Constraints on the Ethiopian Floriculture Industry

The abilities of domestic firms to expand their business into high-productivity sectors and the effects of employment in productive industries are regarded as a challenge to Ethiopia’s structural transformation efforts. The experience of the Ethiopian floriculture industry shows that many domestic firms collapsed after an early burst of firm creation. Fifteen remaining firms, with varying capability levels, appear to be struggling to expand their business and to move up the technological ladder. This chapter identifies the major areas where the domestic firms lack capability and the factors that are weakening them, including the high labour turnover prevalent across the sector. The sector has created widespread employment, predominantly for women, but its impact on worker well-being is limited. These factors imply a weak contribution by the sector to the virtuous cycle of investment, productivity, and employment that is needed to expand productive capabilities, reduce poverty, and challenge gender inequality.