የኢትዮዽያውያን ዴሞክራቶች ድረ-ገፅEthiopian Democrats' Website

Source: Newbusinessethiopia.com

BY NEW BUSINESS ETHIOPIA REPORTER

The destination of Ethiopia’s exports is undergoing rapid shifts, with some long-standing markets being replaced by unexpected new destinations, reveals new report. Source: Ethiopian Revenue and Customs Authority

China, which was the leading importer of Ethiopian goods two years ago has now shifted to Switzerland, according to the ‘Ethiopia’s export performance’ report released by Access Capital, a local firm engaged in research and various investment activities in the country.

“In terms of overall ranking, Switzerland is now at the top of the list having bought 224 million US dollars of goods from Ethiopia compared to the 215 million US dollars bought by China and the 196 million US dollars bought by Germany,” the report released this week noted.

“Each of these top three destinations for Ethiopia’s exports take up roughly 10 percent of the country’s total exports. The unexpected ranking of Switzerland reflects the purchase of gold by Swiss banks and is in line with a common worldwide pattern of trade in gold between commercial and/or central banks.”

Ethiopia’s annual exports recently reached a never-before-seen level of 2 billion US dollars, a growth of 38 percent from the year before. In terms of exports by country of destination, the big surprise—and one with a clear policy message—is the significant role that “South-South” trade linkages can play for Ethiopia’s export prospects.

Only four out of the top ten markets for Ethiopia’s exports were located in the conventional ‘West’ (Switzerland, Germany, Netherlands, and U.S.) while the other six countries are in what might be termed as the ‘South’ (China, Somalia, Saudi Arabia, Sudan, UAE, South Africa), the report stated.

“It is also striking that countries with very low per capita incomes and highly unsettled /dysfunctional domestic political environments (Sudan and Somalia) are now larger markets for Ethiopia’s exports than some of the world’s richest and most stable countries. Thus, without neglecting long-standing historical trade links, Ethiopia’s exporters would be well-served by paying equal attention to increasingly important neighboring and regional markets in the developing world.”

The report further noted that beyond the top three markets, surprising shifts are taking place in the markets for Ethiopian exports. The 4th, 7th, and 10th largest export markets for Ethiopia are now other African countries: Somalia, Sudan, and South Africa, with each buying 172 million UD dollars, 115 million US dollars, and 74 million US dollars in Ethiopian products respectively.

“The growing role of “South-South” trade is also evident in the fact that the 6th and 8th largest markets for Ethiopian exports are now Saudi Arabia and the United Arab Emirates respectively. Indeed, somewhat to our surprise, we find that Somalia, Saudi Arabia, Sudan, UAE are each individually now bigger export markets for Ethiopia than is the United States or Italy or Great Britain or Japan.”

Efforts to improve the diversification of Ethiopia’s export products are certainly working, as seen in the steady drop in the share of coffee exports, according the report. “But the unusual concentration of most non-coffee exports on just a single country market can hold back future growth and warrants a search for supplementary markets."

"Addressing this situation seems to call for a combination of more aggressive market opening efforts (e.g., focusing trade promotion efforts in unexplored markets), upgrading quality, and widening the specific sub-categories of non-coffee exports in which Ethiopia may have specialized to date,” Access Suggested.

With respect to the objective of moving into higher value-added exports, this clearly remains in its very early stages and the limited progress so far indicates that manufacturing sector exports (leather products, processed meat, or clothing) are still facing greater domestic obstacles compared to agricultural and raw material exports (such as coffee and gold), the report also indicated.

It is impressive, by any measure. The rise of export by a third do make our Nation one of the roaring leopards of Africa. Little is said about one of the major export destination of Ethiopian produce which is Djibouti. The same goes for the informal trans boundry trade through the porus border. I wouldnt be surprised the export of moonshine to Sudan is not included in the statistics. Overall, the impressive South to south trade is a serious factor as such transactions, for the most part, don't contribute to pollution and as most of our trading partners are our immediate neighbours, it will only cement our friendship. Adjustant countries  who depend on trade will think twice before they go to war, therby strengthening their friendship. Moreover, such trade will make the beneficiaries to look out for trouble or troublemakers. As Ethiopia is the seat of African Union, such evergrowing trade will lay the foundation of the Union of African countries which should be encouraged further. Considering the massive pollution resulting from shipping our produce half way across the World, the govt should abolish all tariffs and encourage such trade. True, such practice falls within the ' spirit of COP 15' which has target of lowering emission from such long distance shipping of produce.

The long term objective of Ethiopian govt has to be to diversify the variety of export items. Most of all, we have 80 million consumers whose appettite is ever growing. Thus setting up massive industiral park in Samara, a stone throw away from Djibouti is long over due. Some of the items can be tailored for local consumption while others should be exported. The Govt will have to approach the Djibouti govt in setting up a joint tax free industrial park along the Ethio Djibouti border. Engaging the Djibouti govt in such massive undertaking is urgent and will only benefit both Nations. As there is a bottleneck at Djibouti, such venture will only  facilitate the trade relations of the two countries. Djibouti, which is sitting at the mouth of the most traveled shipping route is an strategically important country for World Trade. While Egypt is levying fees, amounting to $5 billions US  at Suez Canal, harldy any benefit is being garnered by Djibouti for the Straight is a natural path.  However, the Nation of Djibouti does have leverage according to the Law of the Sea. A tiny country like it doesnt have much leverage , but if it were to  ally itself with Ethiopia, it is another matter.   such powerful assosiation of Ethiopia, Djibouti and perhaps Yemen can explore  ways of tapping into  a fraction of what the Egyptians are pocketing.