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“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable” Adam Smith.
Ethiopia’s population is over 100 million, and a GDP of $86.56 billion. Agriculture accounts for 47% of the GDP and 70% of the employment. However, the service industry has surpassed agriculture as the principal source of the GDP. According to a report from the World Bank, the number of people under the poverty line ($1.25/day) is 29.6% of the population, and the life expectancy is 65 years.
The total area of the country is about 111.5 million hectares, with 74.3 suitable for agriculture. Unfortunately, only 15 million are in use. According to the Ethiopian investment agency, the irrigation potential of the country is around 4.3 million hectares, and with 14,465,000 hectares in use, that makes it .16 per hectare, per person.
The variations in rainfall patterns make livelihood critical, especially in arid areas of the world. An increase in agricultural productivity drives economic growth among the large labor force made up mostly of smallholder farmers. Increased productivity creates a surplus, which can boost investments as surplus turns into savings. Besides, an increase in income creates additional consumers, which helps expand the manufacturing sector. Therefore, an increase in agricultural and manufacturing output with the support of the financial sector hastens development in the region. However, agricultural productivity requires certain variables to stimulate growth. Subsidies to reduce fertilizer prices, government-financed, and managed credit programs, centralized fertilizer procurement, and distribution and control of output markets are fundamentals to improve agricultural productivity.
The Horn of Africa region depends mostly on the agricultural sector, and its growth needs to have linkages to industry and markets. In this regard, a clear understanding of the regional production and market systems, an in-depth scientific market and value chain analysis helps to accelerate agriculture-led industrialization by identifying bottlenecks and suitable solutions at each stage of the value chain.
On top of aiming to transform from agricultural-based to industrial-based economy, tackling youth unemployment by creating job opportunities should be a priority for all nations in the horn of Africa. One of the key pillars for employment creation and industrialization is to promote Micro and Small Enterprises (MSE) schemes. Currently, there are many initiatives on livelihood programs and projects by governments and other actors; these initiatives need to be guided by proper livelihood strategies. The livelihood programs and projects should focus on these three major pillars: Provision, Protection, and Promotion. There is also a need to consider the socioeconomic background, and scientific analysis of baseline data, to devise context-specific strategies. Moreover, the livelihood strategies need to consider the value chain analysis, market linkages, and prospective growths from micro-enterprises to small and medium enterprises, and gradually reaching to full-scale industries.
Our firm looks forward to working with investors in the production and marketing side of the agriculture sector. We are committed to supporting governments, donors, and other actors’ initiatives to transform the lives and livelihoods of small-scale farmers. CIS believes in scientific methods of addressing causes of poverty, by analyzing value chains, productivity, the income of small scale farmers, and the promotion of fair market systems.