May 09 2014 Meryem KHALED
Investment Research

Back from Addis Ababa, Ethiopia: An attractive destination for investors

I recently had the chance to spend 5 days in the Ethiopian capital, Addis Ababa, on a market study business trip in the sector of beauty and personal care products. This visit gave me the opportunity to discover some key areas of the business as well as few interesting aspects of Ethiopia and its culture, which were completely unknown to me, and which I believe would be worth sharing.

Ethiopia is a landlocked country located in East Africa. It is the 10th largest country of the continent with a total area of 1,104,300 square km.  It has a population of more than 85 Million, with more than 50% of it aged bellow 20 years old. Agriculture is the backbone of the Ethiopian economy with 90% of the population earning its living from the land. The country main agricultural export is Ethiopian coffee, for which it is internationally renowned, and the local currency is the Ethiopian Birr (1Euro=26 Birr).

Ethiopia is a rich mix of diverse cultural ethnicities, languages and religions. As far as its political structure goes, Ethiopia is a federal parliamentary republic split into 9 ethnically-based administrative regions and 2 self-governing administrations: Addis Ababa and Dire Dawa. It has 83 local languages and 200 dialects, with Amharic being the most spoken local language in the country and English the first foreign language. Ethiopia’s religious landscape is made of about 65% Christians and 35% Muslims, with the majority of Christians being Ethiopian Orthodox.

From my encounters with Ethiopians from different backgrounds and social classes in Addis, my general impression was that they were friendly, pacifistic people, who held a lot of love for their country. They were very hospitable and would, most of the time, go out of their way to help you, without expecting as much as a tip in return. The members of the business community that I was brought to meet were all smart, professional people. Their days started quite early, and preferred to hold meetings in the beginning of the day; between 8 and 10 am seemed to be the general preference.

Addis is getting noticeably characterized by a raising middle-class of educated young men and women, who like to take care of their looks, go out to restaurants and parties, and spend on the finest things they can afford. The market of beauty and personal care products benefits largely from this raising attitude.

Based on the home visits conducted, women from different social classes, allocate a significant monthly portion of their incomes to the purchase of beauty products; with more importance allocated to hair care. Ethiopian women value quality over price, and do not hesitate to pay a premium for international hair product brands, which they perceive to be of higher quality. Even ladies from the lowest income groups manage to go to the hair dresser once every 2 or 3 months to get their hair relaxing treatments.

This fun loving, consumption oriented culture, combined with the raising income of the population  and the stability of the country, makes not only Addis, but the whole country, an increasingly attractive destination for many large investors and corporations, who perceive in it a lot of promise.

Meryem KHALED, Analyst, Infomineo.

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