Exports

Half of the record export year is gold, and that is the risk

Waggaa al-ergii rikardii keessaa walakkaan warqee dha; balaan isaas kanuma

Posted 11 Tikimt 2019 E.C. · 08:00 EAT (2:00 Ethiopian time) · Published by Ensight (Mo Creatives)

Goods exports reached US$10.7 billion in the year to 7 July, the highest on record. Gold was US$5.65 billion of it, coffee US$3 billion, and everything else together about US$2.05 billion. The record is real; so is the concentration. Most of the gold comes from artisanal workings, manufactured goods are about 2% of the basket, and the year rests on one metal’s price and one channel of supply.

The claim

The record export year shows Ethiopia’s export base widening.

The figure that tests it

The Ministry of Trade and Regional Integration put goods exports at US$10.7 billion for the year to 7 July, 114% of target. Gold earned US$5.65 billion and coffee US$3 billion (the export year). Take those two away and everything else the country sold abroad, from oilseeds and flowers to every manufactured good, earned about US$2.05 billion between them. That is an Ensight calculation from the ministry’s figures.

Gold alone was 53% of the year. Gold and coffee were 81%. Mining revenue tripled from US$1.88 billion.

Where the gold comes from

Of the 44.067 tonnes of gold Ethiopia produced last year, 40.86 tonnes came from artisanal miners, about 93% (Kurmuk’s first pour). Artisanal output responds to the price paid at the buying window, so the channel that delivered the record can also turn quickly.

Kurmuk, the first large industrial mine, targets 240,000 to 270,000 ounces in its first year. At 32,151 troy ounces to the tonne, that is roughly 7.5 to 8.4 tonnes, or 17% to 19% of last year’s national output. It would make the gold figure steadier; it would not make the basket wider.

What it means, and for whom

For the National Bank, export earnings now move with one world price. For exporters outside gold and coffee, the record says little about their own year: manufactured goods remain about 2% of the basket, and industrial parks exported US$266.9 million without duty-free access to the American market (AGOA).

What would change the view

Three things: a published breakdown of the US$2.05 billion that is neither gold nor coffee; a year in which exports other than gold grow faster than gold; and Kurmuk’s output arriving on plan, which would move gold from a mostly artisanal channel to an industrial one.

Source: Ensight, from Ministry of Trade and Ministry of Mines figures

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