Teshome Abebe
In Ethiopia, a nation with a rapidly growing population and one of the youngest demographics in the world, the youth dividend presents both immense opportunities and significant challenges. With over 97% of its population under the age of 64, Ethiopia stands at a crossroads where the potential for economic growth and innovation driven by its young workforce clashes with the realities of rising costs of living, unemployment, and social unrest. In a new consumer reality where affordability, value, and cost-of-living concerns dominate, Ethiopia’s youth are both a catalyst for progress and a source of volatility. This article explores the dual nature of Ethiopia’s youth dividend, highlighting the opportunities for economic transformation and the chaos stemming from systemic challenges, while grounding the analysis in recent developments and data. This brief analysis examines critically the establishment narrative, focusing on the lived experiences of Ethiopian youths and the broader economic context.
The Youth Dividend: A Demographic Opportunity
Ethiopia’s youthful population is often described as a demographic dividend—a window of opportunity where a large, working-age population can drive economic growth if properly harnessed. With a median age of 19 and a population projected to reach 190 million by 2050, Ethiopia has the potential to leverage its human capital to boost productivity, innovation, and consumption in a consumer landscape increasingly focused on affordability and value. For example, consumers in Ethiopia will be most active adopters of smartphones as possession rates have increased from 66% (73% in Sub-Sahara Africa) in 2023 to a projected 89% by 2030. This facilitates greater access to digital financial services, and eventually, greater convenience, security and accessibility.
1. Entrepreneurship and Innovation: Ethiopia’s youth, like youth elsewhere in the world, are increasingly tech-savvy and entrepreneurial, fueling the growth of startups and digital platforms. The rise of mobile technology and internet penetration (estimated at 20% in 2024) has enabled young Ethiopians to create businesses catering to cost-conscious consumers. For example, ride-hailing apps like Ride and e-commerce platforms like Jiji are gaining traction, offering affordable services and goods tailored to local needs. These ventures not only address affordability but also create jobs, with the informal sector employing an estimated 80% of urban youth.
2. Consumer Market Growth: The youth dividend aligns with a growing consumer base that prioritizes value-driven purchases. Young Ethiopians, particularly in urban areas like Addis Ababa, are driving demand for affordable fashion, fast food, recreation and digital services. The rise of local brands and micro-enterprises reflects a shift toward cost-effective alternatives to imported goods, which have become prohibitively expensive due to inflation and currency devaluation. For instance, the Ethiopian birr lost over 50% of its value immediately following economic reforms in 2024, making locally produced goods more competitive compared to imported ones.
3. Agricultural Transformation: With an estimated 80% of Ethiopia’s population engaged in agriculture or agribusiness, young farmers are adopting innovative practices to increase productivity and meet the demand for affordable food. A reported initiatives like the Agricultural Transformation Agency (ATA) have supported youth-led agribusinesses, providing training and access to markets. These efforts are critical in a country where food inflation reached 39% in 2024, exacerbating cost-of-living pressures for low-income households.
The Chaos: Challenges of the Youth Dividend
While the youth dividend offers promise, it also fuels chaos when systemic issues like unemployment, inflation, and political instability remain unaddressed. Ethiopia’s young population faces significant barriers that threaten to destabilize the country and undermine its economic potential.
1. Unemployment and Economic Hardship: Despite a government reported GDP growth of 7-10% annually, driven by urban-focused services and infrastructure in the form of “corridor development”, 72%% of Ethiopians remain multidimensionally poor, with rural youth particularly affected. Incidentally, it isn’t clear if the authorities understood the subtle differences between “corridor development” from “development corridor”! Youth unemployment stands at approximately 27%, and underemployment is rampant. The economic fallout from the 2020-2022 Tigray civil war, combined with global shocks like the COVID-19 pandemic and the interminable wars in Amhara & Oromia have driven inflation to record highs, with the cost-of-living skyrocketing. For example, public servants like teachers in Addis Ababa, and now medical professionals throughout the country, are protesting their conditions as they struggle to afford necessities as prices for essentials like teff and fuel have more than doubled since 2022.
2. Migration and Desperation: Frustrated by joblessness and rising costs, many young Ethiopians are risking their lives to migrate abroad, particularly to Saudi Arabia via perilous routes across the Red Sea. The Qeerroo movement, a youth-led protest group, for example, highlights the anger over landlessness, marginalization, and repressive governance. The movement’s activism led to political change in 2018 with the rise of Prime Minister Abiy Ahmed, but ongoing economic crises and the Oromo Liberation Army (OLA) active and powerful insurgency along with the patriotic Fano movement have fueled further discontent, with parts of Oromia descending into violence since 2018.
3. Social and Political Unrest: Ethiopia’s youth are both victims and perpetrators of unrest. In Tigray, young people express exhaustion with violence, with residents pleading for peace amid fears of possible renewed conflict with neighboring countries. The flawed and now fragile 2022 peace agreement between the federal government and the Tigray People’s Liberation Front (TPLF) is at risk of falling apart, and youth in conflict zones face limited opportunities, driving some toward extremism or crime. Urban youth, meanwhile, grapple with mental health crises and disillusionment, as affordability constraints limit their access to education and housing.
Navigating the New Consumer Reality
In the context of Ethiopia’s cost-of-living crisis, where inflation and “economic reforms” have strained households, the focus on affordability and value is reshaping consumer behavior and should alter policy priorities. The government’s National Medium-Term Revenue Strategy aims to increase the tax-to-GDP ratio to 30% by 2028, but fee hikes for services like passports and vehicle licensing have added to the financial burden on citizens. At the last count of this author, there have been over 12 types of taxes and/or fees that were levied against residents since the “economic reform” driven by the IMF. Meanwhile, low-income households, who spend over 60% of their income on food, are prioritizing cost-effective solutions, from bulk buying to reliance on informal markets or even forgo meals in what appears to be a race to the bottom.
For businesses, the youth dividend offers a chance to tap into a growing market of value-conscious consumers. Companies that offer affordable, locally produced goods and services—such as solar-powered appliances or low-cost mobile data plans—are thriving. However, success depends on addressing the chaos of unemployment and instability along with ensuring security and solving the continuing wars, which dampen consumer confidence and purchasing power.
An Economy that Works for Everyone
Before we conclude and state what Ethiopia must prioritize to harness the youth dividend and mitigate chaos, let us look at the data from the World Population Dashboard (2024):
People aged 0—14 = 39%
Aged 15—64 =58%
Aged 65+ = 3%
For Policy wonks, here is a different disaggregation of the data:
Aged 15—24 = 19%
Aged 25—54 = 32%
Aged 55—64 = 4%
Aged 65+ = 3%
The data suggest that planning a nation’s socioeconomic agenda requires structure. Rapid growth in any sector implies investments that need to be undertaken in that sector. A rapid growth of a young adult population unable to find employment, for example, can lead to unrest and chaos.
To harness the youth dividend and mitigate chaos, we suggest that Ethiopia prioritize, among others, job creation; quality education and housing; conflict resolution; and economic stabilization.
Ethiopia’s youth dividend is a double-edged sword, offering a pathway to economic transformation through innovation and consumption, yet threatening chaos when systemic challenges go unaddressed. In a consumer reality defined by affordability and value, the nation’s ability to empower its youth while stabilizing its economy will determine whether this demographic boon becomes a catalyst for prosperity or a source of further unrest. By investing in jobs, education, and peace, Ethiopia can unlock the full potential of its young population and navigate the complexities of its cost-of-living crisis.
Teshome Abebe, PH.D. is a former Provost and Vice President for Academic Affairs at two institutions.
References:
- Addis Standard. (2024, December 23). Progress or Hardship? How Ethiopia’s economic reforms impact low-income households amid inflation, escalating cost of living. www.Addisstandard.com%2Fprogress-or-hardship-how-ethiopias-economic-reforms-impact-low-income-households-amid-inflation-escalating-cost-of-living%2F&data
- The New Humanitarian. (2025, April 23). “I am going to Saudi Arabia, or my grave”: The exodus of Ethiopia’s frustrated youth. www.thenewhumanitarian.org%2Fnews-feature%2F2025%2F04%2F23%2Fethiopia-frustrated-youth-south-south-migration-africa
- BBC News. (2025, March 17). Ethiopia’s Tigray region: Residents fear fresh conflict. www.bbc.co.uk.
- Al Jazeera. (2025, April 22). Ethiopia | Today’s latest from Al Jazeera. www.aljazeera.com%2Fwhere%2Fethiopia%2F&data.
Editor’s Note : Views in the article do not necessarily reflect the views of borkena.com
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Thank Dear Brother Teshome Abebe, PhD. for your usual intuitive article loaded with factual statistical numbers. Such well researched numbers are the ones that always walk the walk and talk that talk. I am always on a lookout for his much anticipated articles. Then when I find one, I can’t help it but sit back and get educated. He never inserts derogatory terms such as ‘Neftegna, Woyane and Oromummaa to feed on raw emotion of the gullible and denigrate a group of noble people like some of these well read individuals among us usually do. He always gets 10 cases of applause for that from me.
Blessings to you and your family.