




































Economy 
ISSN: 2313-8181 
Vol. 2, No. 1, 1-9, 2015 
www.asianonlinejournals.com/index.php/Economy 

 
 

* Corresponding Author 

 

 

1 

 

Ethiopia and the BRICS: An Assessment of Trade and 

Investment Flows 
 

Maxwell Ekor
1*

 --- Oluwatosin Adeniyi
2
 --- Jimoh Saka

3
   

                
1
Preston Consults, Abuja, Nigeria 

2
Department of Economics, University of Ibadan, Nigeria 

3
Department of Economics, Lagos State University, Nigeria    

 

Abstract 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

 

 

 
This work is licensed under a Creative Commons Attribution 3.0 License 

Asian Online Journal Publishing Group 

 

Contents 
1. Introduction ................................................................................................................................................................................. 2 

2. Overview of BRICS Investment Flows ...................................................................................................................................... 4 

3. BRICS Investments in Africa ..................................................................................................................................................... 5 

4. Trade Flows and Intensity between Ethiopia and the BRICS ................................................................................................. 7 

5. Summary and Policy Implication of Findings .......................................................................................................................... 9 

References ........................................................................................................................................................................................ 9 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethiopia is the 83
rd

 largest economy in the globe according to the World Bank figures for 2013. The 

country is considered to have huge but untapped potentials in the sub Saharan Africa region as well 

as one of the attractive investments destinations on the continent. This study therefore examined the 

investment flows and intensity of trade between Ethiopia and the individual BRICS for the period 

1995 to 2011. A striking finding is that not a significant proportion of the BRICS investments in 

Africa go to Ethiopia. With respect to trade flows, Ethiopia recorded trade deficit with all the BRICS 

countries in the period under review, while its trade intensity index with all of them was less than 

one. Arising from these findings a number of relatable policy implications are documented. First, 

given that Ethiopia is considered as one of the recent success stories in Africa, the BRICS in general 

and South Africa in particular may explore areas of potential benefits by improving bilateral 

economic relationship with the country. Second, given that Ethiopia is experiencing massive 

developments in its infrastructure, South Africa may take advantage to invest in some of the projects. 

Third, the relatively low trade intensity with Ethiopia means that going forward there are possible 

areas of opportunities that may exist which may ultimately boost trade flows between Ethiopia and 

the BRICS.  
 

Keywords: Real GDP, Foreign direct investment, Trade intensity, Policy, BRICS, Ethiopia. 

    JEL Codes: C32, C51, F14, F52. 

 

http://creativecommons.org/licenses/by/3.0/


Economy, 2015, 2(1): 1-9 

 

 

 

 

2 

 

1. Introduction 
Ethiopia is considered one of the countries in Africa that is recording steady progress in its economic 

transformation process. Blessed with natural resources such as gold, platinum, copper, potash, natural gas, and 

hydropower, Ethiopia’s gross domestic product (GDP) as shown in Figure 1 has increased from $11.4 billion in 1981 

to $94 billion in 2011. The real GDP growth as depicted in Figure 2 indicates that Ethiopia recorded average growth 

of 4.8% between 1980 and 2011 and this was partly due to the negative growths recorded in some years in the 1980s 

as well as in the early 1990s. However, since 2004 the country has witnessed robust real GDP growth which 

averaged approximately 11% between 2004 and 2011.  

With respect to the GDP composition, the Ethiopian economy is mainly agrarian, with the agriculture sector 

contributing on average 46% to the GDP between 2002 and 2011 whereas the service sector is the second highest 

contributor of average 42%. While the industrial sector contributed approximately 12% to the GDP in the period, the 

manufacturing sector had the least share of average 4.7%. Given the strategic importance of the agriculture sector 

and the need to ensure food security and sufficiency, the government has continued to consolidate on its relationship 

with donors in the area. This has strengthened the country’s agricultural resilience thereby contributing to the 

reduction in the share of the population prone to starvation. The downside, however, is that real income continues to 

be eroded by inflation given that the consumer price index averaged 8.9% between 1982 and 2011 while growth in 

GDP per capita averaged 8.9%. Nevertheless, the integration of the Ethiopian economy into the global system has 

improved consistently since 1993 with trade (% of GDP) averaging 38% between 1993 and 2011, higher than the 

average 17% recorded between 1981 and 1992.     

Given the progressive stance of the Ethiopian economy, it may in the near future be strengthening and 

consolidating its bilateral relationship with key countries, not just in Africa but also on the global stage. To this end 

and given the rising relevance of the BRICS (Brazil, Russia, India, China and South Africa) countries as highlighted 

in studies such as De Castro (2012),  it may be interesting to see how Ethiopia is currently relating with these 

countries, especially with respect to trade and investment.  

The BRICS presently account for about 43% of global population, 18% of international trade and 25% of the 

world’s GDP in purchasing power parity terms. Ethiopia is currently the 8th largest economy on the continent of 

Africa and one of the fastest growing. This means that a consolidated relationship between the individual BRICS and 

Ethiopia may be beneficial to all parties involved and the African continent at large. Of particular interest is the 

relationship between South Africa and Ethiopia due to suggestions that for the former to improve and consolidate its 

involvement in the BRICS group, it must improve on its bilateral trading and investment relationships with other key 

countries on the African continent.  

Therefore, following from the above, the goal of this paper is to provide some evidence on the trading and 

investment relationship between Ethiopia and the individual BRICS countries.  

 

 
Fig-1. Ethiopia’s Nominal GDP (1981-2011) (million) 

                      Source: World Development Indicators (2012) 

 

 
Fig-2. Ethiopia’s Real GDP Growth (%) (1981-2011) 

                       Source: World Development Indicators (2012) 

 



Economy, 2015, 2(1): 1-9 

 

 

 

 

3 

 

 
Fig-3. Ethiopia’s GDP Composition (% of GDP) (1981-2011) 

                    Source: World Development Indicators (2012) 

 

 
Fig-4. Growth in GDP Per Capita and Inflation 

                    Source: World Development Indicators (2012) 

 

 
Fig-5. Ethiopia’s Trade Balance (% of GDP) (1981-2011) 

                      Source: World Development Indicators (2012) 

 



Economy, 2015, 2(1): 1-9 

 

 

 

 

4 

 

 
Fig-6. Ethiopia’s Current Account Balance (% of GDP) 

                          Source: World Development Indicators (2012) 

 

2. Overview of BRICS Investment Flows     
The aggregate inflows, outflows and consequently the net-flows of the BRICS investments in the period 1992 to 

2011 are shown in Figure 7.  The picture shows that China leads the pack with an average foreign direct investment 

(FDI) outflow of $16.9 billion and inflows of $60.4 billion, resulting in a net-flow of $43.5 billion in the period.  

Brazil recorded the second highest flows of FDI with an estimated average outflow of $3.9 billion compared with 

inflow of $22.6 billion, resulting in net-flow of $18.7 billion. While Russia’s average inflow and outflow of FDI are 

estimated at $17.8 billion and $17.2 billion resulting in a net flow of only $579 million, India recorded a net flow of 

$5.9 billion. South Africa had the least flows of FDI but its inflows outperformed the outflows making the country 

record a net flow of $1.6 billion.    

    

 
Fig-7. Average FDI Flows of the BRICS 1992 - 2011 

                           Source: UNCTAD Statistics - http://unctad.org/en/pages/Statistics.aspx 

 

When the BRICS FDI outflows are considered as percentage of GDP, Figure 8 shows that Russia outperformed 

the other BRICS members with its FDI outflow averaging 1.8% of GDP in the period. This is followed by South 

Africa’s 0.9% of GDP, while Brazil and India both recorded an average of 0.5%. China recorded the least FDI 

outflow of 0.4% of GDP in the period.  With respect to FDI inflows as percentage of the GDP, Figure 9 shows that 

China recorded the highest as the FDI inflow into the country averaged 3.6% of GDP, while Brazil and Russia 

followed with averages of 2.1% and 1.9%. South Africa recorded average 1.3% in the period and India had the least 

inflows in the period with its FDI inflow averaging only 1.1% of GDP between 1992 and 2011.   

            

Brazil Russia India China S/Africa

Inflows 22,594.43 17,814.83 11,390.94 60,385.82 2,616.45 

Outflows 3,944.26 17,235.44 5,414.89 16,932.74 930.09 

Netflows 18,650.17 579.39 5,976.04 43,453.08 1,686.36 

-

10,000.00 

20,000.00 

30,000.00 

40,000.00 

50,000.00 

60,000.00 

70,000.00 

$
 m

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n



Economy, 2015, 2(1): 1-9 

 

 

 

 

5 

 

                   
Fig-8. BRICS FDI Outflow as a % of GDP 

                      Source: OECD Statistics - http://stats.oecd.org/                   

 

 
Fig-9. BRICS FDI Inflow as a % of GDP 

                    Source: OECD Statistics - http://stats.oecd.org/                      

 

3. BRICS Investments in Africa     
Although ascertaining the exact volume and value of FDI flows from the BRICS to specific countries in Africa is 

challenging due to data constraint, Figure 10 provides an indication that Angola is a key beneficiary of Brazil’s 

investment flows into Africa. In addition, Figure 11 shows that most of the loans by Brazil into Africa has flowed 

more to Angola relative to other countries on the continent.   

 

 
Fig-10. Main Brazil’s FDI Investment in Africa 

                   Source: World Bank (2012)  

 

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

1
9

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1
9

9
1

1
9

9
2

1
9

9
3

1
9

9
4

1
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0
9

2
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1
0

2
0

1
1

Brazil Russia India

China South Africa

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

19
90

19
91

19
92

19
93

19
94

19
95

19
96

19
97

19
98

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20
02

20
03

20
04

20
05

20
06

20
07

20
08

20
09

20
10

20
11

Brazil Russia India

China South Africa

2001 2002 2003 2004 2005 2006 2007 2008 2009

Angola 265 18 22 24 17 20 73 58 124

South Africa 8 0 2

0

50

100

150

200

250

300

US
 $ 

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on
 



Economy, 2015, 2(1): 1-9 

 

 

 

 

6 

 

 
Fig-11. Main Brazil’s Intercompany Loans to Africa 

                   Source: World Bank (2012)  

 

Russia’s investments in Africa as shown in Table 1 indicate that the country’s areas of interest are in oil 

exploration, mining, aluminum and power. The countries that have benefited from this preference and choice of 

investments include South Africa in the area of mining and exploration (oil, gas, diamonds and copper), while 

Botswana had Russia investing about $2.5 billion in 2007 in its mining and processing industry. Also, Russia’s Rusal 

invested about $250 million in Nigeria’s ALSCON in the aluminum refining sector through acquisition.  Angola 

benefitted from Russia’s investments in 1992 and 2006 when Russia’s Alrosa and Sintez made investments in 

Greenfields.   

 
Table-1. Major Investments of Russian Companies in Africa 

 
  Source: African Development Bank (2011) 

 

India is one of the top investors in Africa, with investments in joint ventures and wholly owned subsidiaries. The 

bulk of these investments flow into the Chemicals, Plastic and Rubber sectors which accounts for about 31% of the 

country’s investments in the continent. Other sectors that India’s investors find attractive in Africa include 

marketing, sales, and distribution (17%) and the Food, Beverage and Tobacco (FB&T) sector (12%). The agriculture, 

fish and natural resource sector has approximately 6% share, while professional services and financial intermediaries 

had 5% share of inflows from India. Sectors categorized into other sectors had 24% of the shares of investments from 

India.      

With respect to the destination of China’s investments in Africa, Figure 13 shows that South Africa and Nigeria 

had the largest shares of 20% each between 2003 and 2007, followed by Sudan and Algeria with 12% each.  Angola 

had only 2% share of the total investments of China in Africa while Ethiopia had 1% in the review period. In terms 

of infrastructure financing by Chinese investors in 2007, approximately 24% of the total share went to Nigeria 

followed by Angola’s 20% and Ethiopia’s 10%.  

 

 
Fig-12. India’s Investments by subsectors in Africa 

                         Source: KPMG Research (2012) 

 

2001 2002 2003 2004 2005 2006

Angola 9 12 3 10 1 1

South Africa 0 0 1

0

2

4

6

8

10

12

14

U
S $

 m
ill

io
n 



Economy, 2015, 2(1): 1-9 

 

 

 

 

7 

 

 
Fig-13. China’s FDI Flows to Africa by Destination 

                Source: China Ministry of Commerce Report (2008) 

 

4. Trade Flows and Intensity between Ethiopia and the BRICS 
The trade flows between Ethiopia and the BRICS countries in Figures 14 – 18 indicates that all the members of 

the group recorded trade surpluses with Ethiopia in the period 1995 to 2011. From Figure 14, Brazil’s export to 

Ethiopia was significantly higher than its imports from Ethiopia. Specifically, while exports averaged $24.1 million, 

imports from Ethiopia averaged only $0.2 million between 1995 and 2011. This means that Brazil recorded trade 

surplus of $23.9 million with Ethiopia in the review period.  

  

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 
Fig-14. Brazil – Ethiopia Trade Balance 

                             Source: UNCTAD Statistics - http://unctad.org/en/pages/Statistics.aspx   

 

 
Fig-15. Russia-Ethiopia Trade Balance 

                            Source: UNCTAD Statistics - http://unctad.org/en/pages/Statistics.aspx  

 

Similarly, Figure 15 shows that Russia maintained a trade surplus of $52.0 million with Ethiopia given that its 

exports averaged $55.9 million and imports $3.9 million. With respect to India’s trading relationship with Ethiopia, 

Nigeria
20%

S/Africa
20%

Sudan
12%

Algeria
12%

Zambia
8%

Angola
2%

Guinea
2%

Ethiopia
1%

Mauritius
2%

Egypt
2%

Congo, Dem, Rep
4%

Niger
4%

Others
11%



Economy, 2015, 2(1): 1-9 

 

 

 

 

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Figure 16 shows that India’s exports to Ethiopia between 1995 and 2011 averaged $121.6 million while imports 

averaged $11.9 million, giving a trade surplus of $109.7 million.  

 

 
Fig-16. India – Ethiopia Trade Balance 

                                   Source: UNCTAD Statistics - http://unctad.org/en/pages/Statistics.aspx  

 

 
Fig-17. China – Ethiopia Trade Balance 

                         Source: UNCTAD Statistics - http://unctad.org/en/pages/Statistics.aspx  

 

In terms of the relationship with China, Figure 17 explains that while China’s exports to Ethiopia averaged 

$405.8 million, imports averaged only $70.4 million, bringing the surplus in the period to $335.4 million. Figure 18 

shows that South Africa also exported more to Ethiopia compared with its imports from that country and ended up 

with an average trade surplus of $20.9 million.  

 

 
Fig-18. S/Africa – Ethiopia Trade Balance 

                            Source: UNCTAD Statistics - http://unctad.org/en/pages/Statistics.aspx 

 



Economy, 2015, 2(1): 1-9 

 

 

 

 

9 

 

Although Ethiopia recorded trade deficit with all the BRICS countries between 1995 and 2011, it is pertinent to 

find out how intensive the trading activities were in the period. Therefore, in line with the study by De Castro (2012) 

who examined the trade intensity between the individual BRICS and selected countries in the European Union, the 

trade intensity index is defined as: 

Trade Intensity =      
   

  
 
   

  
 

Where 

                                      = country   exports to country    
                                      = country   total exports 

                                   = world exports to country    
                                    = total world exports.  

The results of the computation as shown in Figure 19 depicts that Ethiopia’s trade intensity index is less than one 

with all the BRICS countries, implying that trade with Ethiopia is relatively small when compared with what these 

countries individually carried out with the rest of the world. However, in relative terms, the trade intensity index is 

highest with India, followed by China and then South Africa. The implication of this is that although trade with 

Ethiopia is relatively small when compared with the rest of the world, India and China have found Ethiopia an 

attractive destination for trade.  

 

 
Fig-19. Ethiopia’s Average Trade Intensity with the BRICS, 1995 - 2011 

                          Source: Authors’ Estimations 

 

5. Summary and Policy Implication of Findings   
The study examined the investment flows of the BRICS as well as attempted to provide an insight into country-

specific destinations of these investments, with specific focus on Ethiopia. Also, the trade relationship between 

Ethiopia and the individual BRICS is analyzed for the period 1995 to 2011 with a view to examining the level of 

trade intensity. Two main issues stand out from the findings. First, not a significant proportion of the BRICS 

investments in Africa go to Ethiopia. Second, the country is getting a fair share of infrastructure finance investments 

from the BRICS. With respect to the trade flows, Ethiopia recorded trade deficit with all the BRICS countries, while 

its trade intensity index was less than one in all cases. However, in relative terms, its trade intensity index was 

highest with India, followed by China and then South Africa.  

A number of policy implications can be deduced from the study. First, given that Ethiopia is considered as one of 

the recent success stories in Africa, the BRICS in general and South Africa in particular may explore areas of 

potential benefit by improving bilateral relationship with the country. Second, given that the country is experiencing 

massive developments in its infrastructure, South Africa may take advantage to invest in some of these projects. 

Third, the relatively low trade intensity with Ethiopia means that there are possible areas of economic engagement 

which may ultimately boost trade flows between Ethiopia and the BRICS.  

 

References 
African Development Bank, 2011. Russia’s economic engagement with Africa. Africa Economic Brief, 2(7). Available from 

http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Russia's_Economic_Engagement_with_Africa.pdf [Accessed 

August 14th 2012]. 

China Ministry of Commerce Report, 2008. Available from http://gzly.mofcom.gov.cn/website/comment/foreign/message/js [Accessed August 

14th 2012]. 

De Castro, T., 2012. Trade cooperation indicators: Development of BRIC bilateral trade flows. International Review of Business Research 

Papers, 8(1): 211-223. 

KPMG Research, 2012. India investing in South Africa and Africa. Available from 

http://www.kpmg.com/ZA/en/IssuesAndInsights/ArticlesPublications/Doing-Business-with-

India/Documents/India%20investing%20in%20South%20Africa%20and%20Africa.pdf [Accessed August 14th 2012]. 

World Bank, 2012. Bridging the Atlantic’ South-South partnering for growth. Available from 

http://siteresources.worldbank.org/AFRICAEXT/Resources/africa-brazil-bridging-final.pdf [Accessed August 17th 2012]. 

World Development Indicators, 2012. Available from data.worldbank.org/sites/default/files/wdi-2012-ebook.pdf [Accessed August 10th 2012]. 

 

Views and opinions expressed in this article are the views and opinions of the authors, Economy shall not be responsible or answerable for any loss, 

damage or liability etc. caused in relation to/arising out of the use of the content. 

 

http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Russia's_Economic_Engagement_with_Africa.pdf
http://gzly.mofcom.gov.cn/website/comment/foreign/message/js
http://www.kpmg.com/ZA/en/IssuesAndInsights/ArticlesPublications/Doing-Business-with-India/Documents/India%20investing%20in%20South%20Africa%20and%20Africa.pdf
http://www.kpmg.com/ZA/en/IssuesAndInsights/ArticlesPublications/Doing-Business-with-India/Documents/India%20investing%20in%20South%20Africa%20and%20Africa.pdf
http://siteresources.worldbank.org/AFRICAEXT/Resources/africa-brazil-bridging-final.pdf

