Ethiopia reeling from rising inflation, economic slowdown

“Everything is increasing except our wages,” Ethiopian porter Zerihun told AFP, summing up the financial crisis facing the Horn of Africa nation as it reels from skyrocketing inflation and an economic slowdown.

After a decade of dynamic growth during the 2010s, Africa’s second most populous country has suffered multiple shocks, including the Covid-19 pandemic, a record drought, a two-year war in its northernmost region of Tigray and the global impact of the invasion of Ukraine.

Annual average inflation is expected to hit 30 percent in 2022 (compared to 26 percent last year), driven by an increase in food costs.

“Groceries, food, rent, all prices have gone up,” said Zerihun, a 30-year-old father of two working at the sprawling Merkato market in the capital Addis Ababa.

“Because of the cost of living, life is very difficult... life has become expensive,” said his colleague Sintayeh Tadelle, who has two sons aged 12 and six and “no savings”.

Were it not for handouts from the Addis Ababa municipal government including uniforms, books and school meals, his family would struggle to survive, the 29-year-old porter told AFP.

The porters at Merkato, considered Africa’s largest open-air market, earn five birr (nine US cents) for loading or unloading a crate. On average, a good day brings in than five dollars in wages.

“The economy is slow, so there’s less work and my pay is less,” said Zerihun.

Very difficult

Packed with thousands of stalls stocking everything from clothing to industrial machinery, the busy lanes of Merkato teem with buyers, sellers, touts and day labourers.

But regulars say business has taken a sharp hit this year as inflation dampens customer appetite for spending.

“Business is very cold, not only here but in all sectors,” said Hamat Redi, manager of a shop selling televisions and washing machines.

A few doors down, shopkeeper Sisai Desalegn complained about a nationwide shortage of foreign currency, making it difficult for him to import the sound equipment and solar panels sold in his store.

“Because of the shortage, we are not getting enough foreign exchange from the bank to import goods,” he told AFP.

“We estimate that our business has lost 40 percent in two years,” Desalegn said, adding that the downturn has forced him to sell everything at the purchase price, putting profits out of reach.