Ethiopia Economy


The Ethiopian economy is dominated by the agriculture and services sectors-with each accounting for about 45 percent of gross domestic product (GDP), leaving only about 10 percent for industry, of which manufacturing accounts for about 6–7 percent. Exports are highly concentrated, with coffee alone accounting for more than 60 percent of the total. Moreover, Ethiopia could hardly be located in the international market for manufacturing exports, having an industrial export share much less than the already minuscule median for Africa. The limited change in the structure of the economy, especially with regard to manufacturing, is partly explained by the low levels of investment flows and the sluggish growth of the private sector, which was too little to affect its historically low share in labor-intensive manufactures. Indeed, even after more than a decade of reforms by the current Government of Ethiopia (GOE) private economic activities in the Ethiopian manufacturing sector remain very small, even by African standards.
Agriculture Ethiopia's economy in respect of total production is dominated by agriculture, which accounts for 45.9% share of the Gross Domestic Product (GDP) during 2006/07 fiscal year. Approximately 45% of Ethiopia's landmass is arable, but only about 10,556 thousands hectare is presently under cultivation.

Currently, agriculture is the leading sector in terms of contribution to the overall economic growth and devel­opment by supplying food for domestic consumption and raw materials for the domestic manufacturing industries and primary export commodities which constitute as high as 86% of the total foreign exchange earnings. The national economy, therefore, is highly correlated with the performance of the agricultural sector. Moreover, the sector accounts currently for 85% of employment, and supplies 70% of the raw material requirements of local industries

To facilitate the marketing of agricultural products, the government in collaboration with UNDP has just introduced the Ethiopian Commodity Exchange (ECX system with its own separate regulatory body named the Agency for Commodity Exchange. Under this system, is expected that both the private sector and small farmer! Through cooperatives would participate and will be beneficiaries.  


The manufacturing sector, which accounted for merely 13.3% of GDP in 2006/07, is dominated by food, beverage, textiles, hides & skins, and leather industries. But most recently considerable amount of investment is directed towards the establishment of the cement facto­ries in response to the strong surge in demand for cement that emanated from huge construction activities booming in the country.
The sector is primarily oriented toward processing of agricultural commodities. It supplies important consumer goods to the domestic market. The major manufactured export products comprise clothing and apparel, canned and frozen meat, semi-processed hides and skins, sugar and molasses, footwear, tobacco, beverages, oil cakes, bees' wax, and leather and leather products.
The service sector contributed to about 40.4% to real GDP while recording 9.2% growth in 2005/06. The Share of the service sector has been growing up slowly but steadily in recent years reaching 40.8 percent in 2006/07 from its level of 36 percent in 1996/97. This mainly the result of the fast growth of education; real state; renting and business activities; whole sale and retail trade; and hotels and restaurants sub-sectors, which In the last five years registered an annual average growth of 11.6%, 10.2%, 11.3% and 13.7% respectively.