The financial sector registered robust growth in 2009/10 despite global economic shock and financial crisis. The total number of banks operating in Ethiopia reached 15 as two new private banks joined the industry during the fiscal year. The number of bank branches also increased by 45 from 636 to 681. Banks were able to register high profit, enhance resource mobilization, expand their capital level and reduce their non-performing loans to a minimum level in 2009/2010. The fiscal year 2009/2010 saw strong performances in imports and exports, a surge in services and transfers and some narrowing of the current account deficit. Export proceeds amounted to US$ 2.0 billion, 37% higher than the previous year with increases of all major export items except leather products and pulses. Service inflows rose by over 18%. The total import bill grew by 7%, reaching US$8.3 billion, due to increases in the cost of semi-finished goods, fuel, capital goods and consumer goods.
Overall, during the period of PASDEP the non-agricultural sector of the economy showed a 23.6% expansion as a result of the combined effects of the growth in the industry and service sectors. The main factor for industrial growth came from the substantial investments in hydroelectric power generation. Manufacturing showed an annual growth rate of 22.5 percent; mining surged by 95%, though construction was affected by a 1.2% slow down because of a subsequently rectified shortage of cement. In the service sector financial intermediation showed over 30% annual average growth between 2004/5 and 2009/10 as the financial sector continued to expand along with the country's economic growth.
The growth in agricultural output was largely attributed to improved productivity aided by favourable weather conditions and appropriate economic policies. The amount of land under cultivation increased steadily between 1996 and 2008, reaching 11.2 million hectares in 2009/10. The production of major crops, including cereals, pulses and oilseeds, increased by some 5.6% that year. Total agricultural production rose from 119.1 million quintals in 2004 to 191 million in 2009 with productivity averaging 15.7 quintal/hectare (up from 12.1 quintal/hectare in 2004/05). Between 1996 and 2008, cereal yields, aided by significantly greater use of fertilizer, increased by about 40%. Agriculture averaged 8.4% growth during PASDEP (2005/6-2009/10) and provided the basis for the average double-digit economic growth after 2004/2005.
The government has developed a pro-active policy for the horticulture industry, providing tax and excise duty rebates, allowing full proﬁt repatriation, making land and ﬁnance available at low cost, and actively promoting trade standards and the creation of institutions to train skilled staﬀ. The government has encouraged investment in agro-business projects and in land, particularly in areas where land is under-utilized or uncultivated. Some larger projects have been leased to foreign investors but most of those agreed between 2005 and 2010 involved Ethiopian investors. Largely in the southern and western parts of the country in the regional states of the SNNP, Benishangul Gumuz and Gambella, these are intended for the production of wheat, maize and rice as well as bio-fuel products sourced from sugar, jatropha, castor and palm. Generous leases with performance-linked options for renewal are tied to local employment and development as well as provision for sales to local or regional markets. Projects have to fulfil specific requirements in terms of economic benefit and sustainability with respect for the rights and interests of local populations. Any movement of people for agro-industrial development or for hydro-power projects, for example, must be voluntary. click herefor more.
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