East African growth hub Ethiopia lifted its state of emergency two months early on Tuesday, and now could be the time for frontier market investors to dive in, according to analysts.
“Ethiopia’s parliament has just ratified overwhelmingly the draft bill from the cabinet that lifts the state of emergency,” Fitsum Arega, the prime minister’s chief of staff, tweeted. “The government is confident that the public will maintain and protect peace and order.”
The news is the latest in a series of reformist steps that suggest now is “a good window to start investigating” investment opportunities in Ethiopia, according to Jean Devlin, partner in global risk analysis at Control Risks.
Ethiopia ‘coming back from the brink’
Ethiopia, a de facto one-party state, is used to heavy-handed government control. But, last week, the ruling coalition party began talks with opposition groups with a view to amending an anti-terror law critics say stymies dissent.
Meanwhile, the country’s telecoms sector, a state-run monopoly, said it would allow local firms to use its infrastructure to provide internet services.
On top of this, the Financial Times reported that major investor China has cut back its financial ties to Ethiopia, citing concerns over foreign exchange shortages and national debt.
“Caution is still required as Ethiopia is coming back from the brink,” Pat Thaker, editorial director for the Middle East and Africa at the Economist Intelligence Unit, told CNBC via email Monday.
But, with Chinese investment potentially becoming less of a presence in Ethiopia, “this presents an opening for Western investors who have generally stayed back in the last two to three years, and I think the political news will complement that.”
Prime minister listening to international and domestic concerns
Ethiopia imposed a state of emergency in February following the resignation of Prime Minister Hailemariam Desalegn.