Khat’s export revenue dropped dramatically from around $400 million a decade ago to $248 million last year
Addis Abeba – The Ministry of Trade has announced that khat exporters will now be required to undergo a rigorous registration process, which includes meeting newly issued pre-license requirements to participate in the business. The objective of this move is to streamline operations and enhance earnings from khat exports.
The new directive applies to all existing exporters who have renewed their operations in the current fiscal year, as well as those wishing to enter the khat export industry. The re-registration period for exporters is scheduled to take place from 7–25 November, 2023.
During a press briefing held yesterday, Gebremeskel Chala, Minister of Trade and Regional Integration, emphasized the necessity of pre-licensing criteria for the khat export sector. According to him, this criteria aims to identify challenges faced by the industry and implement operational reforms to improve the export revenue derived from this stimulant.
Previously, khat used to rank among Ethiopia’s top five commodities in terms of export earnings. However, the yearly revenue generated from this cash crop has significantly declined from over $400 million a decade ago to $248 million last year.
Gebremeskel also stressed that pre-license requirements are crucial to ensuring fair benefits for farmers engaged in the trading business, preventing illegal traders from infiltrating the system, and encouraging the participation of legal traders.
There are almost 5,000 registered khat exporters in Ethiopia; however, less than 500 are active in the industry.
Gebremeskel warned that khat exporters who fail to renew their licenses within the given timeframe and meet the necessary requirements will have their khat export license revoked.
Khat trading and export have faced recent challenges, particularly after the ministry’s announcement of doubling the export price for the cash crop in April 2022. This decision required exporters to deposit $10 for every kilo of exported khat into an Ethiopian bank. Although the decision was briefly reversed following a ban from the Somaliland Khat Association, it was later reinstated, leading to significant disruptions in the khat market and creating an unsustainable burden for exporters and the farming community.
In May 2022, the Ministry made an additional announcement stating that it had taken action to revoke the business licenses of 830 khat exporters. These exporters were believed to be engaged in unlawful activities such as failing to renew their licenses and misusing their services.
The government’s intervention in khat trading extends beyond the federal level. In July 2023, Addis Standard reported that farmers and exporters of khat in the Oromia region have been grappling with an unforeseen socio-economic crisis due to excessive taxation at multiple checkpoints on both municipal and regional levels. These interventions have had negative consequences for all parties involved, including the farmers and exporters.
According to the Ethiopian Statistical Service, over 3.8 million farmers in Ethiopia are involved in khat cultivation, with annual harvests exceeding 2.4 million quintals.