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Contraband trade is negatively impacting Ethiopia’s hard currency earnings. To combat this the government has formed a Contraband Trade Controlling Command Post stretching from the federal to the Kebele level. Political instability has also reduced hard currency earnings.
The export earnings of the first half of the 2017/18 budget year indicated that the contraband of major export items significantly contributed to the lower performance.
According to Wondimu Filate, Public Relations head of the Ministry of Trade (MoT), contraband trading of major commodities like gold, coffee and livestock continues to be a major factor in the low performance.
He pointed to the lack of coordination between federal and regional governments to cut contraband trading, particularly for livestock, as a major hindrance to solving the problem. “Lack of cooperation of stakeholders has affected the hard currency earnings from gold,” Wondimu added.
In the stated period the government expected USD 2.2 billion, but the actual performance was USD 1.23 billion. This is 61 percent of the projection. It is an increase of 9 percent compared with a similar period a year ago. Agriculture is on the top, earning over one billion USD, while the manufacturing industry is second, generating USD 224 million.
Coffee has contributed to nearly one fourth of the hard currency earnings by USD 381 million and oil seeds has amassed USD 215 million.
The mining sector has suffered. The MoT report indicated that the country’s hard currency earnings from mining declined to USD 58 million from USD 107 million a year ago. For the stated six months the ministry is projected to secure USD 323 million from the mining sector and the gold sub sector was expected to generate USD 301 million.
According to the report from the total earnings of USD 58.3 million gold revenue was USD 47 million, which is almost over six times lower than the target.
Wondimu claimed that the gold sector still suffers from illegal actors and stakeholders have to work strongly to combat the problem.
Wondimu added that the instability in the eastern part of the country has negatively contributed to hard currency earnings.
“The eastern part of the country, which is the major export outlet, has been affected greatly by the instability which has harmed export earnings,” he explained.
In addition, one of the country’s major hard currency sources, Khat, has been suspended from export for several weeks in Somaliland and a few days in Djibouti.
This has decreased Khat earnings, he explained.
For the year the country was expected to earn USD 167 million from khat but the actual achievement was USD 125 million. At the same time the export value and volume of the stimulant plant has declined compared with the similar period the preceding year. The MoT report indicated that khat export for the first six months of 2016/17 was over 25,644 tons with a revenue of USD 143 million, but during the first six months of the current budget year it went down to 22,386tons. .
In the first six months of the budget year Ethiopia exported products to 137 countries. China replaced Somalia, which imports a large amount of khat and vegetables, as the top destination. Ethiopia exported USD 144.4 million worth of commodities to China or 10.7 percent of its total exports, while revenue from Somalia brought in USD 119 million. The US has risen from 7th to 3rd place at USD 99.5 million. The US is a country Ethiopia has sought to tap but has experienced difficulty doing so in the past.
The top ten export destinations make up 62.2 percent of the country’s hard currency earnings. Besides China and USA several countries switched places. The export rankings of the UAE, Israel, Belgium, and Italy went up while Somalia and Saudi, which were first and third went down to second and fourth respectively, The Netherlands, Djibouti, Vietnam, Switzerland, UK and Turkey also went down from their previous positions.
Asia is the continent Ethiopia exports the most to, followed by Europe and Africa, at 42 percent, 28 percent and 21 percent respectively.