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

The food sector is a critical part of Ethiopia’s economy, accounting for 40% of its gross domestic product (GDP) and 80% of its exports, while employing 75% of the nation’s workforce [1]. 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 remains a major hurdle, mainly due to the structure of the country’s financial sector and its limited ability to fund SMEs.

Nonetheless, recent funding opportunities and reforms are accelerating SME investment in Ethiopia’s food sector. For example, on May 22, 2024, the African Development Bank approved a grant of $42.86 million to finance the implementation of the Agri-MSMEs Development for Jobs Program [2]. These investments reflect growing confidence in SMEs’ potential to strengthen the national food sector. However, with a deliberate intellectual property (IP) strategy, SMEs in the food sector could be even better positioned to make a meaningful economic impact. The pertinent question is, how?

Intellectual property presents a valuable opportunity for SMEs to distinguish their brands and gain a competitive edge. Studies show that packaged innovation can impact buying behaviour, as consumers typically purchase products based on their appearance. SMEs can use trademarks to protect the shape, colour or design of a product’s packaging, enhancing brand identity. Already, SMEs around the world are applying for non-traditional marks such as scents, sounds, motions, and flavours, though these are not currently 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 commercialised to generate additional 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. Although industrial designs are considered a subset of patents, they focus on the distinctive packaging of a product and can serve to indicate its origin. Registering an industrial design grants SMEs exclusive rights, enhancing brand reputation and potentially boosting revenue and market share.

Copyrights and trade secrets also play a critical role in strengthening SME investments in Ethiopia’s food sector. On the one hand, copyright protects the exclusive rights of creators of literary, musical, or artistic works—including sound recordings and broadcasts—to reproduce, publish, or perform their works. In today’s 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 retain their impact. On the other hand, trade secrets protect confidential business information, which may be licensed or sold. Examples such as the Coca-Cola formula and KFC’s 11 Herbs and Spices illustrate the immense economic value of trade secrets. Properly leveraged, such protections could significantly benefit Ethiopian SMEs.

In conclusion, Ethiopia's food sector is still largely untapped and requires a bold IP strategy for SMEs to unlock its full potential. Given the economy’s reliance on agriculture and food, SMEs are well-positioned for higher returns if Ethiopia can enact laws on plant breeders’ rights and geographical indications (GIs). Ethiopia should also considerratifying key international treaties, such as the Lisbon Agreement on the Protection of Appellations of Origin and their International Registration, and acceding to the Geneva Act. This would allow Ethiopian food products to be recognized and protected across all contracting parties, enabling SMEs to internationalise their businesses, increase global revenues, and leverage the local economy in return.