It is important to note that on the heels of the implementation of the macroeconomic policy reform, Ethiopia in the present circumstances has jumpstarted achieving the sought after objective at the earliest possible time. In the face of a wide spectrum of speculation and in the midst of every challenge, the new reform has set in motion yielding results and heading in the right direction more than ever before.
As the newly implemented macroeconomic policy reforms play a paramount role in providing a new impetus, it is envisioned that quandaries revolving around black market that have been left un answered will find a solution just around the corner. As the accomplishment of the reform is fully hinging on the participation of all stakeholders, everyone without batting an eye should strive for the success of the implementation.
Unless everyone regardless of age, sexual category, religion, ethnicity and other related aspects stand in unison, getting the desired goal will be like squeezing blood out of stone.
With respect to the situation of foreign exchange, there is a large amount of foreign currency traded that can be legally issued and taxed, and this loss of revenue creates obstacles to support government and public services and infrastructure. Other than that black market can exacerbate the cost of living by creating artificial shortages and increasing inflation in the length and breadth of the country in the shortest possible time.
As the federal government of Ethiopia has been going to great lengths with the intention of achieving the desired target, the future will be rosy. Apart from propelling the country’s economy to new heights, the macroeconomic policy will change the lives of the people of the Horn of Africa and beyond.
Speaking to ENA, Chairperson of Indian Mohan Group PLC in Ethiopia, Mayur Kothari recently said that the full implementation of macroeconomic reform policy of Ethiopia has created competitive investment opportunity in the country.
Noting that his company was eagerly waiting for the macroeconomic reform, the chairperson stated the reform is crucial for manufacturing sector. The reform policy is vital to manage the economy, increase export trade, attract investment, and boost foreign currency earnings, the investor elaborated.
Moreover, the macroeconomic reform will reduce the foreign exchange rates gap between the black market and banks, he said, adding this measure will alleviate the shortage of the foreign currency facing the manufacturing sector.
He cited the lack of foreign currency as an obstacle for launching new projects for his company and he stated that the reform policy will be instrumental to bridge the previous gap. It will also boost export trade, increase farmers’ revenue worth of their labor and achieve equitable economic benefits, he said.
It is possible to control illegal money transfers by following strict regulations and monitoring money transfers. This is evident in various nations. In point of fact, following the implementation of the macroeconomic policy reform the exchange rate system have significantly reduced black market activity.
Prime Minister Abiy Ahmed (PhD) said, “The government has established key strategic directions to ensure the efficient and effective implementation of the macroeconomic reform program. The major policy measures outlined are aligned with our long-term and medium-term national development plans. Additionally, the government will develop robust monitoring and support frameworks to safeguard Ethiopia’s national interests and maximize benefits for our citizens. All relevant ministries and governmental institutions will provide the necessary monitoring and support.”
“In addition, necessary measures will be taken to protect vulnerable members of society from short term negative impacts of the reform. Social safety net programs will be strengthened. In addition, low-income government employees will receive necessary wage subsidies. The government will also partially subsidize fuel price increments,” he pledged.
The macroeconomic reform process will be subject to continuous review and evaluation. The government will make timely, necessary, and predictable policy adjustments based on current information. Following the macroeconomic reform process, the government will implement active measures to address potential good governance concerns and criminal activities. Additional details regarding the reform will be regularly disclosed by the Ministry of Finance and the National Bank.
The transition of the foreign exchange management system to a market system in which the foreign exchange rate is determined between banks and their customers and people can trade dollars directly in banks with no difficulties. Up to the present moment, people purchase from black market in view of the fact that they do not have access to dollars in the bank.
In former times, banks were not able to collect more dollars on account of the currency law. But at the present time, banks are raising currency at a high level. When they have enough Dollars and jumpstart providing foreign exchange services at full capacity, people will not buy from black market. Through the passage of time, the black market will deteriorate and vanish from the face of the country until hell freezes over.
A case in point, countries like Kenya, Uganda and Tanzania can be cited as an example. As macroeconomic reform policy has been implemented in these nations there is no such a thing as black market. Noting that the elimination of black market would help control inflation by removing artificial price triggered by irregular exchange rates. Needless to say a more stable currency may lead to lower prices for imported goods.
Ethiopia’s macroeconomic reform policy will unlock and fundamentally transform the stagnating economy, Ethiopian Steel PLC CEO Bhavesh Chandaria said, according to information obtained from local media.
The chief executive officer with rich experience about Africa in the recent past stated that the years of restrictive economic control regime in Ethiopia did not pay rewards to Ethiopia. As the decades of the restrictive economy control regimes failed to improve the economy, the country has embarked on a macroeconomic reform policy that is under implementation.
Like many economists, Chandaria described the reform as a ground-breaking and transformational change that would stimulate to Ethiopia’s stagnant economy by addressing deep-seated economic structural issues, including foreign exchange distortions and macroeconomic imbalances.
“This reform is ground-breaking. It has gotten attention and all my global friends and investors have been calling since last week to find out how it actually pans out. I found it is comprehensive, holistic and business incorporation. Corporates cannot ask for more,” he said. Most importantly, the CEO noted that the reform would unlock and transform the economy from the sellers’ market where buyers and customers were suffering.
According to him, consumers in the Ethiopian economy have suffered from high cost, long wait period, lack of choices to a fair, efficient market and buyers’ market. The reform would eliminate the opportunity and power advantage unduly given to traders to certain intermediaries like banks and monopoly, he added.
In addition, the macroeconomic reform will fundamentally stimulate the country’s Foreign Direct Investment (FDI), Chandaria pointed out. The reform also lends an opportunity to enhance manufacturers’ production capacities, which are suffering under capacity.
With the help of proper regulatory measures, one can effectively crack down on the black market. This transition will not only stabilize the economy but also increase the government’s income as it is on the basis of the legality of the work. Besides, the macroeconomic reform implementation plays a huge role in restoring trust in financial institutions, laying the foundation for sustainable economic development by attracting foreign investment, and attracting everyone to financial technology.
No one denies the fact that elimination of the black market would help control inflation by removing artificial price pressures caused by irregular exchange rates. With the help of proper regulatory measures, Ethiopia can effectively crack down on the black market.
As it is possible to smooth the path of the implementation without any hitch, pertinent bodies should move heaven and earth to bring about the predetermined objective.
Minister of Government Communication Service (GCS), Legesse Tulu (PhD), announced that the government will continue to implement enhanced measures against entities engaged in illegal activities following the implementation of macroeconomic reforms, according to sources.
The Minister briefed the media recently on the progress of the macroeconomic reforms, summer activities, and other current national issues. In his briefing, Legesse stated that these newly introduced reforms are expected to sustain comprehensive economic growth in Ethiopia.
Ethiopia has embarked on a macroeconomic reform policy to address deep-seated economic structural issues, including foreign exchange distortions and macroeconomic imbalances, it was indicated. He highlighted that 2023 saw numerous successful endeavors, particularly in the summer irrigation agriculture, and Ethiopia’s tourism sectors.
He further emphasized that the developmental initiatives in various corridors are a source of national pride and benefit to citizens. Legesse explained that the economy has demonstrated resilience by overcoming both external and internal shocks, achieving sustainable growth.
He asserted that the recently initiated comprehensive macroeconomic reform implementation will reinforce Ethiopia’s growth, contributing to creating a stable macro-economy, improving trade and investment, enhancing sector efficiency and competitiveness, and strengthening the government’s implementation capacity.
The reform plays a crucial role in ensuring inclusive growth, increasing the effectiveness of development projects, and improving government revenue, the Minister stressed.
He commended the majority of the business community for understanding the necessity of the reforms and continuing their usual business activities with a sense of national duty.
BY ADDISALEM MULAT
THE ETHIOPIAN HERALD WEDNESDAY 21AUGUST 2024
