Ethiopia has begun to recover from its past civil war. The renewed focus on agriculture and its infrastructure has improved the overall living conditions of the population. Despite the widespread poverty in Ethiopia the country is considered to be one of great potential. The reliance on rainfall continues to pose a threat for an impoverished population.



99.5 mill.

(% of population)

65 %

Corruption Perception Index

33 / Rank 103

Income per Capita

619 USD

Income Distribution (gini index)

34 (2010)

Tourism contribution to GDP

4.2 %

Annual growth rate

9.6 %

Wholesale & retail sector (% of GDP)


Travel Turist industry growth forecast

1.7 %

Import 2015

Trading partner - EXPORT

Somalia 13.4%, Kuwait 12.8%, Netherlands 10.6%

Main export of goods (USD):

Refined petroleum, coffee, sesane seeds, fresh or chilled vegetables

Export 2015

Trading partner - IMPORT

China 27.7%, Kuwait 5.7%, India 5.3%

Main import of goods (USD):

Petroleum oils, telephones, palm oil, orin structures

View sources

Sources:  World Bank, AfDB, CIA Factbook & Transparency International

  1. World Bank: Population, Income pr. Capita (current USD 2015), Annual growth rate (2015), Urbanization (% of population), Income distribution (Gini index of 0 represents a perfectly equal distribution of income, where all income recipients receive the same income. The greater inequality, the higher the gini index. If the gini-index is 100, one person earns the entire income in the economy. ), Poverty at 1,25/day
  2. AfDB 2011: Middle class distribution: Middle class with floating class ($2-20 per day) / Middle class without floating class ($4-20 per day)
  3. Transparency International 2014: Corruption Perception Index (a scale from 0-100, where 0 means the country is highly corrupt and a 100 mean that a country is perceived as very clean). The ranking is out of 168 countries.
  4. The Travel & Tourism Competitiveness Report 2015, World Bank
  5. World Integrated Trade Solutions, World Bank 2015: Trading partners, main imports and exports of goods 

The political climate

Ethiopia is one of the most populous countries in the world, with anticipated population growth of around 3% per annum on average over 2014-2020. By 2020 the population is expected to reach 112 million people. Improving living conditions and sanitation standards combined with increasing industrialization and business development in urban areas attract more people creating a surplus of cheap labor force. Although poverty is widespread Ethiopia has recorded significant double-digit GDP growth over the last decade.

According to Transparency International’s Corruptions Perception Index, which measures the perceived levels of public sector corruption worldwide, Ethiopia ranks 103 out of 168 countries with a score of 33. This is a sign of widespread bribery, lack of punishment for corruption and public institutions that don’t respond to citizens need.

Primary production

The agricultural sector is critically important to overall economic performance and poverty alleviation. About 11.7 million smallholder households account for approximately 95 % of agricultural GDP and 85 % of employment. With a total area of about 1.13 million km2 and about 51.3 million hectares of arable land, Ethiopia has tremendous potential for agricultural development. Only about 11.7 million hectares of land, however, are currently being cultivated; just over 20 % of the total arable area. Nearly 55 % of all smallholder farmers operate on one hectare or less. The agricultural sector accounts for roughly 41 % of GDP, and 72 % of exports. Cereals dominate Ethiopian agriculture, accounting for about 70 % of agricultural GDP. Livestock production accounts for about 32 % of agricultural GDP and draught animal power is critical for all farming systems. Over the past decade, cereal production has more than doubled to nearly 15 million tons, as a result of horizontal expansion and increased yields. Nevertheless, food security remains a critical issue for many households, and for the country as a whole. Moreover, expansion of the cropped area to more marginal lands has led to severe land degradation in some areas. Increasing productivity in smallholder agriculture is the Government’s top priority, recognizing the importance of the smallholder sub-sector, the high prevalence of rural poverty and the large productivity gap. Productivity enhancement must be complemented by efforts to help farmers graduate from purely subsistence farming to semi-subsistence/semi-commercial status practicing farming as a business and to adopt more sustainable natural resource management practices in order to arrest and reverse degradation. Ethiopian agriculture is dominated by subsistence, low input-low output, rain fed farming system. The use of chemical fertilizer and improved seeds is quite limited despite Government efforts to encourage the adoption of modern, intensive agricultural practices. Low agricultural productivity can be attributed to limited access by smallholder farmers to agricultural inputs, financial services, improved production technologies, irrigation and agricultural markets; and, more importantly, to poor land management practices that have led to severe land degradation. Ethiopia has one of the highest rates of soil nutrient depletion in sub-Saharan Africa. As almost half of Ethiopia’s GDP depends on the agriculture sector, the country is very exposed to climatic shocks. Recurring droughts pose threats to exported food production and more importantly to domestic food supply. To tackle this problem, the government is committed to diversifying the country’s economic dependence.

Agriculture, value added (% GDP)  Food imports (% GDP)  Food exports (% GDP) 
41 (2015)  11 (2015)  72 (2015) 



In recent years the bulk of Ministry of Agriculture and Rural Development (MoARD) support for the sector has been in the Disaster risk management and food security (DRMFS) program, while investments for production support, rural commercialization and natural resource management have been more limited. In the coming years the key challenge is to re-balance policy and investments to pursue sustainable productivity and profitability objectives, whilst executing a carefully controlled phasing down strategy of social safety-net activities under the DRMFS program. The Goal of the current Policy and Investment Framework (PIF) is to “contribute to Ethiopia’s achievement of middle income status by 2020”. The Development Objective aims to “sustainably increase rural incomes and national food security”. This objective embodies the concepts of producing more, selling more, nurturing the environment, eliminating hunger and protecting the vulnerable against shocks. The PIF sets out a 10-year framework within which investments in the agricultural sector will have to be carried out in order to implement the Comprehensive Africa Agriculture Development Program (CAAPD) for Ethiopia. It builds on the Agricultural Development Led Industrialization (ADLI) strategy and it focuses on increasing agriculture productivity, managing natural resources and facing risks of natural disasters.

Commercial indicators

Over 2009 to 2013 all consumer good categories grew significantly. The largest growth was observed in beverages, where alcoholic drinks posted a 30% growth, soft drinks posted a 29% growth and hot drinks a 28% growth. Over 2013-2018, the beverages categories are expected to sustain the most rapid growth rates. Packaged food value sales in 2013 stood at US$1,224 million, having recorded a 19% over 2009-2013, mainly driven by strongly performing noodles and pasta which were introduced to the Ethiopian market relatively recently. Driven by overall economic growth, households’ income and expenditure is set to increase substantially in the upcoming years. A significant part of increasing income will also go to non-essential products such as clothing and appliances.  More than half of the middle class is in the floating category, living on less than $ 4 per day. According to IMF the emerging middle class is enjoying increasing buying power in a country that failed to feed itself just three decades ago and estimate that Ethiopia could become a middle-income nation by 2025. According to the manager of Ethiopia’s largest shopping center Nega Asfaha the middle class is already increasingly brand conscious, even if available cash remains limited and is demanding more convenience, more choice, and more brands.

 In Addis Ababa, modern retail is in early stages of development when compared to other sub-Saharan African countries. In 2013, 8 modern retailers were operating 15 stores (for a total sales area of 15,300 sqm) who represent 0.5% of total grocery spending in the country. All modern retailers in Addis Ababa are mid-sized local companies, operating medium-sized stores with no single store being larger than 1,500 sqm.  In 2013, there were a total number of 323 supermarkets and hypermarkets that engage in the business, according to Addis Abeba Trade & Industry Bureau (AATIB). This number reached in 2015 764. There are still a lot of Ethiopians who avoid supermarkets because of fear of higher prices relative to the open market; the neat organization and big building also intimidates them. Currently, supermarkets heavily rely on imported items, whereas they source vegetables from different irrigation farms or the local vegetable markets. The government’s ambition is to modernize the local retail sector through continued investment in state-owned cash-and-carry wholesaler Alle, before allowing competition from international retailers. US giant, Walmart, and the Kenyan supermarket chain Nurkumatt have expressed interest in entering the market but FDI restrictions will continue to leave them on the outside looking in until the local retail market gets stronger and more organized.

Ethiopia is a hierarchical country implying that people accept a hierarchical order in which everybody has a place and which need no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat. Ethiopia is considered a collectivistic society. This is manifest in a close long-term commitment to the member 'group'. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link, hiring and promotion decisions take account of the employee’s in-group, management is the management of groups. Ethiopia is also a masculine society implying that managers are expected to be decisive and assertive and the emphasis is on equity, competition and performance and conflicts are resolved by fighting them out.

A low level of urbanization poses a challenge to provide services and goods outside of the major cities. Due to a negative trade balance, the government imposes especially tight regulations on imported goods. While there are no quantitative import restrictions or import quotas in Ethiopia, strict foreign exchange control administered by the National Bank, in addition to customs entry barriers significantly deter imports. Although the Ministry of Trade is becoming more time- and cost-effective, certain product categories remain subject to lengthy scrutiny by government institutions. However, the government of Ethiopia announced its intentions to join the WTO, which may eventually end anti-competitive practices that are creating inefficiencies in trading with the country.


The government of Ethiopia has substantially invested into the country’s infrastructure mainly focusing on road and railroad development. Less than 10 % of the population lives in a radius of 2 kilometers of a paved road. The emergence of the railroad system will be hugely beneficial for the landlocked country and will increase transportation capacity. With the new road and rail network in the country this will also create additional employment across several regions. Ethiopia is close to starting exploitation of its natural gas reserves, which will open up new possibilities in the energy sector. Launches of new hydro plants and diversification to alternative ways to produce energy ought to diminish the country’s relatively weak electricity coverage and increase Ethiopia’s future development and competitiveness.


Ethiopia is landlocked and uses the ports of Djibouti in Djibouti and Berbera in Somalia. Early 2016, the railway from Addis Ababa to Djibouti opened which reduced the journey from days to 8 hour. A railway is under construction to Afar State to secure access to Potash that would help boosting the agricultural sector. Ethiopian Airlines became a Star Alliance-member in 2011, and Ethiopia has airports spread across the country. Furthermore, a city metro is underway in Addis Ababa.

Paved roads (% of total)  Total network (railways km)  Mobile Cellular subscribers (per 100 people) Airports with paved runways 
 13 (2015) 681  32 17 

Its capital Addis Ababa provides a constant visit of international wealthy visitors. Ethiopia is initiating tourism but lack adequate governance of the sector. They have some basic infrastructure for tourism but still face market failures pertaining to regulation, resources, and institutions, which also affect the macro economy.

Middle class distribution (millions)

Religion (percentage)

Reports of interest

World Bank (2017): "Doing Business in Etiopia".

Passport (2017): "Country Profile: Ethiopia"

The Danish Embassy in Etiopien

The Danish Ambassador to Etiopien is Mette Thygesen. 

The Embassy of Denmark, Etiopien

​Bole Subcity
Woreda 03 (Bole - 03)
P.O. Box 12955
629 Street
House no. 99_11

Tlf: +251 (0) 911 25 55 87
Click here to visit the website of the Embassy