IGAD LPI, in cooperation with the Ministry of Finance and Economic Development (MoFED), has revisited estimates of livestock’s contribution to the Ethiopian economy, through two consecutive studies, which conclude that the contribution of livestock in the Ethiopian Gross Domestic Product (GDP) and to the wider economy is much higher than previous estimates. The studies, “The Contribution of Livestock to the Ethiopian Economy – Parts One and Two” examine and draw conclusions in three key areas:
• The contribution of livestock to the agricultural GDP;
• The value of livestock services not captured in the national accounts;
• The contribution of livestock to the wider economy.
The contribution of livestock to agricultural GDP was reported in IGAD LPI Working Paper No. 02-10 (IGAD LPI WP 02-10). This working paper concluded that current GDP figures dramatically underestimate the value of livestock’s contribution. The study’s initial calculations of total value of 12 categories of ruminant livestock production readjusted estimates based on 2008-09 figures upwards by 47%. Furthermore, the value of animal draught increased livestock contribution to the national agricultural GDP by a factor of 113% over the current gross value.
The second study (IGAD LPI WP 02-11) computes those services provided by livestock that are not captured in national accounts. In the light of this, total economic benefits of livestock goods and services are now estimated be at about 113 billion Ethiopian Birr (ETB) which is more than three and a half times greater than MOFED’s original estimate in 2008-09. Of the 80 billion ETB increase in benefits, about 15 billion ETB are derived from recalculating the value of livestock products and the remaining 65 billion come from broadening the estimation to include other utilities provided by livestock.
The findings not only strengthen the case for increased investment in the livestock sector, but they also indicate where investments and polices should be directed. A recent IGAD LPI working paper (IGAD LPI WP 01-11) produced in collaboration with the African Union InterAfrican Bureau for Animal Resources (AU-IBAR) found that the vast majority of policies focus solely on the production and marketing of livestock and livestock products, to the exclusion of other, non-marketed, livelihoods functions provided by livestock, such as savings, transport, risk management and wealth accumulation. This is a gap when seen in the light of the Ethiopian economic studies that found these non-marketed livestock services to be worth approximately twice as much as livestock production and sales.