Ethiopia is has a population of around 102 million and is ranked at 174 out of 187 countries in the United Nations Human Development Report (2016). This is one of the lowest scores in the low human development group and below the average for countries in Sub-Saharan Africa.

The World Bank report that “since 2000, when Ethiopia had one of the highest poverty rates in the world, households have experienced a decade of remarkable progress in well-being and the country has seen a 33 percent reduction in the share of the population living in poverty. This progress has been underpinned by strong and sustained economic growth averaging 10.9 percent annually. The pace of poverty reduction in Ethiopia since 2000 has been impressive, and particularly so when compared to other African countries. Only Uganda has had a higher annual poverty reduction during the same time period. Ethiopia is one of the most equal countries in the world and low levels of inequality have, by and large, been maintained throughout this period of economic development.”

The World Bank reports that “this progress is not without its challenges, however, and poverty remains widespread in Ethiopia. The poorest households have become poorer than they were in 2005; high food prices that improve incomes for many poor farmers make buying food more challenging for the poorest. Despite improvements, Ethiopia still has relatively low rates of educational enrolment, access to sanitation, and attended births, and challenges remain around investment in the health, safety and education of women and girls.”

According to the African Development Bank Ethiopia is steadily recovering from the 2015/16 and 2017 droughts, with continued expansion of services and industry and a rebound in agriculture. At 39.3%, services accounted for the largest share of GDP in 2016/17, 39.3%, driven by trade, transport, and communications, although this share decreased from 47.3% in 2015/16. Industry’s share of GDP increased from 16.7% in 2015/16 to 25.6% in 2016/17, driven by construction, electricity, and manufacturing. Implementation of the export-led industrialization strategy supported growth in industry. Although agriculture’s share of GDP stagnated at 36%, the sector’s growth rate increased from 2.3% in 2015/16 to 6.7% in 2016/17 due to rising commodity prices, notably for coffee. Growth continues to be led by investment in line with stable public infrastructure spending and higher foreign direct investment (FDI). Real GDP growth during 2017/18–2018/19 will be led by greater agricultural productivity and strong industrial growth.

DFID Ethiopia Strategy 

The UK’s vision is that by 2020, Ethiopia is transforming into a stable, industrialised, resilient, more inclusive country, able to self-finance its way out of poverty and harness the potential of its focusing on three priorities:

Building resilience to crises: Between 2010 and 2015, UK support prevented 4.2 million people from going hungry at a time when the country experienced severe drought, and helped to save a child’s life every 40 minutes. The UK continued programmes will ensure 4.1 million Ethiopians are able to withstand climate shocks and drought, protect the most vulnerable and improve nutrition for 5.7 million people, as well as working together on migration challenges which is in both the UK and Ethiopia’s interests.

Economic development: Ethiopia’s GDP has tripled since 2005 and living standards have risen markedly. UK support is catalysing over £500 million in new investment and helping to generate jobs and better incomes, and access to finance for over a million people, as well as to increase tax revenue by two percentage points to provide more support for public services such as health and education.

Basic services: UK support has provided 4.9 million people with access to water and sanitation, and enabled 500,000 more women to use modern methods of family planning. Ongoing work will support 1.2 million children in school, provide 1 million more people with family planning services, and help 2.4 million people access water and sanitation services.

World Bank Doing Business

Latest data from the Doing Business Report (2018) indicate that Ethiopia has stagnated, with a ranking in 2018 of 161. The distance to frontier score was 47.77, a slight advance on 2017, but Ethiopia remains below the regional average Distance to Frontier score of 50.43.

Reform areas in 2017 included

  1. Starting a Business: Ethiopia made starting a business easier by removing the requirement to open a bank account for company registration and eliminating the paid-in minimum capital requirement.
  2. Trading across Borders: Ethiopia made trading across border easier through a series of initiatives including the implementation of a risk-based inspection system, the streamlining of documents for importers and the strengthening of the customs authority.