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INTRODUCTION 1
1.1 HISTORY, GEOGRAPHY, AND ECONOMY
Ethiopia is an ancient country with a rich diversity of peoples and cultures and a unique alphabet
that has existed for more than 3,000 years. The country has always maintained its independence, even
during the colonial era in Africa. Ethiopia was ruled by successive emperors and kings with a feudal
system of government until 1974. In 1974, the military took over the reign of rule by force and
administered the country until May 1991. Currently, a federal system of government exists, and political
leaders are elected every five years. The government is made up of two tiers of parliament, the House
of the Council of Peoples Representatives and the House of Federal States, with the regions, zones,
weredas, and kebeles within them having elected council members. The administrative boundaries within
the country have changed three times since the mid-1970s, and at present Ethiopia has nine regional
states, Addis Ababa City Administration and Dire Dawa Administration Council.
Ethiopia is situated in the Horn of Africa between 3 and 15 degrees north latitude and 33 and
48 degrees east longitude. It is a country with great geographical diversity; its topographic features
range from the highest peak at Ras Dashen, which is 4,550 meters above sea level, down to the Affar
Depression at 110 meters below sea level (CSA, 2000). The climatic condition of the country varies with
the topography, with temperatures as high as 47 degrees Celsius in the Affar Depression and as low as
10 degrees Celsius in the highlands. The total area of the country is about 1.1 million square kilometers
and Djibouti, Eritrea, Sudan, Kenya, and Somalia border it.
Ethiopia is an agrarian country, and agriculture accounts for 54 percent of the gross domestic
product (GDP), employs about 80 percent of the population, and accounts for about 90 percent of the
exports (CSA, 2000). The country is one of the least developed in the world, with a per capita gross
national product (GNP) in 1998 of US$100 (PRB, 2000). Coffee is the main export of the country. The
Ethiopian currency is the Birr, and at present, 1 US dollar is equivalent to about 8 Birr. Between 1974
and 1991, the country operated a central command economy under the socialist banner of the Derg
regime. However, since their overthrow, Ethiopia has moved toward a market-oriented economy. At
present, the country has two government-owned commercial banks and six privately owned commercial
banks, one government-owned insurance company and seven private insurance companies (NBE, 2000).
There are also 15 microfinancing institutions established by private organizations.
1.2 POPULATION
Table 1.1 provides a summary of the basic demographic indicators for Ethiopia from data
collected in the two population and housing censuses carried out in 1984 and 1994. The population
increased over the decade from 42.6 million in 1984 to 53.5 million in 1994. There was a slight decline
in the population growth rate over the decade, from 3.1 percent in 1984 to 2.9 percent in 1994. Ethiopia
is one of the least urbanized countries in the world, with less than 14 percent of the country urbanized
in 1994. Female life expectancy is about two years higher than male life expectancy. Over the decade,
life expectancy for both males and females did not improve.
Introduction * 1