Unraveling Ethiopia’s Economic Crisis: The Convergence Of Cult Economy And Shock Doctrine Leading To Total Collapse

Wondemagne Ejigu
Uppsala, Sweden.

Before I begin, I want to clarify that I am not a professional economist. However, I am deeply interested in the subject and make an effort to learn as much as I can about it. Over the past few years, institutions like the IMF, World Bank, and others have struggled to analyze the Ethiopian economy accurately with the available analytical tools. Essentially, the Ethiopian economy has lacked a clear structure and cohesive policy framework. In short, there is no clear direction or foundation. When the Prime Minister and other officials within the regime discuss the economy, they often refer to miraculous changes occurring in a spiritual realm, which most of us are unable to perceive due to what the PM Abiy regime describes as spiritual blindness. 

Although it may sound strange and unspiritual to Prime Minister Abiy and Prosperity Party followers, economics is a science, not a form of spiritual voodoo that mysteriously grows because the prime minister and prosperity party cadres simply believe or dream it to be so. This might serve as a temporary burst of excitement, akin to hours of praise in halls where prosperity preachers tell the public, “If you believe it, you will achieve it.” Economic growth, however, is driven by measurable scientific indicators that do not require miraculous, divine, or voodoo-like interventions. For any economy to grow, key factors such as GDP, consumption, investment, international trade, and political stability must be present and show positive signs. Under Prime Minister Abiy regime, the economy has been reticent in terms of consumption, investment, and international trade. Regarding political stability, the country has been plagued by sporadic, ongoing conflicts and civil wars. So, the question remains: where and how did this miraculous economic transformation supposedly occur? It’s a valid question, especially for those of us lacking the so-called spiritual vision. 

The Cult Economy: 

The answer is clear: Ethiopia lacks a coherent economic structure, clear direction, and effective policy. While the Prime Minister and his party always claim that miraculous growth is happening in their imagination, they are essentially promoting their own version of a cult economy. We can call it the Ethiopian version of a cult economy, and credit Prime Minister Abiy Ahmed for it. In the real world, economists define a cult economy as a perceived gain or growth that is heavily favored by a specific group of investors or traders who strongly believe in its potential to generate value in the future, even if the current fundamentals are weak. However, in the Ethiopian version of cult economy, there are no tangible economic concepts like investment, trade, or consumption. There is no visible new investment across sectors, and previous efforts in manufacturing are doomed to failure because they do not reflect Prime Minister Abiy Ahmed’s legacy. Some of these endeavors even echo the name of Meles Zenawi. The manufacturing sector that survived Prime Minister Abiy’s quest for legacy has suffered from countless armed conflicts and civil wars. Despite this, the Prime Minister and his team remain steadfast in their belief of miraculous economic growth, even as the country’s economy continues to deteriorate, inflicting immense and unbearable suffering on Ethiopians at large. Sadly, this is not the end of the story—the Ethiopian version of a cult economy is not the only story, it gets even worse! 

The Shock doctrine : 

The Ethiopian version of a cult-like economy and its miraculous economic growth could not withstand the senseless war projects undertaken by the regime. The civil war in Tigray, the ongoing civil war in the Amhara region, and other armed clashes across the country have drained a substantial portion of the already fragile economy. Additionally, Prime Minister Abiy and his party’s lavish lifestyle have severely strained the nation’s financial stability, almost choking it to the brink of collapse. The Abiy regime has no choice but to seek urgent financial assistance through shock therapy measures from the IMF and the World Bank, which the IMF and World Bank are more than happy to give, as long as the nation’s economic legs/doors are wide open. 

As Ethiopia opens itself up to extensive economic liberalization under the guidance of the International Monetary Fund (IMF), an increasing number of critics, both domestically and internationally, warn that these reforms resemble a textbook example of what Naomi Klein famously called the ‘Shock Doctrine.’ This strategy involves exploiting crises—whether economic, environmental, or political—by allowing political actors to capitalize on chaos caused by natural disasters, wars, or other emergencies to push through unpopular policies such as deregulation and privatization.

These neoliberal economic reforms unapologetically serve the interests of Western superpowers by ruthlessly undermining poor economies like Ethiopia, leaving them perpetually dependent on small aid packages from the Western world. The term ‘Shock Doctrine,’ coined by Naomi Klein, describes how international financial institutions often exploit crises to implement radical free-market policies, which frequently result in negative economic consequences for the countries affected. 

Examples such as Russia, Iraq, Poland, and Chile demonstrate how the Shock Doctrine can devastate nations, leaving lasting damage. Ethiopia now faces a critical crossroads: will it pursue a form of market-driven ‘progress,’ risking falling into a self-destructive economic cult? a new era of disaster capitalism and economic recolonization—a phenomenon unlike anything seen before? 

In recent years Ethiopia’s poor economic performance has been explained as a miraculous growth visible only to the spiritually gifted, such as the Prime Minister and his close circle. The Prime Minister claims to possess divine-like intelligence, envisioning Ethiopia becoming one of the world’s two superpowers within thirty years. Meanwhile, ordinary citizens, who inhabit the harsh realities of daily life, continue to suffer from soaring inflation, a shortage of foreign currency, unsustainable debt, and war-related destruction. 

In response, the IMF and World Bank have stepped in—not only providing financing but also imposing a series of conditionalities. Central among these is the privatization of major state-owned enterprises, including Ethiopian Airlines, Ethio Telecom, and even the energy sector of the Grand Ethiopian Renaissance Dam, which are being considered for partial or complete privatization. 

However, as history demonstrates, such “reforms” often come at a significant cost. Joseph Stiglitz, a Nobel laureate and former chief economist of the World Bank, has long criticized the IMF’s one-size-fits-all approach. In his influential book ‘Globalization and Its Discontents,’ Stiglitz argued that IMF programs frequently exacerbate poverty and inequality, weaken institutions, and undermine democratic accountability—trends that are glaringly evident in today’s Ethiopia. 

John Perkins, in ‘Confessions of an Economic Hit Man,’ recounts how developing countries are lured into massive debt traps by international lenders and then coerced into selling off national assets and accepting foreign control. Ethiopia, with its fast-growing population and strategic location, fits neatly into this pattern. Under the guise of reform, we are witnessing a modern replay of imperial extraction, where public wealth is handed over to transnational corporations and foreign investors.

Meles Zenawi, the late Ethiopian Prime Minister, was no blind follower of neoliberal orthodoxy. He was deeply skeptical of the IMF’s structural adjustment programs, arguing in various writings and speeches that Africa’s path must prioritize state-led development, equity, and national sovereignty. It is ironic—and tragic—that Ethiopia is now embracing the very model Meles rejected during his administration. 

In ‘Dead Aid,’ economist Dambisa Moyo warned that foreign-led economic restructuring fosters dependency rather than self-reliance. She argued that African nations need capital markets, infrastructure, and internal accountability—not externally imposed reforms that strip governments of their autonomy. Ethiopia’s current trajectory risks validating Moyo’s fears: a future where reform becomes a euphemism for foreign domination. 

Ethiopians were not consulted about these reforms. There has been little parliamentary debate and no public referendum. The sale of public enterprises—built through generations of labor and national sacrifice—is being rushed with technocratic urgency, absent meaningful democratic participation. This raises troubling questions: Who benefits from this reform agenda? Who owns Ethiopia’s future? Civil society groups, trade unions, and some Ethiopian economists have begun to voice concern. They fear job losses, weakened national sovereignty, and the rise of monopolistic foreign interests. But dissent is muted, often sidelined by the narrative that ‘liberalization is inevitable and the ordinary citizen’s unbearable suffering is just part of the prophecy.’ 

Conclusion: 

It is fair to say that Ethiopia’s version of a cult economy, combined with the shock doctrine, is paving the way for a complete collapse of the country’s economy, with unimaginably severe social and economic consequences. The Prime Minister and his allies appear blinded and enticed by the very cult they have created. 

Historically, cult leaders tend to fall when their entire cult system breaks down. To date, there has been no example of a cult leader who takes preemptive measures; cults invariably end in catastrophe. What makes this situation in Ethiopia even more complex is that the effects of the shock doctrine have been felt from the very first day of implementing IMF-backed reforms. What is likely to come is frightening to even consider. It is high time for civil servants, labor unions, and universities to step up, take control of the situation, and steer the country in a different direction—otherwise, the nation is headed toward a rapid and destructive crash. Now is the moment to act.

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

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