Economic Growth, Coffee Sector Investment, and Future Prospects in Ethiopia

Transcription

1 Economic Growth, Coffee Sector Investment, and Future Prospects in Ethiopia by Demese Chanyalew, PhD G.M DeMar Ethio-Afric PLC, and Independent Consultant, AKLDP/Tufts University Presented at the African Fine Coffee Association 15 Conference, Addis Ababa, Ethiopia February 14-18, 2017 th 1

2 1. Economic Growth and Change Trends Chronology of actions GDP/AGDP Trend Structural shift indicator Selected indicators of growth and change Words of caution 2. Coffee Sector Development Indicators of change Investment actors Challenges 3. Future prospects 2

3 Period Lead event Implication on Policy/strategy and Institutions Regime change: Derg 1990/ /0 0 Chronology of actions for economic growth and change to Transition to EPRDF Government Socialist/collective to market led Transition policy Privatization of state farms (including coffee) Review of policies and strategies including land policy, policy and strategy of PAP areas Refinements of ideology--- Revolutionary democracy, Democratic developmentalism 2000/ / / / / /1 5 SDPRP ( Sustainable Development and Poverty Reduction Programm) PASDEP (Plan for Accelerated and Sustainable Development to End Poverty) GTP I (Growth and Transformation Plan-I) 2015/ /2 0 GTP II Launch of RDPS Market oriented peasant agriculture Adopting and Needs Assessments for MDGs Elaborations and refinements of sectoral policies and strategies Ch.7 of PASDEP Extensive work on economic growth corridors identification Embarking on expansions of public and private universities and TVETS Forceful mobilization of resources for social and economic infrastructure development ( health, education, roads, telecommunication and energy) Aggressive move to attract FDI Recognition and path making for PPP Establishing ECX---Coffee the lead commodity Recognition for commercial agriculture promotion lowland Stock taking and review of policies and strategies to align to the AU/NEPAD CAADP initiative and the subsequent Agriculture sector 10 years PIF Strong move towards commercialization including the promotion of SCFs Launch of Renaissance Projects including GERD Strong move to irrigation agriculture in all scale where feasible Mining Launch of CRGE Modernization and commercialization Linking farmers-the educated youth-investors Aligning with the Malabo Declaration of

4 18 Trends of AGDP and GDP Growth Transition SDPRP PASDEP GTPs Growth Rate /1 1994/5 1998/9 2002/3 2006/7 2010/ /15 Fisical year AGDP GDP 4

5 60 Structural Shift Indicator Transition SDPRP PASDEP GTP s 45 GDP Share Percent /1 1995/6 2000/1 2005/6 2010/ /16 Fiscal Year Ag and allied Industry service 5

6 Item 2000/ /16 Population in million Life expectancy at Birth (M-F) Infant mortality 97: : 1000 People: Physician 47836: :1 People: Nurse 8461:1 1999:1 Access to safe water country wide (in %) Per capita food production (K-Cal grain equivalent in quintal) Poverty head count (in %) GDP per capita (in USD) Road in KM Asphalt Road in KM Gravel Road in KM All types , 414 Number of Commercial Banks 8 18 Electricity production ( 000 KWH) Public Universities

7 Digest the good performance in terms of the base the country is starting from the bottom of the trough of backwardness and underdevelopment Poverty is still a daunting challenge---still about 23 million people below poverty line Though country level food security ensured still HH level food and nutrition insecurity is a challenge Though income growth is at a faster and high rate question of distribution remains to be addressed 7

8 Item 2000/ /15 A. Area under major crops (in Million ha.) B. Coffee area in ha C. Coffee area % share (B/A) Agriculture share of export value Coffee share of export value (%) Coffee share of Ag. Export value Economy wide diversification intra-sector diversification Some additional facts Agriculture with holding size of 10 ha and above is < 2% Coffee cultivated by over 4 million primarily smallholding farming households (IFPRI, 2015) Coffee provides employment/income for 15 million people Biggest Coffee exporter in Africa, accounting for 3% of the 8

9 o Public goods and services--- Extension, ECX (Refer to IFPRI/EDRI study. Bart et.al Coffee Value Chain on the Move: Evidence from Smallholder Coffee Farming in Ethiopia.) o Private individuals--- e.g. wet mills, medium and large-scale coffee farms o Cooperatives--- Market infrastructure and marketing o Foreign investments --- 9

10 Keeping up with the growth momentum--- =>at least maintaining the world production rank and increasing the global coffee trade position Ethiopia is the biggest coffee exporter in Africa accounting for 3% of the global coffee trade (ICO, 2014) 10

11 Brazil Country 1990/ / /16 Production Rank Production Rank Production Rank Indonesia Peru Colombia Ethiopia Guatemala Honduras India Mexico Vietnam , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Source: ICO

12 Research and extension infrastructure to solve R&D problems--- e.g solutions for disease Development infrastructure including irrigation to overcome shocks induced with inadequate and erratic rain Linking research, extension, technology multiplication (specifically improved seedlings) and distribution Competition with other commodities and maintain coffee production profitable--- the Challenge with chat and spices Agricultural finance: for smallholders, emerging SCFs and also for medium and large scale farms World price volatility and share of consumers price to coffee farmers 12

13 Conducive policies and strategies Listening government to review policies and strategies based on evidence and maintenance of national interest --- understanding Say s law for policy and strategy review Pragmatics Policies and strategies leading to growth in turn create demands for policy and strategy review/change Capacity and ability to manage shocks including climate induced once such as the recent El-Nino Land for modern and commercial coffee business expansion 13

14 The construction of agro-industry parks Presence of research institutes, HLIs, professional and trade associations (ECSS established) Presence of young and educated youth (from 50% of public universities have faculties of agriculture and natural resources Increasing number of roasters and value adding firms Growing economy and increasing domestic consumption (could be both challenge and opportunity) 14

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