Ethiopia's Exports Grow, But It Trades Little With Its Own Continent

Ethiopia's Exports Grow, But It Trades Little With Its Own Continent

Jun 27 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Ethiopia’s exports to other African countries surged to 940 million dollars in 2025, marking an increase of nearly three-quarters from the previous year. Alongside 1.19 billion dollars in continental imports, the total two-way African trade reached 2.13 billion dollars. Despite this rapid growth, regional trade remains a narrow sliver of Ethiopia's economic footprint, representing over two percent of its 25 billion dollars in total global trade. The little continental integration contrasts sharply with the broader economic momentum reported by the African Export-Import Bank.

Ethiopia is selling more to the rest of Africa than ever before. The trouble is that "more" still adds up to remarkably little.

Exports to the continent jumped in 2025, yet trade with Ethiopia's neighbours remains a sliver of the roughly 25 billion dollars in trade flows directed largely to the rest of the world. According to the latest annual trade report from the African Export-Import Bank (Afreximbank), the country's exports to other African countries grew to 940 million dollars in 2025 up from 540 million dollars a year earlier, a jump of nearly three-quarters.

Imports from continental neighbours reached 1.19 billion dollars. Together, the two flows make up 2.13 billion dollars in two-way trade with the continent, which the Cairo-based institution places at over two percent of Ethiopia's total global trade. The thinness sits awkwardly alongside Ethiopia's portrayal in the same report as one of Africa's standout performers. The Bank named the country the fastest-growing large economy in Eastern Africa, estimating 2025 expansion at 9.2pc and crediting industrial output and a sweeping macroeconomic reform programme.

The figure caps a climb from 6.4pc in 2022 to 7.2pc, then 8.1pc, in the two years that followed.

The reform dividend shows elsewhere. Inflation, which topped 30pc as recently as 2023, eased to 13.2pc in 2025 from 21pc the year before, a slowdown the Bank attributed to tighter monetary policy and the fading effect of earlier devaluations. The reading is close to the 13.4pc recorded by independent analysts at Secure Africa Partners for May 2026. Foreign-exchange reserves, nearly depleted two years ago, recovered to 6.8 billion dollars, according to the Bank's estimate, enough to cover about three months of imports.

However, the cost of adjustment fell on the Birr, which weakened to an average of 138.4 Br to the dollar in 2025 from 83.1 Br a year earlier, and inched up to 157 Br last week, a result of a market-based exchange rate.

Ethiopian authorities have filed tariff schedules under the African Continental Free Trade Area (AfCFTA), and the Afreximbank lists it among regional "champions" whose domestic demand helped lift total intra-African trade by 5.47pc to 213.8 billion dollars. South Africa, it notes, has used Ethiopia's compliance to expand preferential exports of machinery and chemicals.

Still, Ethiopia imports far more than it sells, and mostly from outside Africa, which supplies few of the inputs its industrialising economy needs. The country exported 5.36 billion dollars in goods globally in 2025, nearly double the previous year, while importing 20.17 billion dollars, resulting in a merchandise trade gap of roughly 15 billion dollars.

As a net oil importer hungry for capital goods, fuel, fertiliser and intermediate inputs, Ethiopia, alongside Egypt, Iran and the United Arab Emirates (UAE), has joined the enlarged BRICS grouping as a newer member. According to Afreximbank, the move is part of a broader African turn toward South-South cooperation, a hedge against Western protectionism and an effort to diversify beyond traditional markets. The Bank also flagged Washington's "America First" reciprocal tariff framework, rolled out across 2025 and 2026, as a direct threat to textiles and apparel, sectors it called "vital" to export earnings and household incomes in countries such as Ethiopia and Lesotho.

The official account is more upbeat. According to George Elombi, president and chairman of the board of the African Export-Import Bank, Africa's current policy choices will shape the opportunities open to its young population, the competitiveness of its firms and the continent's place in global value chains.

Not everyone accepts the report's assertions. According to an industry insider, Afreximbank's figure of a 15 billion dollar deficit does not align with the Central Bank's latest data. This person claimed export proceeds have risen sharply, "from eight billion dollars last year to over 10 billion dollars," with merchandise exports now covering nearly 50pc of imports.

The person, who requested anonymity due to his closeness to the administration, also questioned the assumption that conflicts such as the war in Iran would automatically widen the gap.

"Higher transport costs," he argued, "hit imports and exports alike. Both sides are likely to fall together rather than unevenly."

The same period saw a paradox, with the parallel-market rate easing to around 178 Br and 180 Br as importers struggled to secure dollars and transport in the early phase of the conflict. He was sceptical of two fashionable hopes. AfCFTA's potential remains limited, while African economies continue to produce similar primary goods rather than the industrial inputs the continent needs. Nor should BRICS be assumed to open export floodgates, given that Ethiopia has not yet assessed those markets commodity by commodity, with Brazil dominant in coffee and China focused on oilseeds.

"Most telling, Ethiopia's coffee sector faces a supply constraint, not weak demand," he told Fortune. "Buyers keep asking, but the volumes are not there."

According to Fekadu Degafe, vice governor of the National Bank of Ethiopia (NBE), a marked shift has taken hold in the external sector as reform narrows a long-standing trade gap. Commodity exports stood at 3.8 billion dollars before the reforms of the 2023/24 budget year and are projected to nearly triple to 11 billion dollars by the end of the current year. Imports grew from 18.7 billion dollars to 22.6 billion dollars, but export growth outpaced them, trimming the merchandise deficit from 14.2 billion dollars to 11.6 billion dollars, a 2.6-billion-dollar improvement, with gold and coffee the main drivers.

"The gains run beyond goods," Fekadu told Fortune.

Remittances climbed from 6.2 billion dollars to 7.7 billion dollars, and foreign direct investment jumped by about 400 million dollars, while the current-account deficit narrowed from 6.2 billion dollars to 1.8 billion dollars, a 4.4-billion-dollar swing. He disclosed that reserves have grown more than fivefold, though exports to African countries remain limited and Africa's share of Ethiopia's trade is largely unchanged.

For Mered B. Fikreyohannes, an investment advisor and CEO of Pragma capital expert, the moment is a turning point. He observed that rising import and export prices have partly offset the wider gap. Fuel imports reached six billion dollars, up by 1.5 billion dollars, while firmer global prices for gold and coffee eased the pressure. Gold alone now makes up nearly 40pc of exports. Close to 98pc of gold output remains artisanal, capping value addition. Service exports, led by Ethiopian Airlines, are projected to reach 11 billion dollars this year, helping cover energy costs.

"Ethiopia's core constraint is supply, not market access," said Mered. "Were 50 large firms to run at high capacity, gold export earnings could reach 20 billion dollars."

He warned that the present model is unsustainable, with fuel demand alone capable of reaching 10 billion dollars while reliance on raw commodities leaves the economy exposed.

PUBLISHED ON Jun 27,2026 [ VOL 27 , NO 1365]