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  • Zeeyada Gebru

Humanitarian Aid and Socio-Economic Crisis in Ethiopia

Ethiopia, once known as the fastest-growing economy in the world, has now ceased to live up to that name. As war rages Ethiopia’s Northern region of Tigray, resulting in approx. 600,000 casualties and leaving 5.2 million Tigrayans in starvation, the economic status of Ethiopia has declined. Rather than facing the truth of the declining economy, Ethiopia has continued to put up a front, by hiding the atrocities being committed against the innocent people of Tigray. Not only are the people of Ethiopia suffering, but so is the economy.

The high cost of the war has imposed a heavy burden on the country’s economy. The effects of this burden have caused the country to experience the highest inflation rates it's seen in over a decade. To make matters worse, Ethiopia has already drained over $1 billion from the country’s coffers, with most of the money going into military funding. The Ethiopian central bank has also halted all lending and money transfers. As a result, Ethiopia now faces a crisis in its exchange market and a lack of foreign reserves. This caused the official exchange rate to plummet to 45 birrs to the dollar, but sources have stated that the exchange rate increased to as high as 75 birrs to the dollar. As of today, the rate is 53.55 Ethiopian Birr to 1 USD. With the failure of the central bank to maintain the exchange rate and monetary policy, the economy is left in disarray. All 10 regions of Ethiopia have now experienced decreases in their productivity. This mainly includes the mining, agriculture, and manufacturing industries.

Once the world became aware of the inhumane and “gross violations of internationally recognized human rights” being committed by the Ethiopian government, the nation lost its eligibility for trade benefits under the AGOA (African Growth and Opportunity Act) in January 2022. The AGOA provided duty-free access to the U.S. market for over 1,800 products, which helped encourage African countries participating in the AGOA to liberalize their domestic markets. Without AGOA, Ethiopia faces higher levels of unemployment, limited market access, and delays in development plans. Prior to this conflict, the developed world admired and valued Ethiopia for prioritizing peace and prosperity for its people, including creating peace with Eritrea. After 20 years, Ethiopia’s peace agreement with Eritrea gradually took an unexpected role in the War in Tigray.

To many people’s dismay, Eritrea started sending troops to fight against Tigray, even though Tigray and Eritrea had been allies, once in the takedown of the Derg (an Ethiopian military junta) and then again against the People’s Democratic Republic of Ethiopia in 1987. After Eritrea split with Ethiopia in 1993, Tigray and Eritrea grew a hostile relationship due to border conflicts and other sporadic fights, but to many, those minor conflicts didn’t seem to be reason enough to get involved so heavily in the war. So why is the Eritrean government working with Ethiopia? Well, it seems to be connected to Eritrean President Isaias Afwerki’s longing for political and regional involvement, after having two decades of relative diplomatic isolation. As Ethiopia shined in the limelight, Eritrea straggled behind, unable to keep up with Ethiopia’s fast-growing economy, leaving Afwerki bitter and craving economic engagement. He realized that with the fall of Ethiopia he could gain power and help bring more opportunities for intervention and influence.

Along with the loss of trust from their own people, Ethiopia has also lost the trust of other nations. Prior to the war in Tigray, the U.S. had an extremely positive relationship with Ethiopia. The U.S. had worked to provide the country with dependable democratic institutions, developmental growth, and helped the country achieve peace and security. The United States had also previously viewed Ethiopia as a guarantor of security in Africa, which can be attributed to Ethiopia’s work in stabilizing Somalia and South Sudan. Specifically, Ethiopia reduced political and communal conflicts in South Sudan improving security in Ethiopia’s bordering regions and reducing refugee inflows, while similar actions took place in South Sudan as well. With the war now causing ceases in trade and weakened security, Ethiopia has halted the progress of nations they once helped, and lost its credibility as the “guarantor of security.”

Like many other nations in Africa, the U.S. is concerned about the future of Ethiopia and the relationship it will have with Tigray in the years to come, because not only is the economic decline plaguing Ethiopia, but social injustice is as well. Ethiopia’s horrendous war crimes, ethnic cleansing, and genocide will have an everlasting effect on the people of Tigray, making it extremely unlikely for Ethiopia to become a whole united front again. Victims of these crimes will forever remember the atrocities perpetrated against them by the country they thought they belonged to.

Not only has the war caused determinantal effects on the people that reside in Ethiopia, especially those in the Tigray region, but it has caused a country once destined to achieve economic greatness in Africa to lose practically every advantage that deemed it worthy of such a title. Through the possible separation of Tigray as an independent state or through years of rebuilding a nearly severed relationship with Tigray, there can be a future where Ethiopia stands as it once was, once again holding the title of “the fastest growing country in the world.”


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