Export opportunities abound in Ethiopia

Trade Focus

Allan Majuru

A VIBRANT export-led economy is crucial for any country’s economic transformation and sustainable development.

This is why the Second Republic has been implementing a raft of measures to transform the economy and place the country at the centre of regional and global supply routes.

President Mnangagwa has consistently emphasised the importance of transitioning towards an export-led economy as part of his economic reform agenda.

To ensure success, the Government has adopted several policies that promote value addition, which guarantees higher returns in international markets.

Apart from measures to boost manufacturing of export-focused products, the Government, together with ZimTrade, the national export development and promotion organisation, has been actively implementing programmes aimed at diversifying export markets.

The focus has been on expanding market access, fostering trade partnerships and promoting local products on the global stage. Diversifying the export base not only reduced reliance on volatile commodity markets, but also fostered innovation, productivity and global competitiveness.

One of the measures to diversify markets has been a deliberate focus on African markets, leveraging on existing bilateral and multilateral trade agreements.

Recently, ZimTrade conducted a market survey in Ethiopia.

Like Zimbabwe, Ethiopia is a signatory to the Common Market for Eastern and Southern Africa (COMESA), as well as the African Continental Free Trade Area.

The East African country is a growing economy that offers diverse opportunities for Zimbabwe.

About Ethiopia

Located in the Horn of Africa, the Federal Democratic Republic of Ethiopia is the continent’s 10th largest country, with an area of about 1,1 million square kilometres.

The population in 2023 was estimated at 127 million, making it the second most-populous country in Africa after Nigeria.

Over the last decade, it has recorded tremendous growth, with an average annual gross domestic product growth rate of 7,7 percent. Growth has been broad-based, driven by public investments in infrastructure and agriculture, foreign direct investment inflows, and expansion of the services and manufacturing sectors.

Some of the thriving products are textiles, garments, leather and shoe manufacturing. For 2024, Ethiopia is expected to grow by 6,4 percent on the back of the International Monetary Fund’s US$2 billion programme to support the country’s Homegrown Economic Reform Agenda.

Ethiopia’s imports from COMESA have more than trebled from US$339 million in 2020 to US$1,01 billion in 2022.

Imports mainly consist of tobacco, furniture, oil seeds, articles of iron and steel and equipment. The country is dependent on imports, as evidenced by its growing trade deficit with the world. Although it has a high import bill, Ethiopia has a strong import-substitution programme.

This means companies looking to explore opportunities must consider partnerships with locals. There is also a need to penetrate the market with a long-term view of setting up operations in Ethiopia.

Fast-moving consumer goods

Processed foods such as biscuits, sweets and teas, as well as hygiene products, present opportunities for Zimbabwean companies in the Ethiopian market.

Entry into the retail or fast-moving consumer goods sectors requires companies to sign distributorship agreements with established retail distributors in the country.

Since Zimbabwean products are known to be non-GMO, this serves as a comparative advantage to enter the market, taking into consideration the different consumer tastes. Local presence also helps in dealing with associated consumer issues.

In the short run, the dealership entry model can be used with a long-term view of setting up operations through joint ventures in Ethiopia.

For firms to make a breakthrough and reap meaningful benefits, they must have a presence in the market.

Local businesses can also leverage on the diaspora population to introduce local products and drive their popularity.

The African Union and several international agencies have their headquarters in Addis Ababa. Local companies can take advantage of the huge diplomatic presence in Ethiopia’s capital, which requires consistent food supplies from their countries of origin.

This is a model that Indians have used effectively.

Building and construction

Ethiopia is experiencing a construction boom. The ongoing construction projects present opportunities for paint, engineering services and construction consumables to be supplied to Ethiopia.

The projects are funded by the government and development partners.

Local companies in the sector can participate in foreign-funded projects that are subject to an international bidding process.

They can participate in construction tenders, which include building bridges, roads, buildings, warehouses and irrigation systems. More tenders are open to international bidders in consultancy services, which may involve architectural design, engineering services, project management and policy development.

In addition, there are supply tenders that cover the provision of materials, equipment, machinery and specialised products needed for construction projects.

Compliance

The National Bank of Ethiopia regulates imports and exports as part of efforts to manage the foreign exchange position.

The central bank’s import requirements include agency agreements, certificate of origin, commercial invoices, import licences, pre-shipment inspection and a clean report of findings.

The Ethiopian Food and Drug Authority (EFDA) protects the public’s health by ensuring the safety and quality of food, cosmetics and health products.

Also, EFDA regulates the imports of products in Ethiopia.

A certificate of analysis is required for processed foods and pharmaceuticals.

Medicines, medical supplies and medical equipment must be registered with the EFDA. Plants or plant products, as well as seeds and agricultural inputs such as chemicals, pesticides and fertilisers, cannot be imported into Ethiopia unless registered and duly authorised for import by the Ministry of Agriculture.

Allan Majuru is ZimTrade’s chief executive officer.