Other State Department Archive Sites

The State Department web site below is a permanent electronic archive of information released online from January 1, 1997 to January 20, 2001. Please see www.state.gov for current material from the Department of State. Or visit http://2001-2009.state.gov for information from that period. Archive sites are not updated, so external links may no longer function. Contact us with any questions about finding information. NOTE: External links to other Internet sites should not be construed as an endorsement of the views contained therein.

Country Commercial Guides for FY 2000: Ethiopia Report prepared by U.S. Embassy Addis Ababa, released July, 1999 Note*

CHAPTER I. EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at Ethiopia's commercial environment, using economic, political and market analyses. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. government agencies.

With a population of nearly 62 million and a growth rate of 3 percent, Ethiopia is already the third most populous country in Africa after Nigeria and Egypt. It covers 1.3 million square kilometers (slightly less than twice the size of Texas), making it the ninth largest country on the continent. With a per capita income of roughly $120 in 1998, however, Ethiopia ranks as one of the poorest countries in the world. As a land-locked country and with current hostilities with Eritrea in the north, Ethiopia has been forced to shift and use the Djibouti port for nearly all of its trade.

Despite its poverty, Ethiopia has been among the top ten U.S. markets in sub-Saharan Africa over the last several years, although U.S. exports to Ethiopia declined from $148 million in 1996 to $88 million in 1998. The agricultural sector, consisting mostly of peasant farms, accounts for roughly 50 percent of the nation's gross domestic product, 85 percent of total Ethiopian employment, and 70 percent of its exports. To achieve long-term economic and social development goals, and to feed a rapidly growing population, the government of Ethiopia focuses on agricultural development as the catalyst for economic growth. The nation's strategy also includes controlling population growth, strengthening domestic industry, privatizing non-strategic enterprises, and increasing reliance on free market forces and the private sector to expand exports and supplant imports.

Ethiopia's reform program has achieved demonstrable success in stabilizing the economy, reducing poverty, and aiding the transition to a free market system. From 1993-1998, the country achieved an annual average economic growth rate of 6-7% and an annual average inflation rate below 4%. In addition, its government budget deficit before donor grants is only 5-6 percent of GDP. However, Ethiopia has a large current account deficit resulting from a highly negative balance of trade and a high ratio of debt outstanding to exports and GDP. Increased military expenditures over the last 15 months, and a higher anticipated defense budget for this fiscal year, are expected to exacerbate these problems. Ethiopia's primary exports are coffee, hides and skins, sesame seeds, pulses, chat, live animals, honey and beeswax, and fruits and vegetables. Coffee is by far the most important export commodity, constituting between 60-65 percent of exports by value each of the last six years.

The country's main imports include motor vehicles, petroleum products, civil and military aircraft, spare parts, construction equipment, medical and pharmaceutical products, agricultural and industrial chemicals, agricultural machinery, fertilizers, irrigation equipment, and food grains. The major manufacturing subsectors in Ethiopia are food processing, beverages, textiles, clothing, and leather.

The principal obstacles to doing business in Ethiopia are: extreme poverty, which hinders the growth of a consumer economy; poor transportation infrastructure--especially the inadequate road and rail network; inconsistent telecommunications and other utility services; inability to obtain land quickly and cheaply; restrictions on foreign exchange and inadequacies of the banking system; regulatory hurdles for prospective exporters; and slow bureaucratic decision-making procedures.

Country Commercial Guides (CCG) are available for U.S. exporters from the National Trade Data Bank's CD-ROM or through the internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the world wide web at http://www.stat-usa.gov; http://1997-2001.state.gov/; http://www.mac.doc.gov; and http://www.telecom.net.et/~usis-eth/. They can be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-ntis. U.S. exporters seeking general export information or assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-usa-trad(e) or by fax at (202) 482-4473.