Ethiopia

Ethiopia enters 2026 as Africa's second-most-populous nation and one of its most consequential reform stories. Since floating the birr in July 2024 under a four-year, ~$3.4 billion IMF Extended Credit Facility, the economy has delivered strong real growth of around 9.2% in FY2024/25 and disinflation into single digits — headline inflation reached 9.7% in February 2026, down from roughly 30% a couple of years earlier. The IMF completed its fourth ECF review in January 2026, disbursing about $261 million and lifting cumulative support to roughly $2.18 billion.

The investment thesis is early-mover access to a frontier market mid-liberalisation. Sectors long closed are opening: the Ethiopian Securities Exchange launched in January 2025 — the country's first bourse in some five decades — and Ethio Telecom listed in May 2026 alongside Wegagen and Gadaa banks, with six major banks queuing for Main Market listings. Gold has overtaken coffee as the top export earner, surging to roughly $3.5 billion, FDI rose to about $4 billion in FY2024/25, and industrial parks offer incentives to a ~136-million-person domestic market.

The defining risks are security and debt. The Amhara Fano insurgency has been active since 2023, the Tigray peace remains fragile amid renewed Eritrea tensions, and internal displacement runs into the millions. On debt, Ethiopia defaulted on its $1 billion Eurobond in December 2023 and is restructuring under the G20 Common Framework; bilateral deals with China, France and Italy have advanced, but Eurobond talks have stalled after bondholders rejected a proposed haircut, and FX buffers remain thin at around 2.3 months of import cover.