Well over 60 percent of the country's foreign exchange is obtained through the export of coffee and it also contributes a substantial percentage of Ethiopia's export tax revenue. Furthermore, coffee accounts for about 10 percent of government revenue. A quarter of the population is directly or indirectly engaged in the production, processing and marketing of coffee. Though not easily quantifiable, the multiplier effects of this commodity on other sectors of the national economy such as wholesale and retail trades, banking and insurance, transport etc., are also enormous. In addition, coffee plays a significant role in Ethiopia's social and cultural life.
Ethiopian coffee is processed by two well-known methods, the dry and wet methods.
The bulk of the annual product, nearly 80 percent, used to be sun-dried while the rest was wet processed. Due to the misguided economic policy of the Derg regime, private investors were prohibited from participating in either the processing or trade of washed coffee. Hence, the wet method of coffee preparation, which fetches premium prices in the world market, did not expand in the past, but currently appreciable progress is being made. In order to encourage and promote private sector participation in the coffee sub-sector, license issuance fees were reduced in 1993. As a result, the number and market share of participants has largely increased.