By Oluwayinka Odufote
Your commercial awareness dose
Ethiopia is the second-most populous country in Africa, and it’s located in the east of Africa. It is landlocked country and also, among the horn of Africa. Most landlocked countries are underdeveloped and poor as they rely on transoceanic trade which usually doubles the cost of their trade compared to their maritime neighbours.
However, Ethiopia has miraculously experienced fast growth in its economy despite being a landlocked country. As of 2000, Ethiopia was the third poorest country in the world with a GDP per capita of $620 and with more than 50% of its population living
below the global poverty line. Then from 2000 to 2018, the country experienced a surge in its economy.
Currently, Ethiopia’s GDP per capita is $1,066. The advancement of its economy has been ascribed to many factors including, the privatization of many government-owned industries. Presently, Ethiopia practices a mixed economy, but it is gradually moving to a market economy as only a few sectors such as transportation, banking, and telecommunications which are considered strategic are still under state control. In 2015, the country’s poverty rate fell to 31% and the life expectancy increased from 52 to 66. No doubt, this is a big achievement for Ethiopia.
Again, almost 70% of Ethiopia citizens are youths and nearly 50% are under 18. These statistics show the high level of human capital present in Ethiopia. The enrolment into higher education has multiplied since 2005 and the tertiary institutions have increased from eight to thirty-six plus in a short period. Also, 70% of its students are trained in technology and science while the remaining 30% are trained in the field of social sciences and humanities. In a country where 65% of the labor industry contributes to
the GDP, it is bound for technology-based industries to survive thanks to the availability of human capital. The IMF and World Bank data shows that between 2019 and 2020, the Ethiopian economy grew by 9.5% and 9.8% accordingly.
Now, the manufacturing and IT industries have been key elements to the country’s economic growth. The government invested in a large part of the country’s production and manufacturing sector to stimulate income. As of 1957, the manufacturing sector of Ethiopia was monopolized by the handicraft and cottage industries. Then later, the government pumped funds into this sector and diversified it by encouraging agro-industrial activity and import substitution. This action increased manufacturing
production at a yearly rate of 6.1%. Today, this industry accounts for 11.4% of Ethiopia’s GDP. Furthermore, it is well known that agriculture is the mainstay of the Ethiopian economy.
The country receives over 50% of revenue on its exports which are mostly agricultural commodities. To add to its growing economy, Ethiopia experienced an impressive digital transformation. The future of tech in Ethiopia has taken meaning in Africa as it emerging as the number one tech hub in Africa. The government also provided sponsored incubators that would cater to business start-ups. And, an IT initiative drone was built to deliver blood and other health products to people living in remote areas. According to Science Alert, Ethiopia invested about $3million to launch its first space program. As of 2016, Ethiopia launched The Ethiopian Space Science and Technology Institute (ESSTI).
According to Quartz Africa, Ethiopia is the third fastest growing economy in Africa with South Sudan being the first and Rwanda, the second. Despite South Sudan’s political instability, the country has recorded positive economic growth. The growth of the oil and mining sector was estimated to have heightened by 10.7% and its service sector is calculated to have grown by 0.4%. This is a stepping stone for South Sudan to evolve from being listed as one of the poorest countries in the world. However, the country still encounters hyperinflation, distortions in the foreign market, and high debts which can plunge its growing economy easily. ‘South Sudan has registered positive economic growth.
However, for this growth to impact the lives of its citizens, a crucial portion must be reinvested in benefiting food security and basic service delivery.” According to World Bank Country Manager for South Sudan, Husamm Abudugga. 39% of Rwandans live below the global poverty line but the Rwandan economy had developed extensively after the 1994 Rwandan genocide. Presently, the economy is undergoing economic reconstruction and the government has invested resources and time into soft and hard infrastructure to attract foreign investments. The economies of these countries are growing rapidly, and they are giving Africa a frontline in foreign trade.
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