The Economics of Khat Trade and its Dynamic Institutions: The Ethiopian Context since the 1980s

Studies about khat have shown a remarkable progress in recent times, both in terms of quality and quantity. However, their focus to a large extent is on the chemistry and pharmacology of the plant; and more so on its impact on the consumers’ health. The trading systems, the logic of the khat markets, the networks and the structures that kept the khat industry vibrant skipped the attention of researches. This study deals with the institutional evolution, performance and constraints of those institutions and structures governing khat trade in Ethiopia since the 1980s. A qualitative research method has been employed in this study. Yet, due to the complexity of the subject under study, I have to operate eclectically in my choice of data gathering instruments and analysis. Eclectically, in this context, refers to the application of divergent but complimentary methods of gathering, analysis and interpretation of data. Oral data for this study have been garnered primarily through key informant interviews and Focus Group Discussions (FGD).Oral data required for this study have been collected for over four years shuttling to both study sites in the east and southern Ethiopia on various field trips. Relevant secondary literatures dealing with khat have also been consulted. Findings from this research helped to document the evolution of some key features in the way the khat business is being run and the various work processes that consistently animated the trade. Attempts have also been made to shade some light on the institutional evolution of the trading system and the role of the state in khat trade in Ethiopia. I argue in this paper that decentralization and autonomy are the hallmarks of the prominent khat trading systems in Ethiopia.