Ethiopia’s remarkable economic growth has been accompanied by a substantial decline in poverty over the past years. The recent growth was driven mainly by services and agriculture on the supply side, and private consumption and investment on the demand side. Despite that, the country is one of the poorest in the world, with a rapidly growing population  .
In Ethiopia, economic activity has shifted from agriculture directly into construction and services, largely bypassing the critical phase of industrialization. To facilitate industrialization, Ethiopia has strengthened its institutional, legal and regulatory framework with a focus on promoting Foreign Direct Investment (FDI) in light manufacturing, especially in the form of industrial parks. Ethiopia’s Growth and Transformation Plan II has a goal of making Ethiopia as a manufacturing hub in Africa .
Sustaining the current economic growth, creating employment opportunities for the young, and sustainably manage the natural resources remain among the greatest challenges in Ethiopia. Moreover, keeping with the conventional economic development model of the country (business as usual) would more than double its GHG emissions. Ethiopia’s contribution to GHG emissions is very low on a global scale, however, if the conventional economic development is pursued, the projected environmental impact risks follow the pattern observed around the globe . As noted previously, in Ethiopia, the country’s economy and the livelihood of its people are highly vulnerable to climate change.
The main drivers for the projected development of the country’s economy through a business as usual pathaway are developments linked to different sectors such as agriculture, forestry, electric power, transport, industry and buildings. For instance, the cattle population is expected to increase from close to 50 million to more than 90 million in 2030 and the agricultural crop production is expected to increase from around 19 million tonnes to more than 71 million tonnes in 2030, producing an incredible increase of GHG emissions .
Rapid population growth, low level of technology and innovation, and the fact that the country’s economy and the livelihood of people are highly dependent on agriculture and land based natural resources make the country highly vulnerable to climate change. Although Ethiopia has been contributing the least to the causes of climate change, it is one of the severely affected countries by its impacts. The country has been suffering with recurrent draughts, famine, and flooding caused by climate change, which have severe impacts on the country’s economic development.
Key policies and governance approach
Ethiopia has been implementing two successive Growth and Transformation Plans since 2010 (GTP I: 2010-2015; GTP II: 2016-2020) and has recently embarked in another Ten-Years Development Plan (2021-2030). In both of the past two GTPs and the current Ten Years Development Plan, creating a Climate Resilient Green Economy has been considered as one of the pillars [3, 4, 5].
Ethiopia has been sowing global example on incorporating climate change and resilience into its development strategy. The country has been implementing the Climate Resilient Green Economy Strategy (CRGE) since 2011 and has developed Ethiopia’s Climate Resilient Green Economy National Adapatation Plan in 2019 (NAP-ETH).
The Climate Resilient Green Economy (CRGE) Strategy sets a vision for a low-carbon, resilient economy which features strongly in the GTP II. The CRGE generally aims to achieve middle-income status by 2025 while developing a green economy. The CRFE Strategy has been developed to avoid the negative impacts of the conventional development path, such as the increase in GHG emissions and the unsustainable use of natural resources . The CRGE initiative is led by the Prime Minister’s Office, the Environmental Protection Authority (EPA), the Ethiopian Development Research Institute (EDRI), and six ministries. These institutions and the relevant ministries have dedicated significant resources to the initiative and have organized the framework and process to the develop the green economy initiative.
Successes and remaining challenges
Ethiopia’s ambitious goals to become a “green economy front-runner” is an expression of its potential for and belief in a sustainable model of growth. It is a challenging task for Ethiopia to achieve its economic development goals in a sustainable way while reducing the greenhouse gas emissions. Reaching the middle-income country status will require boosting agricultural productivity, strengthening the industrial base, and fostering export growth .
In addition, building resilience is the main task for Ethiopia in order to manage climate shocks. Building resilience and expanding market access to farmers is crucial to strengthening agricultural and rural livelihoods for the bottom 40% of the population, as the severity and frequency of droughts continue to increase. Recent successes in sustainable land management practices have helped to reduce vulnerability to climate shocks, even though risks arise from volatility in seasonal rainfall. The management of the climate shocks will be rooted in national programmes and line ministries while building their capacities to respond to longer term needs and acute events .
Initiatives and Development Plans
According to the National Adaptation Plan of Ethiopia, the country is planning to develop the green economy strategy based on four pillars :
- Improving crop and livestock production practices to increase food yields, hence food security and farmer income, while reducing emissions.
- Protecting and re-establishing forests for their economic and ecosystem services, including as carbon stocks.
- Expanding electric power generation from renewable sources of energy fivefold over the next five years for markets at home and in neighboring countries.
- Leapfrogging to modern and energy-efficient technologies in transport, industry, and buildings.
To achieve successful economic transformation, Ethiopia has heavily invested in road and railway infrastructure, industrial parks, universities and the energy sector over the last decades .
To build towards the development of a green economy, the country has identified a number of initiatives mainly in the sectors (Agriculture, Forestry, Power, Transport, industrial sector and buildings) that are considered as pillars for CRGE. In the forestry sector, Ethiopia has been investing in tree planting and in the last 3 years alone, the country has planted about 16.7 billion seedlings under the Green Legacy Initiative. The country is also part of the Great Green Wall Initiative, an African-led movement with the ambition to grow an 8,000km natural wonder across the entire width of Africa. In Ethiopia, since the start of the initiative, in 2007, 15 million hectares of degraded land has been restored .
Goals and Ambitions
Ethiopia aims to achieve middle-income status by 2025 and simultaneously develop a green economy . The country is committed to building a climate-resilient green economy and its plan to do so comprises of actions to reduce greenhouse gas emissions while safeguarding economic growth (“green economy”) as well as adaptation initiatives to reduce vulnerability to the effects of climate change (“climate resilience”).
In its current Ten Years Development Plan (2021-2030), the country has set the following goals  :
- To increase greenhouse gas emissions reduction capacity from the present 92.7 million metric tons of carbon dioxide equivalent (CO2) to 162.3 million metric tons of carbon dioxide equivalent by 2030.
- To increase national forest coverage from current 15.5% to 30% by 2030.
- To raise power generation capacity from renewable sources from 4,478 megawatts to 19,900 megawatts by 2030.
- To increase the length of railway lines from 902 km to 4,199 km by 2030.
- Ethiopia is committed to building a climate-resilient green economy and its plan to do so comprises actions to reduce greenhouse gas emissions while safeguarding economic growth (“green economy”), as well as adaptation initiatives to reduce vulnerability to the effects of climate change (“climate resilience”).
- To develop a green economy, the country has identified a number of initiatives in each sector of the economy mainly in the sectors (Agriculture, Forestry, Power, Transport, industrial sector and buildings) that are considered as pillars for CRGE. Ethiopia has abundant renewable energy resources and has the potential to generate over 60,000 megawatts (MW) of electric power from hydroelectric, wind, solar and geothermal sources .
- The country in its current 10 Years Development Plan has set Climate Resilient Green Economy as one of the strategic pillars of its development plan.