With over 120 million populations, Ethiopia is the second most populous nation in the African continent next to Nigeria, and one of the fastest-growing economies in the region. However, it has also remained one of the least developed nations of the world, and it has now advancing towards growth and prosperity thereby being middle-income nation within the shortest time possible.
The country’s strong growth rate is built on a longer-term record of growth over the past 15 years where the country’s economy grew at an average of nearly 10% a year, one of the highest rates in the world.
The government launched a 10-Year Development Plan, based on its 2019 Home-Grown Economic Reform Agenda, which runs from 2020/21 to 2029/30. The plan aims at sustaining the high growth achieved under the Growth and Transformation Plans of the previous decade while facilitating the shift towards a more private-sector-driven economy.
The plan would foster efficiency and introduce competition in key growth-enabling sectors like energy, logistics, and telecom, improve the business climate, and address macroeconomic imbalances. The government of Ethiopia is taking proactive measures to ensure millions of Ethiopians secure employment opportunities both locally and overseas via bolstering the economic progress. The government has also facilitated job placements for too many citizens, including workers who found employment abroad. Following the right national strategy, the nation could harness all its resources and societal progress to meet employment goals and stimulate economic growth.
According to the Ministry of Planning and Development, Ethiopia’s economy is expected to grow by 8.3 percent in the new 2024/5 Ethiopian fiscal year set to begin as of July 8, 2024 (Hamle 1, 2016). It is well known that Ethiopia has been ranked the 5th among African countries with largest economies in 2024.
The Ethiopian government has announced that the country’s economy is on track to achieve a projected 7.9% growth rate for the Ethiopian 2023/2024 fiscal year. Well, Ethiopia’s strong growth rate builds on a longer-term record of growth over the past 15 years where the country’s economy grew at an average of nearly 10% a year, one of the highest rates in the world. Among other factors, growth was led by capital accumulation, in particular through public infrastructure investments.
The consistently high economic growth over the last decade resulted in positive trends in poverty reduction in both urban and rural areas. It also aims to foster efficiency and introduce competition in key growth-enabling sectors such as energy, logistics, and telecom, improve the business climate, and address macroeconomic imbalances. As learnt from the government, the country has vast untapped potential to generate jobs through outsourcing but stressed the need for a strategic approach to fully realize all its potential.
New Year, New Hope
Ethiopia seeks to chart a development path that is sustainable and inclusive in order to accelerate poverty reduction and boost shared prosperity. Significant progress in job creation, as well as improved governance, will be needed to ensure that growth is equitable across society. Achieving these objectives will require addressing key challenges which includes addressing macroeconomic distortions that constrain private sector development, structural transformation, and generation of jobs.
Addressing food insecurity, which is growing due to adverse weather events, conflict, and global conditions leading to high inflation of food prices has been the big assignment of the government to be gradually deal with as frequent severe weather events alongside long-term impacts of climate change undermine agriculture and pastoral livelihoods as well as food security.
As the rapid growth of population and economy leads to a further increase in demand for water resources, the country needs to combine efforts here and there. The contradiction between supply and demand of water resources has become the main bottleneck restricting sustainable development of a regional social economy.
The green economy is a way of realizing that development at the national, regional and global level and that is relevant to all economies, be they are state or more market-led.
Similarly, through resource substitution and efficiency, production can be maintained with a decrease in resource use. While water is often a renewable resource except in the case of fossil stores not replenished under present climate regimes, diversion of water from the environment above certain levels leads to negative environmental impacts in terms of both reduced volumes and quality.
Similarly social and economic costs that would normally be unacceptable will be implemented under these conditions of balancing social, economic and environmental priorities. As such, this ‘politically optimal’ balance is made up of individually sub-optimal elements.
These technologies and approaches have traditionally been used to maintain social and economic outcomes and growth facilitate growth under the circumstances of withdrawing blue water from production under a peak scenario. Due to conjunctive use of blue and green water, and utilization of efficiency developments, there is no reason why potential economic or social gains should be sacrificed when compared to the blue water pathway traditionally perused. Rather, there should be an environmental gain compared to the peak development pathway, due to blue water diversions being lower and consequently less environmental degradation.
The shift towards green economy through the sustainable intensification of agricultural production progresses through three main avenues. True, increasing water use efficiency in both rain-fed and irrigated agriculture through integrated land and water management, water harvesting, and conjunctive development of green economy.
Besides, the promotion of institutional reforms that enable the adaptation and operation of green economy instruments. It is important to emphasize that there is no one-size-fits-all solution to promote greener economies. The adoption and mix of strategies must be tailored and targeted to specific political, social, economic and environmental circumstances.
In recognition of the difficulties in shifting towards full cost recovery, the concept of ‘sustainable cost recovery’ has been put forward. Creating a green economy for water is visualized as a shift from mobilizing inputs as a means to maximizing outputs, towards optimizing appropriate multiple inputs and instruments (blue and green water, soil and crop management) to maximize outputs. This transition can be economically incentivized through accounting for the multiple value streams of the natural resources to boost economic growth.
Institutional reform should be regarded as a key component in creating a green economy. However, such reform is politically mediated, and needs to be conducted with the same attention to optimality and sustainability inherent in other areas of the sustainable economy.
Alemayehu Kumera, an economist said, “Since water resource is also a kind of comprehensive natural resources, which has a variety of use values and can supply with the water needs for many sections, which involves economy, resource, science and technology, ecosystem and environment, it has to be given due emphasis for economic progress.”
As to him, sustainable utilization is a better form for the water resources would be of paramount importance in boosting economic, social and ecological benefit and may improve the economic, social and ecological environment so that the limited water resources can maximize its function.
“Ethiopia’s Economy has registered better performance in key growth sectors over the years despite internal and external predicaments those need to be addressed well. Yes, as to the information gained from the government, Ethiopia’s successive economic growth is showing better performance when compared with several other countries,” he added.
The Ethiopian government has announced its ambitious plan to create a number of jobs, both domestically and abroad. Such a bold move is part of a broader strategy aimed at tackling unemployment, which remains a significant challenge in the country.
These are especially visible in agriculture where, with the support of reforms, Ethiopia can potentially shift from being a net importer of agricultural commodities to generating sizable surpluses of as much apart from quenching its populations’ thirst, he underlined.
In sum, Ethiopia seeks to chart a development path that is sustainable and inclusive in order to accelerate poverty reduction and boost shared prosperity. Significant progress in job creation, as well as improved governance, will be needed to ensure that growth is equitable across society.
Achieving these objectives will require addressing key challenges including addressing macroeconomic distortions that constrain private sector development; structural transformation, and generation of jobs, reducing the incidence of conflict that has been having a substantial impact on lives, livelihoods, and infrastructure; tackling urban employment levels which have not recovered fully; addressing food insecurity which is growing due to adverse weather events; locust invasion, conflict, and global conditions leading to high inflation of food prices. Besides, generating good jobs as improving current jobs and creating new ones help boost the economic progress of the nation.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD WEDNESDAY 11 SEPTEMBER 2024
