The Economic Activity of Ethiopia

The main driving force behind the economy of Ethiopia is its agriculture. This in spite of the fact that the Ethiopian agricultural sector is often afflicted with recurring adversities such as extreme drought. Furthermore, high government taxation and highly inadequate agricultural infrastructure also contribute negatively to this very important sector of the country’s economy.

Ethiopia’s agriculture comprises almost half of its total gross domestic product and it provides a means of income for almost 80% of the total labor force of the country. The main products are coffee, maize, flowers, potatoes, and vegetables with coffee representing almost 1% of the world’s coffee exports. In Africa, Ethiopia is the largest producer of livestock and the second largest producer of maize.

The manufacturing sector of Ethiopia contributes only 4% to its total economy but its does show some promise of development. Leather and some textiles are important for this sector but food and beverages account for almost half of the total production. Much of Ethiopia’s manufacturing sector is based in the capital of Addis Ababa.

Tourism in Ethiopia, just like its agriculture, is highly constrained by the lack of proper framework to support its growth. The country lacks suitable tourist infrastructure such as hotels to really push the sector forward. The recurring drought has also greatly impacted the development of the tourism sector of Ethiopia.

Due to Ethiopian law that prohibits the private ownership of land and the lack of patent laws whatsoever, Ethiopia has no privately owned businesses to help in its economy. There are also no foreign banks allowed to set up in the country thus making it very difficult for local business people to find and secure loans for start up business ventures.