Ethiopia has emerged as one of Africa’s leading economic performers, achieving a robust 7.2% growth rate, bolstered by a thriving agricultural sector, increased gold and electricity production, and significant reforms, as reported in the World Bank’s latest Global Economic Prospects report. Despite this positive momentum, the country faces considerable debt distress, even as its growth outlook remains one of the most promising on the continent.

The World Bank’s report, released on Tuesday, highlights Ethiopia’s economy as a regional standout. While growth is moderating from previous highs, it remains strong at 7.2%, driven by comprehensive reforms that have alleviated long-standing constraints and boosted output in key sectors.

The report projects that “growth is expected to moderate to a still-robust 7.1% in 2026 and then rise to 7.7% in 2027,” citing improved monetary conditions, productivity gains, and a recovery in investment.

However, the report also issues a cautionary note: “Ethiopia remains in debt distress, with elevated sovereign spreads amid ongoing debt restructuring negotiations with bondholders.”

In a regional context, Guinea led Sub-Saharan Africa with an estimated 7.5% growth over the past year, followed closely by Benin at 7.3% and Ethiopia. Looking ahead, Rwanda is also expected to see strong growth, projected at 7.2% in 2026 and 7.6% in 2027.

Global Context

Globally, the economy has proven more resilient than anticipated despite trade tensions, with growth projected at 2.6% in 2026 and 2.7% in 2027—a slight upward revision, largely driven by better-than-expected performance in the United States.

Nevertheless, the World Bank warns that the 2020s are on track to be the weakest decade for global growth since the 1960s. A troubling divide is widening: while nearly all advanced economies have surpassed pre-pandemic income levels, about one in four developing economies still has lower per capita incomes.

“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said Indermit Gill, the World Bank Group’s Chief Economist. He urged governments to “aggressively liberalize private investment and trade, rein in public consumption, and invest in new technologies and education” to avoid stagnation.

The report highlights a pressing jobs challenge for developing economies, with 1.2 billion young people set to enter the workforce in the next decade. It advocates for a three-pillar strategy: strengthening capital, improving the business environment, and mobilizing private investment.

With public debt in developing economies at a half-century high, the report underscores the urgent need for fiscal credibility, calling for well-designed and enforced fiscal rules to stabilize debt and foster growth.

Land governance failures in Ethiopia are accelerating ecological degradation and pushing the country toward a potential food security crisis, land policy experts have warned. Policymakers and advocates at the Land for Life–Ethiopia “Land for Life Forum” said that without urgent reforms, weak land management will undermine the very agricultural base on which the economy depends.

Although agriculture remains the backbone of Ethiopia’s economy, experts argue that outdated laws, poor implementation and weak enforcement in the land sector are eroding the foundations of the entire food system. They describe land management as the “invisible infrastructure” that determines who can use land, under what conditions, and for how long — and say that the current framework is failing farmers and ecosystems alike.

Research presented at the forum indicates that the absence of secure land rights is discouraging long‑term investment in soil health, water conservation and climate‑resilient practices. Instead, many farmers, unsure whether they can keep or pass on their plots, are forced into short‑term, extractive use of the land, which accelerates degradation and reduces productivity over time.

Experts stressed that land management is not just a technical exercise, but a matter of equity, stability and survival. Widespread disputes over land tenure, illegal occupation and opaque allocation processes are deterring responsible agricultural investment and fuelling local tensions. Participants urged the government to treat land governance as a national security issue and to move quickly to resolve conflicts and clarify rights.

Weak institutional oversight has also created openings for corruption and discriminatory practices in land administration. This, analysts warned, is pushing smallholder farmers — who make up the bulk of Ethiopia’s rural population — to surrender their land rights, deepening extreme poverty and widening inequality. They argued that building a modern, digitally supported land information system is an urgent priority, not a long‑term luxury.

“Land management is an invisible infrastructure of our entire food system. When this infrastructure is weakened, the whole system will be destroyed,” said Bezualem Bekele at the event. He linked the loss of tenure security and misuse of land directly to ecological decline, noting that degraded soils, deforested hillsides and eroded watersheds are symptoms of deeper governance failures.

Experts also highlighted the twin pressures of large‑scale investment and rapid change in Ethiopia’s lowlands. In the absence of clear and enforceable legal frameworks, communities face displacement risks from uncontrolled foreign and domestic investment, as land is reclassified and leased out without meaningful consultation. Rather than supporting sustainable development, this pattern of allocation is depleting natural resources and deepening ecological imbalances, they said.

The country’s centuries‑old pastoralist systems are among the most affected. Rapid urbanisation, population growth and state policies that prioritise permanent agriculture and capital‑intensive investment have steadily squeezed traditional grazing lands. Pastoral areas are often treated as “empty” or “idle” land, despite their long‑standing role in supporting livelihoods and maintaining fragile ecosystems through mobility‑based herding.

Advocates argue that this narrative mislabels pastoral production as “backward” and environmentally harmful, while ignoring the ecological value of seasonal movement and flexible grazing patterns. As communal rangelands are privatised or converted to farms, livestock pressure intensifies on the remaining open pastures, fuelling conflicts and accelerating land degradation.

Despite strong constitutional language, implementation has lagged. Article 40(5) of Ethiopia’s Constitution recognises pastoralists’ rights to freely access land for grazing and cultivation and to protection from arbitrary displacement. Yet in practice, experts say, pastoral communities are being excluded from decision‑making as their grazing areas are reduced and fragmented by new projects and enclosures.

With climate shocks intensifying in the lowlands, regional bodies such as the African Union and IGAD have begun to acknowledge that mobility is a critical survival strategy rather than an anachronism. Specialists at the forum called for legal recognition of “flexible borders” and seasonal corridors, similar to arrangements in parts of West Africa, to allow herders to move across administrative and even international boundaries in response to rainfall and pasture conditions.

Proposed measures include mapping and formalising livestock routes, harmonising cross‑border regulations with neighbouring states and integrating pastoralists’ traditional knowledge into national research and extension systems. Experts argued that these steps would help stabilise livelihoods, reduce conflict and support more climate‑resilient land use.

Participants also criticised decades of top‑down development approaches in the lowlands, noting that billions of dollars in projects since the 1960s have failed to deliver lasting improvements in pastoral communities’ wellbeing. They blamed this on policies that sideline local voices, misunderstand the logic of pastoral systems and impose fixed, sedentary models on landscapes and societies built around mobility.

Without a decisive shift toward inclusive, transparent and ecologically grounded land governance, experts warned, Ethiopia risks further soil depletion, biodiversity loss and rural impoverishment — with direct consequences for national food security and social stability.

Ethiopia is projected to remain among Africa’s fastest‑growing economies over the next two years, supported by robust agricultural output, recovering investment and gradual macroeconomic stabilisation, according to the United Nations’ World Economic Situation and Prospects 2026 report. The UN expects stronger performance in large least developed countries such as Ethiopia to help lift average growth in the world’s poorest economies to 4.6 percent in 2026 and 5.0 percent in 2027, although this still falls short of the 7 percent target set in the Sustainable Development Goals.​

The report notes that Ethiopia’s recent growth has been underpinned by improved macroeconomic management, better harvests and relatively favourable commodity price trends, which have supported rural incomes and domestic demand. As one of the biggest economies in East Africa, Ethiopia is contributing significantly to the subregion’s projected expansion of about 5.8 percent in 2026 and 5.7 percent in 2027, keeping East Africa among the continent’s top‑performing blocs.​

However, the outlook remains clouded by elevated public debt, limited fiscal space and rising climate‑related risks that are straining already tight budgets. The UN warns that many least developed countries, including Ethiopia, face a challenging external environment marked by higher global interest rates, weaker aid flows and heightened trade uncertainty following recent tariff hikes in major markets.​

Progress on poverty reduction is also under pressure, with extreme poverty increasingly concentrated in sub‑Saharan Africa despite the post‑pandemic recovery. The report cautions that slow per‑capita income growth, recurrent droughts and other climate shocks, and pockets of fragility could erode social gains unless growth becomes more inclusive and climate‑resilient.​

The UN identifies deeper regional integration, including full implementation of the African Continental Free Trade Area, and scaled‑up investment in infrastructure, green energy and productive sectors as critical to sustaining Ethiopia’s growth momentum. It also calls for stronger international support on debt relief and concessional financing for countries like Ethiopia to preserve space for social spending and development investments.

Sub‑Saharan African executives rank unemployment, weak public services, debt and inflation as the most urgent threats to their economies over the next two years, according to the World Economic Forum’s Global Risks Report 2026. The region’s risk profile, drawn from business leaders in countries such as Nigeria, Kenya, Ghana, South Africa, Zambia and others, highlights a persistent social and economic squeeze rather than the frontier technology or geopolitical shocks that dominate headlines elsewhere.

Across multiple Sub‑Saharan African economies, “lack of economic opportunity or unemployment” is listed as the number-one national risk, reflecting concern over slow job creation, large youth cohorts and uneven post‑pandemic recovery. In Nigeria, Ghana, Kenya, Botswana, Lesotho, Liberia, Morocco, Mozambique, Namibia, Senegal, Tanzania, Zambia and Zimbabwe, unemployment or lack of opportunity appears in the top five risks, often in first place. South African executives also rank joblessness as the country’s leading threat, ahead of crime and infrastructure disruptions.

Weak public services and social protection — including education, infrastructure and pensions — emerge as the second defining pressure point for the region. Respondents in Nigeria, Kenya, Zambia, Mozambique, Cote d’Ivoire, Angola, Honduras‑style peers and several other African states consistently place “insufficient public services and social protections” among their top three concerns, underscoring fears that fragile health, education and welfare systems are unable to absorb new shocks.

Inflation and debt burdens further complicate the picture. Business leaders in countries such as Angola, Egypt, Cameroon, Malawi, Morocco and others point to high prices and rising public and private debt as key short‑term threats, signalling limited fiscal space to respond to future crises. In many cases, inflation is listed alongside economic downturn and unemployment, highlighting a risk of stagflation‑like conditions that could deepen poverty and social tension.

While advanced and emerging economies in other regions increasingly worry about the disruptive potential of artificial intelligence and quantum technologies, Sub‑Saharan Africa’s risk map remains dominated by basic economic and governance challenges. AI‑related risks do appear in the top five for some African countries, including Ghana, Kenya, Rwanda and South Africa, but they sit alongside, rather than replace, older structural threats such as crime, health decline and inequality.

The report warns that this combination of weak job markets, strained state capacity and high living costs could amplify social unrest, erode trust in institutions and slow the region’s ability to benefit from global technological and economic shifts. It also notes that development assistance and stronger domestic institutions will be critical for helping African states manage these overlapping risks and avoid being further marginalised in an era of intensified geoeconomic confrontation and technological divides.