Netherlands Embassy in Addis Ababa, Ethiopia

The Ethiopian economy

Roses being grown in Ethiopia (E. van der Veen)

The Ethiopian economy continues to grow strongly, led by expansion of the agriculture sector as well as increasing share for services and industry. Between 2004 and 2012, the Ethiopian economy grew with 10.9% on average (source: World Bank). Manufacturing is also picking up. The Ethiopian government is ambitiously investing in infrastructure, such as the Grand Ethiopian Renaissance Dam, roads, railways (connecting Addis Ababa to Djibouti), energy and aviation, as well as investments being made in industry and manufacturing. This public driven growth contributes to a high level of inflation. Due to investments in the public sector, credit for the private sector is limited.

Growth strategy

Economic development is driven by the Growth and Transformation Plan (GTP), a five-year plan established by the Ministry of Finance. The GTP is aimed at achieving 11-15% GDP growth in 2010-2015, a.o. by attracting foreign direct investment in agriculture and industry, and improvement of infrastructure. It also provides the framework for agricultural development, focused on smallholders, market systems, and involvement of the private sector. Currently the follow-up of GTP is being prepared.

Import-export

The Ethiopian trade balance is characterized by a consistent trade deficit, due to the limited production of exportable goods and large amount of imported goods. Manufacturing of exportable goods is stimulated by the Ethiopian government through incentives. Main export products are coffee, oilseeds (world’s second largest exporter of sesame), vegetables, gold and cut flowers. According to the government, export has increased to USD 900 mln in the first quarter of 2014, coming from USD 250 mln in 2007.

NL-ETH Trade relations

The Netherlands is in the top 10 of exporting destinations for Ethiopia (around EUR 73 mln in 2014, source: CBS), largely due to the export of cut flowers, vegetables and fruits. Of the EU member states, the Netherlands is one of the most prominent investor in the country, if not in volume, then certainly in terms of innovation (in particular in the horticulture sector) and the creation of jobs for Ethiopians. The Government of Ethiopia, including the regional states, welcomes Dutch investments in all areas, including horticulture. It is very keen to get more Dutch investors, both in the agriculture sector and beyond.