Ethiopians celebrate new year amid high inflation

Renewed conflict in the north, crippling drought and stubbornly high inflation: Ethiopians rang in their new year on Sunday with little to celebrate.

At a livestock market in the capital Addis Ababa, traders and visitors alike bemoaned the various crises confronting Africa's second most populous nation.

"As you can see now, everything is expensive. If there was peace it wouldn't be like this," trader Endashew Denekew told AFP on Saturday, the eve of the new year holiday known as Enkutatash.

"The peace situation that you see and hear in different places is not good. People stayed at home and didn't come to the market and bring their livestock."

Fighting broke out last month between Prime Minister Abiy Ahmed's forces and the Tigray People's Liberation Front (TPLF), shattering a five-month truce that had raised hopes of a peaceful resolution to the nearly two-year war.

"The heightened level of conflict and fragility in Ethiopia is of great concern," the World Bank said in a gloomy report on Ethiopia published on September 8.

"Multiple conflicts combined with historic drought and other shocks have severely impacted millions of Ethiopians, jeopardizing the economic and social development progress the country has achieved in recent years."

The UN's emergency response OCHA earlier this month described the humanitarian situation in Ethiopia as "dire", with 20 million people nationwide in need of assistance because of conflict as well as climatic shocks such as prolonged drought and seasonal floods.

With a population of 115 million, Ethiopia has been one of the world's fastest-growing economies over the past 15 years, according to the World Bank. But like many has been hard hit by the Covid pandemic and the fallout from the war in Ukraine, as well as its own domestic woes.

Inflation in July was running at 33.5 percent, according to official data, with food inflation at 35.5 percent, deterring people from spending.

"There are not the usual crowds that you would see during the holiday market, like before," civil servant Chombe Gebrehana told AFP near the main open-air market in the capital.

"Inflation has had its impact. If people had enough money in their hands... we wouldn't see smaller crowds like this during the holiday market."

In a recent interview with the state-run Ethiopia News Agency, Abiy's senior policy adviser Mamo Mihretu acknowledged the cost of living crisis but said the government was taking measures to bring prices under control.

"Our effort is actually bearing fruit because inflation, if not completely addressed, is becoming stable right now," said Mamo, who is also head of the country's sovereign wealth fund.

He said the government was adopting reforms to attract investment and trade and forecast economic growth of six percent this year.

Meanwhile, the renewed hostilities in the north have led to a new round of frantic diplomacy to try to end the conflict that first erupted in November 2020.

"May the parties in the conflict have the courage to choose talks over fighting, and participate in an African Union-led process that produces a lasting peace," the visiting US envoy for the Horn of Africa, Mike Hammer, said in a new year's message to Ethiopians.

Back at the livestock market, metal worker Assefa Alemu says only a few people are buying.

"I used to buy (sheep) from 4,000 to 5,000 birr (about $75 to $95 at current exchange rates). But today it is 15,000 birr (about $285). Some people have less income, they can no longer afford this... the current situation is very difficult," he told AFP.

"I think if peace comes to the country, the prices will decrease."