Ethiopia's Export Sector Struggles As Revenue Plummets By 12 Percent, Falling $1.6 Billion Short of Target

Workers in an Ethiopian textile factory (M. Haileselassie / Deutsche Welle)

Addis Abeba — Ethiopia's export sector grapples with a concerning decline in revenue as the just-concluded fiscal year comes to a close. Official reports reveal that the country's export earnings in 2022/23 dwindled to $3.6 billion, experiencing a notable 12% decrease compared to the previous fiscal year. This decline not only signifies a significant setback from the previous fiscal year but also falls $1.6 billion short of the targeted $5.2 billion.

Unlike 2022/23, the country generated record earnings in 2021/22, generating $4.1 billion in revenue from the export sector. The surge can be largely attributed to the substantial increase in global prices for coffee arabica and gold. The export of coffee alone contributed $1.4 billion, accounting for over one-third of the overall earnings during the period.

Agricultural commodities continued to dominate as the driving force behind Ethiopia's export trade, constituting a staggering 79% of the country's export earnings in 2022/23, according to data from the Ministry of Trade and Regional Integration^[1]. Revenue from the green bean alone stood at $1.3 billion during the year, which fell short of the government's target by $500 million.

Ethiopia shipped 20% less coffee in 2022/23, compared to the previous fiscal year. The Ethiopian Coffee and Tea Authority revealed^[2] that the country only managed to export around 240,000 tons of coffee during the just-concluded fiscal year.

The industry sector accounted for $400 million (11.8% of the total), showing a 23% decrease compared to the previous fiscal year. Over the past few years, the manufacturing sector has faced challenges due to a shortage of raw materials^[3] caused by the foreign currency crunch. Consequently, the average capacity utilization rate of manufacturing industries fell below 45%.

However, Melaku Alebel, the Minister of Industry^[4], revealed that, in May 2023, the capacity utilization rate improved to 56%. Additionally, the impact of Washington's decision to exclude Ethiopia from the African Growth and Opportunities Act (AGOA) negatively affected industries ability to export their products.

On the other hand, earnings from minerals reached $251 million, representing 6.9% of the overall revenue. The revenue from mining witnessed a decline of $323 million compared to the previous fiscal year. The primary cause of the recent decline can be attributed to a significant decrease in the amount of gold supplied to the government from major gold-producing regions such as Oromia and Benshangul Gumuz. Nearly 90% of the mineral earnings are derived from gold.

Additionally, the flourishing contraband trade along Ethiopia's borders with Sudan and South Sudan also played a role in decreasing the export revenue generated from gold. AS

References

1. ^{^} according to data from the Ministry of Trade and Regional Integration (www.facebook.com)
2. ^{^} The Ethiopian Coffee and Tea Authority revealed (www.facebook.com)
3. ^{^} the manufacturing sector has faced challenges due to a shortage of raw materials (addisstandard.com)
4. ^{^} Melaku Alebel, the Minister of Industry (addisstandard.com)