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Ethiopia, officially known as the Federal Democratic Republic of Ethiopia, is a sovereign state located in the Horn of Africa. It shares a border with Eritrea to the north and northeast, Djibouti and Somalia to the east, Sudan and South Sudan to the west and Kenya to the south. With nearly 100 million inhabitants, Ethiopia is the most populous landlocked country in the world, as well as the second-most populous nation on the African continent after Nigeria. It occupies a total area of 1,100,000 square kilometers (420,000 sq. mi), and its capital and largest city is Addis Ababa.
Ethiopia's financial system is small and largely dominated by the state. Currently, public banks account for 67% of total deposits and 55% of loans and advances. Government dominates lending, controls interest rates, and owns the largest bank, the Commercial Bank of Ethiopia (CBE) whose assets represent about 70 percent of the sector total, as of April 2012. The Central Bank, the National Bank of Ethiopia, has a monopoly on all foreign exchange transactions and supervises all foreign exchange payments and remittances.
By June 2011 the private credit to GDP ratio for Ethiopia was around 9% compared with the average of 30% for sub-Saharan Africa. The financial sector has recently been experiencing a reversal of financial deepening. The broad money to GDP ratio declined from 27 percent in 2007-2008 to 25 percent in 2008-2009, while the ratio of domestic credit to GDP decreased from 32 percent to 27 percent over the same period. Negative real interest rates (stemming from high inflation and low deposit rates), high reserve money growth, bank-by-bank credit ceilings, and a lack of competition in the banking sector have contributed to the economy's continued demonetization in recent years, which is posing increasing risks to financial stability. Authorities have made commitments to promote monetization, improve liquidity management and achieve positive real interest rates in the financial sector, but reversing demonetization remains a major challenge.
Ethiopia's banking sector included 16 commercial banks in 2012. While the state has recently allowed the local private sector to participate in banking which brought about a rapid expansion of private banks, foreign ownership and branch operations remain strictly barred. Private Banks have generally outperformed their state-owned counterparts and their market share of resource mobilization exceeds that of public banks, with a market share of loan collections and deposits rising to 49 percent and 52 percent in 2007-2008. However, the share of new loans disbursements controlled by private banks for the same period decreased, and stood at 43.3 percent in 2007-2008. The banking sector as a whole, while remaining relatively sound, is characterized by excess liquidity. Non-performing loan ratio standing at 1.8 percent as of March 2012 appears unusually low, especially given the strong domestic credit expansion.
The microfinance sector is relatively well developed but not strictly supervised. At last count about 31 MFIs, reaching 2.4 million people, operated in the country and have become a major source of financial services to many farmers and businesses. Some unlicensed NGOs are also active in the delivery of microfinance services through informal channels.
The non-banking sector remains largely undeveloped, except for 16 insurance companies with about 190 branches across the country.
|Agriculture||Coffee, legumes, oilseeds, cereals, potatoes, sugarcane, vegetables|
|Manufacture||Food processing?Textile?beverages, leather, chemicals, cement|
|Services (Including financial)||38.9% (2011 estimate)|
|Harar Brewery||Consumer Goods|
|Commercial Bank of Ethiopia||Financials|
|Awash International Bank||Financials|
|Ethiopia Commodity Exchange||Financials|
|Yousran International||Consumer Goods|
|Yeboo Communication Network||Technology|
|Ethiopian Telecommunications Corporation||Telecom|
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The Ethiopia Commodity Exchange (ECX) is a commodities exchange established April 2008 in Ethiopia. In Proclamation 2007-551, which created the ECX, its stated objective was "to ensure the development of an efficient modern trading system" that would "protect the rights and benefits of sellers, buyers, intermediaries, and the general public"
The ECX is set up as a private company owned by a partnership of the market actors, members of the exchange, and the Ethiopian government, led by Eleni Gebre Medhin a former economist for the World Bank. As of July 2011, the physical presence of the ECX consists of 55 warehouses in 17 regional locations. It has grown from trading 138,000 ton in its first year to 508,000 tons in its third year, with nearly equal shares of coffee and oilseeds and pulses. The value of the ECX rose 368 percent between 2010 and 2011 to reach US$1.1 billion. As of November 2010, the trading floor in Addis Ababa handled 200 spot contracts in such commodities as Coffee, sesame, navy beans, maize, and wheat. It was assessed in July 2011 that total membership equaled 243 with total clients, who trade through members, numbered about 7,800. Farmer Cooperatives represented 2.4 million smallholder farmers, which make up 12 percent of the membership.
Currently, the ECX is the only stock or commodity exchange in Africa to have streamlined payment transfers down to "T+1" (Next day payment after a trade) from its clearinghouse to its partner commercial banks. Market data reach is expansive. "Push" price date is transmitted in real time to outdoor electronic ticker boards in 32 rural sites, to the ECX website, 256,000 mobile subscribers via instant messaging, the radio, TV and print media. "Pull" market data is available through a toll-free phone-in service. The service received more than 1 million calls in September 2011, 70 percent coming from rural callers.
The first year of The Ethiopia Commodity Exchange's existence is documented in the PBS Wide Angle film The Market Maker.
The Ethiopian Economy is one of the least monetized in the world with over 85 percent of the population having little access to banking and financial services. From this perspective, it might appear that Ethiopia has little to fear from the current global crisis. The Ethiopian Prime Minister told Parliament ‘ In general, we don't expect drastic effects on our economy, our financial structure is not as liberalized as those of affected countries and the economy is not intertwined to Western economies to face a crisis.’
There are three areas in which the global financial crisis might affect Ethiopia – reduced aid, investment, and remittance.
Ethiopia relies on the outside world to finance many of its development programs. The funds come in a form of aid or investment from countries hard hit by the crisis. Therefore, the crisis is likely to reduce the flow of aid and investment as countries strive to solve the domestic financial crisis (e.g. the numerous bailout programs launched in North America, Europe, and Asia). The Ethiopian Prime Minister has acknowledged that this situation might affect aid and investment flow during his address to the Parliament.
The Ethiopian Electric Power Corporation, the only provider of electricity in Ethiopia, has indicated that its investment plans will be severely affected due to the crisis (www.ethiopiareporter.com). According to the Chief Executive Officer, giant international banks such as Morgan ING and others have started to invest in the power sector in Ethiopia. Since these banks are affected by the market turmoil, the Corporation expects a knock on effect – a reduction in investment.
Finally, there are hundreds of thousands of Ethiopians leaving abroad mainly in Europe and North America who transfer money to their relatives back home. As the financial crisis bites, the ability of these people sending remittance will be severely affected. This will have a negative effect on the livelihoods of those who depend on remittance.
Some of the oldest evidence for anatomically modern humans has been found in Ethiopia, which is widely considered the region from which modern humans first set out for the Middle East and places beyond. According to linguists, the first Afro-asiatic speaking populations settled in the Horn region during the ensuing Neolithic era. Tracing its roots to the 2nd millennium BC, Ethiopia was a monarchy for most of its history. During the first centuries AD, the Kingdom of Aksum maintained a unified civilization in the region, followed by the Ethiopian Empire circa 1137. Ethiopia derived prestige with its uniquely successful military resistance during the late 19th-century Scramble for Africa, becoming the only African country to defeat a European colonial power and retain its sovereignty. Subsequently, many African nations adopted the colors of Ethiopia's flag following their independence. It was the first independent African member of the 20th-century League of Nations and the United Nations. In 1974, at the end of Haile Selassie's reign, power fell to a communist military dictatorship known as the Derg, backed by the Soviet Union, until it was defeated by the Ethiopian People's Revolutionary Democratic Front, which has ruled since about the time of the collapse of the Soviet Union in 1991.
Ethiopia's ancient Ge'ez script, also known as Ethiopic, is one of the oldest alphabets still in use in the world. The Ethiopian calendar, which is approximately seven years and three months behind the Gregorian calendar, co-exists alongside the Borana calendar. A slight majority of the population adheres to Christianity (mainly the Ethiopian Orthodox Tewahedo Church and P'ent'ay), while around a third follows Islam (primarily Sunni Islam). The country is the site of the Migration to Abyssinia and the oldest Muslim settlement in Africa at Negash. A substantial population of Ethiopian Jews, known as Bete Israel, resided in Ethiopia until the 1980s, but most of them have since gradually emigrated to Israel. Ethiopia is a multilingual nation with around 80 ethnolinguistic groups, the four largest of which are the Oromo, Amhara, Somali, and Tigrayans. Most people in the country speak Afroasiatic languages of the Cushitic or Semitic branches. Additionally, Omotic languages are spoken by ethnic minority groups inhabiting the southern regions. Nilo-Saharan languages are also spoken by the nation's Nilotic ethnic minorities.
Ethiopia is the place of origin for the coffee bean which originated from the place called Kefa (which was one of the 14 provinces in the old Ethiopian administration). It is a land of natural contrasts, with its vast fertile West, jungles, and numerous rivers, and the world's hottest settlement of Dallol in its north. The Ethiopian Highlands are Africa's largest continuous mountain ranges, and Sof Omar Caves contain Africa's largest cave. Ethiopia has the most UNESCO World Heritage Sites in Africa.
Ethiopia is one of the founding members of the UN, the Group of 24 (G-24), the Non-Aligned Movement, G-77 and the Organization of African Unity. Ethiopia's capital city Addis Ababa serves as the headquarters of the African Union, the Pan African Chamber of Commerce and Industry, the United Nations Economic Commission for Africa, African Aviation Training HQ, the African Standby Force, and much of the global NGOs focused on Africa. In the 70's and 80's, Ethiopia suffered from civil wars and communist purges which devastated its economy. The country has begun to recover recently however, and now has the largest economy (by GDP) in East Africa and Central Africa. According to Global Fire Power, Ethiopia has the 42nd most powerful military in the world, and the third most powerful in Africa.
Hailemariam Desalegn Demeke Mekonnen
(Deputy Prime Minister)
(Deputy Prime Minister)
(Government Chief Whip)
The birr is the unit of currency in Ethiopia. Before 1976, the dollar was the official English translation of birr. Today, it is officially birr in English as well. In 1931, the Emperor of Ethiopia, Haile Selassie I, formally requested that the international community use the name Ethiopia (as it had already been known internally for at least 1600 years) instead of Abyssinia, and the Issuing Bank of Abyssinia also became the Bank of Ethiopia. Thus, the pre-1931 currency could be considered the Abyssinian birr and the post-1931 currency the Ethiopian birr, although it was the same country and the same currency before and after. 186 billion birr were in circulation in 2008 ($14.7 billion or €9.97 billion). The birr was reintroduced in 1945 at a rate of 1 birr = 2 shillings. The name Ethiopian dollar was used in the English text on the banknotes. It was divided into 100 santims (derived from the French centime). The name birr became the official name, used in all languages, in 1976. Besides having almost all the legends in Amharic, there are two features which help to immediately identify an Ethiopian birr. Early dated coins, those dated before EE1969, feature a crowned rampant lion holding a cross. This can be seen in the adjacent picture.
Later dated coins, those dated EE1969 or after, picture the head of a roaring lion, with a flowing mane. Coins were struck at several mints, including Paris, Berlin, and Addis Ababa. Coins without mintmarks were generally struck at Addis Ababa. The coins struck at Paris have either the mintmark "A" with the cornucopia and fasces privy marks, or the cornucopia and torch privy marks without the "A".
|National Song||"Wodefit Gesgeshi, Widd Innat Ityopp'ya"|
|Currency||Ethiopian birr (ETB)|
|GDP / GDP Rank||177.458 Billion USD|
|GDP Growth Rate||10.2 Percent|
|GDP Per Captial||$1945.888 (PPP)|
< 1.0% Hindus
< 1.0% Buddhists
< 1.0% Jews
< 1.0% Other Religions
President – Sahle-Work Zewde
Prime Minister – Abiy Ahmed
|Website||Go to the web|
|Public Debt||54.862 Percent|
|Unemployment Rate||5.735 Percent|
|Labor Force (Occupation)||-|