Ethiopia and frontier markets on the Horn of Africa

Ethiopia has emerged to become one of the economic powerhouses in Africa with overall growth rates averaging around ten per cent in the past decade. As a growing political, economic, and transportation hub, it is rivalling neighbouring Kenya in Eastern Africa and provides investors on the Horn of Africa with a more stable business climate than its neighbours Sudan, South Sudan, and Somalia.

Despite its economic progress,  Ethiopia has had little success in its oil industry to date. There have yet to be any commercial discoveries and exploration efforts only recently led to signs of oil resources. But high oil prices over the past decade have pushed the government in Addis Ababa to intensify its efforts to support exploration activities to ease its import burden.

The proposed paper will trace recent exploration efforts in Ethiopia, the prospects for the development of the oil sector in the current period of lower oil prices, and highlight central challenges, particularly regulatory, infrastructure, and physical security. Finally, the paper will provide a regional perspective on the state of the oil industries in Djibouti, Eritrea and Somalia and their connection with Ethiopia.

By: Tim Steinecke

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