As part of a wider attempt to increase export revenues amidst weak economic
performance, Ethiopian authorities doubled the price of khat for exports to
Somaliland and Djibouti in April 2022. Following much controversy, the
decision was reversed a few months later. What was behind this trade price ‘fix’
and why does it matter?
Khat – a mild stimulant widely consumed in the Horn of Africa – has long flourished
as a strategic resource for the Government of Ethiopia (GoE). Last June, it was
announced that the cash crop generated the fourth largest volume of export revenues
after coffee, gold and cut-flowers in 2021-22. When Ethiopia’s Federal Ministry of
Trade and Regional Integration suddenly doubled khat’s long-standing export price
to 10 USD/kg in April 2022, this was a controversial move. For producers and traders
across the Horn of Africa the price increase was a challenging development. Not
only was this the biggest increase in over two decades,2 it also risked politicizing the
inter-regional khat trade between Ethiopia and Somaliland and relations between
the Oromo and Somali communities on either side of the border.