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Export performance has failed to meet government targets in the past fiscal year. Actual performance results were far from projections forecasted by the GTP Policy Matrix five years ago.
Information Capital obtained from the Ministry of Trade (MoT) indicated that the country earned USD 2.99 billion from exports. Revenue shrank by 8.1 percent from 2013/14 export earnings. In the preceding year, the country had earned USD 3.25 billion exporting agricultural products, natural resources and manufactured goods.
The income target for the 2014/15 year was USD 5.04 billion; the actual achievement was 59.5 percent of the projection.
A multitude of factors are said to have affected export trading. A lack of coordination between responsible bodies is one of the causes for the missed target. Lack of manufacturing inputs supply, sub-capacity production, challenges in international price competition and oversupply of export products to the local market are also said to be challenges that have led to weak performance.
A falling gold price in the international market has also forced traditional gold miners to limit their supply.
Weather conditions have reportedly had adverse effects on horticulture export revenue by influencing flower production. Besides unfavorable weather conditions, the transition by investors engaged in fruits and vegetables export to other business sectors contributed to the fall in revenue.
The delay in granting land to investors wanting to expand their farms and the fluctuation of the Euro further constrained the horticulture sector, according to the MoT’s report.
In the livestock business, the country had adopted a new trading practice to encourage cattle and cattle products export, nevertheless the code was not applied entirely.
“Smuggling livestock to neighboring countries is still the main hurdle that affects the export,” the report states.
When the Growth and Transformation Plan (GTP) was launched five years ago, the government had ambitious export plans just as with other economic and social development targets.
The GTP Matrix had projected that the export volume would grow by at least fourfold at the end of the GTP from the 2009/10 volume.
Development of the manufacturing sector and vast agricultural yields were the main components that reportedly contributed to export growth. The GTP had a goal to earn nearly USD 10 billion by the end of the plan on July 7, 2015.
However, the targeted income was revised to less ambitious figures, owing to lower achievements in the early years of the plan. For instance, the target set for the past year was almost half of the projection at the onset of the GTP, which was USD 5.04 billion.
2014/15 Export destination
Export achievements for the 2014/15 period showed changes in terms of trade destinations.
In the past year, the country exported various items to 138 countries, expanding its export base from 124 destinations in 2013/14.
China was listed as the top export destination for the last two consecutive years of the GTP. A year ago, the most populated country in the world overtook neighboring Somalia, the historic export destination for Ethiopian goods. China has imported USD 377.8 million worth of goods from Ethiopia during the five years, which constitutes 12.6 percent of the total export revenue.
Somalia, Germany, Saudi Arabia and the Netherlands stood behind China in that order. The four countries imported Ethiopian items sharing 9.8, 7, 7 and 6 percent respectively of Ethiopia’s export revenue.
Export to US markets showed growth compared to the 2013/14 performance. The US became the sixth largest importer of Ethiopian goods, up from seventh place in the previous two years. The US, one of the biggest markets in the world, represented 5.8 percent of Ethiopian exports.
Twenty destinations represented 79.7 percent of the total export revenue, purchasing a total USD 2.39 billion in merchandise.
Asia is the leading continent to import Ethiopian products. It purchased exports amounting to 40.2 percent or USD 1.2 billion. The report shows that 36 Asian countries imported Ethiopian products.
Thirty-seven European countries spent USD 759.3 million (25.3 percent) on exports from Ethiopia; 46 African countries paid USD 565.7 million (18.9 percent); and 15 American countries purchased USD 212.4 million in export goods (7.1 percent).
Coffee is the leading export, earning Ethiopia a significant amount of hard currency.
In the 2014/15 fiscal year, the volume of coffee export contracted compared to the previous year; nevertheless, earnings increased due to a price increase in the international market over the past few months.
In 2014/15, the country exported 183,840 tons of coffee, earning USD 780 million. According to the ministry, in the 2013/14 fiscal year, the country earned USD 718.8 million, having exported 190,876 tons.
Falling international commodity prices in the past two years had affected the country’s foreign business income. But in the past few months, the coffee market showed some progress.
Germany and Saudi Arabia are the primary buyers of Ethiopian coffee, sharing 18.1 and 16.7 percent of coffee exports in the past year. USA, Japan, Belgium and France are other considerable consumers of Ethiopian coffee, buying 14, 14, 5.8, and 4.2 percent of coffee exports respectively.
Ten countries combined bought USD 664.2 million or 85.1 percent worth of coffee.
Oil seeds, pulses, horticulture and khat
In the 2014/15 fiscal year, the country earned USD 504 million from 315,250 tons of oilseeds export. China was the major destination for oilseed products, particularly for sesame seeds. China bought USD 314 million worth of oil seeds, while Israel imported USD 85.7 million worth.
According to MoT’s report, sesame seed export earnings declined from the previous year. A year ago, the country had earned USD 642.7 million from 300,906 tons of oilseeds export. The recent report indicated that the seed’s export grew to 315,250 tons while the revenue shrank by 21 percent.
Pulses export has also declined by 12 percent compared with the 2013/14 performance and stood at USD 220.3 million, down from USD 251 million a year ago. India and Pakistan are the major Ethiopian legume importers representing 18 and 15.5 percent of exports respectively.
In the past year, the country exported USD 203 million worth of flowers. 81 percent was exported to the Netherlands, the major international flower market. Revenue from the flower sector has shown a growth of 1.6 percent from the preceding year. The vegetable and fruit sector has contributed USD 45.5 million in revenue, growing by over three percent.
khat export had registered a steady growth in recent years, but last year’s export declined by volume and revenue.
The report stated that the revenue from khat declined by close to 8.4 percent, while the volume declined by more than 4.8 percent.
In the past year, major European destinations like the UK banned the stimulant plant. Somalia had imported USD 217 million or 80 percent of the product, followed by Djibouti which bought 17.7 percent of the export.
The manufacturing sector, which was expected to play a significant role in augmenting the country’s export, contributed a mere USD 389.5 million. Over USD 2.6 billion in earnings were expected from manufacturing, which includes chemical and metal products, and agro-processing.
Mid-way into the five year plan, the government introduced several incentives to boost the sector and encourage Foreign Direct Investment (FDI). It insisted on pushing local business communities to engage in the sector. The government also seeks to discourage businesses involved solely in trading, in order to promote manufacturing.
Leather production was one of the areas in the manufacturing sector expected to register significant growth in the GTP period. However, it did not significantly grow since the beginning of the five year plan. In the past year, the leather production contributed USD 131.5 million, which is similar to the 2013/14 performance but far from the GTP target. Under the GTP, the leather sector was expected to bring in USD 500 million in the 2014/15 fiscal year.
The textile and garment sector, which registered growth in the beginning of the GTP, is also another sector that did not meet its targets. In 2014/15, the sector contributed USD 98 million in export earnings, which dropped 11.7 percent compared to the 2013/14 performance. The textile sector was also expected to bring in USD one billion in exports in the past year.
Mining revenue similarly registered a decrement of 23 percent in the past fiscal year compared to the previous year’s achievement.
Gold is traditionally the major source of hard currency in the mining sector. However, in the 2014/15 fiscal year, both the export volume and export revenue declined significantly.
Gold export revenue declined by over 25 percent, while export volume also dropped by over 21 percent. According to the ministry’s report, the sector brought in USD 338 million, down from USD 456 million a year ago.