Embassy of The Federal Democratic Republic of Ethiopia


Salient Features: Socialist oriented after the 1974 revolution, with strong state controls. Thereafter, a large part of the economy was transferred to the public sector, including most modern industry and large-scale commercial agriculture, all agricultural land and urban rental property, and all financial institutions: some private enterprise and capital and capital participation permitted in certain sectors. Since mid-1991, a decentralised, market-oriented economy emphasising individual initiative, designed to reverse a decade of decline. In 1993 gradual privatisation of business, industry, banking, agriculture, trade and commerce underway.

National product: GDP purchasing power equivalent $20.3 billion

National product real growth rate: 6% (1995 est.)

GDP per capita: $200 (1994 est.)

Consumer price index: 10% (fiscal year 93/94)

Unemployment rate: 30%

Exports: $219.8 million (f.o.b.-1993 est.)

Imports: $1.04 billion (c.i.f.-1993 est.)

External debt: $3.9 billion

Currency: 1 Birr = 1 00 centim

Exchange rate: US $1 = 6.35 Ethiopian Birr (3/96), 5.95 (1994), 5.0 (fixed rate 1992-93)

Structure of the economy

The Gross Domestic Product in 1994 was broken down to:

Major industrial products: food and beverages, textiles, leather, cement, metal products, paper, plastic products, automotive and tractor assembly, tires, and certain chemicals.

Major agricultural products: coffee, tea, oilseeds, cotton, tobacco, fruits, pepper, sugar cane, fish and livestock.

Major exports: coffee, oilseeds, hides, livestock.

Major imports: machinery and equipment, industrial inputs, pharmaceuticals, chemicals.

Ethiopia is endowed with vast agricultural, mineral, and energy resources, which remain virtually untapped as a result of the civil war and economically stagnant period, which ended when the Transitional Government set Ethiopia on the path toward democracy and economic freedom.

The Government of the Federal Democratic Republic of Ethiopia has introduced an economic reform plan that emphasises the use of free market mechanisms and liberalised trade laws to encourage foreign investment and trade, as well as domestic entrepreneurs.

The new economic plan will speed up the economic and social development in the country through the increase in supply of goods and services and the growth and liberalisation of the private sector. It will encourage foreign investors to participate in the reconstruction efforts of the country, and it will develop and promote domestic private capital to enhance sustainability.

The economic and social development initiatives of the Federal Government involve both local governments and local non-governmental organisations in all stages of the development process in order to encourage accountability among the public and to better address the needs of the Ethiopian people.


Ethiopia is a predominantly agricultural country with over 80 percent of its population farming on about 15 - 20 percent of the arable land. The agriculture sector accounts for over half of the GDP and 85 percent of export earnings, the most important of which is coffee. Some of the finest and rarest coffees in the world are grown in the highlands of Ethiopia, and Ethiopia is Africa's third largest producer of coffee, after Uganda and the Ivory Coast. In addition, Ethiopia has one of the largest livestock resources in the world. Given the key role that agriculture plays in the economic development of the country, the Government has placed special focus on agriculture in its development agenda. Agriculture can be a stimulus to improve land utilisation and productivity, generate income and be used as a springboard for growth in the industrial and service sectors.


The industry and manufacturing sector plays an important role in the economy by supplying consumer goods, generating employment opportunities, absorbing agricultural raw materials and earning foreign exchange through exports. This sector comprises light manufacturing products such as construction materials, metal and chemical products as well as basic consumer goods such as food, beverages, leather, clothing and textiles. Production is concentrated in and around Addis Ababa and mostly caters to the domestic market, although the number of exported goods is steadily growing.

To help the industrial sector to grow, the Government is making concerted efforts to dismantle barriers to investment and private sector participation caused by excessive regulation from past regimes.


The mining sector of the economy has immense potential for development. A limited scale of gold tantalum and platinum mining is currently being undertaken. Several North American countries have signed contracts with Ethiopia to conduct gold exploration in certain parts of the country.

The development of Ethiopia's mineral wealth is one of the Government's leading economic objectives. Mining operations are expected to be an important economic catalyst for the Government's export-oriented development strategy. The goal is to get the minerals sector up to 10 percent of GDP within 10 years.

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