China is scaling back investment in Ethiopia in the face of rising foreign exchange shortages and government debt, highlighting the fragility of the African nation’s economy as the new prime minister prioritises political reform to quell three years of deadly social unrest.
For much of the last decade Ethiopia has been a leading investment destination in sub-Saharan Africa, particularly for China. But Beijing’s waning enthusiasm for the region’s fastest-growing economy reflects the challenges facing Abiy Ahmed, the prime minister, as he juggles demands from a public hungry for both democracy and development and myriad vested interests.
Business people, diplomats and bankers said Chinese entities, which have loaned more than $13bn between 2006 and 2015 for everything from roads and railways to industrial parks, were now taking a “more cautious approach” to Ethiopia. “The Chinese have said they’ve reached their limit,” one diplomat in Addis Ababa said. “’We’re way overextended here,’ they told us openly.”