1. Historical Factors:
- Colonisation: Historical exploitation and unequal trade relationships during Ethiopia's colonial past impeded its economic development and hindered the establishment of a robust industrial base.
2. Political Instability:
- Internal Conflicts: Protracted conflicts, including civil wars and border disputes, have diverted resources that could have been invested in economic development.
3. Economic Dependency:
- Agriculture Reliance: Ethiopia's economy is heavily reliant on agriculture, making it vulnerable to external factors like weather conditions and fluctuating global commodity prices.
4. Landlocked Location:
- Lack of Access to Seaports: Ethiopia's landlocked location increases transportation costs and limits its access to international markets.
5. Inadequate Infrastructure:
- Limited Transport Networks: Insufficient roads, railways, and ports hinder the efficient movement of goods and services within Ethiopia.
- Poor Electricity Access: Large segments of the population lack reliable electricity, which constrains industrial development and modern service sectors.
6. High Population Growth:
- Rapid Population Increase: Ethiopia's population growth rate outpaces economic growth, straining the provision of basic services and economic opportunities.
7. Human Capital Deficiencies:
- Low Literacy Rates: Inadequate access to quality education contributes to a relatively low-skilled labour force, hindering economic productivity.
- Health Challenges: High disease burdens, such as HIV/AIDS, malaria, and malnutrition, negatively impact productivity and workforce potential.
8. Weak Business Environment:
- Regulatory Barriers: Restrictive business regulations, bureaucracy, and corruption create an unfavourable climate for domestic and foreign investment.
- Limited Access to Finance: Challenges in obtaining credit and capital hinder entrepreneurship and business expansion.
9. External Debt:
- Debt Burden: Ethiopia's sizeable external debt can divert resources needed for development towards debt servicing.
10. Global Trade Dynamics:
- Unfair Trade Practices: Unequal terms in international trade, including subsidies and tariffs, often disadvantage Ethiopian exports in global markets.
Addressing these challenges requires long-term investment, prudent economic policies, and support from the international community to foster sustainable and inclusive economic growth in Ethiopia.
