BDS Ethiopia - Country info

Geography and People
History I Government
The Economy I Economic Liberalisation
Education and Health
Financial Services I Cities and Towns
Infrastructure and Utilities
Road and Air Transport I Railways and Ports
Telecommunications I Power Supply

Population: 74.2 million (UN, 2005)

Capital: Addis Ababa

Area: 1.13 million sq km (437,794 sq miles)

Major languages: Amharic, Oromo, Tigrinya, Somali

Major religions: Christianity, Islam

Life expectancy: 46 years (men), 49 years (women) (UN)

Monetary unit: 1 Birr = 100 cents

Main exports: Coffee, hides, oilseeds, beeswax, sugarcane

GNI per capita: US $110 (World Bank, 2005)

Internet domain: .et

International dialling code: +251

Ethiopia is strategically located on the Horn of Africa at the crossroads between Africa, the Middle East and Asia. It has a population of 70 million people (2003), ranking the third most populous country in Africa after Nigeria and Egypt. It covers an area of 1.14 million square kilometres (445,000 square miles) with a population density of 58.9 inhabitants per km2 (2002). It is bordered by Djibouti and Somalia to the east, Eritrea to the north, the Sudan to the west as well as Kenya to the south. It is situated within easy reach of the Horn’s major ports, which connect it with the Middle East and Europe. Access to these ports has played a prominent role in enhancing the country’s international trade.

Geographically, Ethiopia is a country of immense contrasts. High mountains, which in the Semen (in the north) and Bale Mountain Ranges (in the south east) tower over 4,000 meters (13,120 feet) above sea level, give way to flat lowlands, 180 meters below sea level in the Dankal Depression, the lowest depression in the world. The Great Rift Valley divides the country into western and eastern highlands and is a further fascinating geographical feature of the country. Besides the aforementioned diverse physical features, Ethiopia is also endowed with canyons, gorges and rivers. The major river basins include the Abay (Blue Nile), Awash, Baro, Omo, Tekeze and Wabe Shebele.

Ethiopia enjoys a pleasant climate varying from cold to temperate and from sub-tropical to tropical. Much of the country, however, has a climate tempered by the high altitude, although it lies just within 150 north of the Equator. There are two rainy seasons in the country: the “small” rains in February and March, and the “big” rains from June to September. Alpine vegetation marks the highlands, while the lowlands have woodlands, bush lands, savannah and semi-arid shrubs. About 45 % of Ethiopian’s landmass is rated as being arable, but only 15% of this area is presently being cultivated. Only about one percent of the 10 million hectares of potentially irrigable land is being cultivated.

The people are ethnically, linguistically and culturally diverse. So, there are about eighty languages spoken in the country, which corresponds to the number of ethnic groups. These languages fall into four main language families, namely Semetic, Cushitic, Omotic and Nilotic. Amharic is the working language of the Federal Government. English is the medium of instruction in secondary schools and higher education institutions, and it is widely used in business transactions, particularly in the banking and insurance sectors.

Ethiopia, the land that was once known as Abyssinia, being once one of the great kingdoms of the ancient world is old beyond what most people can imagine. Its culture and tradition dates back to over 3,000 years. In fact, Lucy, the oldest hominid that was found in the Afar Region makes the country the oldest home of mankind on the planet.

Moreover, the country is one of and has perhaps the richest histories on the African continent and has a wealth of castles, palaces, ancient churches and monasteries as well as unique wild life, bird life and breath-taking vistas.

The Federal Democratic Republic of Ethiopia (FDRE) was established under a new Constitution as of 21st of August 1995. The Constitution provides for a federal State system, which is structurally based on the Federal Government, nine autonomous States and two chartered cities (Addis Ababa and Dire Dawa). The States and chartered cities are vested with powers of self-administration. They also have legislative, executive and judicial powers, regarding all matters that fall under their respective jurisdictions, except for those exclusively given by the Constitution to the Federal Government, such as national defence, foreign affairs, macroeconomic policy and the printing of currency.

The country has a parliamentarian form of government with a bicameral parliament, which is comprised of the House of Peoples’ Representatives and the House of the Federation. The House of Peoples’ Representatives is the highest authority of the Federal Government and its members are elected by the people for a term of five years on the bases of direct universal suffrage. The House of the Federation is composed of representatives of Nations, Nationalities and Peoples elected by the State Councils for a five-year term.

The Head of the Federal Government is the President who is elected by a joint session of the House of Peoples’ Representatives and the House of the Federation for a six-year term. The executive power is vested in the Prime Minister and the Council of Ministers. The Prime Minister is elected from among and by members of the House of Peoples’ Representatives and accountable to the same. The Prime Minister is the Chief Executive of the Federal Government, the Chairman of the Council of Ministers, and the Commander-in-Chief of the National armed forces. He forms the Council of Ministers after the approval of the nominees he submitted to the House of Peoples' Representatives.

The Ethiopian economy is predominantly of agricultural nature and the production in such a sector constitutes a major part of the country’s economy, contributing about 45 % to the country’s gross domestic product (GDP) and about 62 % to total exports. It accounts for 85 % of total employment. Coffee, a major cash crop, is of high quality and contributes about 62 % of total agricultural exports. So, it is a major source of foreign currency earnings. Manufacturing, mining, trade, tourism, construction, services, etc., which make up the remaining 55 % of GDP, all supplement the agricultural sector. Industrial activities contribute only 11 % to GDP and 16 % to total exports.

Agriculture is predominantly in the hands of small farmers, all-working on individual smallholdings and mainly for household consumption. So, the sector has remained fragmented and inefficient up-to-date. This is a vivid indication that Ethiopia’s agriculture is characterised by its low level of mechanisation and makes the sector receptive to technological adaptation and attractive to investments of both foreign and domestic nature.

Varieties of crops are grown in different parts of the country on a seasonal basis. The main crops are cereals (teff, barely, maize, wheat, sorghum, and millet), pulses (horse beans, vetch and lentils) and oil seeds (Niger seed, flax, rape seed, sesame, castor beans and Soya beans). The main cash and industrial crops are coffee, oil seeds, pulses, cotton, sisal, tobacco, fruits and sugar cane.

As aforementioned, 10.9 % of the GDP comes from the industrial sector that supplies important consumer goods to the domestic market. The major manufactured export products include clothing and apparel, canned and frozen meat, semi-processed hides and skins, sugar and molasses, footwear, tobacco, beverages, oil cakes and bees wax.

Although less than 3 % of the GDP currently comes from the mining sector, there are proven reserves of minerals such as gold, platinum, tantalum, nickel iron-ore, coal, marble, potash, copper, silica, limestone, diatomite, etc., as well as oil and natural gas. These all await exploitation and make the country a destination for business and investments from both foreign as well as domestic investors.

Since 1992, the Government has successfully implemented a series of reform programs, in order to transform the economy from a command to a market economy, to speed up the integration of the economy into the world economy and encourage the wider participation of the private sector in developing the national economy. Such reforms include, among others, the following short-term economic stabilisation and structural adjustment measures:

As a result, a great deal has been achieved since 1992 in moving away from a highly centralised economy to a more liberal market economy. Particularly, as a result of such a liberalisation, the economy has shown a marked growth improvement, growing at annual average rate of 6.4 % in the last several years. The rate of inflation declined from around 20 % in 1992 to an annual average rate of below 4 % for the last ten years. The country’s foreign exchange has improved, the budget deficit has declined to acceptable levels, and above all private investment activities have flourished.

Ethiopia’s education system produces well-trained skilled and semi-skilled technical and business personnel. The country’s universities, colleges and technical institutions turn out professionals, semi-professionals and a technically skilled workforce necessary for the business sector. Thousands of primary and secondary schools lay the foundation for human resources development.

The Ministry of Education has recently been trying to increase the intake capacity of higher institutions at both graduate and post-graduate levels. Private universities and colleges are also flourishing in Addis Ababa and in the regional cities. The graduates of these colleges and universities are believed to meet the demands of skilled manpower in the economy. The New Education and Training Policy also aims at providing skilled and productive workforce that contributes to the country’s economic development. To this effect, the Government has given high priority for technical and vocational education and training (TVET) program, and now there are 151 TVET schools in the country that are run by the Ministry of Education, Ministry of Agriculture and non-governmental organisations (2001/02).

Currently, there are various foreign community schools offering kindergarten, elementary, junior high school, and secondary education at international standards; among these are English, French, German, Italian, Greek and Indian community schools.

Most urban centres have a reasonable number of hospitals, health centres and clinics as Regional Governments have increased their budgets substantially.

Efficient banking and other financial services are available in Ethiopia. While the National Bank of Ethiopia (NBE) serves as the Central Bank, commercial banking functions are performed by the Commercial Bank of Ethiopia (CBE) and by a number of private commercial banks. The CBE and private commercial banks offer savings and check accounts, extended short-term loans, deal with foreign exchange transactions, provide mail and cable money transfer services, participate in equity investments, provide guarantee services and perform all other commercial banking activities.

The two specialised banks are the Development Bank of Ethiopia (DBE) and the Construction and Business Bank (CBB). The DBE extends short-, medium- and long-term loans for viable development projects, including industrial and agricultural projects. It also provides other banking services, such as check and savings accounts to its clients. It has 32 branches in different parts of the country. CBB provides long-term loans for the construction of plants, which produce housing construction materials, such as concrete blocks, roofing materials and other related products, for construction of private schools, hotels, clinics, hospitals, for acquisition or maintenance of dwellings, and for real estate development. Other than its specialised services, CBB offers all other commercial banking services to businesses.

In conformity with the relevant laws of the country, foreign enterprises (companies formally registered/ established and operating in Ethiopia) are entitled to access domestic credit borrowing on the same terms and conditions applicable to Ethiopian companies.

The Ethiopian Insurance Corporation (EIC) was the only insurance company that offered all classes of insurance services some years ago. But to up-to-date a number of private insurance companies, which can offer all these services, have joined the business. Consequently, a competitive business environment has been created in the sector.

Addis Ababa, the Federal Capital, lies in the central plateau at an altitude of 2,400 meters, 90 north of the Equator. Its average annual temperature is 160C (600F) and the average annual rainfall lies at 122.1 millimetres.

As young as a city can be, Addis Ababa was founded in 1887, and has a population of about 3 million. It is the seat of the Federal Government, the African Union (AU), and the United Nations Economic Commission for Africa (UNECA). Several other regional and international organisations have their headquarters and branch offices in the capital. It is also the centre of commercial activities and industry. Manufacturing plants for steel fabrication, wool, tanneries, textiles, cement, tyres, leather goods and breweries are some of the factory types located in and around the capital.

Resort centres with hot springs and lakes as well as national parks, which lie to the south and east of Addis Ababa, are easily accessible by road. Among those resort areas are Sodere, Langano, Awassa, Wondo Genet and Awash Park. They are adorned and frequented by both locals and foreigners.

The other important centres of trade and industry in the country are: Awassa, Dire Dawa, Gonder, Dessie, Nazareth, Jimma, Harar, Bahir Dar, Mekele, Debre Markos and Kombolcha, just to mention a few. They are connected to Addis Ababa by asphalt and gravel roads. All of them have good infrastructural facilities, such as water, electricity, telephone, Internet services, first class hotels, with most of them also having access to airports.

The provision of good quality infrastructure services is the key to an efficient operation of the private sector and the integration into the global market as well as for attracting foreign direct investment. Therefore, the Government has been and is still engaged in comprehensive infrastructure development programs in roads, telecommunications, energy and others.

Road transport is by far the most dominant means of transport in Ethiopia providing for over 90 % of passenger and freight carriage. Therefore, the Government has singled out this area as being a top priority for public investment and has made concerted efforts and progress in the expansion of the country’s road network.

Both asphalt and gravel roads radiate from Addis Ababa to main cities, towns and centres of commercial, industrial and agricultural activities. Work of asphalting the gravel roads to and from most of these centres to Addis Ababa is under way and most of them are near to completion. International highways link Addis Ababa with neighbouring countries: Djibouti, Eritrea, Kenya and the Sudan. As part of the extensive infrastructure development program, the Ethiopian Government has earmarked some USD 2.02 billion for the road sector in the next five years. Under the Road Sector Development Program II (RSDP II) it is envisaged to rehabilitate and upgrade trunk roads, upgrade and construct link roads and construct a substantial amount of rural roads in the coming three years.

The Ethiopian Airlines that has managed to achieve a very good reputation for itself in its 57 years of service, offers excellent passenger and cargo air transport services. The airline and all its technical and training activities provide an opportunity for building Addis Ababa as a regional hub for air transport.

Ethiopia has three international and 18 domestic airports. Its international flights link the country with over 45 cities in four continents: 26 in Africa,12 in Asia, five in Europe and two in North America. It is also expanding its intercontinental services to realise its motto of being “Africa’s Link to the World.” Its extensive domestic network serves 26 destinations. Its modern fleet includes Boeing 767, 757 and 737 jets for international flights. Five Fokker 50s, two ATR42s and three DHC6s serve the domestic market. In addition, two Lockheed L100s and one Boeing 757s operate cargo and non-scheduled services.

Ethiopia has already secured two modern aircrafts and will soon secure a further 10 B737-700s and B767-300s, which will replace the existing B737-200s and B767-200s and significantly modernise and enlarge Ethiopian’s medium and long–range fleet. The purchase also includes a 777 fleet. The Ethiopian Airlines is renowned for its services and has an outstanding safety record, as confirmed by periodic checks of international regulatory bodies such as the U.S. Federal Aviation Administration (FAA), the International Civil Aviation Organisation (ICAO) and Ethiopian Civil Aviation Authority (ECAA).

At the Addis Ababa Bole International Airport, with its new passenger terminal and facilities, could match the growth in operation and fleet. The construction of an ultra-modern cargo terminal and maintenance hanger will soon begin. The civil aviation sector in Ethiopia has been liberalised under Investment Proclamation No. 280/2002 (as amended). The air transport services using aircraft with a seating capacity of up to 20 passengers are exclusively reserved for Ethiopian Nationals. Air cargo service is, however, open to foreign investors without any restrictions on capacity. To this end, private airline companies have already started to emerge. Abyssinia Air Transport Company has already joined the business. Besides, many other private air transport companies have acquired a permit to operate in the sector and are expected to be soon operational.

In contrast to air transport, Ethiopia has a limited rail service that stretches 780 km, linking Addis Ababa with the port of Djibouti via the eastern Ethiopian cities of Dire Dawa and Nazareth. The port of Djibouti, located on the Red Sea coast serves Ethiopia for import-export trade. Port Sudan is another external trade route at present in the western part of the country. Other ports accessible to Ethiopia in the future, as may be necessary, include Berbera in the east and Mombassa in the south. The Ethiopian Shipping Lines provides import-export and coastal carrier services on its vessels.

Maritime and Transit Services Corporation provide cargo handling, harbour facilities and services. Private transit companies also render these services.

Ethiopia’s telecommunications facilities, which are relatively efficient by Sub-Sahara African standards, are showing marked improvement.

Direct microwave links connect all regional cities and a number of smaller towns have automatic telephone services. Excellent international communications links are maintained by means of two satellite earth stations, providing telephone, telex, fax, internet and television services, digital data network, pre-and post-paid mobile telephone and coin box international telecommunication services. Microwave links exist with Kenya, Djibouti and the Sudan. Moreover, digital telephone exchanges have been installed.

In recognition of the Government’s commitment to attract foreign direct investment, the Ethiopian Telecommunications Corporation (ETC) has taken a number of measures to foster an enabling investment climate. In its Eighth Development Program (2001-2005), it has plans to increase the telephone penetration rate from 0.3 % (3 to 1000 people) to a minimum of 1.0 % (1 to 100 people) and thus meet all pending demands of both the urban and rural population. The corporation is also planning to enhance its capacity in terms of capital, technology and management by creating a strategic partnership by means of transferring partial ownership of the public operator to an international company or a consortium.

The Ethiopian Postal Service and private courier agencies operate postal services, including sky-pack facilities, domestically and for international contacts.

Ethiopia has vast hydropower and promising geothermal energy resources. Its hydropower potential is estimated at being around 15,000-30,000 MW. The topographic features of the country allow at least 20 - 25 % of this potential to be utilised economically.

Up-to-date the aggregated electricity generation is a mere two billion kwh/a, which is much less than two % of the actual potential. The present regional distribution system of electric services is carried out mainly via the Inter-Connected System (ICS) and via a self-contained system to a certain degree. The main industrial towns are all connected into the national grid. Almost the entire ICS capability is provided by the seven hydroelectric power plants at Finchaa, Koka, Awash II, Awash III, Melka Wakena, Tis Abay I and Tis Abay II. An eighth and a ninth hydropower plant, at Gilgel Gibe and Tekeze with installed capacities of 180 MW and 312 MW are scheduled to become operational in the year 2003 and 2007 respectively. Electric energy is supplied at 380/220 volts and 50 Hz AC at low level; the high voltage transmission facilities are 230KV, 132KV, 66KV and 45 KV, while the medium voltage distribution is in 33 KV and 15 KV.

Electricity in Ethiopia, generated mostly from hydropower, is relatively cheap. It is supplied by the Ethiopian Electric Power Corporation (EEPCO).

The Government has liberalised the sector allowing foreign investors to participate in generating electric power by setting up hydroelectric power plants. The only restriction is, however, on the transmission and distribution of electrical energy through the Integrated National Grid System, which is exclusively reserved for the Government. Therefore, foreign investors can generate the bulk of hydropower and finalise a power-purchase agreement with the Ethiopian Electric Power Corporation (EEPCO) for transmission and distribution.