Experts in Ethiopia’s livestock sector have raised serious concerns over the rising prevalence of counterfeit letters of credit (LCs) and the lack of adequate insurance coverage, warning that these issues threaten the country’s rapidly growing livestock export industry. The sector, which contributes 19 percent to Ethiopia’s GDP and 45 percent of its agricultural GDP, faces significant challenges in sustaining export growth due to financial insecurity and operational risks.
Industry leaders point to an increasing number of dubious LCs in importing countries, particularly in the Middle East-Ethiopia’s key livestock market-and the absence of affordable, comprehensive insurance for live animals during transit. These problems, they say, could undermine the sector’s long-term stability and economic potential.
The Ethiopian government aims to generate $127 million from livestock exports this fiscal year, having already achieved about $63 million in the first nine months. While this reflects progress compared to previous years, experts argue that the current earnings fall short of Ethiopia’s vast livestock potential.
The Ethiopian Livestock Exporters Association (ELEA) has been vocal about the mounting financial and operational pressures on exporters. Hayder Kemal, a board member of ELEA, expressed frustration with shifting payment terms, noting that many buyers now prefer cash against documents (CAD) over letters of credit, which traditionally offer more secure payment guarantees.
“More buyers insist on CAD payments, and we are also seeing an increase in fake letters of credit that lack proper verification or contain misleading assurances,” Hayder said. These fraudulent LCs, which mimic legitimate financial instruments issued by reputable international banks, pose serious risks to exporters.
Regarding insurance, Hayder highlighted the persistent shortage of affordable insurance options tailored for live animal exports. He called for sustained government support and resources to develop accessible insurance schemes that can protect exporters and animals alike.
These concerns were voiced at the 2nd COMESA Institutions Awareness Forum and the 6th COMESA Business Fair and Conference held in Addis Ababa on May 6, 2025. The event brought together government officials, private sector representatives, export agencies, development partners, and other stakeholders.
Hope Murera, Managing Director and CEO of ZEP-RE, a regional reinsurer, reinforced the importance of insurance in safeguarding livestock trade. She noted positive developments in shifting from national to regional livestock insurance programs, which aim to spread risk more broadly. However, she stressed that ongoing government backing and collaboration with regional bodies like COMESA are essential to address challenges, including illegal cross-border trade activities.
Ethiopia’s livestock export sector remains a vital economic driver, involving farmers, traders, cooperatives, and exporters. Yet, experts warn that poor coordination and communication among these actors hinder the sector’s effectiveness and growth.
According to recent data, Ethiopia has exported 12,500 metric tons of livestock this year, with the United Arab Emirates accounting for 45 percent of sales. Notably, Ethiopia began transporting livestock by freight train to Djibouti last year, marking a significant logistical advancement.
