“Everything is increasing except our wages,” says Ethiopian porter Zerihun, summing up the financial crisis in 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 effect of the invasion of Ukraine.
Annual average inflation is expected to hit 30% in 2022 (compared to 26% last year), driven by an increase in food costs.
“Groceries, food, rent, all prices have gone up,” said Zerihun, who works in 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 porter said.
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 about five dollars in wages.
“The economy is slow, so there’s less work and my pay is less,” said Zerihun.
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, the 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 said.
“We estimate that our business has lost 40% in two years,” Desalegn said, adding that the downturn has forced him to sell everything at the purchase price, putting profits out of reach.
As a result, he has reduced his daily expenses.
“It’s very difficult to make do with what you have,” he said, underlining that the war in Tigray meant his former customers — traders and farmers from the north — were no longer coming to the market.
The slowdown in trade with the north has also seen fewer trucks turning up at Merkato, which means less work for porters like Zerihun and Sintayeh.
The conflict put pressure on government finances and hit key sectors such as agriculture and industry. It also scared away investors and foreign partners, contributing to a shortage of foreign currency in an importing nation.
A peace deal signed last month between the federal government and Tigrayan rebels has raised hopes of an economic recovery.
“I hope the peace agreement will make the situation better in the future,” said Zerihun.
But Ethiopia’s economy hit roadblocks before the war began in November 2020, with the Covid-19 pandemic triggering a sharp slowdown. Growth, which averaged 9.7% between 2010 and 2018, fell to 6.1% in 2020 and is forecast to drop below 4% this year, according to the International Monetary Fund.
The drought ravaging the Horn of Africa has weighed on agriculture — a key employer in the largely rural nation — and contributed to the explosion in food prices, with the conflict in Ukraine also affecting the cost of living.
The causes behind the crisis may be manifold and complex, but the harm is easy to see, according to Zerihun.
“Eventually, all this affects low-income people like us,” he said. — AFP
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