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Geography, agriculture and economy

Ethiopia occupies a large part of the Horn of Africa. covering an area of about 1 million km2. It has an estimated population of 80 million, growing at an annual rate of about 2.6 per cent.

The country's topography and climate are extremely varied. The Great Rift Valley cuts through a massive central highland complex of mountains and plateaus surrounded by lowlands. About 85 per cent of the population lives in the temperate zone in the highlands. The population becomes sparser and poorer in cooler zones and especially in the hot zone, where conditions are tropical or arid and temperatures range from 27° to 50°C.

Agriculture
Agriculture accounts for about 47 per cent of GDP, provides approximately 70 per cent of raw material required by the industrial sector, generates more than 90 per cent of export earnings and accounts for 85 per cent of employment. Almost 12 million smallholder farmers produce about 95 per cent of agriculture’s share of GDP.

Although the country has a huge potential for agricultural development, only about 20 per cent of the total arable land area is cultivated. A subsistence, low-input low-output rainfed farming system dominates agriculture.

The main crops include coffee, cereals, maize, sorghum, wheat, barley and millet.
Cereals account for about 70 per cent of agriculture’s contribution to GDP. Cereal yields doubled over the past decade but in recent years cereal production has stagnated. As cultivation has extended to marginal lands, it has led to severe land degradation. The country’s irrigation potential is severely underutilized. Livestock production is an important sector of agriculture, accounting for about 15 per cent of GDP.

Economy
When the current government came to power in 1991 it embarked on a series of reforms to achieve broad-based economic growth in a stable market economy. Reforms were accompanied by increased pro-poor public spending in agriculture, education, health, water, roads and telecommunications. Partly as a result of these reforms and investments the economy registered rapid growth that continued through 2008, placing Ethiopia among the top performing economies in sub-Saharan Africa. The financial sector now includes a fairly robust microfinance industry with an emerging network of operationally sustainable rural savings and credit cooperatives (RUSACCOS). The challenges that threaten to slow economic growth are the current high inflation rate and increasingly frequent droughts.

Source: IFAD