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Ethiopia

eth map

Trading Partner:

We work with the Oromia Coffee Farmers Cooperative Union(OCFCU).

Country Statistics:


Total Population – 68 961 000
Infant Mortality Rate – 114 per 1000
Life Expectancy – 46 years
GNI per Capita – US$100

Background


Ethiopia is one of the poorest countries in the world. Late in 2003, the International Monetary Fund (IMF) and the World Bank deemed Ethiopia eligible for an additional US$700 million of “Topping Up” debt relief. Such relief is necessary to return Ethiopia to sustainability, according to the Bank and make her eligible for US$1 billion in new lending. To be eligible for this relief, Ethiopia has met with the tough economic restructuring conditions imposed through the IMF and the World Bank over a five-year qualifying process. Nevertheless, the G7 creditors have stalled the disbursement of relief – despite their own acknowledgement and rules that fully entitle Ethiopia to it. This means that Ethiopia is obliged to divert an estimated US$35 million annually to service debt repayments to much richer creditors instead of investing in hospitals, clean water and sanitation.

“We are concerned about the Bank being in a position where it is in a continual cycle of lending and forgiveness,” US Treasury officials explained in February 2004.  As the dollar worsens, the value of Ethiopia’s revenues from exports (denominated in dollars) has fallen, in contrast to the rise in the value of her debts (denominated in non-dollar currencies).
Meanwhile, the Swiss-based corporation Nestle continues to defend its demand for $6m in compensation for the 1975 nationalization of a livestock firm that was owned by Germany's Schweisfurth Group, a Nestle subsidiary, during the former communist regime.  According to Oxfam, “the Ethiopian Government has offered to pay Nestle about $1.5m (£930,000) - a figure based on the current exchange rate between the dollar and the Ethiopian birr. But the food giant is pushing for a payment of $6m, a sum based on the exchange rate in force at the time of the nationalization.”  Nestle spokespersons say: "This goes way beyond the legal case. It very important for a country like Ethiopia that people do not fear to invest." More than 40 governments and individuals are making claims against the Ethiopian Government for money lost during the communist regime, while the Ethiopian people struggle to feed themselves.
In addition to the debt burden, unpredicted circumstances have affected Ethiopia’s economic recovery and her ability to get back on a sustainable development path, including:
  • The price of Ethiopia’s major export, coffee, has fallen 73 per cent in the last 20 years, increasing the present value of Ethiopia’s debt in relation to exports by around 20 per cent.
  • The Ethiopian drought of 2003 was one of the worst in history and cut agricultural production and exports, and making large food imports necessary.


Resources:
http://www.unicef.org/infobycountry/ethiopia.html
http://www.globalpolicy.org/socecon/tncs/2002/1219nestle.htm
http://www.globalpolicy.org/socecon/develop/debt/2004/0213ethiopia.htm