Golden growth.
Ethiopia's economy is growing on gold.
The country, whose north is facing renewed shooting, announced a record export of 11 billion dollars, half of which is gold. The precious metal has become the main fuel of the Ethiopian economy, which Prime Minister Abiy Ahmed presents as a success story.
Ethiopia produced 44 tons of gold last fiscal year and earned $5.65 billion in gold, up 61 percent from the previous year, and economic growth estimates range from 9 to 10 percent, making it one of the fastest growing in Africa. Coffee brought in another 3 billion, and together with gold these two goods account for three quarters of exports.
The record also has a back side. The main increase did not come from new production, but from the diversion of flows, because in the past gold was smuggled abroad, but now artisanal miners hand it over to the central bank for a premium, and even now, according to some estimates, up to 60 percent of the metal enters black circulation. Physical production increased by only 5 tons, and industrial companies produce only 3 tons out of 44.
Ethiopia's gold reserves are modest by growth standards, because 44 tons a year with artisanal mining is quickly hitting the ceiling, and the economy relies on high world prices and smuggling brought into an official channel. The country will be able to keep up as long as gold rises in price and the conflict in Tigray does not spread to the mining areas, but with the first serious collapse in prices or a new round of war, the growth of "gold" will reveal its fragility.
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