Country Context
Ethiopia is one of the top performing economies in Sub-Saharan Africa. This country has been able to register an average growth rate of 11 percent during a decade before four years and has been declining down to below 6.6 percent since then. GDP projections for the Fiscal Year-2022 was only at 3 percent. Multiple shocks with differing magnitude and nature including, internal conflicts, the COVID 19 pandemic, droughts, crop pests like the locust manifestations, and the effect of the Ukraine crisis among others (UNDP, 2022).
Agriculture is the main stay of the economy; and exports are almost entirely relies on agricultural commodities. Coffee fetches the largest foreign exchange. Other agricultural products that earn foreign exchange include oil seeds, dried pulses, hide and skin as well as live animals. The young flower industry is also becoming another source of foreign revenue.
Ethiopia’s economic growth has been remarkable, lifting 15 million people out of poverty accompanied by significant improvements in social indicators. The multidimensional poverty index fell in absolute terms from 0.545 to 0.489 between 2011 and 2016, and the incidence of poverty declined from 39% in 2005 to 24% in 2016.
Challenges
The Government of Ethiopia recognizes that, despite impressive growth rates, measures of human development remain unacceptably low. According to the 2021/2022 Human Development Index (HDI) report, life expectancy at birth is 65, and annual per capita income is USD 170 (2 361). Infant and maternal mortality and child malnutrition rates are among the highest in the world; and adult literacy has remained at around 40 percent. Furthermore, only 58 percent of the population has access to potable water, and around 12 million people suffer from chronic or transitory or acute malnutrition.
There are marked differences between rural and urban areas with poverty being concentrated in rural areas where most households continue to live on less than USD 0.50 (30.8) per day. Not surprisingly, many rural households find it impossible to survive without access to seasonal wage employment or aid from the Productive Safety Net and related social protection programs. Even though Ethiopia is one of the ten countries globally that has attained the largest absolute gains in its HDI over the last several years, it still ranks 175th out of 191 countries (UNDP, 2022).
Despite the progress made, Ethiopia faces compounded challenges including high levels of multidimensional poverty, increasing climatic shocks such as drought and flooding, while facing heightened conflict risks, amidst the global economic crises with rising prices and inflation - all affecting essential commodities including food.
Food insecurity remains a major challenge, with up to 10 million people that require emergency food assistance each year. Accounting for 40% of the country’s GDP (World Bank, 2021), agriculture and food system remains vital to food security, healthy diets, and economic transformation. For instance, while Ethiopia has the largest livestock population in Africa, there are still major constraints of the livestock sector are shortage of feed resources, drought, poor husbandry and biosecurity systems for livestock and poultry and limited veterinary services coverage. The lives of poor people and future poverty reduction in Ethiopia need to be driven by improvements in this sector. Transforming agricultural and rural development require effective policy environment and governance systems.
The agricultural sector
The agriculture sector plays a central role in the life and livelihood of most Ethiopians, where about 12 million smallholder farming households account for an estimated 95 percent of agricultural production and 85 percent of all employment. The Ethiopian Government has formulated a series of policies, strategies and programs to promote agricultural development to achieve food and nutrition security and build resilience. The government has developed second Growth and Transformation Plan (GTP II) for the period 2016-2020. The overarching objective GTP II is the realization of Ethiopia’s vision of becoming a middle income country by 2025. In GTP II, agriculture sector is considered as one of the major sector driving growth.
Rapid population growth with increasing food demand, fragile ecosystems, increasing energy demand and eminent dangers from climate change are among key problems in the agriculture sector of the country. The GoE currently strategized to invest in technological advances to guarantee food security at household level and increase sufficient supply for industries and increase the production of selected outputs for the export market.
The plan under this sector focused on improving agricultural production and productivity and commercialization; reduce degradation of natural resources and improve its productivity; reduce vulnerability to disaster and build disaster mitigation capacity via ensuring food security.
FAO priorities and initiatives
Ethiopia is one of the focus countries for the implementation of FAO regional initiative “Africa’s Renewed Partnership to End Hunger by 2025”. This partnership calls for accelerated action by member countries in the fight against hunger through the establishment of ambitious targets within the CAADP (Comprehensive Africa Agricultural Development Program) framework. In addition, the country is a focus country for the regional initiative on Building Resilience in Africa’s Dry lands. This initiative aims to strengthen institutional capacity for resilience; support early warning and information management systems; build community level resilience; and respond to emergencies and crises.
FAO is committed to helping countries achieve a healthier, more sustainable future. That means finding the right combination of policies, innovations and public and private investment to achieve to the Sustainable Development Goals (SDGs), and attain FAO’s four betters dimension of agrifood systems – better production, better nutrition, a better environment and a better life for all.
Ethiopia has identified agro-industrialization as having the potential to lead a structural transformation of the economy and the modernization of the agriculture sector. The approach is envisaged to make market available for smallholder farmers to sell their produce, contributing to increased income, create off-farm employment in processing and services (particularly relevant for youths) and create economic opportunities for small and medium enterprises thus contributing to the reduction of poverty in rural areas.