Issue No. 260

Published 19 Nov 2024

From War to Welfare

Published on 19 Nov 2024 8:18 min

From War to Welfare

As international support continues to return to Ethiopia, Addis has secured substantial financial backing from institutions like the IMF and World Bank, as well as renewed sovereign loans from individual governments. Yet this influx of funds has done little to alleviate the hardships faced by ordinary Ethiopians. Soaring inflation, particularly in the cost of food and fuel, has made basic necessities unaffordable, while millions remain dependent on humanitarian aid to survive. Far from easing the burden on Ethiopian citizens, potential financial lifelines highlight a troubling disconnect between international support and the realities on the ground, where both rural and urban communities continue to grapple with rising poverty and economic instability.

Ethiopia, with a population estimated at over 130 million in 2024, once celebrated rapid economic growth that halved extreme poverty and improved health and education. But these achievements are now unravelling under the strain of inflation exceeding 35%, global supply chain disruptions, extreme weather events, and protracted armed conflict in parts of Tigray, Amhara and Oromia. These crises have destabilised agriculture, displaced millions and deepened food insecurity, with over 20 million people now requiring urgent assistance.

The government’s allocation of resources is now under scrutiny, particularly its focus on military expenditure. Ongoing unrest, particularly the Fano insurgency in Amhara, has prompted escalating military spending, reportedly exceeding USD 1 billion during the Tigray war alone. This focus on military solutions strains Ethiopia’s budget, diverting resources from critical sectors like healthcare, education and infrastructure. Consequently, poverty rates have surged to 68.7%, with Ethiopia now ranking 175th on the Human Development Index and 145th in progress toward the UN Sustainable Development Goals.

Ethiopia has recently  implemented significant economic reforms to secure bailouts from the IMF and World Bank. These have included a market-based exchange rate, removing most restrictions on current accounts, and modernising monetary policies. Among the most notable changes is the floating of the birr, which has served to align it with black market rates, and a 14 November revision to the National Bank of Ethiopia (NBE) that allows exporters to retain 50% of their foreign currency earnings. While these reforms are intended to address inflation, foreign currency shortages and mounting debt, they have in fact exacerbated price instability and eroded purchasing power, further burdening the average Ethiopian.

These reforms also signal a shift from the developmental state model championed by former PM Meles Zenawi, which prioritised state intervention and infrastructure-driven growth. By contrast, Abiy Ahmed’s administration has embraced a free-market approach, selling off public industries and welcoming privatisation. While Meles’ policies sought to lay a foundation for democracy and middle-class growth, Abiy’s strategy appears driven by the immediate need for foreign investment, often at the expense of social safety nets.

Despite significant international support, there is growing concern that much of the financial assistance intended to aid Ethiopia’s most vulnerable populations is instead being diverted to sustain ongoing armed conflicts in Amhara and Oromia.Rather than stabilising the economy or rebuilding infrastructure in conflict-affected regions, resources appear to be disproportionately absorbed by military operations. This diversion not only prolongs political instability but also undermines urgent recovery efforts, leaving displaced communities and struggling populations without the support they desperately need amid a worsening humanitarian crisis.

The destruction still prominent across Tigray, and now in Amhara and Oromia, starkly contrasts with high-profile government projects, such as the renovation of Meskel Square in Addis Ababa. These development projects, while visually striking, highlight a troubling prioritisation of image over substance. Outside the capital, infrastructure remains in shambles, aid is insufficient, and millions of displaced Ethiopians are struggling to rebuild or sustain their lives. Agricultural disruptions caused by armed conflict and extreme climate events exacerbate inflation, while supply chains remain broken and rural economies grind to a halt.

Ethiopia’s strategic importance continues to attract foreign investment, particularly from the UAE and China, who view the country as a gateway to the Horn. Western nations, wary of ceding influence, remain engaged but often tie financial support to governance reforms. This geopolitical competition underscores Ethiopia’s ongoing global significance, but does little to address its domestic crises.

The current trajectory of the Ethiopian government is unsustainable, with military spending and vanity projects overshadowing the urgent need for meaningful humanitarian aid, development assistance and reform. Ethiopia faces mounting inflation, deepening poverty and persistent instability, yet resources are being diverted from rebuilding and addressing citizens’ most basic needs. Without a decisive strategy to stabilise the economy, rebuild infrastructure and prioritise public welfare, Ethiopia risks further entrenching its dependence on foreign aid and further exacerbating the struggles of its people.

International support and economic reform offer opportunities to effectively address these challenges, but their impact is currently undermined by misplaced priorities. Military operations and superficial development cannot replace the comprehensive recovery efforts and governance reform essential for Ethiopia’s brighter future. To escape cycles of poverty, armed conflict, political unrest and economic instability, the Federal Government of Ethiopia must shift its focus from war to welfare, channelling resources towards rebuilding lives, fostering growth and restoring trust.

By The Ethiopian Cable Team 

To continue reading, create a free account or log in.

Gain unlimited access to all our Editorials. Unlock Full Access to Our Expert Editorials — Trusted Insights, Unlimited Reading.

Create your Sahan account Login

Unlock lifetime access to all our Premium editorial content

You may also be interested in

Issue No. 938
An Army in Search of a Nation
The Somali Wire

Last April, General Sheegow Ahmed Ali-- once the highest-ranking military officer hailing from the Somali Bantu-- died in ignominy in a Mogadishu hospital. A senior commander who had previously spearheaded operations in south-central Somalia, Sheegow had been summarily sentenced to 10 years in prison in 2023 for operating a militia in the capital. His death-- mourned widely and protested in Mogadishu and Beledweyne-- returned the spotlight to the pernicious issues of discrimination in the Somali National Army (SNA).


22:23 min read 16 Mar
Issue No. 937
The Other Strait
The Somali Wire

The Horn of Africa's political fate has always been wired to external commercial interests, with its expansive eastern edge on the Red Sea serving as an aorta of trade for millennia. A Greek merchant's manual from the 1st century AD describes the port of Obone in modern-day Puntland as a hub of ivory, tortoiseshell, enslaved people and cinnamon destined for Egypt. Today, as so often quoted, between 12-15% of the world's seaborne trade passes along the arterial waterway, with the Suez Canal bridging Europe and Asia. But well before the globalised world or the vying Gulf and Middle Powers over the Red Sea's littoral administrations, the logic of 'gunboat diplomacy' underpinned the passage over these seas.


19:31 min read 13 Mar
Issue No. 120
Sudan's Islamists Return to the Sanctions List
The Horn Edition

Once on the US-designated terrorist sanctions list, it is unsurprisingly rather difficult to come off it. And with the US designating the 'Sudanese Muslim Brotherhood' as terrorists, elements of Khartoum's military government may now have the dubious honour of being on it twice. First time out in 1993, Khartoum was deemed a US State Sponsor of Terror in the wake of a raft of jihadist plots linked to the Islamist authorities in Sudan. Nearly three decades later, and only after Sudan's partial ascension to the Abraham Accords, the title and punishing sanctions were lifted for the civilian-military transitional government. Today, though the warring Sudan is no longer home to an Osama bin Laden or Carlos the Jackal, a US labelling of 'terrorist' has returned to Khartoum.


25:44 min read 12 Mar
Issue No. 936
More Guns, Less State in Somalia
The Somali Wire

At the collapse of the Somali state in the early 1990s, the bloated, corrupt, and clan-riven national army was nevertheless in possession of vast quantities of light weapons. Much of it sourced during Somalia's ill-fated alliance with the USSR and later Western and Arab patrons, government armouries were soon plundered by warring militias across Mogadishu, Kismaayo, Baidoa, and every garrison town as the country descended into chaos, providing the ammunition for the deaths of hundreds of thousands of people.


22:24 min read 11 Mar
Issue No. 322
Adwa, Empire, and the Ghosts of History
The Ethiopian Cable

Almost exactly 130 years ago, a vast Ethiopian army led by Emperor Menelik II outmanoeuvred and overran the invading Italian army at Adwa in Tigray, bringing the first Italo-Ethiopian war to a decisive close. By midday on 1 March 1896, thousands of Italian soldiers and Eritrean 'askaris' had been killed, sparing Ethiopia from the carving up of the African continent by European colonisers.


0 min read 10 Mar
Issue No. 935
A Pyrrhic Victory in Mogadishu
The Somali Wire

The Greek philosopher and historian Plutarch recounts that King Pyrrhus of Epirus, after defeating the Romans at Asculum in 279 BC, lamented, "One more such victory over the Romans and we are completely done for." After almost four torturous years, the same might be said for any more supposed 'victories' for the incumbent federal government of Somalia. To nobody's surprise, the constitutional 'review' process undertaken by Somalia's federal government was never about implementing direct democracy after all. It was, as widely anticipated, a thinly veiled power grab intended to centralise political power, eviscerate Somalia's federal system, and extend the term of the incumbent president, Hassan Sheikh Mohamud (HSM). And so, at the 11th hour and with less than 70 days remaining in his term of office, HSM declared Somalia's new constitutional text 'complete' and signed it into 'law.'


20:27 min read 09 Mar
Issue No. 934
An Open Letter From The Jubaland President
The Somali Wire

On 4 March 2026, Somalia's Federal Parliament hastily ratified dozens of controversial constitutional amendments, thus finalising President Hassan Sheikh's tailor-made Constitution. Speaker Aden Madobe has now declared the new revised Constitution effective immediately. In doing so, the speaker and his government have deliberately destroyed the existing social contract agreed upon by the people of Somalia.


20:08 min read 06 Mar
Issue No. 119
Abiy's Drone Diplomacy in Baku
The Horn Edition

At the end of February, Ethiopian PM Abiy Ahmed departed on a rather unusual visit to Baku, Azerbaijan. Slated as a meeting between two emerging powers, a focus on trade and investment frameworks was particularly emphasised by Foreign Minister Gedion Timotheos. More importantly, of course, was the signing of a comprehensive defence agreement by the two countries on 27 February. Spanning drone technology, armoured vehicles, artillery shell production, and air defence, the new agreement builds upon a framework from November 2025, which also included reference to refurbishing T-72 tanks, electronic warfare, and military-industrial manufacturing. Though war has not yet returned to Tigray as many feared, Abiy's vision of a militarised domestic —and regional —posture no doubt requires more hardware.


24:16 min read 05 Mar
Issue No. 933
Ramadan and Rupture
The Somali Wire

Ramadan is known as the 'Month of Mercy', typically characterised by forgiveness and reconciliation within the Islamic world. Not so in Somalia, where Villa Somalia's ruinous push to 'finalise' the Provisional Constitution has taken another grim twist in recent days. The collapse of opposition-government talks on 22 February was inevitable, with Villa Somalia's flippancy evident in the needless arguments over venue and security personnel.


17:05 min read 04 Mar
Scroll