Symbiosis Institute of Business Management, Hyderabad

Name of the Guide Dr. V K Satya Prasad

Course International Marketing

Name of the Student  Pranav Balamurali Krishna

PRN  21021141097

Submission Date 26/12/2022

Ethiopia: An Emerging Market Oppurtunity?

Introduction
It is no surprise that Ethiopia is one of the classic examples of a neo-
modern developing nation. The signs are definitely there – Recent
overthrow of a strict regime that saw the major damage of the economy
before the rule, ensuring great economic opportunities, liberalization,
privatization, globalization of the major breadwinning industries of the
nation, but only doing so with a little supervision from the now
democratic government.

Industrial Policy and Market Opportunities

The most obvious signs of the increasing market opportunities for the
North African country are the increase of Ethiopia’s population by 30%,
to a whopping 94 million people, between 2003 and 2013. In this period,
not only did the country’s GDP increase from $8.6 billion to $47.5 billion,
it also reported a 6th rank out of 54 sub-Saharan African nations in terms
of market opportunities.
The more nuanced aspects of the industrial policy are Ethiopia’s deep-
rooted connection to its government. There is a massive influence of the
country’s government in the business of the country. While a lot of
business and market opportunities are privatized and liberalized, the
Ethiopian government still adhered to a state-led development model.
The Ethiopian government also attempted a lot to protect local
companies and encourage import substitution, perhaps due to the money
pit that is the country’s imports. A major way Ethiopia is trying to attract
foreign investment is by means of local manufacturing, given how the
country is in need of technology and knowledge.
To compensate for the technology and also acting as a enticing factor in
attracting foreign investment is the country’s well balanced mix of cheap
and trained labour.

Investing in Ethiopia
Infrastructure – While the country is developing rapidly in terms of
building infrastructure, it still lacks massively when it comes to practical
functioning of the development achieved by the country.
Human Resources – A good supply of skilled, affordable employees
meant the country is quite habitable for companies that are looking for
cheap human resources. However, it is to notice that a few companies
from major first world nations like the United States and Canada find it
difficult to bridge work culture, management style and communication
methodology between expatriate and local employees.
Limited Competition – Ethiopia’s biggest selling point as an emerging
market opportunity is the limited competition that already exists in the
country. Great upstart opportunities are available everywhere in the
country, which can negate the advantages of an established
multinational.

Market Challenges
Ethiopia has a lot of potential, but the market still faces challenges. While
the government gradually liberalises and reforms the economy, the state
still has a considerable influence in the majority of economic sectors. The
banking, insurance, and financial services sectors are not permitted to be
owned by foreign entities, while the Ethiopian government (GOE)
remains to be in charge of the utilities sector. State-owned enterprises
(SOEs) dominate the economic landscape, leaving little room for the
private sector to flourish.
Foreign exchange shortages will continue to be a problem for Ethiopian
businesses because of the country's poor export performance and the
strong demand for foreign currency, particularly for GOE infrastructure
priority projects. Businesses should constantly be prepared for downtime
and slowdowns in the industrial sector, as well as delays of up to a year in
the delivery of foreign currency. There is no easy fix for the persistent
foreign exchange shortfall, which continues to be the biggest problem for
American suppliers.
Up until 2009, the Ethiopian economy expanded quickly, but it is still
vulnerable to continuous droughts and unpredictable commodity prices,
which have an impact on both the price and demand of Ethiopia's main
export goods. Because coffee accounts for almost one-third of Ethiopia's
exports, the price of coffee has a substantial impact on the country's
export earnings.
Government processes and documentation are generally cumbersome
and bureaucratic, but recent years have seen some advances. The World
Economic Forum (WEF) acknowledges that Ethiopia's small and medium-
sized enterprises (SMEs) face significant obstacles, including onerous
customs administrative procedures, the high cost of logistics, and access
to capital and foreign currency. The GOE is dedicated to enhancing its
ease of doing business, despite the fact that the customs clearance
procedure is still exceedingly slow.

Conclusion
In conclusion, from all the situations mentioned in the case with CareCo,
ShoeCo, and MedCo, and the exhibits showing the growth projections
for those corporations, it is evident that the country is potentially a gold
mine for those companies which are trying to risk and put something on
the line to gain a massive share market, while also massively increasing
their profitability.
Is Ethiopia an emerging market opportunity? Well, yes.