COUNTRY PROFILE

Ethiopia is a federal republic of 9 states with capital city Addis Ababa. It is a landlocked country of more than 1,125,000 sq km with an estimated population of well over 75 million inhabitants out of which 85% live in rural areas and are mainly subsistence farmers and pastoralists.

 

The Ethiopian economy depends to a large extent on the agricultural sector which accounts for nearly 50% of the Gross Domestic Product (GDP). However the contribution of agriculture is expected to be far higher as the production of subsistence farmers tends to be excluded from the calculations. In general, the agricultural sector consists of numerous scattered small farmers at subsistence level and relatively few commercial producers and exporters. For many years, the national government had an important stake in the production of basic agricultural and food items like cereals, milk, meat, fruits and vegetables through its state farms.

For years the focus of the government of Ethiopia as well as international organizations in the area of poverty reduction has been on food security and self-sufficiency. For both sides more attention is now given to access to food through promotion of purchasing power and market oriented production (including exports).

Reports by the World Bank, OECD and African Development Bank on Structural bottlenecks of the Ethiopian Economy in general and the export oriented sectors in particular, have been well taken by the Government of Ethiopia. Privatization of state enterprise, promotion of commercial production and exports have become part of the Government's policy towards economic growth and poverty reduction (as formulated in the plan for Accelerated and sustained development to End Poverty-PASDP; September 2006). Policies have been shaped to create a more favorable investment climate and a more enabling environment for private sector development.

Agricultural exports to the European Union and North- America have been dominated by a few agro based commodities like coffee, leather and meat. For long Ethiopia depended to a large extent on coffee for its foreign exchange earnings as it used to account for about 65% of its total export revenues. Other important export products are oilseeds, Khat, Pulses, Hides and Skins. Until recently, horticulture was seen as one of the most underdeveloped sectors in Ethiopia and its contribution to the country's export earnings had been almost negligible (until 2001 less than 2% in export value). Large state farms dominated the production and export of fresh fruits and vegetables. Few years ago however, most of these farms have privatized and the cultivation of fruits, vegetables and flowers for export have been promoted.