Ethiopia’s growth should stabilize around 8% in the coming years thanks to infrastructure investments, Moody’s indicated in a country report.

In the report, the rating agency indicates that the East African country’s growth has been largely spurred by infrastructures investments, which recorded an average of 10% rise between 2009 and 2018.

These investments fall within the framework of the government’s ambition to diversify an economy that has been dependent on coffee and gold imports for a long time. For this diversification purpose, it increased its infrastructure investments in the transport and energy sector.

For instance, the Grand Renaissance Dam, which should be operational by 2021, is to transform Ethiopia into one of the largest energy exporters in Africa.

According to Moody’s, the Ethiopia-Djibouti rail line should reduce transport cost by 50% and the overall transaction costs by about 20%.  

The country announced that it wanted to increase its road network to 200,000 km by 2020. Between 1991 and 2018, this network rose from 19,000 to 121,171 km according to figures provided by the minister in charge of the roads.

All those investments should also support a rising industrial sector boosted by the government’ strategy to transform Ethiopia into one of Africa’s industrial poles based on the textile industry.

“Given the transport link and an oversupply of energy in the country, industrial parks along the railways have become attractive locations for multinational companies’ investments,” Moody’s reveals.

The rating agency explains that the country is nevertheless vulnerable to many factors namely low foreign reserves, the public debt denominated in foreign currencies and geopolitical risks in the Horn of Africa.

Moutiou Adjibi Nourou