By Rayhaan Iqbal |
Ethiopia has had a long and proud history. Home to the adored Queen of Sheba and the only African nation to resist colonization, Ethiopia saw its fate change dramatically due to the cruel conquerors: War and Famine. If you were to travel back in time 30 years ago chances are you would hear about the “biblical famine” that hit Ethiopia. Civil war and political turmoil had gripped the country and catalyzed the impact of the famine. In 1984, media outlets put the number of people affected at 8 million and the number dead at 1 million. It was an event that helped perpetuate stereotypes about Africa being a land of suffering, poverty and hunger.
However over the following 30 years Ethiopia began to “roar”, becoming what journalists and economists have dubbed as one of “Africa’s’ lions”, and with good reason. The country has grown from strength to strength with an increase in the number of dollar millionaires with reportedly 1,300 in 2007 to 2,700 in 2013 and a massive 93% growth in GDP. One of the main reasons for the growth stems from the economic reforms and privatization of state-owned businesses by the post-revolution government. Further privatization has been seen in its pharmaceutical, manufacturing, large-scale farms and service areas and in 2012 accepted bids of around $121 million for seven of its state-owned business. Privatization is helping to fuel Ethiopia as the money is used to invest into infrastructure and energy to help it remain competitive across the African continent. However certain sectors of the economy such as Telecoms and Air & Land travel still remain in the government’s control for strategic reasons. It should also be noted, that privatization has also been met with stagnation, with reports of seven public enterprises failing to be sold, this succeeded an even worse year in which the agency planned to sell 20 enterprises but managed a mere 5.
Ethiopia’s economy is enhanced by the mining, tourism, transportation, fishing, telecoms and manufacturing sectors but agriculture remains the dominant driving force. Despite the potential for drought and the adverse effects of overgrazing and deforestation, agriculture is Ethiopia’s most fruitful sector. It accounts for around 46% of her GDP and 85% of jobs. Much of the growth is credited to the Ethiopian government’s ‘Growth and Transformation Plan’, which has, and further plans to increase the amount of irrigated land, aide small farmers and help families which lack basic necessities. They also hope to rapidly increase cash crop yields from around 18 metric tonnes to 39 metric tonnes. Many have credited the plan as a success, especially since it is on target to achieve a GDP growth objective of 11-15% per year from 2010 to 2015, as between 2013-14, GDP was about 10.6%. This is quite an achievement considering Ethiopia’s neighbour Kenya only achieved 4.8% in the same year.
One of Ethiopia’s largest cash crops is coffee, with around 25% of Ethiopia’s population relying on coffee production for work. Coffee is the world’s second most valuable exported product worth around $15.4 billion globally in 2010 and totaling $840 million for Ethiopia’s exports and foreign capital in the same year. Significant amounts are exported to the EU, Asia and North America and providing the government with 10% of its annual revenue. Coffee, specifically Arabica coffee, has had a long cultural link with the country, with the local legend of Kaldi who first discovered the crop when he noticed the effects it had on his flock. Other major crops include: oil seed, cotton and flowers. Aside from crops, livestock plays an important component within the agriculture sector according for around 7.5% of export value for hides, skins and leather products and live animals accounting for 3.1%. It should be noted that Ethiopia is one of the largest exporters in coffee and livestock across the continent, with significant potential to increase the yield if the government plans are successful.
That being said, an economy based on agriculture does have its limits. One issue is that Ethiopia experiences dangerous droughts and surprise flooding, disasters which will worsen in the coming years from the repercussions of global warming. If Ethiopia is to succeed it must invest and develop its other sectors. It has tried to increase its manufacturing sector, and is succeeding with some avail in becoming a manufacturing powerhouse in Africa, however it is grossly underdeveloped with concerns such as its low production capacity. One should also note that the manufacturing sector is primarily concentrated in Addis Abba and must expand across the country if it is to grow. Two other key areas could be its transportation and tourism sector, with the award winning state-owned Ethiopian Airlines, which flies to 61 international destinations and hailed as one of Africa’s best airlines. Tourism is an important part of the governments’ plans to combat poverty, and the sector accounted for 5.5% of GDP in 2006 but has only increased by a mere 2% since then. Ethiopia has great potential, especially through natural parks, wonders and safaris, and when compared to her neighbor Kenya, whose tourism sector accounts for 11.9% in 2014, you can see the disparity.
Source: The MArket Mogule
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