Entrepreneurship Zone: 24 January 2023 :: Profit-making idea: Ethiopia’s untapped pasta market potential

Tue Jan 24 08:56:59 CAT 2023

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Entrepreneurship Zone: 24 January 2023 ::  Profit-making idea: Ethiopia’s untapped pasta market potential

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According to a report by Manufacturing Africa, a UK government-funded programme supporting investment in manufacturing, there is an opportunity in Ethiopia to produce high-quality, affordable pasta or instant noodles. This aligns with the Ethiopian government’s goal of import substitution.

According to the study, there is a significant demand for locally manufactured pasta or instant noodles in Ethiopia, valued at $0.8 to $1.1 billion. This offers manufacturers a chance to achieve high gross margins, but success will depend on a strong brand, access to raw materials, and an increase in local production of subsidised durum wheat.

Ethiopia’s pasta industry is hampered by limited availability of quality durum wheat, steep production costs due to the elevated price of wheat, and challenges associated with foreign exchange scarcity. Going forward, the government has put in place a plan to grow sufficient durum wheat to sustain the sector and has taken steps to improve productivity, such as promoting the use of improved seed varieties.

There is currently a wide selection of imported pasta available in Ethiopia, with most high quality options coming from Turkey ($770/metric tonne) or Italy ($1,090/metric tonne). Businesspeople interested in this opportunity should have the capability to manufacture and distribute durum pasta at prices below those of imported varieties.

The report suggests that given the challenges associated with pasta processing, there is an opportunity to plug the demand gap with pasta variations and instant noodles.

Despite being Africa’s third largest wheat producer, Ethiopia relies on imports to meet 15-20% of its total demand, of which 36% is consumed as processed wheat in the form of pasta, wheat flour and pastries. The majority of imported wheat is sourced from the United States (26%) and Romania (17%).

To meet their wheat needs, Ethiopia’s flour and pasta processors rely on the Ethiopia Grain Trade Enterprise, which controls all commercial wheat imports and makes wheat available at a government-subsidised rate.

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