Economic
Activities
Types, Importance,
Challenges and Solutions of
economic activities in
Ethiopia
1)Primary economic activities
• operations directly utilize natural resources
• Workers in this field, referred to as red-collar workers
• In 2021, primary activities accounted for 50% to 60% of
occupations in low-income countries, making them the dominant
labor market segment in developing nations.
1.1 Agriculture
• Agriculture, the cultivation of soil, crops,
and livestock, is vital to Ethiopia's
economy, contributing 35.79% to GDP.
• 95% of farmers are smallholders
• rain-fed farming, traditional farming
practices, follow seasonal cycles
Challenges of agricultural sector
Land Climate change Political Market and
degradation and disturbance Supply Chain
deforestation Inefficiencies
Climate resilient agriculture
Solutions to Technological Innovations
strengthen
agricultural Utilization of Degraded and
economy Marginal Lands
Policy and institutional support
1.2 Forestry
• art and science of
protecting, conserving,
and managing forests
• estimated 4% to the GDP
through the production of
honey, forest coffee,
natural gums, and timber.
• enhances agriculture,
employs millions, drives
eco-tourism
Deforestation and forest
Challeng degradation
es Climate Change Impacts
forestry
sector Weak policy enforcement
faces
Natural Disasters
Strengthening Sustainable
Forest Management
Solutions
for Restoring land
forestry Developing Sustainable Energy
Alternatives
Enhancing Market Access and
Value Addition
1.3 Mining
• a process of extracting useful minerals from
the surface of the Earth
• contributed less than 1% to Ethiopia’s
economy
• the Legadembi Gold Mine, Ethiopia’s largest,
and the Danakil Potash Project, which has the
potential to become one of the world’s
largest potash producers.
• contributes to foreign exchange earnings and
job creation
• Infrastructure and Power Supply
Challeng • Shortage of Skilled Professionals
• Overreliance on gold
es faced • Terrorism and Violence
by mining • Environmental Impact.
sector
Solutions •Lower-Impact Mining Techniques
to •Reusing Mining Waste
•Rehabilitating Mining Sites.
enhance •Shutting Down Illegal Mining
the •Adding value to the minerals like
developing Tantalum Refining Plants in
Kenticha
mining
sector
1.4 Fishery
• catching, breeding, and
harvesting fish from its inland
water bodies
• 194 native, 40 endemic, and
11 exotic fish species
• Ethiopia's annual fish
production potential is 94,500
tons, but actual exploitation is
38,370 tons.
• approximately 0.02% to
0.05% of Ethiopia's GDP
Sedimentation and Weed Growth
Challenge Illegal Fishing Methods
s
hindering Post-Harvest Losses
the fishery
sector Infrastructure and Market Gaps
Infrastructure Development
Solutions Strengthening Policies
to develop
fishery Research and Monitoring
Capacity Building
2)Secondary economic activities
• refers to industries that process, transform, and manufacture raw
materials into finished products, adding value to natural
resources
• These activities include manufacturing, processing, and
construction.
• Workers in this sector are known as blue-collar workers
2.1
Manufacturing
• It remains underdeveloped in
Ethiopia, accounting for only
4.4% of GDP in 2022
• 18 operational industrial parks
by 2023.
•Ethiopia has made progress in
light manufacturing exports,
especially textiles and leather.
• However, these exports remain
small, with most production
serving domestic markets.
Dependency on Imports for Raw Materials
Challenges
affecting Limited Infrastructure
the Security and Political Instability
manufacturi
ng sector
shortage of skilled workers,
underutilization of capacity
Minimal participation in global value
chains
Developing Domestic Supply Chains
Solutions to Strengthening Industrial Parks and
enhance Attracting Investment
manufactur Boosting Export Capacity and
ing
Diversification
Enhancing policy frameworks,
developing a skilled workforce, and
leveraging technological innovation.
3)Teritary economic activities
• Encompasses the production of services instead of end goods
that meet the needs of individuals.
• Can be profit or nonprofit segment
• white-collar workers or pink-collar workers.
3.1) Transportation
Road: Railway: is less Air transport:
most available and common, with the very important for
widely used mode of biggest one being international trade
transportation Addis Ababa-Djibouti and tourism, most
Railway expensive
3.2
Communicati
on
• In Ethiopia, communication
channels include traditional
media (television, radio,
newspapers), mobile phones,
and the internet.
• Enables sectors like education,
tourism, and healthcare to
expand by providing wider
access to services, information,
and global markets.
• Transportation and
communication together
3.3 Trade
• Ethiopia’s trade deficit has been widening, with
total imports rising by more than 12% annually on
average during the last 11 years.
• The majority of Ethiopia’s imports come from Asia
(61%, with 40% originating from China) followed by
Europe (25%), and the Americas (8%, the vast
majority (89%) originating from the United States),
and other countries in Africa (7%).
• Exports contribute around 6.59% of Ethiopia's GDP,
amounting to approximately $10.79 billion in 2023.
Major exports include: coffee, fresh-cut flowers,
fresh vegetables
• The top imported commodities include Palm oil,
3.2 Tourism
• Ethiopia’s rich cultural heritage,
wild life and national parks makes
it great tourist destination
• For foreign exchange and job
creation, such as in services like
hotels, transportation, and
cultural activities
• Contributes to 4.2% of
Ethiopia's GDP, yet the country
remains under-developed in its
tourism sector compared to its
potential
Underdeveloped Infrastructure
Limited Access to Communication Services
Challenges
Trade Barriers and Logistical Inefficiencies
Faced by the
Service Political Instability and Conflict
Sector
Currency Volatility and Foreign Exchange
Shortages
Lack of Developed Tourism Industry
Solutions to Enhance the service sector’s economy
contribution to Ethiopia
Expansion of
Infrastructure Liberalization Internet and
Improvement and Competition Mobile
Connectivity
Trade Facilitation
Diversification of Promotion and
and Regulatory
Export Products Marketing
Reforms
4)Quaternary economic activities
• specialized tertiary activities
• knowledge-based services that require expertise, intellectual
skills, and specialized information.
• Examples include Research and development (R&D), education,
information technology (IT), financial planning, consulting, and
media
5)Quinary economic activities
• represents the highest level of economic activity, centered
around decision-making, innovation, and leadership
• These are the CEOs running major corporations, the scientists
pushing the boundaries of knowledge, and the policymakers who
influence laws and global strategies
• require years of education, experience, and often, a visionary
approach to solving complex challenges.
• Sometimes referred to as “Gold Collar Workers”
Economic Activity and
Social Health
Overall
importance Economic Activity and
of economic Political Stability
activities
Economic Activities and
Sustainable Growth
Thank You!
December 24, 2024
