Background  |  Investment Law   Privatization

Background

Ethiopia is Africa's tenth largest country, covering a land area of 1.1 million square kilometers. Ethiopia lies in north-east Africa. It borders Sudan in the west, Somalia and Djibouti in the east, Eritrea in the north and Kenya in the south. With a population of approximately 60 million people, it is the third most populous country in Africa after Nigeria and Egypt.

The last census of October 1994 showed a total population of 53,500,000 inhabitants, out of which 14% were classified as urban and 86% as rural. The total number of households was 11,100,000 with an average of 4.8 persons per household. The estimated annual rates of growth of the population are 2.9% per annum (total) and 5.3% (urban) and yield the following estimates:

Year Estimated Population (millions)
Urban Rural Total
1999 9.5 52.5 62.0
2000 10.0 53.8 63.7
2001 10.5 55.1 65.6

Further population projections expect a total population of 83,400,000 by the year 2010 with 14,400,000 urban inhabitants and 69,000,000 people living in the rural areas.

There are two main religions in Ethiopia, Christianity and Islam, each accounting for roughly half of the population. The capital city is Addis Ababa, which has an estimated population of between three and five million people. The Ethiopian currency is the Birr. The fixed exchange rate regime was abolished in 1992 and the current rate is Birr 8.25 per US Dollar. Some select economic indicators are presented as follows

Year 1992/93 1993/94 1994/95 1995/96 1996/97
GDP at current prices (in birr) 26.7 28.3 33.9 37.9 41.1
GDP growth rate (%) 12 1.7 5.4 10.6 5.6
Exports Growth Rate (%)   25.7 62.2 -9.0 46.3
Public Savings
(% of GDP)
-0.9 -2.3 2.6 4.5 5.6
Government Borrowing
(%of GDP)
3.2 1.9 0.3 -1.3 0
Gross Domestic Investment
(% of GDP)
12.2 15.1 15.7 21.0 20.3
Gross Domestic Saving
(% of GDP)
5.6 5.0 6.7 6.6 9.4
Exports
($ millions)
222.4 279.6 410.2 410.2 643.3
Imports
($ millions)
1,051.8 914.6 1,063.0 1,412.9 1,341.8
Trade Balance
($ millions)
-829.4 -633.8 -607.9 -1002.7 -737.5


Ethiopia's current road network is only 26,705 kilometers. The first phase of the Road Sector Development Programme to rehabilitate and upgrade the Country's major road networks will be completed in 2002. Upon completion of the programme, the current road density per thousand kilometers. will increase by 11% and there will be a significant quality improvement in import-export routes and other all-weather roads on major national routes.

The Government has also similar improvements and upgrading projects in Phase II covering the years from 2002 to 2007. Here, the plan is to further the road density per thousand kilometers. by 41% compared to that of 2002 as well as, improve the quality of the road network.

Hydro-power generation of electricity has recently been opened up to private foreign investors. Current installed capacity amounts to only 411 megawatts (MW). The Government is planning to increase capacity to 546MW by the year 2000 and double generating capacity a decade from now.

There is a plan to expand state-owned telecommunication services during the period 1996-2000, including the modernization and diversification of offered services. The programme envisages a dramatic increase in the number of telephone lines from 150,000 in 1996 to over 760,000 by 2001. This will raise the telephone lines to 12 lines per 1,000 persons (the average level for sub-Saharan Africa).

Furthermore, in order to bring Ethiopia up to world standard in technology systems and practices, the Government is under preparation to engage a strategic partner in the Government owned Ethiopian Telecommunication Corporation.

 
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