Ethiopia: Strategic and Economic Interests

Ethiopia, with a population of around 109 million, is one of Africa’s fastest-growing economies and holds strategic and economic interest for major partners like India.

Key Factors of Interest

• Manufacturing Base: Ethiopia has a substantial manufacturing base and a large domestic market.
• Geographic Position: Located in the Horn of Africa, it plays a pivotal role in regional stability and politics.
• Hydropower Potential: The country is a potential renewable-energy powerhouse, particularly in hydropower.

Political and Economic Developments

Ethiopia is emerging from civil conflict, attempting to build a national consensus, and hosting the African Union headquarters. Efforts to diversify access to the Red Sea via Somaliland and Eritrea highlight its drive for strategic autonomy in trade and logistics.

India-Ethiopia Bilateral Relations

Educational Collaboration

• Indian teachers and professors have historically shaped Ethiopia's education system.
• Ethiopia was a pilot for the Pan-African e-Network project, maintaining collaboration with IIT Delhi for tele-education.
• It sends a significant number of African students to India, often through government-funded programmes.

Investment and Economic Cooperation

• Indian investments in Ethiopia topped $4 billion, initially focusing on agriculture, now shifting to mining.
• Mining, especially in gold, critical minerals, and rare earth elements, presents significant opportunities.

Defence Cooperation

• India established the Harar Military Academy in 1956 and has supported Ethiopian military training since 2009.
• Recent MoUs and meetings aim to expand training, capacity building, and defence exports.

Challenges and Opportunities

• Ethiopia seeks to attract Indian investment in pharmaceuticals, agro-processing, light manufacturing, and mining.
• India could update agreements like the Double Taxation Avoidance Agreement to support private-sector engagement.
• Ethiopia needs to address investor concerns related to foreign exchange, taxation, and regulatory consistency.

Multilateral Cooperation

• India and Ethiopia can expand cooperation through BRICS, G-20 platforms, and South-South frameworks.
• The African Continental Free Trade Area offers easier market access for Ethiopian-based Indian companies.

Conclusion

India-Ethiopia relations have bright prospects, with potential for dynamic, mutually beneficial partnerships driven by political will, targeted reforms, and strategic alignment. The meeting between Prime Minister Narendra Modi and Ethiopian Prime Minister Abiy Ahmed Ali at the G-20 summit has further catalysed this relationship.