Last month, during the conflict in the northern Tigray region, DBL's compound experienced an explosion that caused damage to the factory's windows, significantly impacting its business operations. A company official, Abdul Waseq, mentioned that all they could do at that moment was pray aloud, as they were at risk of losing their lives. Ethiopia has been investing heavily in infrastructure and industrial development in an effort to boost its economy and transition from an agrarian society to a manufacturing hub. In 2017, Ethiopia was recognized as the world's fastest growing economy. A year after assuming office, Prime Minister Abiy Ahmed promised to reduce the government's control over an economy of more than 100 million people and open up sectors like telecommunications, generating excitement among investors reminiscent of the glasnost era. However, over the past two years, Ethiopia has faced numerous challenges including ethnic conflicts, natural disasters, and the COVID-19 pandemic. The recent outbreak of violence between the military and Tigray's former ruling party, along with concerns about prolonged unrest, have caused investors to reevaluate their optimism. The country's efforts to boost manufacturing exports have not yet generated enough foreign currency to cover imports and debt service costs, making investors wary. Even before the pandemic, the IMF had warned that Ethiopia was at high risk of debt distress. Abiy's government stated that despite facing crises, Ethiopia is continuing with reforms that will lay the groundwork for a modern economy. Mamo Mihretu, a senior policy adviser in the prime minister's office, highlighted the country's economic resilience in the face of challenges like COVID and ongoing insecurity. Ethiopia's textile production is relatively small compared to other countries like Vietnam and China, but the country's focus on the industry in recent years reflects its ambitions in manufacturing. Ethiopia's main exports include agricultural products like coffee, tea, spices, oil seeds, plants, and flowers. As the fighting approached the regional capital of Tigray, Mekelle, textile companies started closing down and evacuating their staff. Cristiano Frati, an electrician evacuated from a factory owned by the Italian hosiery chain Calzedonia, expressed concern that they may not be able to leave as the conflict drew nearer to the city. Calzedonia announced on November 13 that they had suspended operations at the plant, which employs around 2,000 people, because of the conflict. The company has not provided any further comments on the situation. A broad perspective displays the Hawassa Industrial Park in the Southern Nations, Nationalities, and Peoples region of Ethiopia on November 17, 2017. Meanwhile, DBL has evacuated its overseas employees from Ethiopia. M.A. Jabbar, the managing director, expressed concerns about the uncertainty caused by the ongoing conflict and questioned when it will come to an end. Another international company, Velocity Apparelz Companies, which supplies to H&M and Children's Place, has also temporarily closed down according to a company official who spoke to Reuters. H&M expressed their concern over the situation and stated that production has stopped at their three suppliers in Tigray. However, they mentioned that they will continue to work with Ethiopia as they have a total of 10 suppliers in the country. Indochine Apparel, a Chinese company that supplies Levi Strauss & Co, reported that their operations in the Hawassa industrial park in southern Ethiopia are unaffected. Levi Strauss stated that they are monitoring the situation closely and have not experienced any disruptions to their supply chain so far. Ethiopia's clothing industry was already facing challenges prior to the conflict in Tigray due to the economic impact of the COVID-19 pandemic. Many factories struggled to survive due to decreased orders, resulting in wage cuts and layoffs. This downturn was not exclusive to the garment sector, as insurance companies had already ceased coverage for political risks beyond specific regions of Ethiopia. A risk consultant working with corporate clients described the current situation in Ethiopia as bleak. The consultant, like many others interviewed by Reuters, chose to remain anonymous due to concerns about potential retaliation from the government. Abiy's attempts to improve a restrictive political environment had led to increased ethnic conflicts even before the conflict in Tigray. The violence that escalated in 2019 in various parts of the country had caused disruptions to projects, particularly in agriculture. The head of an agri-industry project that had to postpone its investment last year mentioned, "The fighting began just as we were preparing to start planting." Employees are sewing garments at the Indochine Apparel textile factory in Hawassa Industrial Park in Ethiopia's Southern Nations, Nationalities and Peoples region on November 17, 2017. IKEA, a Swedish furniture company, established a purchasing office in Ethiopia in the previous year but closed it in September due to challenges related to the political and social climate, COVID-19, and changes in the cotton market in Africa. Additionally, Coca-Cola Beverages Africa, a bottling partner of Coca-Cola, reported to Reuters that the conflict in Tigray, which represents 20% of its sales in Ethiopia, has disrupted its operations in the country. This setback follows delays in the construction of two new bottling plants as part of a $300 million investment plan announced the year before, attributed to the pandemic and an increase in excise taxes. With the capture of Mekelle recently, Abiy announced triumph over Tigray's previous ruling party (TPLF). Abiy's adviser Mamo mentioned that the quick and resolute conclusion of the military mission will alleviate any worries among investors about political instability. Despite the TPLF's determination to continue fighting, the government must be extremely careful. Ethiopia's foreign debt has increased significantly in the last ten years due to heavy borrowing, particularly from China, for infrastructure and industrial projects. Foreign direct investment inflows have been decreasing consistently since reaching a peak of over $4 billion in 2016, dropping to approximately $500 million in the first quarter of the current fiscal year. Inflation is currently at a level of around 20%. Finding a solution to this situation is challenging, as obtaining additional funds from the IMF or accessing the markets are not viable options. Menzi Ndhlovu, a senior country and political risk analyst at Signal Risk, an Africa-focused business consultancy, stated that the best hope for Ethiopia is a global economic recovery next year. Despite ongoing unrest, Ethiopia made significant advancements this year with the passing of a landmark investment law and currency reforms. The government is also moving forward with plans to liberalize the telecommunications sector by opening tendering for new telecoms licenses and selling a minority stake in Ethio Telecom. Companies interested in investing in Ethiopia are not discouraged by the current situation, as these developments are expected to inject much-needed dollars into the struggling economy. However, Ethiopia's ambitious plans for manufacturing have been hindered for the time being. Waseq from DBL, who has now gone back to Bangladesh, questioned who would be willing to invest in such circumstances, stating that no one would.