This year, Ethiopia joined BRICS+ newcomers Iran, Saudi Arabia, the United Arab Emirates, Egypt and Argentina, alongside its originals – Brazil, Russia, India, China and South Africa – to help foster a partnership with stronger economies.

Russia played a prominent role in accepting Ethiopia as a fully fledged BRICS member, despite many hurdles. It appears that Moscow is hoping to play a leading role in Ethiopia – a nation of more than 120 million people – in a bid to replace the Western influence that has been the norm across the greater Horn of Africa region.

The Ethiopian government hopes the partnership with BRICS, and Russia, in particular, which will assume the presidency of the group this year, will help change the worrying trajectory and inject some vitality into its weakened economy.

Ethiopia defaulted by missing a scheduled coupon payment on its $1bn 2024 euro bond in December, yet the country has much lower absolute debt levels than other distressed African sovereigns, such as Ghana and Zambia.

The IMF has a mission to visit the country while its government tries to secure a loan agreement. An agreement by Paris Club creditors to suspend payments until 2025 may be withdrawn if Ethiopia does not get an IMF loan by the end of March.

Russian investment grows

“Russian investors have a low tolerance for risk when investing in African countries where conflict is common, capital repatriation is difficult and business environment is difficult to navigate. They prefer industries like the extractive sector, which enable them to get returns in the short term, as these industries allow them to recoup investments more quickly,” Samson Berhane, an Addis Ababa-based economic analyst tells The Africa Report.

Russian investment works to the benefit of both nations.

“It helps to diversify [Ethiopia] foreign investment as it gives it alternative options, especially when it deals with Western interests, and for Russia to build new alliances as it is threatened with sanctions from the West,” says Berhane.

Through an enhanced economic partnership between Russia and Ethiopia, which has historically been pegged on the sale of wheat, both nations expect to increase the volume of exports to each other, generating mutual economic benefits, such as:

• Yango, a taxi-hailing app owned by the Russian company Yandex LLC, which entered the Ethiopian market in 2023, becoming the first international brand to enter the local taxi market.
• There have been regular bilateral visits by high-level dignitaries to increase trade between the two nations, while Ethiopian Airlines has increased the frequency of its flights to Russia to help take advantage of the budding relationship.
• Last year, the government of Ethiopia signed a deal with Russia to start the production of Lada cars in the war-torn region of Amhara, in Kombolcha, with a local partner, Ethio-Engineering Group. The partnership will serve the Ethiopian and regional markets, including South Sudan, Somalia, Kenya and Sudan.

Michael Shurkin, the Director of Global Programs at 14 North Strategies, says such a partnership is shortsighted and devoid of long-term vision unlike the ones from China that seem entrenched and vibrant across the continent.

“This [leads] me to fear that they are looking for short-term gains rather than a long-term investment. I still can’t say this is a bad thing for Ethiopia, especially as Ethiopia’s relations with the US are on a decline,” he tells The Africa Report.

Russia was also a prominent advocate against sanctions called by Western nations within the UN Security Council when accusations of war crimes against Ethiopia intensified. The move boosted Russia’s soft power and Moscow’s reputation among Ethiopians.

During the early months of the war between Russia and Ukraine, there were long queues of young people at the Russian Embassy in Addis Ababa who wanted to express solidarity and sign up to fight on the side of Russia. A wave of a “NO MORE” campaign grew among locals with vast demonstrations organised by the Ethiopian government against the perceived interference of Western nations in the internal affairs of Ethiopia while Russia was celebrated.

Russian military cooperation

In 2021, Russia and Ethiopia signed a military-technical cooperation as the Tigray northern conflict was raging and the central government was fighting an insurgency in the volatile northern region of Tigray.

Russia has since increased its military cooperation with Ethiopia as the nation tried to contain recurring conflicts in many parts of the region, including the regions of Amhara and Oromia.

Moscow has also helped with the training of the Ethiopian army as well as supplying military equipment to the Addis Ababa cash-strapped government.

“Russia is ready to continue providing assistance to Ethiopia in training its domestic specialists in various spheres”, said Russian Foreign Minister Sergey Lavrov, during the Tigray war in 2022.

Western alienation

Ethiopia, once a darling of Western powers, including the US, has seen a spiralling exodus of Western foreign investors; the ones that had helped make it one of the fastest-growing economies in the region.

• Last year, Ethio-lease, the pioneering foreign-owned financial services company, suddenly closed its operation in Addis Ababa, citing dwindling foreign exchange shortages. Owned by the US-based African Asset Financial Company, the company was also a victim to recurring conflicts felt across the nation.
• France’s Orange also withdrew last year from bidding for a minority share of the state-owned Ethio-telecom.

Many of its industrial parks that were once fully occupied now sit idle as the Biden administration continues to suspend its tax waivers through the African Growth Opportunity Act (AGOA).