Africa’s biggest coffee producer has revised rules to allow foreign companies to buy the commodity directly from farmers and processors, the latest in reforms to liberalize East Africa’s biggest economy.
Until now Ethiopia — which prides itself as the birthplace of coffee — required buyers such as Starbucks Corp., Volcafe Ltd., Louis Dreyfus Co., Olam International Ltd. and Sucafina SA to purchase shipments from local companies.
Controls have also been lifted off other commodities including oilseeds, pulses, hides and skins, forest products, poultry and livestock, but not on fertilizer, which Ethiopia subsidizes.
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“The sectors were reserved for local investors to protect and encourage them,” said Hanna Arayaselassie, head of the Ethiopian Investment Commission. “However, we did not see as many local companies engaging with these businesses as we had hoped, nor did we see many local companies upgrading themselves and getting involved in the manufacturing sector.”
Foreign traders that purchased at least $10 million’s worth of coffee annually for the past three years will qualify for the permits, according to the new directive.
The country produced 833,000 tons of coffee last season, according to the Ethiopian Coffee and Tea Authority, making it the continent’s leading grower. About half of the produce is usually consumed in the nation of about 120 million people.
In the past season, Ethiopia exported beans valued at $1.3 billion. The sales account for as much as 40% of the country’s export revenue.
Once-socialist Ethiopia is opening its economy through reforms including allowing foreign investment into financial services and telecommunications.
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