East African growth hub Ethiopia lifted its state of emergency two months early on Tuesday, and now could be the time for frontier market investors to dive in, according to analysts.
"Ethiopia's parliament has just ratified overwhelmingly the draft bill from the cabinet that lifts the state of emergency," Fitsum Arega, the prime minister's chief of staff, tweeted. "The government is confident that the public will maintain and protect peace and order."
The news is the latest in a series of reformist steps that suggest now is "a good window to start investigating" investment opportunities in Ethiopia, according to Jean Devlin, partner in global risk analysis at Control Risks.
Ethiopia 'coming back from the brink'
Ethiopia, a de facto one-party state, is used to heavy-handed government control. But last week, the ruling coalition party began talks with opposition groups with a view to amending an anti-terror law critics say stymies dissent.
Meanwhile, the country's telecoms sector, a state-run monopoly, said it would allow local firms to use its infrastructure to provide internet services.
On top of this, the Financial Times reported that major investor China has cut back its financial ties to Ethiopia, citing concerns over foreign exchange shortages and national debt.
"Caution is still required as Ethiopia is coming back from the brink," Pat Thaker, editorial director for the Middle East and Africa at the Economist Intelligence Unit, told CNBC via email Monday.
But, with Chinese investment potentially becoming less of a presence in Ethiopia, "this presents an opening for Western investors who have generally stayed back in the last two to three years, and I think the political news will complement that."
Prime minister listening to international and domestic concerns
Ethiopia imposed a state of emergency in February following the resignation of Prime Minister Hailemariam Desalegn.
Longstanding tension had bubbled up between ethnic groups in the country, and the new restrictions were intended to quell civil unrest by, for example, prohibiting the distribution of politically sensitive material or unauthorized demonstrations.
Current Prime Minister Abiy Ahmed assumed office in April. The lifting of the state of emergency is a "welcome sign that the new prime minister is listening to international, as well as domestic, concerns over opening the political space," Devlin told CNBC via email.
The country, known for its exports of coffee and other agricultural products, has seen foreign direct investment grow to over $3 billion in 2015/16. The Ethiopia Investment Commission cites leather goods, textiles, horticulture and industrial parks as areas of strategic investment and promotes incentive packages on its website.
Ethiopia, though poor, also presents a considerable consumer market as Africa's second most populous country with over 100 million inhabitants.
Security situation 'still far from sorted'
China has helped build infrastructure in the country, notably a railway that links the capital Addis Ababa to the neighboring port state of Djibouti, thereby helping landlocked Ethiopia ship its goods. But according to the Financial Times' source, "The Chinese have said they've reached their limit."
Civil unrest has also bled into the business sector. "Local tensions against foreign business interests are in some cases very high," Thaker said, citing the recent assassination of the country manager for Nigerian mining group Dangote Industries. Abiy is "moving in the right direction, but the security situation is still far from sorted," she added.
"The reputational impact of investing in Ethiopia, particularly with regards to human rights concerns, has been something investors have been considering more deeply in recent years," Devlin said. Abiy has indicated that he is driving towards reform that will address the country's recent instability, but "there's still a long road ahead."