For more than a century, the Mohan family has been a fixture in Ethiopia’s business landscape, tracing its roots back to the arrival of Mr. Mayur Suryakant Kothari’s grandfather in 1915. Now leading Mohan Group of Companies as CEO, Harsh Kothari represents the fourth generation of his Indian-Ethiopian family, guiding the company through an era of historic economic transformation. With academic credentials from the University of the West of England and the University of Warwick, Harsh Kothari brings both legacy and global perspective to the challenges and opportunities facing Ethiopia today.

In this interview with Capital, Harsh Kothari discusses the sweeping economic reforms reshaping Ethiopia, the prospects and pitfalls of opening the market to international players, and the evolving role of local businesses in a rapidly integrating global economy. Drawing on his family’s deep history and his own experience at the helm of a diversified enterprise, Harsh Kothari offers candid insights into the country’s economic trajectory and the resilience required to thrive in times of change.

Capital: How do you evaluate the evolution of the Ethiopian economy, particularly in light of the ongoing massive reforms?

Harsh Kothari: We are witnessing countless reforms, but some of the most significant include the revision of the commercial code, the introduction of a capital market, the liberalization of the telecom and banking sectors, a major and historical foreign currency reform, and the establishment of free trade zones. These changes are historic and will provide substantial advantages for the country.

Additionally, operational practices are shifting toward digital interfaces, making the environment more conducive for youth and incoming investors. Recently, a new directive was issued allowing foreign direct investment (FDI) in retail and wholesale trade. This signals Ethiopia’s integration into the global economy, enabling it to compete internationally. The global market is now becoming our market.

These reforms will significantly benefit both existing and new businesses, boosting trade and investment activities.

Capital: The government recently introduced incentives for FDIs in free trade zones and industrial parks, including duty-free schemes. What are your thoughts on this?

Harsh Kothari: We are the first to operate in the Dire Dawa Free Trade Zone, which is a groundbreaking concept. Free trade zones operate outside standard government regulations, allowing goods to enter without the usual customs processes. Duties and other formalities only apply when goods leave the zone.

As a nation, we have faced long delays at ports, costing the country between USD 1 billion to USD 1.5 billion annually in demurrage and warehousing fees directly or indirectly. Accelerating the development the Dire Dawa Free Trade Zone, could help us save these costs. For context, Djibouti’s free trade zones exported USD 5.5 billion last year, with 95% of those exports destined for Ethiopia. This shows that Ethiopia could similarly become a trading hub if we develop our own zones effectively.

Free trade zones also benefit exports. Once goods enter the Dire Dawa Free Trade Zone, they are considered exported, reducing lead times and streamlining transactions.

Another major opportunity is merchant trading, where we can facilitate exports between other countries without the goods ever entering Ethiopia. For example, if goods are in China and the market is in Nigeria, we can handle the transaction and documentation from Ethiopia, effectively becoming a financial hub. This is a transformative shift—Ethiopia doesn’t have to rely solely on its own resources to be an exporter.

The capital market will also provide citizens with diverse investment opportunities, boosting economic activity and enabling businesses to scale up and compete globally. The Free Trade Zone is expected to reduce inefficiencies, increase supply, and help manage inflation.

Capital: Given that these reforms open Ethiopia to global competition, some worry that local businesses may struggle against more experienced international players. How do you respond?

Harsh Kothari: I believe we can compete. When FDI was first introduced, there were concerns about local manufacturers being overshadowed, but instead, both local and foreign investors expanded their operations.

Ethiopia’s manufacturing and infrastructure base is relatively strong compared to many African nations. We have thriving cement, steel, and footwear industries, while sectors like chemicals and mining are emerging. Our clean energy potential is enormous, and we are making strides in technology and banking.

Our labor force is another advantage—Ethiopian youth are hardworking, trainable, disciplined, and eager to contribute to national development. With financial sector liberalization, we now have access to global financial tools, further enhancing our competitiveness.

Yes, there is a learning curve, but we have the capacity to adapt and thrive.

Capital: Some experts argue that foreign investors, including in banking, may not enter Ethiopia as expected. What is your perspective?

Harsh Kothari: I am of the opinion that investors will come. The government has laid the groundwork by improving laws and inviting foreign participation. The market is still assessing the changes, but interest is growing.

I have personally met with four foreign banks exploring opportunities in Ethiopia. Their primary concern is market maturity, but this will develop over time. Two decades ago, skeptics doubted large-scale investments in Ethiopian industries, yet today, global players in footwear, chemicals, and other sectors are operating here. The same will happen in banking, retail, and trade; foreign investors are evaluating the landscape before entering.

Capital: The IMF recommends maintaining tight monetary policies while easing restrictions on bank financing for the private sector. Do you think this will attract foreign banks?

Harsh Kothari: Yes. A disciplined financial sector ensures stability, limits inflation, and ensures that credit goes to viable businesses. This creates a more attractive environment for investors. I advise the business community to embrace modern practices so that it is easier to transition to a globalized market.

Capital: Your family has been in Ethiopia for over a century, witnessing periods of openness and restrictions. How do you compare past economic policies with the current reforms?

Harsh Kothari: My great-grandfather came to Ethiopia as an employee but later started his own business. The business continued through generations until it was halted during the socialist era. My father, Mr. Mayur Kothari revived it and transformed it, and I now manage it. My father called the group, ‘Mohan’ in loving memory of his father (my grandfather).

However, today’s business landscape is vastly different. Trade is now interconnected with services, technology, and a more complex ecosystem. I envision Ethiopia leapfrogging into a modern, globally integrated economy.

Capital: What are your primary business ventures?

Harsh Kothari: We operate in multiple sectors, polymer compounds, which are essential inputs for over 300 industries, such as packaging, footwear, and cables. We also engage in value-added manufacturing, producing rubber sheets and various footwear (including leather shoes, canvas shoes, flip-flops, safety and industrial shoes), contributing to import substitution. We have a small nail and barbed wire factory in the steel sector. Of course, we are also in the trading business.

Additionally, we operate in the Dire Dawa Free Trade Zone, expanding into trading with key logistic advantages that come with the location and associated incentives provided by the Government.

Capital: How do you assess the progress of Ethiopia’s manufacturing sector?

Harsh Kothari: It is growing, but I personally feel that it could’ve grown at a much faster pace. A Goldman Sachs report predicts Ethiopia could become the world’s 17th-largest economy by 2075, with a GDP of USD 6 trillion. Achieving this requires relentless effort from all stakeholders. It is crucial to identify and streamline the challenges and impediments that hamper the rapid growth of the Ethiopian manufacturing sector.

Capital: Some fear Ethiopia’s economy is heading for a crash due to slowdowns in finance and real estate. What is your assessment?

Harsh Kothari: “Crash” is a dramatic term; I see this as a market correction. Healthy economies experience cycles of growth and adjustment.

I believe the current corrections in the financial and real estate sectors are natural and necessary. A healthy market experiences fluctuations—prices cannot keep rising indefinitely without periodic adjustments. Whether it’s real estate, equity and shares, or any other commodity, price movements reflect market responsiveness to reality. When money supply tightens, spending naturally slows. As prices decline, buyers re-enter the market, gradually driving growth again. This cyclical correction is inherent in free-market economies.

About four years ago, bank loans and real estate were booming. Many people took out loans to buy land, houses, or build factories. While some investments were productive, most were not. There was a widespread belief that land alone would appreciate in value without contributing to actual productivity. However, sustainable growth requires investment in productive assets—those that generate or expand economic activity.

Now, the market is correcting these imbalances. Money tied up in unproductive assets is being reallocated, while productive investments continue to grow. There was a significant gap between rental income and interest rates with investors hoping that the real estate curve will continue to rise at a constant rate (or above), creating a negative return against capital on real estate vis a vis bank interest rates—a gap that made real estate artificially attractive yet unsustainable. Now, rents and interest rates are adjusting, and real estate prices are stabilizing.

At the same time, bank lending has tightened, making credit less accessible than before. I see this as a positive development because the market is self-regulating. Banks are becoming more cautious, and the private sector is being pushed toward smarter, more sustainable investments.

The upcoming capital market will also provide new opportunities, diversifying investment channels so that resources aren’t concentrated in just a few sectors. This is a correction—not a crash—and it’s a normal part of any economy. The U.S. saw major corrections in 2008 and more recently in certain stocks and commodities. India has experienced multiple cycles of ups and downs as well.

Economic corrections vary in scale—sometimes affecting specific cities, other times having global repercussions. The magnitude differs, but the principle remains the same: markets must adjust to remain healthy.

Overall, this is a good sign. The economy is rebalancing, and the market is steering itself toward more rational and sustainable growth.