@UNCTAD – Ethiopian Business Review

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In a development that signals a major realignment in Africa’s coffee trade, Uganda has officially surpassed Ethiopia to become the continent’s leading coffee exporter, marking a watershed moment in a market long dominated by Ethiopia’s legacy.

According to the latest figures released at the World of Coffee Geneva 2025 event, Uganda exported a record 47,606.7 tonnes of coffee in May 2025, significantly outpacing Ethiopia’s 43,481 tonnes for the same month. This marks the first time in recent memory that Ethiopia has been outpaced on export volume by a regional competitor.

The data also revealed that Uganda exported 793,445 60kg bags in May alone, a staggering 43.59% increase from the 552,569 bags shipped in May 2024. This performance earned the country USD 243.9 million in a single month, pushing Uganda’s cumulative annual earnings to USD 2.09 billion between June 2024 and May 2025. Over that period, Uganda exported 7.43 million bags, compared to 6.08 million the previous year.

Ethiopia, long celebrated as the birthplace of coffee and Africa’s traditional leader in export volume and quality, finds itself in a more competitive environment than ever before.

Officials from Uganda’s Ministry of Agriculture, Animal Industry and Fisheries credited the achievement to sustained efforts in boosting coffee quality, expanding production, and enhancing value chain coordination.

Back home, Ethiopian industry leaders have responded with calm optimism. Gizaw Worku, General Manager of the Ethiopian Coffee Association, downplayed the significance of the monthly figures in an interview with Sheger FM.

“Uganda becoming Africa’s top coffee exporter for one month does not surprise us,” Gizaw said. “Monthly export volumes can fluctuate for various reasons—including shipment schedules, international demand cycles, and port logistics. Even Brazil, the world’s largest coffee exporter, faces such monthly variations.”

He emphasized that Ethiopia still leads the continent in total annual exports and added: “As of now, Ethiopia remains Africa’s top coffee exporter when looking at the year as a whole. A temporary spike from another country should not be misinterpreted as a long-term shift.”

However, Gizaw acknowledged Uganda’s recent progress: “Uganda is clearly making strides. They’re investing in coffee sector reforms and expanding their reach in global markets. But for Ethiopia, our strength lies in the premium quality and heritage of our Arabica coffee. What matters is how we maintain consistency, build traceability, and adapt to the global market.”

He also cautioned, “If we see a consistent decline in our monthly exports over several consecutive periods, then that’s when we should raise questions. But for now, this is just a market fluctuation.”

Ethiopia remains Africa’s largest coffee producer, responsible for roughly 559,400 tonnes annually, and accounts for about 17% of the global coffee market. Ethiopia ranks fifth globally in coffee production and holds the eighth position worldwide in coffee exports, shipping approximately 3.76 million 60kg bags per year.

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Ethiopia is projected to lose approximately USD 5 million in customs revenue during the first year of implementing the African Continental Free Trade Area (AfCFTA) agreement, according to the Ethiopian Policy Studies Institute.

The projection was disclosed as part of the finalization of Ethiopia’s National AfCFTA Implementation Strategy, which outlines the country’s roadmap for integrating into the continent-wide free trade pact. The strategy was officially launched during a public consultation forum held in Addis Ababa on June 20, 2025.

The high-level event brought together senior government officials, private sector leaders, and development partners. Among the key attendees were Dr. Kassahun Goffe, Minister of Trade and Regional Integration; Yasmin Wohabrebi, State Minister for Trade and Regional Integration; and Dr. Abebe Ambachew, Senior Researcher at the Policy Studies Institute.

According to Dr. Abebe Ambachew, Senior Researcher at the Policy Studies Institute, the estimated revenue loss over a 13-year period could reach USD 83.3 million, with USD 5 million expected in the first year alone. He added that customs duties currently account for about 25.6% of Ethiopia’s total government revenue from imports.

“Given that most of Ethiopia’s trade occurs with non-African countries, the impact of AfCFTA-related tariff losses may not be as severe in the short term,” said Dr. Abebe. “However, the country must take steps to diversify revenue sources and strengthen its export base.”

Speaking at the launch of the ECOTRADE Project, Dr. Kassahun also emphasized Ethiopia’s limited experience in duty-free trade frameworks.

“We have primarily operated within a tax-based trade system and lack practical exposure to free trade. This transition will have direct implications for our customs operations and logistics systems,” he stated.

He further highlighted structural barriers beyond tariff-related issues, pointing to regional connectivity constraints. “Although Ethiopia’s aviation sector ranks first in Africa, it still cannot be effectively utilized for large-scale continental trade,” he added.

The African Continental Free Trade Area (AfCFTA) was signed on March 21, 2018, in Kigali, Rwanda, and officially entered into force on May 30, 2019, after reaching the required number of ratifications. Ethiopia ratified the agreement in 2019 but has yet to fully liberalize its tariffs or participate in the AfCFTA’s Guided Trade Initiative.

Current trade figures show that only 14% of Ethiopia’s exports are destined for African markets, while just 9.6% of imports originate from the continent. This indicates a limited level of trade integration with African partners and suggests that Ethiopia’s gains from AfCFTA may take time to materialize.

To mitigate the projected revenue gap, experts at the forum emphasized the need to expand alternative tax mechanisms and boost export performance, particularly in value-added sectors. Dr. Abebe noted that Ethiopia’s export and import volumes have both shown moderate growth over the past decade, presenting a potential foundation for greater regional trade integration.

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Ethiopia recorded a significant rebound in foreign direct investment (FDI) in 2024, attracting approximately US USD3.98 billion, a 21.9% increase compared to the previous year, according to the latest United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2025.

This growth positions Ethiopia as the leading FDI recipient in East Africa, a region that collectively attracted around USD8.5 billion in 2024, marking modest growth despite a challenging global environment characterized by an 11% decline in worldwide FDI flows.

Neighboring countries contributed to this regional investment landscape with Kenya drawing an estimated USD2.5 billion in FDI, Tanzania about USD1.1 billion, Uganda approximately USD0.7 billion, and Rwanda close to USD0.2 billion. These inflows reflect steady investor interest across sectors such as fintech, manufacturing, infrastructure, renewable energy, agribusiness, and technology.

Ethiopia’s surge is driven by reforms and investments targeting telecommunications, renewable energy, agribusiness, and logistics, marking a recovery after subdued inflows following its 2016/17 peak of USD4.12 billion.

The East African region showed resilience, with greenfield projects increasing by 32% and international project finance deals rising 38%, signaling confidence in new investments despite global FDI contractions.

Regional integration initiatives such as the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA) remain vital in enhancing investment flows and fostering economic diversification across the region.

In a further boost to Ethiopia’s regional economic engagement, the Ministry of Trade and Regional Integration (MoTRI) recently convened a high-level validation workshop on the country’s National AfCFTA Implementation Strategy. The event brought together policymakers, private sector representatives, development partners, and trade experts to review the final draft of the strategy designed to guide Ethiopia’s active participation in the landmark continental trade agreement.

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Ethiopia’s Special Economic Zones (SEZs) have secured nearly USD 900 million in new investments in the current fiscal year alone, a leap that signals the zones are active engines of industrial growth.

As reported by the Ethiopian Press Agency, 89% of all developed land and factory shades in the country’s 13 SEZs have been taken up. Bole Lemi and Adama Industrial Parks have reached full occupancy, while Jimma SEZ stands at 90%.

“This level of uptake shows that previously stagnant areas are now attracting serious investment,” said Zemen Junedi, Deputy CEO of Promotion and Marketing at the Industrial Parks Development Corporation (IPDC), in an interview with The Ethiopian Herald. “Most of the newly registered projects are already operational.”

Zemen attributes the turnaround to a set of government-led legal and regulatory reforms—nearly 80 policy frameworks have been revised. The goal: eliminate red tape and boost investor confidence. The results are visible. Just a few years ago, local investor participation in SEZs stood below 5%. That figure now stands at 60%, with Ethiopian firms operating alongside foreign players in zones across the country.

SEZs have also shifted from being purely export-driven to supporting import substitution, especially in textiles, pharmaceuticals, automotive assembly, logistics, and agro-processing. Parks once seen as underutilized are now actively contributing to employment, technology transfer, and foreign exchange generation.

“Zones that were struggling are now alive with factories, warehouses, and local value chains,” Zemen said.

However, recent reports highlight persistent challenges for workers within these zones. Laborers face wages as low as USD26 per month, among the lowest globally. Poor working conditions, including long hours, inadequate occupational safety, and substandard housing, contribute to high turnover rates—sometimes exceeding 10% monthly. Inflation continues to erode workers’ purchasing power, while weak enforcement of labor laws and limited union influence leave many with little protection or recourse.

The Institute of Foreign Affairs (IFA), in collaboration with the Ministry of Foreign Affairs, held a high-level conference on Tuesday at the Sheraton Hotel under the theme “Exploring New Avenues: Economic Diplomacy as a Mainstay of Ethiopian Foreign Policy.”

The forum brought together leading government institutions — including the Ministry of Finance, Ethiopian Securities Exchange, Ethiopian Investment Holdings, Ethiopian Investment Commission, and the Ministry of Foreign Affairs — to discuss how to align foreign policy with Ethiopia’s economic ambitions.

Central to the discussions was the Homegrown Economic Reform Agenda, launched in September 2019, which aims to liberalize and modernize Ethiopia’s economy. Panelists explored how the reform program is positioning the country to better integrate with the global economy and attract quality investments.

In his opening remarks, IFA Executive Director Jafar Bedru stressed the need to shift diplomatic efforts beyond traditional political frameworks. “Our diplomatic engagements must transcend conventional paradigms and adopt a proactive, business-oriented approach — one that prioritizes investment and trade facilitation,” he said.

Ambassador Workalemahu Desta, Political and Economic Diplomacy Advisor, MoFA, acknowledged that while Ethiopia’s economic and business diplomacy is making progress, it still falls short of matching the opportunities created by recent reforms. He noted the growing global demand for competitive investment destinations, emphasizing Ethiopia’s strategic potential.

“Globally, production and labor costs are soaring. Multinational companies are actively seeking low-cost, stable, and business-friendly environments — and Ethiopia is emerging as a top destination,” he said.

Ambassador Workalemahu also underscored Africa’s growing strategic importance, pointing to the African Continental Free Trade Area (AfCFTA) as a transformative platform. “AfCFTA is unlocking a vast market for investors across Ethiopia. Additionally, our membership in BRICS and the New Development Bank enhances our positioning within the evolving global economic order,” he added.

Dr. Tilahun Kassahun, CEO of the Ethiopian Securities Exchange (ESX), highlighted the need to diversify Ethiopia’s financial landscape to sustain economic growth. He emphasized that beyond traditional financing mechanisms, both local and foreign private investors require access to alternative financial instruments such as portfolio investments. He mentioned that amid the launch of the capital market in Ethiopia, the Ministry of Foreign Affairs must attract investments from abroad as the old technical way of investment has changed to easy and Central Securities Depository. “Beyond simply counting how many remittance accounts are opened, a new key performance indicator (KPI) should be how many CSD accounts are created,” he added.

He also revealed that the capital market is expected to integrate with the interbank lending system in the first week of July. Just six months after its launch, the interbank market has already facilitated over ETB 800 billion in transactions, with daily volumes reaching several ETB billion, he reported.

This comes on the heels of the launch of a Diplomatic Guide for the Homegrown Economic Reform Agenda, unveiled on Monday by the Ministry of Foreign Affairs in collaboration with the Ministry of Finance, the Ethiopian Securities Exchange, and Ethiopian Investment Holdings.

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Ethiopia is set to receive USD 260 million in fresh funding from the International Monetary Fund (IMF), as part of a broader USD 3.4 billion loan program aimed at supporting economic recovery and ongoing reforms.

This latest installment brings the total IMF support disbursed under the Extended Credit Facility (ECF) to nearly USD 1.85 billion. The fund’s staff and Ethiopian authorities have now reached a staff-level agreement to complete the third review of the program.

The news comes as Ethiopia shows strong signs of macroeconomic improvement. According to the IMF, inflation is cooling down, exports are rising, and international reserves are growing faster than expected.

“Ethiopia’s economic performance has gone beyond expectations,” said Alvaro Piris, head of the IMF team that visited Addis Ababa in April. “The shift to a more flexible exchange rate has gone smoothly, and government efforts to modernize monetary policy, improve tax collection, and reform state-owned enterprises are starting to bear fruit.”

Despite the progress, challenges remain. The gap between official and black market exchange rates has widened again in early 2025. The IMF notes that fees and commissions in the foreign exchange market are still high, making currency access difficult for many businesses.

To fix this, new measures are being rolled out to make the FX market more transparent and efficient. These include easing restrictions, reducing costs, and improving regulation.

The IMF also emphasized the importance of keeping up the reform momentum. Continued discipline in monetary policy, better tax systems, and a stronger private sector are all seen as key to building long-term growth.

The ECF program, approved in July 2024, is designed to help Ethiopia stabilize its economy, support vulnerable communities, and unlock growth by encouraging private investment and reforming outdated financial systems.

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The International Monetary Fund (IMF) is expected to convene this summer to consider the third review of Ethiopia’s USD3.4 billion support program, according to a spokesperson cited by Reuters. The review remains on track with the original schedule, signaling continued confidence in Ethiopia’s reform trajectory despite recent delays in securing a staff-level agreement.

An IMF delegation visited Addis Ababa in mid-April for routine assessments. At the time, Ethiopian authorities anticipated a swift announcement of a staff-level agreement. However, no official update has since been issued, leaving observers awaiting clarity as the Executive Board meeting nears.

If approved in June, the review will unlock a 191.70 million Special Drawing Rights (SDR) tranche—equivalent to about USD265 million—to support the country’s sweeping macroeconomic reform agenda. The disbursement would represent a crucial injection of liquidity as Ethiopia navigates fiscal consolidation, foreign exchange liberalization, and structural adjustments.

The IMF program, agreed upon last July, was a key requirement for Ethiopia’s participation in the G20’s Common Framework for debt restructuring. Since then, the government has secured a preliminary deal with official creditors and is preparing to engage with private bondholders in the coming weeks and months.

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The National Bank of Ethiopia (NBE) has sold USD 50 million in its sixth bi-weekly foreign exchange auction, part of its ongoing commitment to a market-based forex mechanism aimed at enhancing price discovery and external stability.

The weighted average rate of successful bids in this round reached ETB 133.1715 per US Dollar, compared to ETB 132.9643 in the previous auction held on May 7, 2025. This reflects a slight depreciation of the Birr by approximately 0.16%, consistent with the central bank’s strategy to gradually align the official rate with real market dynamics.

A total of 14 commercial banks received foreign currency allocations in today’s auction. The results suggest continued demand for USD among local banks, while the Birr’s modest weakening indicates a controlled shift towards a more competitive exchange rate regime.

The auction mechanism, introduced as part of broader monetary reforms in 2024, is designed to narrow the gap between official and parallel market rates, foster transparency, and ensure equitable foreign currency distribution.

The next forex auction is scheduled to take place in two weeks, with details to be announced ahead of time.

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Ethiopia and Hungary have resumed negotiations to finalize an agreement on the avoidance of double taxation—an important fiscal policy tool that could unlock new opportunities for cross-border investment and trade.

Held in Addis Ababa, the second round of talks builds on earlier discussions that took place in Budapest, Hungary, where both sides reached preliminary understandings on most of the core issues.

Representing Ethiopia, Tewedaj Mehammed, Head of the Legal Affairs Department at the Ministry of Finance, emphasized that the agreement would not only eliminate the burden of double taxation but also foster a more predictable and investor-friendly environment. “This agreement will pave the way for enhanced business development and deepen economic cooperation between our two nations,” he noted during the opening session.

From the Hungarian side, Ms. Gyongyi Antal, Head of the Division of International Taxation at Hungary’s Ministry for National Economy, expressed optimism about the ongoing dialogue. “The removal of double taxation barriers creates a conducive environment for companies to thrive and connect. Most technical issues were addressed in the first round, and we are hopeful this session will bring consensus on the remaining points,” she said.

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Ethiopia has recorded its highest-ever coffee export revenue, with the sector generating USD 1.868 billion over the past ten months of the current fiscal year — a historic milestone for the nation’s most iconic export.

The Ethiopian Coffee and Tea Authority announced today that 354,302 tonnes of coffee were exported during the period, exceeding the national target by 147% in volume and 142% in revenue. This performance surpasses all previous annual records in the country’s export history.

According to Dr Adugna Debela, Director General of the Authority, the figures represent an increase of 70% in volume and 87% in revenue compared to the same period last fiscal year. The sector exported 145,316.3 more tonnes, generating an additional USD 869.13 million, reflecting both growing global demand and Ethiopia’s enhanced export capacity.

Dr Adugna highlighted that Germany, Saudi Arabia, and the United States ranked as the top three destinations for Ethiopian coffee exports during the reporting period. Germany imported 61,239 tonnes, contributing USD 295 million (17% of total revenue), followed closely by Saudi Arabia with 60,182 tonnes valued at USD 290.7 million (20%), and the United States with 28,299 tonnes accounting for USD 192 million (10%).

“This outstanding achievement is the result of a well-coordinated national effort,” said Dr Adugna. “From farmers and cooperatives to exporters, regional authorities, and federal institutions — all stakeholders played a vital role. We are deeply grateful for their commitment and determination.”

He further expressed optimism that the final two months of the fiscal year will build upon this momentum, reinforcing Ethiopia’s status as a world leader in premium coffee production.

Older Posts

Uganda Tops Ethiopia in Monthly Coffee Exports for First Time

Ethiopia Anticipates USD5 Million Customs Revenue Loss in AfCFTA’s First Year

Ethiopia’s FDI Surges Nearly 22% to USD4 Billion in 2024, Leading East Africa’s Investment Recovery

Ethiopia’s Special Economic Zones Attract USD900M in a Single Year as Occupancy Hits 89%

Key Government Institutions Convene to Reinforce Economic Diplomacy as Pillar of Ethiopian Foreign Policy

IMF Staff Back USD260M Disbursement as ‘Ethiopia Exceeds Reform Targets’

IMF to Review Ethiopia’s USD3.4B Program Despite Staff-Level Delay

Ethiopia Conducts Sixth Forex Auction, Birr Weakens Slightly

Ethiopia, Hungary Move Closer to Double Taxation Accord

Ethiopia Breaks Coffee Export Record, Earning USD 1.87 Billion