Several U.S. sanctions and restrictions on Ethiopia and Eritrea remain in place due to the countries’ failure to fully implement the peace deal reached with the Tigray People’s Liberation Front in November 2022.1 While progress has been made toward ceasing hostilities, reports of human rights abuses in the region persist. The ongoing restrictions continue to create uncertainty for those seeking to do business in Ethiopia, Eritrea, and the Greater Horn of Africa region, even as foreign investment in Ethiopian telecommunications and aviation has resumed. Those with interest in investing in the region should take careful note of the current status of sanctions and restrictions in the region in order to avoid negative impacts on their business.
After two years of armed conflict, a peace deal was reached between the Ethiopian government and the Tigray People’s Liberation Front in November 2022.2 Since then, some efforts have been made to carry out the terms of the agreement. For example, Tigray People’s Liberation Front members began handing over heavy weapons to the Ethiopian national army on January 10, 2023, and the active fighting has ended.3However, there are ongoing allegations that the government is committing human rights abuses against civilians.4
While U.S. officials have acknowledged the progress that has been made thus far to implement the peace deal,5 most sanctions and restrictions remain in place.
Since the peace agreement was reached, the United States has taken the following measures:
The Ethiopian government first announced plans to liberalize the economy in 2018,21 but the conflict in Tigray hindered attempts to attract investment.22 In February 2022, the Ethiopian government launched a fund to attract investment for $150 billion worth of state-owned companies and assets, marking a significant step towards privatization.23 However, the ongoing conflict and the government’s reputation for turning off internet and phone services created hesitancy for many investors.24 Since the peace deal was reached, discussions around strengthening the Ethiopian economy and privatizing key sectors, such as telecommunications and aviation, have resumed.25
The peace agreement has helped Ethiopia’s private telecommunications industry recover after a faltering start. Before the peace deal was finalized, the U.S. International Development Finance Corporation (DFC) announced that it was considering recalling its $500 million loan to Safaricom Ethiopia, the first private telecommunications operator in the country,26 because of the human rights violations committed against civilians during the conflict.27 However, discussions with the DFC ended after the World Bank Group’s private investment arm and guarantee agency, the International Finance Corporation (IFC),28 reached an investment agreement with Safaricom.29 In June 2023, the IFC and the Multilateral Investment Guarantee Agency (MIGA) committed to making 10-year guarantees of $1 billion to Safaricom’s shareholders, Vodafone Group, Vodacom, Safaricom, and British International Investment, and a $100 million A-loan to Safaricom itself.30 The IFC will hold a minority position in the company.31
Safaricom is not the only Ethiopian telecommunications provider to seek outside investment following the ceasefire. In November 2022, Ethiopia resumed the process of selling a 45% stake32 in Ethio Telecom, a state-owned telecommunications company, after initially having to postpone the sale.33 Currently, Emirates Telecommunications Group Co. and France’s Orange SA are exploring bids for the 45% stake, but the sale has not been finalized.34 The Ethiopian telecommunications market as a whole is attractive to investors, as Ethiopia has the second-largest population in Africa and is one of the largest telecommunications markets that can still grant a new license to mobile operators.35 Ethio Telecom in particular may be desirable to investors, as the company reported a 20% rise in half-year revenue, amounting to $633 million.36
Although the peace agreement has reinvigorated some foreign funding in the aviation industry, concerns around the implementation of the peace deal have presented a challenge to securing it.
The Export-Import Bank of the United States, an independent executive agency and a U.S. government corporation,37 received an application from Ethiopian Airlines, Africa’s largest carrier, for a $100 million loan to purchase Boeing passenger and cargo airplanes in November 2022.38 Discussion around the loan was a source of tension in Congress.39 Several members of Congress expressed concerns that approving a loan to Ethiopian Airlines Group at this stage would “deprive the State Department of a critical tool to ensure the full implementation of the peace agreement.”40 Despite these concerns, the Export-Import Bank approved a $281 million loan from the Private Export Funding Corporation to Ethiopian Airlines Group in December 2022.41 Ethiopian Airlines Group recently reported a $6.1 billion revenue for the current fiscal year, a 20% increase from last year.42
Several significant U.S. sanctions and restrictions on Ethiopia and Eritrea remain in place, as the peace deal has yet to be fully implemented. However, foreign investment in newly liberalized sectors, such as telecommunications and aviation, has resumed at least in part.
Companies looking to do business in the region, or with concerns about these sanctions, should continue to closely monitor the situation for additional sanctions and contact Ahmad Murrar or Parker White to discuss these topics further.
Foley’s International Trade & National Security practice can help companies navigate this maze of sanctions and restrictions. Its partners include former officials from the Office of Foreign Asset Control, which administers Treasury Department sanctions, and the Department of Commerce. Foley’s Federal Public Affairs practice also can provide companies with up-to-the-minute information about legislative trends.
2023 Foley & Lardner LLP Summer Associate Casey Glasser contributed to the drafting and research of this article.
1 See Agreement for Lasting Peace Through a Permanent Cessation of Hostilities Between the Government of the Federal Democratic Republic of Ethiopia and the Tigray People’s Liberation Front (TPLF), African Union, Nov. 2, 2020, https://igad.int/wp-content/uploads/2022/11/Download-the-signed-agreement-here.pdf; see also Blinken Says Ethiopia Must Do More on Tigray Peace Deal, Associated Press News, March 15, 2023, https://apnews.com/article/tthiopia-blinken-tigray-war-economy-41d18bed7a4d9e56b3b79b044d86683c.
3 See Dawit Endeshaw, Tigray Forces Begin Handing Over Heavy Weapons to Ethiopian Army, Reuters, Jan. 11, 2023, https://www.reuters.com/world/africa/tigray-forces-begin-handing-over-heavy-weapons-ethiopian-army-2023-01-10; see also Press Statement, Antony J. Blinken Statement Marking Six-Month Anniversary of the Cessation of Hostilities in Northern Ethiopia (May 2, 2023).
4 See Catherine Byaruhanga, Ethiopia War in Tigray: Eritrean Soldiers Accused of Rape Despite Peace Deal, BBC News, Feb. 15, 2023, https://www.bbc.com/news/world-africa-64635898; see also Human Rights Watch, Ethiopia: Ethnic Cleansing Persists Under Tigray Truce, June 1, 2023, https://www.hrw.org/news/2023/06/01/ethiopia-ethnic-cleansing-persists-under-tigray-truce.
5 See Blinken, supra note 3.
6 See Notice on the Continuation of the National Emergency with Respect to Ethiopia, 87 Fed. Reg. 175, (Sept. 9, 2022).
7 See E.O. 14046, 86 Fed. Reg. 180 (Sept. 17, 2021).
9 See Office of Foreign Assets Control, Sanctions List Search, U.S. Dep’t of the Treasury, June 29, 2023, https://sanctionssearch.ofac.treas.gov; see also Press Release, Treasury Sanctions Four Entities and Two Individuals in Connection with the Crisis in Ethiopia, U.S. Dep’t of the Treasury, (Nov. 12, 2021), https://home.treasury.gov/news/press-releases/jy0478.
10 See Notice on the Continuation of the National Emergency with Respect to Serious Human Rights Abuse and Corruption 87 Fed. Reg. 239, (Dec. 16, 2021).
11 E. O. No. 13818, 82 Fed. Reg. 246 (Dec. 26, 2017).
12 See Notice, Office of the U.S. Trade Representative, Annual Review of Country Eligibility for Benefits Under the African Growth and Opportunity Act for Calendar Year 2024, 88 Fed. Reg. 95 (May 17, 2023).
13 See Vanda Felbab-Brown, The Exemplary U.S. Sanctions Regime for Ethiopia’s Tigray Conflict and Its Limitations, The Brookings Institution, Oct. 1, 2021, https://www.brookings.edu/blog/order-from-chaos/2021/10/01/the-exemplary-u-s-sanctions-regime-for-ethiopias-tigray-conflict-and-its-limitations.
14 Remarks, Secretary Antony J. Blinken at a Press Availability (Mar. 15, 2023), https://www.state.gov/secretary-antony-j-blinken-at-a-press-availability-31.
15 See DHS Secretary Designates Ethiopia for TPS, U.S. Citizenship and Immigration Services, Dec. 12, 2022, https://www.uscis.gov/save/whats-new/dhs-secretary-designates-ethiopia-for-tps#:~:text=Secretary%20of%20Homeland%20Security%20Alejandro,%2C%20through%20June%2012%2C%202024.
16 See Remarks, Secretary Antony J. Blinken and Ethiopian Minister of Finance Ahmed Shide Following Tour of UN Logistics Center Warehouse (Mar. 15, 2023), https://www.state.gov/secretary-antony-j-blinken-and-ethiopian-minister-of-finance-ahmed-shide-following-tour-of-un-logistics-center-warehouse.
17 See U.S. Foreign Assistance by Country: Ethiopia, U.S. Agency for Foreign Dev., https://www.foreignassistance.gov/cd/ethiopia/2023/obligations/1.
18 See Giulia Paravicini, Many Culprits Stole Food Aid in North Ethiopia, Investigation Finds, Reuters, June 18, 2023, https://www.reuters.com/world/africa/many-culprits-stole-food-aid-north-ethiopia-investigation-finds-2023-06-15.
20 Robbie Gramer, U.S. Lifts Human Rights Violation Designation on Ethiopia, Foreign Policy, June 29, 2023, https://foreignpolicy.com/2023/06/29/ethiopia-tigray-war-human-rights-violations-designation-biden-us-government.
21 See Aaron Maasho, Ethiopia Opens Up Telecoms, Airline to Private, Foreign Investors, Reuters, June 5, 2018, https://www.reuters.com/article/us-ethiopia-privatisation/ethiopia-opens-up-telecoms-airline-to-private-foreign-investors-idUSKCN1J12JJ.
22 See Dawit Endeshaw, Ethio Telecom Posts H1 Growth in Revenue, Financial Service Subscribers, Reuters, Jan. 12, 2023, https://www.reuters.com/business/media-telecom/ethio-telecom-revenues-up-20-financial-subscribers-grow-2023-01-12.
23 See Andres Schipani, Ethiopia Launches Fund to Lure Billions of Dollars in Foreign Investment, Financial Times, Feb. 26, 2022, https://www.ft.com/content/2c02152c-5b70-4dd0-b191-fd8670d197c2.
24 See Zecharias Zelalem, Instability May Make Ethiopia a Hard Sell to Foreign Investors, Al Jazeera , Feb. 5, 2021, https://www.aljazeera.com/economy/2021/2/5/instability-makes-ethiopia-a-hard-sell-to-foreign-investors.
25 See Endeshaw, supra note 22.
26 See Brian Ngugi, Safaricom Consortium Wins Ethiopia Licence Bid on Sh91.8bn Offer, Business Daily, May 22, 2021, https://www.businessdailyafrica.com/bd/news/safaricom-consortium-wins-ethiopia-license-bid-3410236.
27 See U.S. Ban Dims Safaricom Loans for Ethiopia Entry, Business Daily, July 15, 2021, https://www.businessdailyafrica.com/bd/corporate/companies/us-ban-dims-safaricom-loans-ethiopia-entry-3473806.
28 See Alexander Willing and David Goodman, World Bank Group Pledges More Support for Safaricom Ethiopia, Reuters, June 8, 2023, https://www.reuters.com/business/media-telecom/world-bank-group-pledges-more-support-safaricom-ethiopia-2023-06-09.
29 See Patrick Alushula, IFC Injects $257m in Safaricom Ethiopia, The East African, June 9, 2023, https://www.theeastafrican.co.ke/tea/business/ifc-injects-257m-in-safaricom-ethiopia-4264386; see also Patrick Alushula, Safaricom to Retain Control of Ethiopia Unit, Business Daily, May 22, 2023, https://www.businessdailyafrica.com/bd/corporate/companies/safaricom-to-retain-control-of-ethiopia-unit–4242414.
30 See Flagship Telecommunications Project to Bring Affordable, Reliable Internet and Mobile Services to Millions More in Ethiopia, International Finance Corporation, June 8, 2023, https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=27593.
32 This amount was increased from 40% to 45% in February of 2023. See George Obulutsa and David Goodman, Ethiopia Raises Size of Planned Ethio Telecom Stake Sale, Thomson Reuters, Feb. 10, 2023, https://www.reuters.com/world/africa/ethiopia-raises-size-planned-ethio-telecom-stake-sale-2023-02-10.
33 See Ethiopia Restarts Sale of Ethio Telecom Stake, New Telecoms Licence, Thomson Reuters, Nov. 16, 2022, https://www.reuters.com/markets/deals/ethiopia-revives-sale-ethio-telecom-stake-new-telecoms-licence-2022-11-16.
34 See Vinicy Chan and Loni Prinsloo, E&, Orange Said to Weigh Bids for 45% Stake in Ethio Telecom, Bloomberg News, July 6, 2023, https://www.bnnbloomberg.ca/e-orange-said-to-weigh-bids-for-45-stake-in-ethio-telecom-1.1942307.
36 See Endeshaw, supra note 22.
37 See Award Profile Loan Summary, USA spending, https://www.usaspending.gov/award/ASST_NON_08081763XX0003_8300.
38 See Letter from Brad Sherman, Ilhan Omar, and James P. McGovern, U.S. Congress, on Delaying Loan Action to Ethiopian Airlines, to Reta Jo Lewis, Gina M. Raimondo, and Antony Blinken, (Dec. 20, 2022); see also Notice, Export-Import Bank, Application for Final Commitment for a Long-Term Loan or Financial Guarantee in Excess of $100 Million: AP089457XX, 87 Fed. Reg. 222 (Nov. 18, 2022); see also Schipani, supra note 23.
39 See Letter from Brad Sherman, Ilhan Omar, and James P. McGovern, supra note 38.
41 See Export-Import Bank of the United States, Export-Import Bank of the United States’ Board of Directors Approves Final Commitments for Transactions that will Create 4,000 American Jobs, Dec. 22, 2022, https://www.exim.gov/news/export-import-bank-united-states-board-directors-approves-final-commitments-for-transactions; see also International Trade Administration, Ethiopia Infrastructure Major Airlines Group Plans Release of RFP for $4 Billion Airport Project in 2024, U.S. Dep’t of Commerce, May 15, 2023, https://www.trade.gov/market-intelligence/ethiopia-infrastructure-major-airlines-group-plans-release-rfp-4-billion.
42 See Hanna Tesfaye, Ethiopian Airlines Achieves Record Profits and Passenger Growth Despite Global Challenges, Business Info Ethiopia, June 16, 2023, https://businessinfoeth.com/ethiopian-airlines-achieves-record-profits-and-passenger-growth-despite-global-challenges.
