Unrest continues in Oromia, largest coffee producing region in Ethiopia; rising instability could impact markets

The Oromia National Regional State in Ethiopia is a federal region providing the country with its largest flow of export commodities, such as coffee, khat, gold and cattle. Since mid November 2015, protests – against lack of adequate self-rule in Oromia (an example of which is the Master Plan) for the Oromo people, who make up the largest ethnic group in Ethiopia, and against decades-old marginalization of the Oromo in the country as a whole – have hit Oromia; in addition to the report below, experts have also expressed that Ethiopia’s export economy will be impacted by the ongoing protests, in the short-term – with speculations that the government is seriously considering devaluation of the Birr. Though the government’s decision to halt the Master Plan has been taken positively by the protesters, the fact that the decision to halt the Master Plan came after the government had mobilized its armed military, thereby killing more than 140 Oromo persons, and maiming and arresting thousands of Oromo persons, shows the lack of institutional mechanisms to address the Oromo people’s concerns in particular, and all other people’s concerns in general, in Ethiopia. The lack of these institutional mechanisms, if not addressed by the government permanently, will continue to fuel the unrest in Oromia and beyond. The following report focuses on economic impacts of the ongoing Oromo protests in Oromia.

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Rising instability in Ethiopia could impact markets

Ethiopia is experiencing increased levels of instability, calling into question the notion that Ethiopia is ‘rising’, but such issues are unlikely to have an adverse impact on the economy in the long-term.

Ethiopia is facing a number of sensitive challenges which have arisen in tandem with its impressive economic growth rates, which the World Bank claims will result in the country reaching middle-income status by 2025 thanks to the government’s astute economic decision-making.

Ethiopia’s continued rise

Exciting developments continue to emerge from Ethiopia into 2016. On 5 January, the Ministry of Foreign Affairs announced plans to increase regional trade links with Sudan, South Sudan, Kenya, Somalia and Kenya, supported through the government’s increased investments in infrastructure linking the neighbouring countries.

In addition, Ethiopia’s large coffee industry is set to play an increasingly important role in the country’s economy. According to recent reports, Ethiopia will likely increase coffee exports by 45% due to government initiatives, with coffee exports already earning around 30% of Ethiopia’s hard currency.

– Read More (Global Risk Insights (GRI))