Ethiopia is currently our 82nd largest goods trading partner with US$ 108 billion in total (two-way) goods trade during 2018. Goods exports totaled US$1.3 billion; goods imports totaled US$445 million. The US goods trade surplus with Ethiopia was US$ 863 million in 2018, a 47.4 per cent increase over 2017,” the US Department of State report states.
At present, Africa is still implementing the African Continental Free Trade Area (AfCFTA), which is expected to open doors for more trading operations and improve interregional productivity. With this, the US Ethiopia relations stand to expand even further.