The ethnicization of Ethiopia’s informal sector

The Ethiopian governing regime has defined poverty as the biggest threat to its survival since its inception, and has thus established a top-down developmental state model to drive economic growth that would legitimise its existence. While this model has sustained high GDP growth rates, Ethiopia faces a challenge translating such growth into improved livelihoods. The private sector is weakly developed, and job creation in Ethiopia’s urban centres has not kept pace with population growth or rural-urban migration. Employment in the informal economy has been key to an increasing number of individuals’ livelihoods, yet persistent poverty, inequality and marginalisation is also deepening grievances. The ethnically defined federalist system has created potentially powerful ethnic nationalist constituencies and aligned other previously cross-cutting political cleavages with existing ethnic divides, which result in potentially strong centrifugal forces.

The Ethiopian state’s clientelistic approaches to political mobilisation and its claim to legitimacy based on economic growth have equally lost purchase in the face of persistent poverty and marginalisation. With political debate extending beyond previously formalised channels, ethnically based networks are gaining significance. While career perspectives in the formal sector have long been intertwined with the ethnically based political system, such dynamics are becoming increasingly pronounced in the informal sector. The demarcation of boundaries between ethnic groups is becoming more important in the informal sector. While this may help ethnic groupings secure their livelihoods by securing control over various economic sectors and locations, it has reduced inter-group cooperation by eroding cross-cutting social capital and has connected economic grievances with ethnic fault lines. As a result, political tensions between ethnic nationalist groupings increasingly engage substantial urban constituencies, allowing tensions to spill over and exacerbate the broader political strains across the country.

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