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Impact of the Civil War in Ethiopia on the Export Economy in Oromia, Amhara, and Tigray

Ethiopia Civil War
Image : AFP via The Economist (File)

By : Abel Eshetu Gebremedhin 

The civil war in Ethiopia, which began in November 2020, has primarily affected the Tigray region but has also spilled over into other regions such as Afar, Oromia and Amhara. These areas are integral to Ethiopia’s export economy, and the conflict has had profound consequences on agricultural production, manufacturing, and overall trade dynamics. This article explores how the civil war has impacted the export economy in Oromia, Amhara, and Tigray, highlighting the challenges and potential recovery strategies.

Oromia: Coffee and Agricultural Disruptions

Oromia, the largest region in Ethiopia, is a critical area for agricultural exports, particularly coffee. Ethiopia is the largest coffee producer in Africa, with Oromia contributing significantly to this output. The conflict has disrupted farming activities, leading to a decline in coffee production. Farmers have faced displacement, and the destruction of infrastructure has hindered the harvesting and transportation of coffee beans.

Beyond coffee, Oromia produces other essential agricultural exports such as livestock and horticultural products. The instability has affected these sectors by disrupting supply chains and reducing access to markets. As a result, export volumes have decreased, impacting the livelihoods of millions of farmers and agricultural workers in the region.

Amhara: Industrial and Agricultural Setbacks

The Amhara region, known for its diverse agricultural output and burgeoning industrial sector, has also been severely affected by the civil war. Amhara’s agricultural exports, including teff, sesame seeds, and livestock, have faced significant disruptions due to the conflict. The displacement of farmers and damage to agricultural infrastructure have resulted in lower production levels and decreased export capacity.

The industrial sector in Amhara, which includes textiles and garment manufacturing, has suffered due to the conflict. Factories have been damaged or forced to close, leading to a decline in production and export volumes. The loss of AGOA eligibility has further compounded these challenges, reducing market access for Amhara’s textile and garment exports.

Tigray: Devastation of Agricultural and Industrial Sectors

Tigray has borne the brunt of the civil war, with widespread devastation affecting all aspects of life and the economy. The region, known for its fertile lands and significant agricultural output, has seen a catastrophic decline in agricultural production. Key crops such as sesame, pulses, and cereals have been severely affected by the conflict. The displacement of farmers, destruction of farms, and blockade of supply routes have all contributed to this decline.

The industrial sector in Tigray, though smaller compared to Oromia and Amhara, has also been severely impacted. Factories and industrial facilities have been damaged or destroyed, leading to a halt in production and exports. The overall economic devastation in Tigray has had a ripple effect on the national export economy, given the region’s contribution to various export commodities.

Transportation and Logistical Challenges

The conflict has created severe transportation and logistical challenges across all three regions. Key transport routes have become unsafe or impassable, affecting the movement of goods from production sites to export hubs. The port of Djibouti, which handles the majority of Ethiopia’s trade, has experienced disruptions due to the instability in these regions.

Additionally, the conflict has impacted air freight services, with Addis Ababa Bole International Airport facing fluctuations in cargo volumes. These logistical challenges have increased transportation costs, delayed shipments, and reduced the competitiveness of Ethiopian exports on the global market.

Currency Devaluation and Economic Instability

The civil war has exacerbated economic instability in Ethiopia, contributing to the devaluation of the Ethiopian birr. A weaker currency has made imports more expensive and fueled inflation, which has exceeded 30% at times during the conflict. While a devalued currency can theoretically make exports more competitive, the overall economic turmoil and increased costs for exporters have offset any potential benefits.

Exporters in Oromia, Amhara, and Tigray face higher costs for imported raw materials and other inputs, reducing profit margins and competitiveness. The economic instability has also deterred foreign investment, further hampering the growth and recovery of the export economy.

Humanitarian Crisis and Economic Impact

The humanitarian crisis resulting from the conflict has had profound economic implications. Millions of people have been displaced, and there are widespread reports of famine and food insecurity. The diversion of government resources to address humanitarian needs has limited the funds available for economic development and export promotion.

International sanctions and the withdrawal of aid in response to the humanitarian crisis have further strained Ethiopia’s economy. These actions have reduced foreign exchange reserves, limited access to international markets, and hindered efforts to stabilize and grow the export economy.

Path to Recovery

Recovery for Ethiopia’s export economy in Oromia, Amhara, and Tigray hinges on achieving lasting peace and stability. Efforts to rebuild infrastructure, restore agricultural productivity, and attract foreign investment are crucial. The government, along with international partners, needs to focus on creating a conducive environment for economic recovery by addressing security concerns, rebuilding damaged infrastructure, and supporting displaced communities.

Reintegration into international trade agreements and restoring eligibility for trade benefits such as AGOA will be vital for revitalizing the export sectors. Additionally, investing in diversified economic activities beyond traditional agriculture and manufacturing could enhance resilience against future conflicts.

Conclusion

The civil war in Ethiopia has significantly impacted the export economy in Oromia, Amhara, and Tigray, disrupting agricultural and industrial activities, creating logistical challenges, and exacerbating economic instability. Addressing these challenges requires a comprehensive approach focused on peacebuilding, infrastructural development, and economic diversification. While the road to recovery is long and complex, concerted efforts by the Ethiopian government and international community can pave the way for a more resilient and prosperous export economy in the post-conflict era.

Editor’s note : Views in the article do not necessarily reflect the views of borkena.com

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1 COMMENT

  1. This is typical of the extremists’ notion. What else can be done in the past five years of Prime minister Abiy’s leadership other than boostin the economy and ensure more export and reduced import. You banda are spoiling the nation with your poisonous literatures. Keep silent and see the nation will bring about.

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