Paul, Issac (PhD)Keno, Kebede2018-07-272023-11-182018-07-272023-11-182011-03http://etd.aau.edu.et/handle/12345678/10232The purpose of this study was to assess the challenges and opportunities of horticulture induslly focusing on its investment environment; production and export process sand its contribution to Ethiopian export diversification as horizontal export diversification strategy in minimizing an over-reliance on few low value commodities export. /t is a case study of Sebeta area farms of Fuits, vegetables and flowers. Both qualitative and quantitative approaches were employed in the study. Across-sectional survey though questionnaire, interview, focus group discussions and observation methods were used to collect dataFom main industry's developmentfacilitators and farms owners. Secondary data were also gathered ji'om different publications. The data obtained were analyzed though descriptive statistics using SPSS and SWOT analysis by narration. The result of the study reveals that yet the Ethiopian export structure has not been diversified. /t is highly dominated by few traditional agricultural commodities. Hence, its export earning was fluctuating both in value and volume. As a result, the overall balance of payment of the country is widening deficit. The currently horizontal export diversification strategy through horticulture industlY is minimizing an over reliance on few low-value commodities. Investors Fom foreign and domestic both in number and amount of capital they invest on horticulture are rapidly increasing. The generated income account Fom the sector reached for 10% of the nation's foreign currency earning, which was only 3% before four years ago. The industry is also becoming the 3rd largest source of foreign currency next to coffee and oilseeds. The incremental of export share of horticulture produces is mainly Fom the rapidly booming of floriculture whose share is 80.67% in average Fom the industlY 's produces export. The reasons for the sector remarkably booming are incentive schemes given and natural comparative advantages the country has such as favorable climate, abundant land (long term leased), varieties soil types, suitable topography, agro-ecology, cheap labour, loans in advantageous terms, location for export (proximity), irrigable lands and rivers, increase demand of horticulture produces, market oriented policy wilh attractive incentive packages and etc. Moreover, governmental organizations such as EIA, EHDA, MOn DBE and the industry's association EHPEA are working in coordination to enhance development of the industry. Despite these efforts to develop the industry, it is still at nascent stage and not pel/orming at its maximum potential as compared to what would have been achieved. Factors hinder expansion of the industlY and the country could hardly benefit ji'om the industry were emerged from failure in realizing the existing opportunities that help in development of the industry. The main bottle necks against further expansion of the industry are categorized in to lack of public inji'astructures, weak instilutional service delivery, weak market chain and unfair relationship, and lack of skilled manpower in managerial and technical know-how on the industry activities and weak water management. These constraints are serious especially in the rural areas of the country. Because of these problems most horticulture farms in the counlly are limited to just adjacent to main asphalt roads nearby the capital city-Addis Ababa closeness to Bole airport. Hence, in order to expand the industry and be benefited from the sector, working in coordination of Government, donors and stakeholders and investors to fulfill the problem is very important. The currently work of government by giving high attention for public inFastructure has a good prospect for the jilture development of the industry. Key Words: Export diversification, high- value agricultural commodities, Horticulture industryenExport diversificationhigh value agriculturalcommoditiesHorticulture industryThesis