Capital Ethiopia Newspaper

Ethiopia’s trade deficit high despite impressive export increase

Ethiopia’s export and import trade balance refused to narrow during the last five years despite the impressive growth of Ethiopia’s exports.
The country’s exports tripled from 2006 to 2010.  In 2006, 9.64 billion birr came from the export of 97.42 million kilograms of exports. In 2010 about 31.27 billion birr was collected from the export of 1.13 billion kilograms worth of exports. 
Exports covered 26 percent of Ethiopia’s imports in 2010, while the 2006 export figures were able to cover only 24 percent of imports. 
The trend in 2009 was down by a significant amount from preceding years, with exports only able to cover 18 percent of the country’s import.
The 2009 figures were released in the highs of the world economic crisis. It was then the lowest point of   export to imports ratio, although exports had increased by three billion birr to reach almost 14.6 billion birr from the preceding 2008 export figures of 11.57 billion birr.
The trend so far has been slightly increasing.  In the first 11 months of 2011, exports stood at roughly 40.4 billion birr covering 30 percent of the country’s imports.
Abdurrahman Seid, Public relations Deputy Coordinator at the Ministry of Trade (MoT) said the reason for the stubbornly high trade deficits’ Ethiopia entertains is the result of the fact that most inputs used in Ethiopia for projects such as infrastructure raw materials are imported.
He also noted that since the country has been engaged in massive infrastructure projects which need foreign inputs, the trade deficit has failed to narrow.
However, since Ethiopia is embarking on an industrial drive, agro processing and industry sectors are expected to narrow the trade balance gap, as well as subsequently increasing the country’s exports with the increase especially in value added products, ultimately driving Ethiopia’s import substitution strategy, Abdurrahman explained.
Meanwhile, the Ethiopian Government targets not less than 80 billion birr from exports in the 2011/12 Ethiopian Fiscal year.