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A growing partnership...
Trade between Ethiopia and the United States can perhaps be
described with a set of seemingly contradictory yet accurate descriptors;
anemic, burgeoning, underperforming, on a fast track to growth. Despite what may seem an initially confusing picture, it can clearly be shown that Ethio-American trade - while currently very low - is on the rise and in fact may be getting ready for a veritable explosion in the coming years.
Exports of Ethiopian goods to the US
totaled over $66 million for the year 2005 - a 100% jump from only two years
ago when exports were just over $33 million.
What's more, year to date in 2006, exports had already exceeded 2005's
mark by a significant amount, rising to $81 million through November of the
same year. In fact, Ethiopia's exports to the US have doubled every two years since 2002. After what seemed to have been a slower rate of growth in 2007 (with just under $90 million worth of exports), 2008 is looking like it will be a banner year for Ethiopian producers with over $70 million in exports registered in the first 6 months alone!
Imports from the United States have seen gains as
well although not in the same proportion as exports and buoyed by the
significant capital investments made by Ethiopian Airlines in the purchase of
high dollar aircraft from Boeing that made up a sizable portion of those
gains. In 2005, imports from the US
totaled $510 million - a 44% increase from 2004 although significant aircraft purchases were included in both years. Although the overall value of imports for 2006 is significantly less than the prior 2 years, with the exception of the transportation equipment (aircraft) category, imports from the US are on the rise across the board as Ethiopia's economy revs into high gear year after year.
Potential for much more...
Despite the impressive growth rate
of trade in general between the two countries and particularly in exports to
the US, in the  context of overall trade conducted by the US with the rest of
the world and even with the remainder of Sub-Saharan Africa, trade with
Ethiopia can be accurately characterized as anemic, underperforming and while
heading in the right direction, very much in its infancy. Although it has the 2nd highest
population (75 million) in Sub-Saharan Africa, it is currently 23rd
amongst these countries in total exports to the US, exporting less than Guinea
(Population 10 million, exports $90 million), Mauritius (Population 1.3
million, exports $233 million) and Swaziland (Population 1 million, exports
$207 million) amongst others in 2005.
Furthermore, Ethiopia
is endowed with a wealth of natural resources and possesses numerous
comparative advantages to the other countries in the region due the wide
availability and low expense of renewable, hydro-electric power - an
increasingly significant factor at a time when non renewable sources are under
increased price and supply pressures.
Given a host of highly favorable macroeconomic
factors that will facilitate this - including the aforementioned availability
of cheap power, exceptionally low cost of labor, government incentives and
favorable trade regimes such as AGOA - recent trends may only be a precursor to
an explosion of trade between these two countries, bolstered by mutual
strategic interests that underpin ever closer relations.
A piece of the growing pie...
A significant portion of the trade
between the US and Ethiopia (especially as it pertains to exports from Ethiopia)
is driven by the private sectors of both countries which increasingly recognize
the opportunity for ever more profitable business relationships. Given that Ethiopian exports to the US are
basically doubling every 2 years, it is clear that these opportunities are
being realized in spades and what's more, clearly have a lot more headroom to
grow. If you are engaged in a business
that could benefit or are thinking of starting one up, many of these
opportunities are open to you as well. Contact us today to see how you can take
advantage of them too.
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