Table of Contents

Introduction

Country Background and History

Economic and Financial Environment

Political and Legal Environment

Cultural and Social Environment

Marketing Strategy

Webliography

E-mail




Introduction

The following is an extensive report on Ethiopia, the second most populous nation on the African continent. Ethiopia is a developing East African country that offers a wide variety of trade and investment opportunities for International Companies. The country is comprised of 11 semi-autonomous administrative regions organized loosely along major ethnic lines. Formally a socialist country, Ethiopia is undergoing a transition to a free-market economy. A 17-year civil war ended in 1991 and a transitional government turned over power to an elected five-year government in August 1995. International marketers wishing to explore opportunities in Ethiopia are invited to read the following report of a thorough secondary research presented here.

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Country Background/History

Official Name: Federal Democratic Republic of Ethiopia

Short Form

Local Long Form

Local Short Form

Abbreviation

Term for Citizens

Capital

Ethiopia

YeItyop'iya Federalawi Demokrasiyawi Ripeblik

YeItyop'iya

FDRE

Ethiopian(s)

Addis Ababa

History:

During the 1st millennium B.C. Semitic people from Saba' crossed the Red Sea and conquered the Hamite on the coast of what was eventually to become the Ethiopian Empire. By the 2nd century A.D., the Semitic people had established the kingdom of Aksum. The kingdom was ruled by the Solomonid dynasty, so called because the kings claimed direct descent from the biblical King Solomon and the Queen of Sheba, and adopted the Egyptian Coptic form of Christianity. In the 7th century the kingdom declined, but it reasserted its authority in the 13th century, although Muslim invaders retained control of the coastal area and the southeast. Following was a period of chaos. Order was restored in the 13th century with the founding of a new Solomonic dynasty. In the 15th century Zara Yakub reformed the Ethiopian church and established an absolute monarchy, a form of government that survived into the 20th century.

After the reign of Iyasus the Great (1682-1706), the country divided into separate regions. In the late 1800s Ethiopia, which was little more than a collection of semi-independent states, successfully repelled an Egyptian invasion. In 1889 Menelik II established a new capital at Addis Ababa and succeeded in uniting several provinces and repelling an Italian invasion.

Haile Selassie I assumed the throne in 1930 but fled in 1935, when Italian dictator Benito Mussolini invaded. Haile Selassie was restored to the throne in 1941. During the 1960s and 1970s, he focused on foreign affairs while largely ignoring the urgent domestic problems of economic inequity, corruption, and drought. In 1974 students, workers, and soldiers began a series of strikes and demonstrations that ended with the overthrow of Haile Selassie by the military. A state-controlled socialist economy was established, and Lieutenant Colonel Mengistu Haile Mariam emerged as the country's chief political figure, crushing his opposition with military supplies from the Union of Soviet Socialist Republics (USSR).

As the 1990s began, a drastic cutback in Soviet aid left Mengistu's government vulnerable to the two allied rebel movements, the EPRDF (Ethiopian People's Revolutionary Democratic Front) and the EPLF (Eritrean People's Liberation Front), which gained control of the northern provinces in 1990. In 1991 Mengistu fled to Zimbabwe, a transitional government took power, and the province of Eritrea declared its independence. In 1994, power was transferred to the Council of People's Representatives, which elected Meles Zenawi prime minister.

Location/Geography:
Ethiopia is located in the center of the Horn of Africa (northeast Africa) and is bordered on the North by Eritrea, on the Northeast by Eritrea and Djibouti, on the East and Southeast by Somalia, on the Southwest by Kenya, and on the West and Northwest by Sudan. It is the tenth largest country in Africa covering approximately 1,221,900 square kilometers (about the size of Texas, Oklahoma, and New Mexico combined). The major physiographic features are a massive highland complex of mountains and plateaus divided by the Great Rift Valley and surrounded by lowlands along the periphery. The diversity of the terrain is fundamental to regional variations in climate, natural vegetation, soil composition, and settlement patterns.

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Economic and Financial Environment

Currency:1 birr (Br) = 100 cents.

Notes are in denominations of Birr 100, 50, 10, 5 and 1.
Coins are in denominations of 50, 25, 10, 5 and 1 cents.

Financial Information (Exchange Rate)

Currency Birr
Exchange Rate 1 US Dollar = 7.8085 Ethiopian Birr
Thursday, April 22, 1999

Statistics

Items Statistics
Population (1998) 58,652.158
Population Growth Rate 2.21%
Age Distribution 0-14 years 46%
15-64 years 51%
65 years+ 3%
Birth Rate 44.69 births/1,000
Death Rate 21.25 deaths/1,000
Life Expectancy at Birth total population 40.85 years
male 39.76 years
female 41.97 years
Density of Population 51.6 per sq km
Per Capita GDP (1998) $120
GDP (1998) $ 6.1 billion
GDP growth rate (1998) 7%
Inflation (1998) 2%

Major economic and political restructuring has taken place in Ethiopia. Individuals, families and communities throughout the country are benefiting from greater social, economic, and political freedom, and are improving their lives. Two years of good rains and aggressive extension programs have resulted in record harvests which will bring Ethiopia closer to attaining a minimal level of food self-sufficiency. Growth of the GDP of over 7% in the past year has been accompanied by a reduction in inflation to below 2%. Extremely impressive success with stabilization measures has been followed by strong adjustment and liberalization. This success, however, is against a base of extreme poverty and dismally low economic and social indicators and so this success is fragile. With a per capita domestic product (GDP) of $120, Ethiopia remains one of the poorest countries in the world.

Natural Resources

The country is richly endowed with huge manpower, arable land and natural resources. However, much of its potential is not yet exploited. To start with, out of the sixty per cent of its land mass which is known to have a potential for agricultural development, only 15 per cent is said to have been developed. Although its contribution to the national economy is very limited, the country's livestock wealth is the largest in Africa. The mineral resources potential is also rich, much of it yet to be exploited. A few of them are: gold, platinum, marble, tantalite, copper, potash, soda-ash, zinc, nickel, iron and natural gas.

Topography

Ethiopia's topography is one of massive highland complex of mountains and dissected plateaus. The country has a high central plateau that varies from 1,800 to 3,000 meters (6,000-10,000 ft.) above sea level, with some mountains reaching 4,620 meters (15,158 ft.). Elevation is generally highest just before the point of descent to the Great Rift Valley, which splits the plateau diagonally. A number of rivers cross the plateau--notably the Blue Nile rising from Lake Tana. The plateau gradually slopes to the lowlands of the Sudan on the west and the Somali-inhabited plains to the southeast. The landscape consists of high mountain ranges and cratered cones, the highest of which, at 4,620 meters, is Ras Dashen Terara. Thousands of years of erosion have produced steep valleys, in places 1,600 meters deep and several kilometers wide. In these valleys flow rapid streams which are unsuitable for navigation but possess potential as sources of hydroelectric power and water for irrigation.

Climate

Diverse rainfall and temperature patterns are largely the result of Ethiopia's location in Africa's tropical zone and the country's varied topography. Elevation and geographic location produce three distinct climatic zones: (1) cool zone above 2,400 meters where temperatures range from near freezing to 16� C; (2) temperate zone at elevations of 1,500 to 2,400 meters with temperatures from 16� C to 30� C; and (3) hot zone below 1,500 meters with both tropical and arid conditions and daytime temperatures ranging from 27� C to 50� C. Ethiopia has a normal rainy season (meher) from mid-June to mid-September which is preceded by intermittent showers from February or March with the remainder of year generally dry.

Nature of Economic Activity

Ethiopia's economy is dominated by agriculture which accounts for approximately 50% of the Gross Domestic Product (GDP), 65% of total exports and 85% of employment. Coffee alone accounts for over 85% of total agricultural exports. Agriculture is supplemented by manufacturing, mining, trade, tourism, construction, services, etc., which account for approximately 50% of the GDP. Several other crops, e.g., cereals (teff, barely, maize, wheat, sorghum, and millet), pulses (horse beans, vetch and lentils), and oil seed (niger seeds, flax, rape seed, sesame, caster beans and Soya beans), are grown seasonally in different parts of the country. Coffee, oil seeds, pulses, cotton, sisal, tobacco, fruits and sugar cane are the main cash and industrial crops. The industrial sector, which contributes about 11 percent to GDP, supplies important consumer goods both to the domestic and international markets. Textiles, foodstuffs, tobacco, beverages, cement, leather and leather products, wood, metallic and non-metallic product, paper, plastic and tiles are the main manufacturing products. The main manufacturing export products include leather and leather products, canned and frozen meat, sugar and molasses, oil cakes and petroleum products. Even though the mining sector currently contributes less than 1% to GDP, there are proven reserve of industrial minerals and precious metals such as gold, platinum, tantalum, nickel, iron ore, coal, marble, potash, copper, silica, limestone, diatomite, bentonite, etc., which can economically be exploited.

Infrastructure

Donkeys, the main source of transport for the rural population, enable these vendors to go about their business in the Markato marketplace in Addis Ababa.

Ethiopia's surface transport infrastructure, which consists primarily of roads, is inadequate and underdeveloped. Construction of adequate road systems is greatly hampered by rugged terrain of highlands and by heavy seasonal rainfall. Moreover, Ethiopia has the lowest road density per capita in the world. The Addis Ababa Assab road, the country's main route, could become a bottleneck to the movement of goods, despite efforts currently underway to improve it. Twenty-one percent of Ethiopia's highway network is paved, with few interconnecting links between adjacent regions, and a grossly insufficient feeder road network. As a result, large parts of Ethiopia remain isolated and largely dependent on pack animals (donkeys) or human carriers for transport.

Ethiopia has limited rail service links and passenger/cargo air transport service. Its international flights link the country with 43 cities on three continents, and its domestic service links 43 airfields and 21 landing strips with Addis Ababa, the capital city.

Internally, direct microwave telephone links are available to most regional cities; a number of smaller towns also have automatic telephone services. International communications links are maintained through two satellite earth stations, providing telephone, telex, and television services. Digital telephone exchanges have also been installed recently. Generally, telecommunication systems in Ethiopia are good by African standards. Ethiopia has four AM broadcast stations and 1 television station. The majority of the Ethiopian people listen to radios for information, although almost every village has a television in the community center where the villagers can gather to watch television programs as well. There are several foreign-language newspapers published in Ethiopia, including the daily Ethiopian Herald which is printed in English, and the Arabic weekly newspaper Al-Alem.

Level of Urbanization

In the late 1980's, Ethiopia was under-urbanized, even by African standards, with only about 11 percent of the population living in urban areas of at least 2,000 residents. There were hundreds of communities with 2,000 to 5,000 people, but these were primarily extensions of rural villages without urban or administrative functions. Thus, the level of urbanization would have been even lower if strict urban structural criteria were used. Ethiopia's relative lack of urbanization is the result of the country's history of agricultural self-sufficiency, which has reinforced rural peasant life. Urbanization accelerated during the 1960's, when the average annual growth rate was about 6.3 percent. Urban growth was especially evident in the northern half of Ethiopia, where most of the major towns are located. Addis Ababa was home to about 35 percent of the country's urban population in 1987. Another 7 percent resided in Asmera, the second largest city. Major industrial, commercial, governmental, educational, health, and cultural institutions were located in these two cities, which together were home to about 2 million people, or one out of twenty-five Ethiopians. Nevertheless, many small towns had emerged as well. In 1970 there were 171 towns with populations of 2,000 to 20,000; this total grew to 229 by 1980. Today, the rate of urbanization is still hampered by an inadequate infrastructure and tensions with neighboring Eritrea.

Role of Government in the Economy

Ethiopia's economy was 'socialist-oriented' after the 1974 revolution consisting of strong state controls. Thereafter, a large part of the economy was transferred to the public sector, including most modern industry and large-scale commercial agriculture, all agricultural land and urban rental property, and all financial institutions. Some private enterprise and capital participation was permitted in certain sectors. Since mid-1991, a decentralized, market-oriented economy has emerged emphasizing individual initiative, designed to reverse a decade of economic decline. In 1993 gradual privatization of business, industry, banking, agriculture, trade, and commerce was undertaken.

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Political and Legal Environment

Political Ideology/Role of Politics

Between 1974 and 1987, following the deposition of the Emperor Haile Selassie, Ethiopia was governed by the Provisional Military Administrative Council (PMAC), also known as the Derg. In 1975, the council abolished the country's hereditary monarchy. The council was made up of about 80 people, most of whom were members of the armed forces or police. It was headed by a chairman who was the country's chief government official.

The council published a program in 1974 that called for the state to play a leading role in the country's economy and the creation of a specifically Ethiopian brand of socialism. It also called for the establishment of a single, all-embracing political party. The Union of the Ethiopian Marxist-Leninist Organizations was created in 1977 as a umbrella party of various political organizations. These organizations were disbanded in 1984 and replaced with the newly created Worker's Party of Ethiopia, which functioned as the country's only legal political party until 1991, when other parties were legalized. The party changed its name in 1990 to the Ethiopian Democratic Unity Party after relaxing its ideology.

In 1991, two allied rebel movements, the Ethiopian People's Revolutionary Democratic Front (EPRDF) and the Eritrean People's Liberation Front (EPLF), ousted the Marxist-Leninist government. Under a provisional charter, an 87-member elected Council of Representatives chose a president to govern over Ethiopia, pending general elections. A separate government was established in Eritrea, which was then a province of Ethiopia. In 1993, Eritrea was recognized as an independent republic. Ethiopian voters elected representatives to the Constituent Assembly in 1994 and charged them with drafting a new constitution. The constitution was adopted in December, 1994, and the Council of People's Representatives was elected.

Executive and Legislature: According to the 1994 constitution, the head of state is the president, who is nominated by the Council of People's Representatives. A president may not serve more than 2 6-year terms. The legislature also nominates a prime minister from among its members. The prime minister is the chief executive and heads a Council of Ministers, made up of representatives from a coalition of parties constituting a majority in the legislature. The Council of People's Representatives consists of a maximum of 550 directly elected members; at least 20 of these representatives must be members of minority ethnic groups.

Local Government: Ethiopia is made up of nine regions, most with a distinct ethnic majority. Each region has a regional council that may establish lower levels of jurisdiction to allow people to participate in self-government. In accordance with the 1994 constitution, individual ethnic groups within a region have the right to form their own regions or to secede from the federation.

Judiciary: The Ethiopian judicial system consists of two principal branches, the Federal Supreme court has final jurisdiction over federal cases, and the Regional Supreme Courts have final jurisdiction over regional concerns. Regional Supreme Courts may also serve as federal first-instance courts. Federal judges are nominated by the prime minister and appointed after approval by the Council of People's Representatives.

Flag description: Ethiopia's flag design consist of three equal horizontal bands of green, yellow, and red with a yellow pentagram and single yellow rays emanating from the angles between the points on a light blue disk centered on the three bands. Ethiopia is the oldest independent country in Africa, and the colors of her flag were so often adopted by other African countries upon independence that they became known as the pan-African colors.

Relationship with other countries

Foreign Relations Since World War II, Ethiopia has played an active role in world and African affairs. Ethiopia was a charter member of the United Nations and took part in UN operations in Korea in 1951 and the Congo in 1960. Former Emperor Haile Selassie was a founder of the Organization of African Unity (OAU). Addis Ababa is the host capital for the UN Economic Commission for Africa and the OAU. Although nominally a member of the Non-Aligned Movement, after the 1974 revolution, Ethiopia moved into a close relationship with the Soviet Union and its allies and supported their international policies and positions until the change of government in 1991. Today, Ethiopia has very good relations with the U.S. and the West, especially in responding to regional instability and, increasingly, through economic involvement.

Ethiopia-U.S. Relations The United States has had long and cordial relations with the Ethiopian people and was the largest humanitarian donor to Ethiopia from 1984 to 1992 providing more than $1 billion in emergency humanitarian assistance. This humanitarian assistance did not advance the development of Ethiopia because it was concentrated mainly on emergency food relief in response to drought and the ongoing civil war. Today, U.S. assistance is focused on development activities that improve the lives of Ethiopia's people. In 1995, the U.S. Agency for International Development (USAID) began the first phase of its long-term development assistance to Ethiopia. In FY 1996, total U.S. humanitarian and development assistance to Ethiopia was about $81 million. USAID development assistance efforts emphasize support for democracy and governance, agricultural improvement, essential health needs, and basic education.

Ethiopia-Eritrean Relations The armies of Ethiopia and Eritrea clashed on their common border in May-June, 1998. The two countries had close ties, due to their historical links and the personal relationship between their two leaders. Isaias and Meles were fellow rebel leaders, heading two liberation fronts which in latter years cooperated to overthrow the military regime of Mengistu Haile Mariam. Despite periods of ideological and tactical disagreement, Isaias' Eritrean People's Liberation Front (EPLF) and Meles' Tigray People's Liberation Front (TPLF), both formed in the mid-seventies, were the heart of the forces that defeated sub-Saharan Africa's then largest army in 1991. The TPLF is the core of the multi-ethnic Ethiopian People's Revolutionary Democratic Front (EPRDF) which now dominates the Ethiopian political scene. After Eritrean independence, overwhelmingly approved by a referendum in 1993, peacetime relations seemed set to remain firm.

Relations, however, noticeably deteriorated last year, when Eritrea launched its own currency and Ethiopia responded by insisting that cross-border trade be conducted in hard currency. Officials now claim that there had been other minor economic and political problems between the two sides, while Eritrea has recently revealed details of a hushed-up 1997 border clash at Bada in July 1997. Other causes of friction were new maps of Ethiopia's northern Tigray region, and an allegedly enlarged Ethiopian national map on the re-issued Ethiopian currency, the birr.

Conflict broke out in May this year after disagreements over several points on the common border worsened, despite the creation of a joint border commission. Despite intensive peace efforts led by US and Rwandan facilitators, events escalated to a peak in early June, 1998, at which point land forces clashed heavily on three fronts (Badme, Zal Anbessa and Bure) and both sides exchanged air strikes. Presently, the conflict continues.

Tariffs, Quotas, and other Restrictions on Imports and Exports

The Government harmonized customs duties and reduced the maximum import duty to 80% in 1993. The import tariff schedule was reformed in January 1996 and again in January 1997, which lowered the customs duties on hundreds of import items. The Government introduced automated customs processing in 1995. It also launched a vigorous anti-corruption campaign to bolster the effectiveness and efficiency of Government functions by deterring bribery, graft, embezzlement, and misuse of Government funds.

Trade Policy

All imports into Ethiopia require a license and the Ministry of Trade and Industry is authorized to prohibit, restrict or regulate imports and exports. Ethiopia is a contracting party to the Harmonised Commodity Description and Coding System of tariff classification. Presently, the rates range from 5% to 80%. All imports are subject to a general (ad valorem) sales tax which are currently 0%, 5% and 12%. A few products are subject to excise taxes, ranging from 0% to 200%. Free samples of pharmaceutical and medical products must bear the words "not for sale" in English and Amharic. Ethiopia has no Foreign Trade Zones. Samples of no commercial value are usually entered duty-free. Samples of commercial value can be imported temporarily under payment of a bond, which is refunded on export. Persons engaging in foreign trade in Ethiopia must possess a valid foreign trade license. Separate licenses are required for trade auxiliaries.

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Cultural and Social Environment

Language or Languages Spoken/Written

Ethiopia has an estimated 100 distinguishable ethnolinguistic entities, some speaking the same language. At least seventy languages are spoken as mother tongues. Oromo (Oromiffa) is the largest group consisting of about 40% of the total population. Roughly 30% of the total population consists of the Amhara (Amharic), whose native tongue is the official language of Ethiopia. The Tigray, speaking Tigrinya, constitute 12% to 15% of total population. A large number of smaller groups include Somali, Gurage, Awi, Afar, Welamo, Sidama, and Beja. English is the second official language of Ethiopia and is understood in most towns and among the educated sector of the population.

Religion(s) and Religious Influences in Life and Business

Ethiopia's 1955 constitution stated, "The Ethiopian Orthodox Church, founded in the fourth century on the doctrines of Saint Mark, is the established church of the Empire and is, as such, supported by the state." The church was the bulwark of the state and the monarchy and became an element in the ethnic identity of the dominant Amhara and Tigray peoples. By contrast, Islam spread among ethnically diverse and geographically dispersed groups at different times and therefore failed to provide the same degree of political unity to its adherents. Beliefs and rituals varied widely, but fear of the evil eye, for example, was widespread among followers of all religions. Officially, the imperial regime tolerated Muslims (the government retained Muslim courts, which dealt with family and personal law according to Islamic law). However, the imperial authorities gradually took over Muslim schools and discouraged the teaching of Arabic. Additionally, the behavior of Amhara administrators in local communities and the general pattern of Christian dominance tended to alienate Muslims. The revolution brought a major change in the official status of the Ethiopian Orthodox Church and other religions. In 1975, the Mengistu regime disestablished the church, which was a substantial landholder during the imperial era, and early the next year removed its patriarch. All religions were declared equal, and a number of Muslim holy days became official holidays in addition to the Christian holidays already honored. Today, approximately 50% of the population are Ethiopian Orthodox which is identified mainly with Amhara and Tigray peoples but accepted by other groups as well. Approximately 2% are Protestant and Roman Catholic combined. Lastly, approximately 40% are adherents of Islam. The remainder of the population practice various indigenous religions.

Customs/Traditions/Manners/Habits:

Culture: The most significant area of Ethiopian culture is in the field of literature, represented predominantly by translations from ancient Greek, Arabic, and other languages into the ancient Geez and modern Amharic. Most of the works are theological or mythological in nature. Secular literature is largely confined to history. Ecclesiastical architecture is relatively rich because of the early advent of Christianity in the country. Such structures and their frescoes usually show both Byzantine and Coptic influences. Of the folkcraft, silversmithing is remarkable for the imagination and the skill it entails.

Family: Ethiopian familes are very strong, tending to be large with the work divided among mothers, fathers and children. While the fathers are tending the fields, the women are working in their home compounds making nearly all the food and clothing for their families. The Ethiopian extended family exemplifies a deep significance and emotional closeness and importance of the group as opposed to individualism. In some cities or provinces in Ethiopia it may be more common for women to participate in the paid work force than others. Servants and extended family are used to look after children. Many people live in family compounds on the land they work rather than in large villages. People may also belong to larger social groups which have particular significance for ceremonies and rituals associated with marriage and burial. Weddings and funerals are significant ceremonies with large numbers of guests and much food and drink provided.

Food: Ethiopian food is the ultimate in spicy cookery, not only because the food is hot, but also because of the abundance of spices used. Since the 1400's, traders have introduced some non-indigenous ingredients that have added to what we now know of as authentic Ethiopian cuisine. From Portugal came chile peppers, and from the Orient, ginger. India too introduced exotic spices to Ethiopian cuisine.

Although complex in nature, Ethiopian cuisine is simple to prepare. Many of the traditional dishes are stews, one-pot-meals. Berbere, a red paste made up of a multitude of spices and herbs, is a necessary element of Ethiopian cooking. Another important ingredient is butter that has been flavored with onions, garlic, ginger, and spices called niter kebbeh. Wat -- which means stew -- is the traditional Ethiopian dish. Wat can be prepared with chicken (doro) or beef (sik sik). It can also be vegetarian or even contain fish. Wat is a rich red stew stained by paprika that is fiery hot. Chicken wat also contains hard boiled eggs which impart the powerful wat color and flavors. Traditional bread, called injera, is used in place of utensils. Injera is a thin but spongy flatbread as large as a tabletop. It is made from locally grown teff -- the smallest grain in existence. Ground teff is mixed with water and allowed to ferment, then cooked as you would pancake batter over flat clay griddles. Legumes form an integral part of the vegetarian meal. Common legumes include lentils and chick peas. The cooked legumes can be eaten as salads, seasoned with chilies and ginger. Or dried legumes can be ground into flour and used as the base of vegetarian fritters.

Ethiopian drinks are made from local ingredients. Tej is an ancient honey-based wine that often initiates a meal. Talla is a beer made from local grain that often accompanies a snack of nuts or crackers. Lastly, coffee finishes off a traditional meal, sweetened with honey.

Coffee Ceremony

Coffee is Ethiopia's gift to the world. Legend has it that a young Abyssinian shepherd noticed to his amazement that his goats pranced in an unusually frisky manner after chewing bright red berries from a tree. The shepherd too tried the berries and greatly enjoyed their stimulating effect. A monk passed by and observed the boy in that invigorated state and decided to try the berries for himself. Needless to say, he felt quite alert during night prayers. Soon the news spread and all the monks in the area were chewing the berries before their nightly supplications.

There is a consensus among historians and botanists that coffee is indigenous to Ethiopia. Etymologists interpret "COFFEE" as a derivative of the province of Kaffa where it still grows wild. From Ethiopia, coffee spread to Arabia, India, Ceylon, Java, Brazil, Colombia and then back to African countries such as Kenya and Tanzania. Some scholars have found enough facts to prove that the beverage was known in Ethiopia since ancient times.

Coffee still plays an integral role in Ethiopia's daily life and economic well being. It is the country's main export and in all U.S. coffee shops we can enjoy Ethiopian blends from Sidamo, Harar, and Yirga Chafee. It is in the experience of the coffee ceremony, however, that we realize the real power of Ethiopian coffee. One, two and sometimes three times a day, the mother of the Ethiopian household invites the family and neighbors for "buna" (coffee). This is a special time when people are bound together and transcend their daily life. A colorful rug or mat is spread on the floor of the home delineating the sacred space for this ritual. Fresh long green grass called "goosgwaze" and flowers reminding us of our connection to nature and the earth are strewn over the mat. The finely crafted "rekebot" (coffee cup stand) eagerly supports the little handleless cups, "sini", patiently waiting to be filled with the freshly brewed coffee. This ceremony generally lasts from 1 to 2 hours. First the green beans must be roasted either over an open fire or on a small charcoal burner. Each crackle is a bean opening itself up to release its rich provocative essence to tantalize our senses. When the beans have been roasted precisely to the right color, the mother moves around the room with the "baret metad" (the roaster), inviting guests to gently coax the smoke towards themselves with their hands and become one with its enticing aroma. The beans are then crushed with "mukecha" and "zenzena"( mortar and pestal) into fine grains ready to be sacrificed in the boiling water of the "jebena", the black clay coffee pot. Occasionally, a pinch of cinnamon, cloves or cardamom will be added to produce a delightful subtle flavor. At the right boiling point, the pot is taken from the heat and placed in the "matot" (its holder) allowing the grounds to settle. "Itan" (incense) is placed on the "girgira" (little clay holder) supporting a live red hot coal. Permeating the entire room and our senses , this holy smell transports guests into a deeper realm of being. In some areas of Ethiopia, it is believed that the smoke of the incense will carry out any bad spirits that are in the home. "Yebuna kourse" (popcorn or bread) is prepared to be passed with the coffee. The youngest child is summoned to stand ready to bring a cup of coffee to the eldest in the room as well as to all others, thus connecting all generations. Gracefully pouring a thin golden stream of coffee into each little cup from a height of one foot without an interruption requires years of practice. If the cups are placed properly when the pouring commences, even they will ring overjoyed in being filled with this heady elixir. Sugar may be added or in the countryside, salt. Holding the little heated cup requires finger dexterity and reminds viewers of the Ethiopia proverb, "Coffee and love taste best when hot." The atmosphere of the coffee ceremony moves guests to share their thoughts and feelings as well as concerns for the family, neighborhood gossip and community events with those present. A real warm human binding occurs that runs deeply throughout Ethiopian society. Transformation of the spirit takes place during the coffee ceremony.

Aesthetics:African aesthetics generally has a moral basis. This indicated by the fact that in many African languages the same word means "beautiful" and "good". This is consistent with the use and meaning of African art that it should be both beautiful and good, because it is intended not only to please the eye but to uphold moral values. The ethical and religious basis of African art may explain why the principal subject is the human figure; African art often appears in ritual contexts that deal with the vital moral and spiritual concerns of the human condition.

Social Behavior: Handshaking is most appropriate for males and females when meeting strangers. If the same people meet more than once a day, it is customary to shake hands at each meeting. It is polite to shake both hands of elders. Friends usually greet each other with a kiss three times on opposite cheeks. Closest neighboring people get together for a coffee, at least once a day.

Class: Social definitions based on wealth, class, and power have always been present in Ethiopia, but this has begun to change with education and urbanization. Social stratification is related to the status given to various occupations and wealth. Traditionally the most preferred occupations have been those in government, the military, the clergy and farming. Occupations such as metal working, weaving, tanning, and pottery, have traditionally been despised. Family names are used for identification and record purposes. Children take their father's names as their second name. When girls marry they change titles, but keep their father's names.

Gender Issues: Men and women have distinct roles in Ethiopia. Traditionally, men are responsible for providing for the family and handling family contact with the world outside the home. Women's roles are to clean the house and take care of the children. Education levels and professional attainment of women, however, will vary from province to province, and between cultural groups. Education is mainly dependent on proximity to towns or cities, social class, economic situation and cultural and local norms. In cases of occupation women take secretarial, typing or nursing, etc., jobs whereas men take managerial, clerical, engineering or mechanical, etc., jobs.

Courtship and Marriage: Based on interviews, relationships between young men and women are generally conducted in secret, until they are ready for marriage. Sex is a taboo subject and a women's virginity is very highly valued, with the whole family being shamed if she is not a virgin at marriage. To enforce this value, female circumcision is still practiced by some groups, although there have been successful attempts in different areas to remove the practice. Divorce is possible, however, resolution is attempted first. Inter-religious marriage is not usually tolerated. In the past, arranged marriages were common. While this is not usually practiced now, it is important to marry someone the family approves of. Among the Muslim communities, husbands may have more than one wife and large numbers of children are traditionally considered to be a sign of status. In Muslim marriages in the east of Ethiopia women own nothing and do not have protection of their rights, whereas in Muslim marriage in the north, women are considered equal; so the position of women is a matter of culture as well as religion. If the husbund of a Muslim woman dies, it is the responsibility of the husband's brother to take care of the wife and family and possibly marry the widow.

Clothing: Ethiopian women traditionally wear white dresses, while men wear white tunics over riding pants. A large white cloth worn by both men and women over their shoulders is the distinctive part of Amharic and Tigrayan dress which is usually worn on special occasions. A heavy cloth called gabby is worn for warmth whereas a light cloth known as gauz (natella) is worn for dress occasions. The natella usually has a very colorful border on it, which is also found near the bottom hem of the women's dress. A wide variety of clothing can be seen in Ethiopia ranging from loin clothes to the latest fashion.

Business Culture - Protocols, Greetings, etc.

People usually greet each other by bowing heads. A greeting in Ethiopia can be a long and lively process-the longer the greeting, the closer the friends. Another custom is to kiss the cheeks of your friend three times when you greet them.

Business persons should wear suits and ties for business visits. English is widely used for trade purposes but Italian and French are also useful. Nonetheless, knowledge of a few words of Amharic will be appreciated. Some of the more useful are Tena Yistillign - 'Hello'; Ishi - 'Yes'; Yellem - 'No'; and Sint new - 'How much is this?' Normal courtesies should be observed and business cards can be used. Best months for business visits are October to May. Office hours: 0800-1200 and 1300-1700 Monday to Friday.

The Ethiopian calendar year consists of 365 days and is divided into twelve months of thirty days each plus one additional month of five days (six in leap years). Ethiopian New Year's falls on September 11 and ends the following September 10, according to the Gregorian (Western) calendar. From September 11 to December 31, the Ethiopian year runs seven years behind the Gregorian year; thereafter, the difference is eight years. Hence, the Ethiopian year 1983 began on September 11, 1990, according to the Gregorian calendar, and ended on September 10, 1991. This discrepancy results from differences between the Ethiopian Orthodox Church and the Roman Catholic Church as to the date of the creation of the world.

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Marketing Strategy

The Government of Ethiopia is committed to ensuring that private capital plays a significant role in the economy. As a result, it has eliminated discriminatory tax, credit, and foreign trade treatment of the private sector, simplified administrative procedures, and established a clear and consistent set of rules regulating business activities. In June 1996, the Government revised its investment code. The Investment Office of Ethiopia was up-graded to the Ethiopian Investment Authority. The new investment code opens all sectors except large-scale energy projects, transport and financial services to foreign investment. More specifically, the new investment code, eliminates deposit requirements, provides additional incentives for development-related investments, reduces capital entry requirements for joint ventures and technical consultancy services, creates incentives in the education and health sectors, permits the duty free entry of capital goods (except computers and vehicles), opens the real estate sector to expatriate investors, allows investment in government rated hotels by foreigners, extends the losses carried forward provision, cuts the capital gains tax from 40 to 10 percent, and gives priority to investors in obtaining land for lease. Due to the a chronic shortage of foreign exchange, franchising and direct marketing/investment are difficult. Foreign investment inflows through joint ventures, however, are promoted and encouraged by Ethiopia.

Entering the country by means of a joint venture would allow for the transfer and adaptation of needed technology and know-how into the country. Investing in Ethiopia will improve the country's foreign exchange position. A joint venture would allow for the utilization and development of the country's resources, including the generation of local employment opportunities. Lastly, a joint venture would allow for the development of forward and backward linkages, and increased added value in various economic sectors.

Highway construction equipment, construction materials, road maintenance equipment, and rural infrastructure development services were among the numerous materials/services listed as essential items on Ethiopia's priority list for potential investors. As this analysis of Ethiopia reveals, infrastructure is poor and consequently hinders economic development and urbanization. Accordingly, I chose to market in Ethiopia supplies/services that would facilitate an improved infrastructure.

Market segmentation would include the entire country, particularly rural areas. Rural areas are the poorest and least developed and are generally isolated from the urbanized cities. As research has revealed, Ethiopia discourages direct investment and franchising and prefers joint ventures instead for reasons stated above. In addition the reasons already stated, Ethiopian citizens would acquire valuable management and business practices from American businesses. Presently Ethiopia is politically unstable and is warring with its former ally, Eritrea. Also, the numerous different cultures and languages (over 80) would be an obstacle to foreign investors considering direct investment, for example, vs. joint venture. Competition is anticipated to be great for infrastructure products and services since Ethiopia is a very poor, underdeveloped country that presents vast opportunities for first-movers. The products might require local adaptation for the Ethiopian topography which is very rugged and mountainous. Distribution channels present a challenge to any investor because of the lack of an adequate infrastructure system (poor roads and limited air transport) and the absence of a port (Eritrea's port was historically used by Ethiopia prior to the present feuding). Lastly, the products and services could be promoted via Ethiopia's government-owned mass media (radio, television, and newspaper) and privately-owned magazines and newspapers. Since competition is thought to be great, advertising should be intense emphasizing quality, price, and loyalty and commitment to the Ethiopian people.

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Webliography


  1. Wube's Page, (Sept 21, 1998).   "Ethiopia"  
  2. Bank of America, (1995).   "Ethiopia Trade Regulations and Standards."  
  3. Library of Congress, (1999).   "Ethiopia, A Country Study."  
  4. US Department of State, (March, 1998).   "Background Notes."  
  5. U.S. Embassy, (1998).   "Country Commercial Guide: Ethiopia."  
  6. Capitals.Com, (1998).   "Ethiopia."  
  7. Bureau of Consular Affairs, (Oct, 1998).   "Ethiopia - Consular Information Sheet."  
  8. U. S. Embassy, Addis Ababa , Ethiopia, (1998).   "GUIDE ON HOW TO DO BUSINESS IN ETHIOPIA."  
  9. USAID, (1998).   "Ethiopia."  
  10. UNION-TRANSPORT, (1999).   "Ethiopia."  
  11. University of Virginia, (1998).   "AFRICAN ART: AESTHETICS AND MEANING."  
  12. Quick Maps, (March, 1999).   "Ethiopia."  
  13. Custom House Currency Exchange, (1999).   "Currency Converter."  
  14. Central Intelligence Agency. (1997).  The World Factbook 1997. (Pittsburgh, PA: Superintendent of Documents) :  Pages 150-152(s). 
  15. Skabelund, Grant P. (1995).  Culturgrams: The Nations Around Us. ( Brigham Young University) :  Pages 69-72. 
  16. Remington, Renee F. (1996).  1996/1997 Exporters' Encyclopedia. (Baltimore, MD: Dun & Bradstreet) :  Pages 2-446 to 2-455. 
  17. Demessie, Laeke Mariam. (1998). "Ethiopia Stuck in Telecoms Stone-Age." African Business, N 228, (Jan) :  Page 25.
  18. Pawson, Lara. (1996). "Policy To Please." African Business N 215(Nov) :  Page 32.
  19. Lycett, Andrew. (1996). "Rolling Back The State." African Business, N 206 (Jan) :  Page 24.
  20. 1997 Superintendent of Documents. (1997). "Ethiopia, the Second Most Populous Country in Africa, Offers Many Business Opportunities for American Firms." Business America, V 118, (Aug) :  Page 13.
  21. Author last name, first name. (Year of Publication). "Title of the Article." Name of the Journal, Magazine, Volume Number, Issue Number, (Month of Publication, if any) :  Page Number(s).
  22. Author last name, first name. (Year of Publication). "Title of the Article." Name of the Journal, Magazine, Volume Number, Issue Number, (Month of Publication, if any) :  Page Number(s).

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E-mail

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� e-Guide developed by World W. Web on April 22, 1999