NAIROBI: Few countries in Africa boast a history as rich as Ethiopia’s. Egypt with its pyramids comes close, but that is about it.
The nation once called Abyssinia produced kings and queens whose legacy stretches all the way back to biblical times; its might and riches were legendary.
But the Ethiopia of modern times is different.
Its hot-blooded communist revolutionaries, led by the autocrat Mengistu Haile Mariam, seized power from Emperor Haile Selassie and officially pronounced Ethiopia a socialist state in 1975.
The country adopted a Marxist economic system that saw all its state corporations nationalised, and large-scale agricultural lands taken over by the government.
The private sector was quashed, and the country’s markets were closed entirely from neighbouring capitalist countries such as Kenya.
But the lack of trade opportunities with its neighbours and inefficiencies in managing the state-controlled economy saw Ethiopia tumble like a wounded giant into the 1990s and early 2000s.
In 1990, Ethiopia had a gross national product of $6 billion (Sh607.8 billion at current exchange rates). Its citizens earned an average annual income of about $120 (Sh12,175), one of the lowest per capita incomes of any country in the world.
Weighed down by economic problems, such as falling productivity, soaring inflation, growing dependence on foreign aid and loans, high unemployment, and a deteriorating balance of payments, a deep social crisis saw the socialist ruling class change the country’s economic model.
It adopted a more open system that now encourages foreign investment and trade.
On April 5 this year, the Ethiopian parliament passed landmark legislation that eases restrictions on foreign financial institutions.
The move has been termed a watershed moment in Ethiopia’s unfolding economic recovery story.