How IP can improve SMEs investing in the food sector in Ethiopia

Ethiopia’s food sector is vital yet underperforming. SMEs are key to its growth, and leveraging intellectual property can boost innovation, funding, and market access, unlocking the sector’s full potential.

The food sector is a critical part of Ethiopia’s economy, as it accounts for 40% of its gross domestic product (GDP) and 80% of its exports, while employing 75% of the nation’s workforce. Despite its untapped potential, Ethiopia’s food sector continues to underperform, mainly due to limited access to funding, fragmented markets, environmental degradation, and limited private investment. Like in most nations, SMEs play a vital role in Ethiopia by significantly contributing to the nation’s GDP and creating jobs for locals. Boosting the capacity of SMEs to support food production is therefore a primary concern for Ethiopia. However, unlocking finance for SMEs poses a major hurdle for the nation, mainly due to the structure of the nation’s financial sector and its limited ability to fund SMEs.

Nonetheless, recent funding opportunities and reforms are leapfrogging SME investments in Ethiopia’s food sector. For example, the African Development Bank on May 22, 2024, approved a grant of $42.86 million to Ethiopia to finance the implementation of the Agri-MSMEs Development for Jobs Program. These investments reflect the level of trust in SMEs’ capacity to bolster the nation’s food sector. However, with a deliberate intellectual property strategy, SMEs in the food sector are better positioned to contribute more significantly to the nation’s bottom line. The pertinent question is, how?

Intellectual property presents an opportunity for SMEs to distinguish their brand and edge out the competition. Studies show that packaged innovation can impact buying behaviour, as consumers typically purchase products based on their packaging. SMEs can use trademarks to protect the shape or colour of a product’s packaging, which helps to distinguish it. Already, SMEs around the world are applying for non-traditional marks such as scents, sounds, motions, and flavours, though these are not registrable in Ethiopia. When registered, trademarks add significant value to an SME's brand.

Patents are a form of intellectual property that protect new, inventive, and industrially useful inventions. In the food sector, patents could protect innovative food technologies, manufacturing processes, or recipes, which, when protected, could be sold, licensed, or otherwise commercialised to generate increased revenue for food SMEs. These patents could include a unique glyphosate-tolerant crop or enabling technology used in agro fields, such as gene editing or sequencing technologies. Industrial designs, though considered a subset of patents, are mainly concerned with the distinctive packaging of a product and can serve to signify its source. SMEs registering an industrial design are entitled to the exclusive use of such designs, improving brand identity and reputation, with the potential to increase revenue and market share.

Copyrights and trade secrets can also bolster SME investments in Ethiopia’s food sector. On the one hand, copyright is the exclusive right of the owner of a literary, musical, or artistic work, sound recordings, or broadcasts to sell, print, reproduce, publish, and perform such works. In the fast-evolving digital world, food businesses rely on creativity and marketing expertise to attract and reach their target markets. Sub-genres of creative works, such as food photography, food art, and food poetry, promote the food sector and require copyright protection to remain effective. On the other hand, a trade secret is an intellectual property (IP) right on confidential information, which may be licensed or sold. Examples such as the Coca-Cola formula and KFC’s 11 Herbs and Spices showcase the immense economic benefits of trade secrets which, if optimised, may translate into better income for Ethiopian SMEs.

In conclusion, Ethiopia's food sector is still largely untapped and requires a bold SME IP strategy to unlock its potential. Additionally, since the nation’s economy is heavily reliant on food, its SMEs are better positioned for higher returns if Ethiopia can enact laws on plant breeders’ rights and geographical indications to maximise the Ethiopian food sector. Ethiopia should consider ratifying crucial international agreements such as the Lisbon Treaty on International Registration of Geographical Indications and Appellations of Origin and acceding to the Geneva Act, so that food products originating from Ethiopia may be registrable in all contracting parties to the Lisbon Treaty. This way, SMEs can internationalise their businesses, generate revenue on a global level, and leverage the local economy in return.