Ethiopia's market reforms stall.

Position:Country overview

Ethiopia is, by far, the biggest country in East Africa in terms of population, and the biggest, but not by a wide margin, in land area. Since the mid-1990s the country has pursued a reform agenda with the goal not only of improving the lives of its desperately poor citizens, but as well becoming a factor in the global economy.

Ethiopia is among the bottom 10 in the world in terms of per capital income. The country ranks between Niger and the Democratic Republic of the Congo (DRC).

One vivid illustration of the enormous struggle the country faces in upgrading to market economy status is that 70.5 percent of its population collects firewood to use as cooking fuel. The source of this information is Ethiopia's Central Statistical Agency (CSA). Firewood is even collected in the country's urban areas (16 percent).

According to a March 2004 story distributed by the Integrated Regional Information Networks (IRIN), a United Nations agency, "85 percent of the population ekes out a living in the agricultural sector, although almost all are small-scale subsistence farmers in the countryside." Agriculture accounts for about half of Ethiopia's GDP.

It is therefore of more than passing note that in a February 23, 2007 story in The Christian Science Monitor that the newspaper is reporting a move underway in Ethiopia toward establishing a commodities exchange.

The Monitor says that Ethiopia produces more maize than Kenya, Uganda and Tanzania combined, but only 30 percent of production reaches market. The traditional commodity distribution system in Ethiopia includes numerous middlemen, meaning that Ethiopia's farmers are paid a fraction of market prices because of several markups.

A commodities exchange-with adequate communication to regional warehouses-would mean farmers could get better prices and actually make a profit. Wages, presumably, would increase to drive consumer spending.

The exchange idea is a progressive one, but lack of warehousing and transport infrastructure are serious problems.


To continue reading