Ethiopia country overview

The economy of Ethiopia

Geography, People, Culture, and Economic Profile

Ethiopia information index

Resources of Ethiopia

The role of minerals in Ethiopia’s economy is relatively small, with only gold and tantalum holding significant importance. Gold is extracted from Kibre Mengist in the southern region, platinum from Yubdo in the western region, and tantalum from the south-central part of the country. Other minerals such as gemstones, niobium, and soda ash are also mined, with potential for the exploitation of additional mineral resources, including petroleum and natural gas. Additionally, rock salt from the Denakil Plain and quarried building materials like marble are important contributors. However, despite its potential, this sector makes a minimal contribution to the country’s economy, accounting for less than 1 percent of GDP.

Hydroelectricity plays a crucial role as the primary source of power for industries and major cities in Ethiopia. It is generated at various stations, including those located on the Awash River, the Blue Nile River and its tributaries, the Omo River, the Gilgel Gibe River, and the Shebele River. However, these stations only represent a portion of Ethiopia’s full hydroelectric potential, with plans for further development. Some hydroelectric projects, such as the Gilgel Gibe III dam and power station along the Omo River, which was inaugurated in 2016, and the Grand Ethiopian Renaissance Dam (GERD) and power stations along the Blue Nile River, construction of which began in 2011, have sparked significant controversy. The filling of the GERD reservoir, scheduled to occur over several years during the rainy season, commenced in July 2020, and power generation began when the first of 13 turbines was activated in February 2022.

In rural areas, the majority of energy for domestic use is derived from firewood and charcoal, leading to strain on the country’s remaining wood resources. Ethiopia’s long-standing reliance on these sources has resulted in the depletion of trees and soil erosion. The government’s ongoing expansion of hydroelectric power generation aims to improve access to electricity in rural areas and facilitate electricity exports to other countries.

Ethiopia, relies heavily on imports to meet its petroleum needs. The main sources of these imports are Sudan and Djibouti, two neighboring countries with established oil industries. Sudan, located to the west of Ethiopia, is a major oil producer in the region, making it a convenient supplier for its landlocked neighbor. Djibouti, situated to the northeast of Ethiopia, serves as a key transit point for imported oil, thanks to its strategic location along the Red Sea and the Gulf of Aden. Despite its lack of domestic oil production, Ethiopia has successfully managed to secure a steady supply of petroleum through its trade relationships with Sudan and Djibouti. This reliance on imports underscores the importance of maintaining strong diplomatic and economic ties with these neighboring countries. Additionally, it highlights the need for Ethiopia to explore alternative energy sources and invest in sustainable energy solutions to reduce its dependence on imported oil in the long term. In conclusion, Ethiopia’s dependence on imported petroleum underscores the country’s vulnerability to fluctuations in global oil prices and supply disruptions. Moving forward, it will be crucial for Ethiopia to diversify its energy sources and invest in renewable energy technologies to ensure energy security and sustainability for its growing population.

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