Abesha Bunna Bet

An old article that caught my eye. Interesting. 

Ethiopia has the second largest consumer base in the Africa Mid-East region (after Nigeria). The International Monetary Fund (IMF) estimates that in 2007 per capita income will grow by us$35.54 to us$893 making Ethiopia one of the poorest countries in the world. Citing a 2000 household survey in a September 2005 review of the economy, the World Bank reported that 44 percent of the population could not meet basic survival needs.

Additionally, the country is in the grip of a severe five year drought that creates a critical food shortage, especially in rural areas where 85 percent of the population lives-according to the Population Reference Bureau (PRB).

What, then, would be the rationale for taking a detailed look at Ethiopia as a “market” for anything?

The short answer is: Potential. The major factor is Ethiopia’s 77-million consumer base. A second important factor is the country’s abundant natural resources. A third factor is that Ethiopia is one of the world’s oldest continuous civilizations with a cohesiveness-that goes back thousands of years. This cultural homogeneity means that developmental marketing efforts can more easily be replicated throughout the country. But considering the extreme nature of economic and social environment, are even such trial efforts realistic?

There is a budding consensus that supports a very cautious, ‘Yes.’

On May 4, 2006, Business in Africa (Johannesburg) said the Ethiopian government was targeting “double digit” GDP growth. IMF statistics show the average annual growth rate for Ethiopian GDP from 2004 through 2007 at 8.0 percent. So the government’s optimism may not be entirely off the mark.

Business in Africa cited Ethiopia’s Trade and Industry minister for these specifics. “The [government] plan includes the setting up of almost 200 textile factories and 74 shoe factories during the next five years.” Cement production has been targeted at an increase of 300 percent.

Other support comes from an April 16, 2006 report in The Ethiopian Herald (Addis Ababa) citing a local business analyst as saying that economic growth is increasingly coming from “the active participation of the private sector.”

In fact, in the same September 2005 review referenced above, the World Bank said, “Growth is being increasingly driven by private consumption, contrary to the pattern of the 1990s, where growth in public consumption tended to play the leading role.” By far, the best evidence for Ethiopia’s future success is that planning for growth is a local effort. The World Bank says its efforts and those of other donors are “aligned” with the country’s “homegrown poverty reduction strategy.” Models developed locally and supported by the international community have begun to show great promise in other parts of the world.