KEY SECTORS / agro-processing
The opportunity to serve a growing domestic FMCG market and gain access to regional and international export markets
biggest producer of wheat in Africa
largest producer of tropical fruits in Africa
largest livestock population globally
largest producer of sesame globally
in chicken population in Africa
Ethiopia has the potential to become a major player in the agro-processing industry in Africa. Local demand is far from being satisfied as the country continues to import a large amount of perishable goods. In 2021, the imported value of processed agricultural products reached US$4.7 billion. This represents a major cost for a country that is already a major producer of several crops, pulses and oilseeds and a large exporter of horticulture produce. Among the major imported processed agricultural foods are edible oil, refined sugar, malt barley, processed fruits, pasta and macaroni, and milled rice.
Ethiopia’s growing population of over 116 million represents an attractive market for companies in the food and beverage industry. This large market—the second largest in Africa—is enhanced by a growing urban demographic, an emerging middle class and increasingly health-conscious consumers. Agro-processing has the potential to improve food supply in the Ethiopian FMCG market and foster industrial growth. In addition to tackling import-substitution opportunities in Ethiopia, investors have the opportunity to gain access to key export markets by leveraging Ethiopia´s air connectivity, which presently provides access to 116 international major destinations.
In addition to access to attractive markets, investors in the agro-processing sector will also benefit from conditions that make Ethiopia an efficient production location. Low production costs (for land leases, electricity, etc.) and available and relatively skilled and semi-skilled labor are additional factors that give investors in Ethiopia a competitive edge.
Diverse opportunities, attractive potential
Investors are invited to explore various attractive opportunities in agro-processing.
Recognizing the immense potential of agro-processing in Ethiopia, global companies are already expanding to Ethiopia. For example, Invivo Group recently inaugurated Soufflet Malt Ethiopia at Bole Lemi Industrial Park (on the outskirts of the capital, Addis Ababa) at a cost of €60 million.
Production of Edible Oils
Production of edible oils: Ethiopia produces a variety of oilseeds including sesame, soybean, niger seed, ground nuts and linseeds—all with an immense potential for oil processing. Demand for edible oil in Ethiopia is increasing by 12% each year and is currently estimated to reach over 850,000 metric tonnes (MT). Meanwhile, supply—both imported and locally processed—is 550,000 MT, creating a gap of more than 300,000 MT. Currently, 95% of supply is met through imports at an annual cost of over US$650 million—presenting a huge import-substitution opportunity.
Tropical Juice and Juice Concentrate Processing
Tropical juice and juice concentrate processing: Although Ethiopia’s per capita consumption of fruit is relatively low, an increasing awareness of the nutritional benefits of fruit is changing the landscape. Like edible oil, the packed-juice market is dominated by imports. Ethiopia spends more than $17 million each year to import juice. The current addressable local fruit juice market is estimated to be worth over $100 million, and 40% is left unmet.
Avocado processing and export high-end avocado oil to the European market while supporting the growth of avocado production by working with smallholder farmers in Ethiopia.
Poultry processing: Ethiopia has one of the largest chicken populations in Africa but is lagging in per capita consumption of eggs and chicken meat; its African peer countries often consume two to 10 times more. This is an indication of the considerable potential that the Ethiopian market holds. Urbanization, increasing incomes, and the emerging nutrition-conscious low- and middle-class communities in Ethiopia are expected to significantly increase demand in the short term. Investors in poultry processing can reap the economic benefits resulting from these changes.
Animal Feed Production
Animal feed production: Ethiopia has an attractive market for animal feed production, with an unmet domestic demand estimated at US$150 million. In addition to local supply, Ethiopia-based investors have a strategic locational advantage to compete internationally. Ethiopia is centrally located in the global economy and has proximity to the key markets of Africa, the Middle East, and Europe. The value of the animal feed markets in East and North Africa alone is estimated at over US$3 billion, and the markets are largely import-dependent.
Tomato processing: Demand for processed tomato is increasing by 15% annually, and 55% of supply is imported. The current addressable market for processed tomato (paste + ketchup) is estimated to reach 25,500 MT—creating a demand supply gap of about 14,000 MT on which investors can capitalize.
Paving the way for investors
The Government of Ethiopia is highly committed to sustainably increasing agro-processing outputs. In 2020, Ethiopia’s Foods and Beverages Processing and Auxiliary Industry Strategy was launched with the objective of driving the agro-processing agenda to meet growing demand for food and inputs for industries. In addition, as the sector promises potential foreign currency earnings, it is considered a priority sector for development. The government has been investing in infrastructure, institutional reforms, inclusive markets, and innovation and extension services while creating an enabling environment for private sector investment. Agro-industrial parks developed in different corners of the country offer a ‘plug and play’ opportunity, allowing investors to quickly set up their factories and start operation.
agro processing TESTIMONIAL
“The investment by Invivo Group at Ethiopia’s Bole Lemi Industrial Park that we inaugurate today is commendable.… Ethiopia stands ready to welcome and create an enabling environment for committed investors interested in operating at such a large scale”.
H.E. Dr. Abiy Ahmed, Prime Minister of the Federal Democratic Republic of Ethiopia
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