Transforming African Economies - Factsheet on Ethiopia

  • Only 16 percent of Ethiopians live in urban areas, making it one of the least urbanized and most agrarian economies in the world. In 2006, agriculture’s share of GDP was 48 percent, one of the highest worldwide.

  • Ethiopia is also one of the poorest countries on the globe, with a per capita gross national income of US$930 in 2009, 21 percent below the average of low income countries.

  • Unlike many African governments, Ethiopia has invested heavily in its agricultural sector, as outlined in its Agricultural Development Led Industrialization strategy.

  • Ethiopia has achieved substantial economic growth in the past decade, much of this driven by increases in agricultural production. However, further growth will require rapid transformation of the economy and stronger rural-urban linkages.

  • In 2008/09, industry—including mining, electricity and water, and construction—accounted for only 10.7 percent of Ethiopia’s GDP, and the country’s rural-urban transformation is still in its early stages.

  • Ethiopia has made significant progress in primary school enrollment, which tripled between 1991 and 2007. Electricity generation is also increasing rapidly.

  • Major investments in and improvements to transportation infrastructure have significantly reduced travel times between major cities, but the rural road network remains limited. One-third of Ethiopia’s population lives more than five hours from a city of 50,000 people or more.

  • Promoting vibrant rural and small urban center non-farm economies will be crucial for increasing rural incomes and reducing poverty. Because many non-farm activities are related to agriculture, increasing financing, processing, and marketing services could maximize the economic linkages generated from agricultural growth.

  • Providing secure land rights and improving access to education, healthcare, and rural markets would facilitate labor movement, strengthen links to urban centers, and enable rural inhabitants to diversify their incomes.

  • Land policies, regulations on labor mobility, and the allocations of public investments will have a major impact on the future path of Ethiopia’s economy and the extent of poverty reduction.

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International Food Policy Research Institute (IFPRI)