Business Dynamics: Ethiopia

March 2021

Limited by high poverty rates and low educational attainment, Ethiopia ranks among the bottom third of countries globally in many business environment indexes. Weak infrastructure, a government owned financial services sector, and lack of skilled labour limit potential economic growth and pose a number of structural issues. Nevertheless, as one of the largest African economies, Ethiopia remains an attractive market with reforms and improvements taking place across the sectors.

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Overview:

The Country Briefings series examine market potential, economic and consumer trends impacting each country and how they are set to change.

Each Country Briefing covers one of these topics:

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The briefings cover 103 countries and identify topics of crucial interest to planners, marketers and researchers.

Business Dynamics: Ethiopia

HEADLINES

OPERATIONAL AND REGULATORY ENVIRONMENT

Public sector struggling with corruption, with armed conflict threat high in Ethiopia’s Tigray region
While improving, business competitiveness remains weak in Ethiopia

FINANCING AND INVESTMENT

New investment reforms to encourage FDI omit financial services which remains under government control

SKILLS AND LABOUR

High illiteracy rates and minimal higher education attainment limit economic growth potential

TRANSPORT AND INFRASTRUCTURE

Feeble infrastructure and ineffective logistics prevent effective business operation

DIGITALISATION AND INNOVATION

Common internet shut downs harm Ethiopia’s businesses and economic freedom

OPERATIONAL AND LEGAL ENVIRONMENT

Chart 1 Operational and Legal Environment Key Indicators Chart 2 Ease of Doing Business Ranking by Pillar Regional Comparison 2020 Chart 3 Ease of Doing Business Ranking Regional Comparison 2015-2020 Chart 4 Ease of Doing Business Indicators: Time Needed to Start/Close a Business 2020 Chart 5 Ease of Doing Business Indicators: Costs Incurred to Start and Operate a Business 2020 Chart 6 Tax Rates 2020 Chart 7 Insolvency Recovery Rate by Secured Creditors in Ethiopia and Regional Comparison 2020 Chart 8 Global Competitiveness Ranking by Pillar in Ethiopia and Regional Comparison 2019 Chart 9 Global Competitiveness Ranking for Ethiopia and Regional Comparison 2014-2019 Chart 10 Global Competitiveness Index: Macroeconomic Stability Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 11 Index of Economic Freedom Ranking by Pillar in Ethiopia and Regional Comparison 2020 Chart 12 Index of Economic Freedom Ranking Over Time 2015-2020 Chart 13 Index of Economic Freedom: Judicial Effectiveness Pillar Rank in Ethiopia and Regional Comparison 2017-2020 Chart 14 Index of Economic Freedom: Government Integrity Pillar Rank in Ethiopia and Regional Comparison 2015-2020 Chart 15 Number of New Businesses and Annual Real GDP Growth in Ethiopia 2015-2020 Chart 16 New Business Density in Ethiopia Compared to Regional Average 2016-2020 Chart 17 Operational Environment in Ethiopia and Regional Comparison 2019 Chart 18 Corruption Perceptions Ranking: Ethiopia and Regional Comparison 2014-2019

FINANCING AND INVESTMENTS

Chart 19 Key Financial and Investment Indicators Chart 20 Ease of Doing Business Ranking: Getting Credit Pillar for Ethiopia and Regional Comparison 2015-2020 Chart 21 Soundness of Credit Information: Credit Bureau Coverage 2020 Chart 22 Global Competitiveness Ranking: Financial Systems Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 23 Ease of Doing Business Ranking: Protecting Minority Investors Pillar for Ethiopia and Regional Comparison 2015-2020 Chart 24 Index of Economic Freedom: Property Rights Pillar Rank in Ethiopia and Regional Comparison 2015-2020

SKILLS AND LABOUR

Chart 25 Key Skills and Labour Indicators Chart 26 Global Competitiveness Ranking: Skills Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 27 Population Aged 15+ with Higher Education 2015-2020 Chart 28 Education Indicators 2020 Chart 29 Number of University Graduates by Programme 2020 Chart 30 Global Competitiveness Ranking: Labour Market Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 31 Employment by Age 2020 Chart 32 Employment by Gender 2020 Chart 33 Labour Structure Change over 2015-2020 Chart 34 Labour Structure Comparison 2020 Chart 35 Self Employed as % of Total Employed Population 2020 Chart 36 Index of Economic Freedom: Labour Pillar Rank in Ethiopia and Regional Comparison 2015-2020 Chart 37 Minimum Wage per Hour over 2015-2020 Chart 38 Wage per Hour in Manufacturing Sector over 2015-2020 Chart 39 Labour Market Regulations in Ethiopia and Regional Comparison Chart 40 Employment by Industry Sector 2020

TRANSPORT AND INFRASTRUCTURE

Chart 41 Key Infrastructure Indicators Chart 42 Logistics Performance Index Ranking for Ethiopia and Regional Comparison 2015-2020 Chart 43 Global Competitiveness Ranking: Product Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 44 Global Competitiveness Ranking: Infrastructure Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 45 Transportation Mode Indicators in Ethiopia and Regional Comparison Chart 46 Road Infrastructure 2020 Chart 47 Ease of Doing Business Ranking: Trading Across Borders Pillar for Ethiopia and Regional Comparison 2015-2020 Chart 48 Transaction Time for Trading Across Borders 2020 Chart 49 Costs of Trade Transactions Across Borders 2020 Chart 50 Global Competitiveness Ranking: Market Size Pillar for Ethiopia and Regional Comparison 2014-2019

DIGITALISATION AND INNOVATION

Chart 51 Innovation and Digitalisation Key Indicators Chart 52 Network Readiness Ranking by Pillar in Ethiopia and Regional Comparison 2020 Chart 53 Network Readiness Ranking for Ethiopia and Regional Comparison 2019-2020 Chart 54 Network Readiness Ranking: Technology Pillar for Ethiopia and Regional Comparison 2019-2020 Chart 55 Global Competitiveness Ranking: ICT Adoption Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 56 Global Competitiveness Index: Innovation Pillar for Ethiopia and Regional Comparison 2014-2019 Chart 57 Intellectual Property: Ethiopia Compared to Selected Regional Peers

APPENDIX A

The World Bank’s Ease of Doing Business Index (Doing Business) 2020

APPENDIX B

The Global Competitive Index (GCI) 2019

APPENDIX C

The 2020 Index of Economic Freedom

APPENDIX D

The Logistics Performance Index (LPI) 2020

APPENDIX E

The Network Readiness Index (NRI) 2020
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