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Cutting through the Corruption Loopholes

Ethiopia has been grappling with foreign currency shortages for many decades. Despite this, the country’s import figures have been growing, reaching an all-time high in 2021/22 with USD 18 billion, up from USD 14.2 billion recorded in the previous year. Such a staggering increase in imports has further widened the trade deficit. This influx of import transactions involves numerous stakeholders. However, the cumbersome bureaucracies in the customs system, rampant corruption, and exorbitant duty levy have created immense frustration for importers and manufacturers. 

EBR’s Selome Getachew navigates the hurdles in the import processes and how custom procedures, which change now and then, frustrate importers. 


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The export sector in Ethiopia has been under scrutiny for poor performance for decades. As Ethiopia has not been a manufacturing hub as such, the criticism has been downplayed. Despite the number of investors who are seemingly interested in the export business, the country has also been struggling to export value-added items including its flagship coffee. Looking at the exponentially increasing number of exporters that joined the line of business in the last five years, one may think new entrants are helping the country’s success in global trade. Unfortunately, exporters are increasingly in the business to support their imports. And there are even more controversial activities in the field. Though the number of exporters and Dollars earned has shown significant increases, practices in the export sector are full of malpractice that that are hurting the Ethiopian economy, writes Selome Getachew.


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Ethiopia has historically produced some of the best-reviewed single-origin premium coffee beans and boasts the status as the birthplace of coffee. Ethiopian coffees are well renowned for their complexity—strong, wine-like flavor and a very wild acidity. The cash crop remains the nation’s major export item covering over 30Pct of the country’s total export earnings. Various administrations have attempted to fully tap into the country’s full potential for coffee and other agricultural products. The launching of the Ethiopian Commodity Exchange (ECX) was one such attempt, seeking to secure a larger and fairer share for Ethiopian farmers. Recently, coffee exporters, particularly from the State of Oromia, have walked away from ECX to join the vertical scheme where farmers can export or sell directly to exporters or suppliers. With authorities crediting this move for burgeoning exports, there are more complexities at play, writes Selome Getachew.


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Private participation in investment and business activities in the Ethiopian economy has been struggling for decades. Various administrations have done little to nothing when it comes to developing the private sector towards development and alleviating poverty. From communism to state developmentalism to the current administration’s ideology—the private sector seems to be always stuck on the back burner. One recent move by the incumbent is the establishment of the Ethiopian Investment Holdings (EIH). Creating this arm into the Ethiopian economy, the government hopes to counter the sluggish development of private-sector participation in the economy at large. EBR’s Selome Getachew looks into the missions of EIH and expected challenges which it will face to achieve intended results.


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If two words could summarize typical challenges of the Ethiopian economic landscape, forex shortage would do it. And if two words could encapsulate expert recommendations to alleviate the long-time challenge—export diversification suffices. Ethiopia is gifted with abundant natural resources of adequate landmass with fertile topsoil and mineral-rich crust.

It is Africa’s water tower and has the continents largest livestock population. Its favorable climate and young population are also assets. Yet, most of its resources are not properly identified, well-managed, and well-exploited in a way that can resolve its forex crunch which has defined its economy for decades. It is with this challenging past and conditions that the last few years have seen revitalized efforts to shake up the sector and add more items to the exportable list, write Selome Getachew.


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The Ethiopian manufacturing sector is still far from being an engine of growth and economic transformation despite potential and assurances from various actors to the contrary. It plays a marginal role in employment creation, exports, and output. It is also short of stimulating domestic linkages and is dominated by small firms, resource-based industries, low-value and technology products, and weak inter-sectoral linkages.

Ever since 1945, when strategic planning for industrialization first begun, successive administrations have been unable to oversee the take-off of the nascent manufacturing sector. Notwithstanding micro-level problems, legacy issues including foreign currency shortages, electrical power interruptions, and sectoral linkages still linger. But now, adding salt to the wound is the current administration’s tinkering with tariff privileges for factories. Selome Getachew reviews the issue with input from Bamlak Fekadu.


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Forex reserve shortages and the further devaluation of the Ethiopian birr against foreign currencies have been the usual inflation-causing suspects in Ethiopia. Additionally, in recent months, container scarcity is resulting in even more price hikes, especially of Chinese imports. Adding to an already strained global business environment faced with unprecedented challenges, China’s latest power cuts and moves to create a climate-change-conscious economy are felt far afield, writes Selome Getachew.




Ethiopian Business Review | EBR is a first-class and high-quality monthly business magazine offering enlightenment to readers and a platform for partners.



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