About Ethiopia: A short history | Fact-sheet | Further reading

About Ethiopia: Economy

Ethiopia is primarily an agricultural country. Farm products account for more than half of the country's gross domestic product, ninety per cent of exports and around 80% of economic activity. The most important export is coffee, with an export value of $350 million in 2006. However with low international coffee prices many farmers have shifted production to qat ( a mild stimulant) to supplement their income.   Under Ethiopia's land tenure system, the government owns all land and provides long-term leases to the tenants; the system continues to hamper growth in the industrial sector as entrepreneurs are unable to use land as collateral for loans.

In November 2001, Ethiopia qualified for debt relief from the Highly Indebted Poor Countries (HIPC) initiative, and in December 2005 the International Monetary Fund voted to forgive Ethiopia's debt to the body.

The majority of farming in Ethiopia is subsistence of which the most common crops are coffee, teff, wheat, barley, cotton and sugarcane. Ethiopia is the largest producer of livestock in Africa.

However because of its degraded lands, poor cultivation practices, and frequent periods of drought, Ethiopia is chronically unable to feed its population and has to rely on massive food imports.

Industry, which is largely state-run, is mostly restricted to agricultural processing and the manufacture of consumer goods. The main industrial centers are Addis Ababa, Dire Dawa, and Nazret. The leading manufactures include processed food, beverages, textiles, leather, chemicals, metal products, and cement. No large-scale mineral deposits have been found in Ethiopia; gold, platinum, salt, limestone, iron ore, and sulfur are extracted in small quantities. Foreign investment in the mining sector began in the 1990s.

Ethiopia has a poor transportation network, with few year-round roads. The country's one rail line links Addis Ababa and Djibouti. The chief ports serving Ethiopia, which became landlocked with Eritrean independence, are in other countries: Djibouti, in the country of Djibouti, and Aseb and Massawa, in Eritrea.

The annual value of imports into Ethiopia is usually considerably higher than the value of its exports. The principal imports are food, petroleum and petroleum products, machinery, motor vehicles, chemicals, and manufactured consumer goods; the main exports are coffee, hides and skins, oilseeds, grain, and gold. The leading trade partners are Germany, Saudi Arabia, Italy, and Japan.