Green Competitiveness in Ethiopia

Investment Rating - The report does not explicitly provide an investment rating for the industry but emphasizes the critical importance of green competitiveness for Ethiopia's economy, particularly in the context of sustainability regulations and climate change impacts. Core Insights - Environmental and climate factors are increasingly shaping Ethiopia's economic competitiveness, with significant implications for key sectors such as coffee, textiles, cut flowers, and aviation [20][21][25] - The report highlights the urgency of addressing sustainability challenges, particularly in the coffee sector, while also identifying opportunities for growth through renewable energy and vertical integration in value chains [25][30][32] Summary by Sections 1. Assessing Green Competitiveness in Ethiopia - The report provides a high-level assessment of how climate change and environmental degradation impact Ethiopia's economic competitiveness, particularly in critical sectors [20][21] - It notes that Ethiopia has lost economic momentum due to various crises, including the suspension of duty-free access to the U.S. market [20] 2. Supply-Side Impacts from Climate Change - Ethiopia's economy is highly vulnerable to climate change, with projected cumulative economic losses expected to rise significantly by 2030 [22][26] - The report discusses direct impacts on agriculture and indirect effects on production, such as supply chain disruptions and hydropower generation [22][26] 3. Demand for Sustainability - A growing number of sustainability requirements in key export markets are reshaping market access conditions for Ethiopian firms [22][23] - The report emphasizes the need for Ethiopian firms to strengthen links with international buyers to comply with sustainability regulations [22][23] 4. Sectoral Analysis - Coffee: The coffee sector faces significant climate risks and regulatory pressures, particularly from the EU Deforestation Regulation, which could jeopardize over 10% of Ethiopia's export revenues [28][29] - Textiles and Apparel: The sector is under pressure to improve sustainability practices, with a focus on reducing environmental impacts and enhancing local value addition [30][31] - Cut Flowers: The cut flower industry benefits from favorable climatic conditions but faces sustainability challenges related to waste management and transportation [31] - Aviation: Ethiopian Airlines contributes significantly to the GDP but must navigate the challenges of decarbonization and regulatory compliance in the aviation sector [32] 5. Conclusion and Policy Recommendations - The report recommends establishing a coordinating mechanism to track and analyze compliance with sustainability regulations, enhancing Ethiopia's national quality infrastructure, and promoting private sector adoption of standards [33][34][35]