In a significant shift, Ethiopia has revised its regulations to grant foreign companies the authority to directly purchase coffee from Ethiopian farmers and processors. This move is the latest in a series of reforms aimed at liberalizing the economy of East Africa’s largest nation.
Historically, buyers such as Starbucks, Volcafe, Louis Dreyfus, Olam International, and Sucafina were obligated to make purchases through local Ethiopian companies. However, the government has now lifted controls on other commodities as well, including oilseeds, pulses, hides and skins, forest products, poultry, and livestock. Notably, fertilizer remains excluded from this liberalization due to government subsidies.
Hanna Arayaselassie, head of the Ethiopian Investment Commission, explained that these sectors were once reserved for local investors to foster their growth and protection. However, the desired participation and advancement of local companies in these industries were not realized to the extent anticipated by the government.
To qualify for the permits under the new directive, foreign traders must have purchased at least $10 million worth of coffee annually over the past three years. Ethiopia, with its production of 833,000 tons of coffee in the recent season, is firmly established as the continent’s leading grower. Approximately half of the harvest is consumed domestically, while the remainder is exported, generating $1.3 billion in revenue and accounting for up to 40% of the country’s export earnings.
Ethiopia, once a socialist state, is actively implementing economic reforms, including opening up financial services and telecommunications to foreign investment. These measures are aimed at enhancing the nation’s economic growth and prosperity.
