DBL's compound experienced an explosion last month during the fighting in the Tigray region, causing significant damage to the factory and forcing the company to halt operations. Adbul Waseq, an official at the company, described the terrifying experience of praying out loud as they feared for their lives. This incident is one of several that have led foreign garment makers, including DBL, to suspend operations in Tigray. Despite Ethiopia's efforts to invest in infrastructure and become a manufacturing powerhouse, recent events have disrupted its economic growth. A year after assuming office, Prime Minister Abiy Ahmed promised to reduce the government's control over an economy with a population of over 100 million and open up sectors like telecommunications, leading to optimism among investors similar to the glasnost era. However, Ethiopia has faced numerous challenges over the past two years including ethnic conflicts, natural disasters, and the COVID-19 pandemic. The recent conflict between the army and Tigray's former ruling party, along with concerns about prolonged unrest, have made investors cautious. The country's efforts to boost manufacturing exports have not yet generated enough foreign currency to cover imports or debt service costs, putting it at risk of debt distress even before the pandemic, according to the IMF. Abiy's government stated that despite facing crises, Ethiopia is moving forward with reforms to establish a modern economy. Mamo Mihretu, a senior policy adviser in the prime minister's office, mentioned that the Ethiopian economy has shown resilience despite the challenges of COVID and ongoing insecurity. Ethiopia's textile production is relatively small compared to countries like Vietnam and China, with exports totaling $94 million in 2016. The country's main exports are agricultural products such as coffee, tea, spices, oil seeds, plants, and flowers, but its efforts to expand into the textile industry in the last decade reflect its manufacturing aspirations. As the conflict approached Mekelle, the regional capital of Tigray, textile companies started closing down and evacuating their staff. Cristiano Frati, an electrician from a factory run by Italian hosiery chain Calzedonia, expressed concern about not being able to leave the city as the fighting intensified. Calzedonia suspended operations at their plant employing 2,000 people on Nov. 13 due to the conflict and has not provided any additional comments. A broad perspective reveals the Hawassa Industrial Park in the Southern Nations, Nationalities, and Peoples region of Ethiopia on November 17, 2017. Meanwhile, DBL has evacuated its international employees from Ethiopia. "The situation has become unclear," stated managing director M.A. Jabbar. "We are unsure of when the conflict will come to an end." Another international company, Velocity Apparelz Companies, which supplies to H&M and Children's Place, has temporarily closed down, as confirmed by a company official to Reuters. H&M expressed their concern and stated that they are closely monitoring the situation, mentioning that three of their suppliers in Tigray have stopped production. However, they assured that they will continue to source from Ethiopia, where they have a total of about 10 suppliers. Indochine Apparel, a Chinese company that supplies Levi Strauss & Co, reported that their operations in the Hawassa industrial park in the southern part of the country are not affected. Levi Strauss stated that they are keeping an eye on the situation and confirmed that there has been no impact on their supply chain so far. The apparel industry in Ethiopia was facing challenges before the conflict in Tigray due to the economic impact of the COVID-19 pandemic. Some factories closed down, while others reduced wages or let go of employees. This downturn was not exclusive to the garment sector, as insurance companies had already stopped covering political risks outside of certain regions in Ethiopia. A risk consultant described the current situation in Ethiopia as bleak. Similar to many other individuals interviewed by Reuters, the consultant preferred to remain anonymous due to concerns about potential retaliation from government officials. Prior to the conflict in Tigray, Prime Minister Abiy's attempts to alleviate a repressive political environment had already resulted in ethnic tensions. This violence, which escalated in 2019, had caused disruptions in various projects, particularly in agriculture. According to the director of an agri-industry project that had to postpone its investment last year, the fighting coincided with the planting season. Employees are currently working on sewing clothes at the Indochine Apparel textile factory located in Hawassa Industrial Park in Ethiopia's Southern Nations, Nationalities and Peoples region as of November 17, 2017, according to Reuters. Swedish furniture company IKEA had set up a purchasing office in Ethiopia last year, but decided to close it down in September because of challenges related to the political and social climate, COVID-19, and changes in the cotton market in Africa. Coca-Cola Beverages Africa, a bottling partner of Coca-Cola, also reported to Reuters that the conflict in Tigray, which makes up approximately 20% of its sales in Ethiopia, has led to a halt in business operations in the country. Additionally, the construction of two new bottling plants in Ethiopia has been delayed due to the pandemic and an increase in excise taxes. This is part of a $300 million five-year investment plan that was announced last year. With the capture of Mekelle in late November, Abiy announced his triumph over the TPLF, Tigray's former ruling party. Abiy's advisor Mamo stated that the rapid and resolute conclusion of the military operation should alleviate any remaining worries about political instability among investors. Despite this, the TPLF has promised to continue fighting. The Ethiopian government must be extremely cautious, as the country's external 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 in 2016 of over $4 billion, falling to approximately $500 million in the first quarter of the current fiscal year. Inflation is currently at around 20%. "There are limited options to address this situation. The possibility of obtaining additional funds from the IMF is unlikely, and accessing the financial markets is not feasible." 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 this, Ethiopia made significant progress by passing a groundbreaking investment law and implementing currency reforms. The government is also moving forward with plans to liberalize the telecommunications sector by inviting bids for two new telecoms licenses and selling a minority stake in state-owned Ethio Telecom. Sources familiar with the process noted that interested companies were not discouraged by the ongoing unrest, as this could provide a significant boost to the struggling economy. Ethiopia's ambitious plans for manufacturing have been hindered for the time being. DBL's Waseq, now back in Bangladesh, questioned who would be willing to invest in Ethiopia under the current circumstances.