ON 1 January this year, trading under the African Continental Free Trade Area (AfCFTA) became operational.
The agreement pushes for a liberalised trade regime that would gradually lead to an integrated continental market with import tariffs phased out on 97% of tariff lines within 10 to 13 years. The Namibian's AfCFTA Focus brings you fresh insight on what is available in other African countries - creating a possible gateway to collaboration and exports/import opportunities. Every week, every Wednesday.
Focus country for the week:Ethiopia
Capital City: Addis Ababa
President: Sahle-Work Zelda
Population: Est, 112 million people
Official language: Amharic
Borders with: Eritrea, Djibouti, Somalia, Kenya, South Sudan and Sudan
Currency: Ethiopian birr (ETB)
Exchange rate: N$1 = 3,08 ETB
Repo rate: 7%
Banks: 19 banks
Economy Overview: The economy of Ethiopia is a mixed and transition economy with a large public sector. Ethiopia is the second most populous nation in Africa after Nigeria, and the fastest growing economy in the region. However, it is also one of the poorest, with a per capita income of US$850. Ethiopia aims to reach lower-middle-income status by 2025. Ethiopia is a potentially wealthy country, with fertile soil and good rainfall over large regions. Farmers produce a variety of grains, including wheat, corn and millet. Coffee also grows well on southern slopes. Herders can raise cattle, sheep and goats in nearly all parts of the country. Additionally, Ethiopia possesses several valuable minerals, including gold and platinum. A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behaviour. Corporate default probability is high.
The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. On Ethiopia's strengths, the country boasts of a large market and is an active and global player in the aviation sector. It also has great public investment in infrastructure development.
There is, however, also a downside, agriculture (70% of employment, but 40% of GDP) is not very productive and is sensitive to weather conditions and changes in world commodity prices. The country also has low manufacturing capacity and 95% of exports pass through Djibouti. The central bank also has low foreign exchange reserves, lack of foreign exchange and import restrictions.
Major exports: Coffee, oily seeds, gold, cut flowers and zinc ore
Major imports: Planes, helicopters, and/or spacecraft, gas turbines, packaged medicaments, electric filaments and cars
Main export markets: China, the United States, the United Arab Emirates, Saudi Arabia and South Korea
Main import markets: China, India, the United Arab Emirates, France and the United Kingdom
GDP: US$96,61 billion
Govt debt/GDP: 55,26% (2020)
GDP growth 2021 estimate: 2%
Interesting fact: Over 80 languages are spoken in Ethiopia
Compiled by: Lazarus Amukeshe