Addis Ababa
February, 1998
1. OVERVIEW OF ECONOMIC
POLICY
In mid-1991 the previous military regime ended, and a new government
was installed. At that time, the economy was to a large extent
under the dominance of the state which controlled both product
and factor markets, and owned a large part of the modern sector
of the economy. There were severe price distortions of foreign
exchange and interest rates as well as of goods and services.
Since then, the focus of economic policy has been to switch from
a command to a market economy and progressively integrate Ethiopia
into the world market.
The first task was to dismantle the legal restrictions on private
investment and withdraw the state from controlling prices and
markets. To this end, domestic and external trade were liberalized,
state monopolies were abolished, and, at the same time, public
enterprises were made autonomous in terms of management and finance,
cut off from budgetary support, and made subject to eventual divestiture.
Simultaneously, integration with the global market was initiated
through reduction of import tariffs and devaluation of the Birr
(Ethiopia's currency). The maximum
tariff rate was reduced from 230 to 80 per cent, while the Birr
was devalued by 142 per cent against the US dollar. These measures
changed the course of the economy within a relatively short period
of about two years, between mid-1991 and 1993, bringing into operation
market forces and removing substantially price distortions.
In subsequent years, the establishment of a market economy and
integration with the world market was further reinforced. The
foreign exchange auction market for import of goods was fully
deregulated, and the auction itself was held more frequently,
changing from biweekly to weekly. Availability of foreign exchange
for payments of invisibles, such as business travel and medical
treatment abroad, was also increased. Import tariffs were further
reduced from a maximum of 80 to 50 per cent; the average rate
being presently 24.5 per cent. Price controls which remained on
a few essential goods were lifted, thereby virtually completing
the deregulation of prices of goods and services. In addition,
petroleum prices were made periodically adjustable to reflect
changes in world price. Pan-territorial pricing of fertilizer
was terminated as was fertilizer subsidy. Tariffs of electricity
and water were adjusted upwards, the former being scheduled to
cover costs fully and allow a profit margin in the coming few
years. Telecommunications, on the other hand, continues to be
operated on profit basis.
Privatization gathered momentum after
an initial phase of preparation. Given the underdevelopment of
the economy, there are only about 200 state-owned enterprises
to be privatized including factories, state farms, hotels, construction
firms, transport corporations, wholesale marketing firms, and
small retail outlets and restaurants. State-owned marketing enterprises
lost their monopoly with the removal of entry barriers for private
firms, and shrank due to both deliberate down-sizing and competition,
while insolvent enterprises that could not be resuscitated were
allowed to go bankrupt. Retail shops, restaurants, a few factories
and hotels have been privatized. Several other enterprises have
also been offered for sale.
Currently, the main focus of the
on-going economic reform is the widening of the scope of foreign
investment to include telecommunications and electricity generation,
complete the liberalization of the current account, and the deregulation
of interest rates side by side with the creation of securities
market. In keeping with the objective of progressively liberalizing
the foreign trade regime for goods and services, payments on invisible
trade are expected to be deregulated fully by the end of 1990s.
This will enable Ethiopia to attain current account convertibility.
At the same time, the maximum tariff on imports will be reduced
and the average rate lowered to 19.5 per cent.
To summarize, a transition from a command to a market economy has been made. There remain, of course, several scores of enterprises in the hands of the state, but essentially due to the process of undertaking privatization itself, rather than lack of readiness to privatize. Perhaps more challenging is the elimination of price controls, removal of subsidies, commercialization of telecommunications and electricity, and convertibility on the current account. In all these areas, the achievement in policy reforms has been remarkable, as Ethiopia has succeeded to establish a market economy, with minimal price distortions and successively decreasing tariff rates, on a sustainable footing.
2. BACKGROUND TO THE
TOURISM SECTOR
2.1 Tourist Arrivals
Ethiopia's tourism industry had suffered
from the adverse effects of a prolonged civil war, recurrent drought
and famine, strained government relations with tourist-generating
countries, and restrictions on entry and movements of tourists
during the years of the Dergue government from 1974 to 1991.
With the culmination of the civil
war and the introduction of new economic policies by the new government,
tourism is experiencing a more conducive climate for growth and
development as evidenced by statistics compiled by the Ethiopian
Tourism Commission.
International tourist arrivals in
the year 1997 were 115,000 as compared to 79,000 in 1990, representing
a 46% increase since the last full year of the Dergue. In terms
of origin, the 1997 figures showed that 36% came from Europe,
33% from Africa, 14% from the Americas and 12% from the Middle
East. Analysis of the figures also showed that holiday makers,
business travelers and conference participants made up about 60%
of all arrivals. The age profiles of arrivals indicate that the
economically active age groups of 25 to 44 and 45 to 59, together
representing about 76% of total arrivals, are interested in visiting
Ethiopia.
The total number of international tourist arrivals in Ethiopia, although growing, is by no means commensurate with the potentials of the country's attractions. The present constraints to growth are identified largely as shortage of tourist facilities and limited promotion.
The main tourist destination at the
moment is the northern historic route encompassing Bahir Dar,
Gondar, Axum, Makalle and Lalibela. Addis Ababa, the principal
gateway to Ethiopia being a business centre and a conference venue
as well, is in its own right a major destination.
The other destinations chiefly include
the wildlife centres along the Great Rift Valley and the south-west,
and the eastern historic area of Harrar.
2.2 Tourist Facilities And
Services
a) Accommodation
The stock of hotel rooms in the country
has sharply increased over the last few years, with impetus coming
from the market-led economic policies and the liberalized investment
policy of the present government, which encourage private foreign
and domestic entrepreneurial effort. Reasonable tourist accommodation
services are already available at all the major attractions, but
improvements as well as new constructions are taking place currently
in accordance with a newly promulgated classification and standardization
system. There are attempts to attract major international hotel
chains to the country in addition to the Hilton and the Sheraton
that are already in.
The total number of rooms of acceptable
standards to international tourists at present is about 3,500,
out of which more than 1,300 are owned by the private sector.
Virtually all the private sector rooms are results of the new
economic policy which put an end to what one might call a state
monopoly. Government owned and operated hotels, a legacy of the
socialist past, are, under the new government, all slated for
privatization, and already quite a number have changed hands.
b) Tour and Travel Operation
Tour operation and travel agency
has shown a dramatic growth in the last six years, reaching a
record number of 160 firms in 1997. This line of business had
been a state monopoly during the previous regime.
c) Transportation
The chief mode of travel to Ethiopia
for tourists is by air, and the main carrier is the Ethiopian
Airlines, which deservedly has a fine reputation for service.
Major international carriers such as the Lufthansa, Alitalia and
Saudia also land at Addis Ababa, the principal gateway to Ethiopia.
Several other airlines are at various degrees of negotiation to
fly to Ethiopia.
Domestic air travel service is rendered
mainly by the Ethiopian Airlines using Boeing and Fokker jets
as well as smaller aircrafts. Competition in domestic service
has been ushered in recently with the commencement of operation
of a private firm. Land transport is generally used for short
haul in the locality of the tourist attractions.
d) Tourism Facilitation Measures
Having identified major constraints
relating to visa and customs regulations and banking services,
the Federal Government has taken liberalizing steps which will
help facilitate tourism trade. One would also note that the regional
tourism bureaux set up in all the nine regions of the country
would in no small measure facilitate tourism in the coming years.
The Ethiopian Tourism Commission,
which closely works with the regional bureaux, tour operators'
association, and hotel association has a pivotal role in bringing
together the private sector and government regulatory authorities
in the service of tourism.
2.3 Infrastructure
Ethiopia's tourism sector is poised
to benefit from a programme of upgrading, expansion and new construction
of airports, road and communication networks, electric power generation,
and water works, the implementation of which is currently underway
in various parts of the country. The airport improvements at Lalibela,
Axum, Gondar, Bahir Dar, Makalle, Arba Minich and Dire Dawa are
soon to be followed by a major expansion and modernization of
the international airport at Addis Ababa. Road rehabilitation,
upgrading and new construction is an area of infrastructural development
vigorously embarked upon, involving in its present phase 6,000
Km. of trunk roads. These and other infrastructural improvements
are financed from internal sources and external sources including
the World Bank.
2.4 Manpower
The country has a thin layer of professional
and skilled manpower and a large pool of trainable manpower with
a strong cultural disposition for warm hospitality to guests.
But in the competitive world of tourism, manpower training has
become extremely important. The Ethiopian Tourism Commission has
therefore completed the preparation of a plan to double the intake
capacity of its training institute, and integrate with the institute
a model hotel granted by the government in order to facilitate
practical training.
3. ETHIOPIA'S TOURISM
POTENTIAL
3.1 Introduction
As a land of multiple tourist attractions
and a visitor friendly people which is conscious of its historical
heritage, Ethiopia is truly a country of great tourism potential.
It was this recognition of a great potential that encouraged Ethiopia
in the ninteen- sixties to start a tourism industry. After an
initial period of rapid growth, the industry underwent a fast
decline and virtual stagnation for many years due to the revolution
that brought the military to power in 1974, the consequent turmoil,
and recurrent drought and famines.
During the last six years, however,
tourism has once again emerged as a growth industry taking advantage
of the current peace and stability in the country and the liberalized
economic policy of the new government. Ethiopia can now look forward
to increasing its share of the world's tourism market which is
registering a faster world-wide growth than most other industries.
Ethiopia's nearly ideal location on the African continent and
its relative proximity to the Middle East and Europe can add to
the comparative advantage which its numerous and varied attractions
bestow on it.
3.2 Tourist Attractions
In its considerably vast area (1,112,000
sq.Km.), Ethiopia possesses numerous tourist attractions varied
in type and appealing to a wide range of interests. The attractions
include historical, cultural, archaeological, anthropological,
scenic, climatic, therapeutic, and wildlife resources. Such a
unique combination of attractions within a single country has
no match on the African continent, or rarely any where else.
The ancient city of Axum once the
centre of a powerful empire, is still graced with magnificent
obelisks that are millenia old but seem to anticipate modern sky
scrapers in design. Other monuments and ruins of ancient palaces
and temples abound in the city and its vicinity. In addition to
being perhaps the most important spiritual centre of Orthodox
Christianity in Ethiopia, Axum has the distinction of being the
last repository of the much reverred Biblical ARK of The covenant.
The medieval city of Lalibela, a
holy city to Ethiopian Christians, is to the traveler an architectural
marvel. Here stand some of the World's most wonderful churches
hand-carved out of monolithic rocks and mountain sides, complete
with columns, arches, inner sanctums, niches, windows, passages
and drainages. Rock churches also abound in other parts of Ethiopia's
north, particularly in the Lasta and Tigrai regions.
The Islamic world credits Ethiopia
as being the land of sanctuary for the prophet Mohammed's first
Arab followers, who had to flee from their country due to persecution.
The Al Negashi Mosque at Wukro is today a reminder of that Mohammedan
sojourn and religious tolerance in Ethiopia.
Ethiopia's 17th century
capital city, Gondar, with its imposing castles; the island monasteries
of Lake Tana and their centuries-old mural paintings; and the
mysterious carved stone monuments of Tia in the central region
form some of the historic attractions of the country. The walled
city of Harar in the east with its numerous mosques and shrines
of venerable age, narrow winding streets, traditional architecture
and interior decoration, and a glorious past as an important centre
of caravan trade and Islamic culture in Ethiopia is yet another
attraction.
Anthropological finds such as the
3.5 million-year-old skeleton of "Lucy" or Austrolopithecus
Afarensis at Hadar, the 4.4 million-year-old remains of Homo Ramides
Afarensis which is considered to be man's anthropoid ancestor,
and the earliest hand tools of humans unearthed in the Omo valley
attest to the fact that Ethiopia was a cradle of mankind. These
discoveries appeal not only to the specialists, but also to all
those interested in the early beginnings of humans and their civilization.
Ethiopia is sometimes referred to
as a mosaic of peoples and cultures due to its ethnic diversity.
More than 80 languages are spoken and two of the world's major
religions (Christianity and Islam) plus a number of some other
less-known faiths are followed, resulting in rich and varied cultures.
Religious and other cultural festivals, with roots in the distant
past, are very colorful and still continue to form an important
part of communal life.
The physical features of the country
are very remarkable for they incorporate high plateaux, long mountain
ranges, lofty peaks, deep gorges, the largest cave in Africa (Sof
Omar), the lowest depression on Earth (Dallol), the Great Rift
Valley, savannah land, tropical forests, deserts, beautiful lakes,
including Lake Tana - the source of the Blue Nile, spectacular
waterfalls, and volcanic hot springs.
Though situated not far from the
equator, much of the land has a climate tempered by high altitude.
Ethiopia's tourism slogan "Thirteen Months of Sunshine"
partly arises from the idyllic year-round, spring-like climate
of most regions of the country.
The wildlife resources of Ethiopia
entitle it to a share in Africa's reputation in that regard. Virtually
all types of Africa's big game can be found in Ethiopia in their
natural states and habitats. Out of the 845 species of birds and
260 species of mammals registered in Ethiopia, as high as 49 are
endemic animals. Ten national parks, 13 wildlife reserves and
sanctuaries, and 18 controlled hunting areas have been established
in order to protect these resources of the country.
Not all of Ethiopia's attractions
are very widely known, but some are quite famous. Indeed, eight
national attractions have been recognized by UNESCO as world heritage:
Axum's obelisks, Gondar's castles, the island monasteries on Lake
Tana, Hadar (where Lucy was discovered), Tia's carved standing
stones, the walls of Harar, and the Semien National Park.
3.3 Type of Tourism offered by Ethiopia
Ethiopia's wealth of varied attractions gives it a great potential
for cultural and educational tourism, photo safaris, hunting safaris,
bird watching, water sports including river rafting, desert trekking,
mountain camping and other forms of eco-tourism. Health tourism,
on account of the cool climate of most regions of the country
and the numerous hot springs in many volcanic areas, is an additional
type of tourism with great potential.
Conference tourism, long aided by
the presence of a number of international organizations in Addis
Ababa including the headquarters of the Organization for African
Unity and the Economic Commission for Africa (ECA), is poised
to gain greater significance as a consequence of the newly built
ultra-modern facilities at the ECA and the Sheraton Addis.
3.4 Types of Tourists Encouraged
Ethiopia's
policy welcomes all tourists, without regard as to national origin,
creed, colour or economic standing. However, in light of the tourist
facilities available at present and the probable carrying capacities
of some of the well known attractions, much promotion is aimed
at the moment at the rather affluent market. Future developments
and promotions will include a wider spectrum of the international
market.
4. POTENTIAL AREAS OF
INVESTMENT
Quite a number of studies have been
conducted on tourism development, the latest of which is The
National Tourism Development Plan conducted in two phases
by Tourconsult International S.A of Italy. The first phase of
the study was conducted in 1990 dealing with the southern region
of Ethiopia and the second phase, which was completed in 1995,
dominantly dealt with western, eastern and northern regions, thus
complementing the 1990 National Tourism Development Plan. As reconfirmed
in this study, the country possesses a variety of tourist attractions
and offers numerous sites for the development of tourism.
The northern tourist circuit known
as the "Historic Route" comprises the most important
tourist sites such as Bahir Dar, the Blue Nile Falls, Lake Tana
and its island monasteries, Gondar, the Simien National Park,
Axum, Yeha, Debre Damo, Adigrat, Makalle, Lake Hayk, Lalibela,
Dessie and Bati Market. The tourist attractions in these sites
have been relatively well promoted since the 1960s, and many tour
operators in Europe and North America have included them in their
offers. However, shortage of adequate accommodation establishments
and related facilities for sports, recreation and entertainment
have seriously affected the growth of tourism in the area.
The southern, eastern and south western
parts of the country are also endowed with natural and cultural
attractions. The Great Rift Valley with its seven beautiful lakes,
numerous hot springs and a variety of wildlife, offers great potentials
for the development of tourism. But inadequacy of accommodation
and other related facilities have become serious obstacles to
the growth of tourism in the areas . The National Tourism Development
Plan has, therefore, identified various sites for short and long
term development. Of these, the following sites have been identified
as potentially attractive to foreign investors.
The objective of the Project is to diversify the tourist supply
base of the country by developing natural tourist sites, up to
now dominated by historic tourist attractions. The Project foresees
to establish the necessary infrastructure including a hotel, camping
sites, and thermal and mud baths.
Awash National Park is some 225 kms
due east of Addis Ababa and is located in the northern edges of
the Great Rift Valley. The Park encompasses 46 types of mammals
such as lions, cheetah and leopard as well as aquatic animals
such as hippopotamus and crocodiles. Also over 400 different species
of birds have been recorded in the Park.
The proposed lodge will afford facilities
for tourists interested in observing or hunting wild life, and
in enjoying the spa water found in the Park.
The Semien Mountains National Park
is a sanctuary of the rarest animals and plants and is a centre
for observation and trekking. The proposed Lodge which will be
located close to the foot of the Mountains is meant to ease the
burden of tourists visiting the Park.
The Sof-Omar Cave is a complex system
of large and small passages, halls and grottoes, formed by Web
river, one of the main tributaries of Wabe Shebelle river. Despite
its immense touristic value, the Cave has so far remained inaccessible
to tourists due to lack of roads and electrification both inside
and outside the Cave. The objective of the Project is to develop
tourist infrastructure at the Cave to make it a regular tourist
destination. The infrastructure will include a road inside and
outside the Cave, electric lighting of the underground tourist
path having a length of around 1.2 kms, and a tourist facility
centre comprising a lodge and a restaurant.
The "Historic
Route" has always been
on the top of the list of tourist destinations in Ethiopia. However,
shortage of adequate accommodation, recreation and entertainment
facilities has seriously affected the growth of tourism in the
area. Three hotels are proposed to be set up at Bahir Dar, Lalibela
and Makalle, respectively, where the problem is more acutely felt.
| |
| 1. Overview of Economic Policy | |
| 2. Background to the Tourism Sector | |
| 2.1 Tourist Arrivals | |
| 2.2 Tourist Facilities and Services | |
| 3. Ethiopia's Tourism Potential | |
| 3.1 Introduction | |
| 3.2 Tourist Attractions | |
| 3.3 Type of Tourism Offered by Ethiopia | |
| 3.4 Types of Tourists Encouraged | |
| 4. Potential Areas of Investment |
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