
Over the past 20 years, the Ethiopian economy registered a remarkable double-digit real GDP growth and a six-fold increase in per capita to about US$865 in 2018. High public investment in infrastructure and human capital fueled the country’s growth. These investments narrowed fundamental gaps in transport and energy infrastructure and human capital developments, thereby laying the foundation for sustained growth. However, the public investment-led growth model had its shortcomings.
While significant strides have been made, both GTP I and GTP II have not entirely been successful in achieving structural transformation and stimulating exports. The growth has also failed to stimulate private sector development to create decent jobs; gaps remain in ensuring quality universal access to basic services to all Ethiopians.
Furthermore, the efforts to finance ambitious public investment programs through directing domestic financial resources and significant external borrowing, coupled with poor project execution, resulted in serious macroeconomic imbalances, foreign exchange shortages, increased risk of external debt distress, growing financial sector vulnerabilities, limited access to finance for the private sector, high inflation, and potential misallocation of resources. These macroeconomic imbalances, if not corrected immediately, jeopardize the journey to a middle-income economy by 2025.
Against this backdrop, the reform administration led by Prime Minister Abiy Ahmed (PhD) has launched a comprehensive and well-coordinated homegrown economic reform agenda to safeguard macro-financial stability and rebalancing and sustain economic growth.
The reform agenda builds on the achievements of the past decade in infrastructure and human capital developments. The primary objective of the agenda is to sustain economic growth by creating an economic environment supportive of higher private investment and structural transformation. It encompasses three key pillars at the macro-financial, structural, and sectoral levels.
Ever since the incumbent assumed office about seven years ago, it has been working strenuously to transform the country’s economy rapidly and renew the negative image associated with the country for years.
To address the government-launched Home Grown Economy Reform Agenda. Currently, the reform has been leading to registered visible economic progress in the country, PM Abiy indicated.
During his recent interview with Ethiopian Broadcasting Corporate (EBC), the premier noted that visible progress has been recorded in the economy through the reform. Recalling the background of the reform, the premier said that the government had held extensive discussions with local and international stakeholders to solve the economic problem of the country.
Analyzing the total economic state of the country and taking into account the experiences of countries that have undergone economic challenges, the government launched macroeconomic reform depending on the Home Grown Economic Agenda.
The fact that Ethiopia’s economic reform is homegrown does not mean that we do not learn from others and are closed; rather, it is a result of the Ethiopian situation and was learned from others and expanded to our own level. Visible changes have been recorded in the economy through the reform.
Citing export trade as an example of the achievements in the economic sector, he said that Ethiopia earned only 7.5 billion USD in export revenue between 1992 and 2006. However, it is expected to earn more than 8 billion USD from exports exclusively in this Ethiopian fiscal year.
Pointing to the issue of inflation, the premier said that it is a combination of accumulated structural problems, natural and man-made disasters, and international challenges, which are affecting the lives of citizens. Measures have been undertaken to control it, and it has decreased from 34 percent to 13.5 percent this year.
The government’s multi-sectoral initiatives are yielding tangible results in Ethiopia’s economy and development, adding that Ethiopia’s prosperity cannot be ensured by relying on only one sector.
He indicated that the government is working to ensure development and transform the economy by transitioning from a single to a multi-sectoral approach. Agriculture, industry, mining, tourism, and Information and Communications Technology (ICT) have been identified as the main pillars of development, the premier added.
Ethiopia has much potential in these identified pillars and results have been achieved in agricultural productivity, industrial growth, tourism development, mining exports and technology utilization.
Citing the issue of the industrial sector as an example, he noted that the effort undertaken under the “Let Ethiopia Produce initiative” has resulted in significant changes, recalling that before the initiative, the production capacity of Ethiopian industries was about 48 percent, and now this figure has reached 65 percent.
The three industrial parks that existed before the foundation of the reform administration have now increased to 13, and most of the sheds in the parks are now operational. The government has worked to revitalize the industry by building parks where investors can own industrial parks and creating free trade zones. As a result, impressive outcomes have been achieved in the work carried out in the industrial sector. The sector is expected to grow by 13 percent in this Ethiopian fiscal year; it is playing a key role in Ethiopia’s economic growth.
Concerning the Service sector the Premier said that it is crucial for delivering what is produced to the user and that the sector is the backbone of the economy of the country adding that many changes are being made through work to modernize service delivery in various fields, including finance.
He stated that by combining various sectors with supporting fields, multiple results are being achieved and progress is being made adding that changes in various fields have laid the foundation for the next generation to inherit a better country by reducing the debt they will inherit.
The Prime Minister said that Ethiopia is recovering from its diseases and is on the path to recovery, and stressed the need to work tirelessly and tirelessly to realize Ethiopia’s renaissance.
He also emphasized that consolidating and sustaining the changes achieved is the common responsibility of all parties.
Concerning agricultural development, the premier said that “since we have huge development potential in lowland areas, we have to cultivate using sophisticated technologies. Citing the South Omo area irrigation work as an example, he said that we have constructed a 145 km long irrigation channel exclusively in the area.
Ethiopia is endowed with surface water, underground and rainwater along with massive uncultivated land and sparsely populated lowlands. We can achieve a full development plan if we tap resources in the areas.
Ethiopia has managed to stand first in producing wheat in Africa because of measures undertaken. Next, we have to work to enhance productivity per hectare of land. Likewise, we need to appreciate our achievements and fill the left one.
As aid dependency, violates moral basis, we have been working to stop it, common understanding was created among Ethiopians towards it. The committee that works on the issue has been established at the national level to end aid dependency.
There were 27 million people who needed food support before three years. However, 23 million of them were relieved from aid dependency in the past three years. Currently, there are only 3.9 million people who need humanitarian support including internally displaced people. “Extricating 23 million people from aid dependency is the best indicator of Ethiopia’s ever-rising achievement” Abiy underlined.
Explaining the secret behind the achievement, the premier said that weather conditions, national agricultural initiatives like summer irrigation, Yelemat Tirufat and urban agriculture played a great role in ensuring food self-sufficiency adding that the grandparent farming system that has been causing enhanced poultry farming productivity is not known before. However, currently, we are attaining remarkable products using the system.
A regulation has been drafted to collect funds from each sector to support the food self-sufficiency program to sustain the achievement. Beyond gathering yields, we need to construct and expand conducive storage houses to protect agricultural products from damage to sustain food self-sufficiency achievements.
“The National Disaster Risk Management Commission should cultivate and provide food for the needy using agricultural potential existing in the country instead of requesting food for the needy,” the Prime Minister elaborated.
Citing the essence of mobilizing local capacity, the premier said that there are strong social bonds in the country that can strengthen the act of supporting each other.
BY TAMERU REGASA
THE ETHIOPIAN HERALD WEDNESDAY 11 JUNE 2025