BY ABEBE WOLDEGIORGIS
The Ethiopian macro-economy is featured by three major sectors such as agriculture, industry and services. Agriculture creates employment opportunities to almost 80 percent of the labor force, contributes for foreign exchange earnings, and supplies food to the consumers and raw materials to the manufacturing. Currently, it contributes 45 percent to the nation’s Gross Domestic Production (GDP), Solomon Zegeye an economist and a private consultant said.
While conducting an exclusive interview with The Ethiopian Herald recently, he said that the main stay of the nation’s economy is agriculture but currently, contribution of the sector to the GDP is declining and this indicates that Ethiopia is experiencing structural change that means the contribution of manufacturing and service sectors to the GDP is taking the leading.
As to Solomon, though it had registered remarkable outcomes, the Growth and Transformation Plan used to be implemented earlier to the coming to power of the current reformist government had its own shortcomings because it had tried to implement an imported economic plan that did not fit the nation’s economic context. As a result, it was unable to achieve structural change which was targeted to be achieved by 2020.
As to him, the current 10 year perspective development plan introduced by the government goes in line with the reality on the ground and has a potential to attain structural change. It is prepared based on the actor institutions’ implementing capacity in a bottom up approach, he said.
He further stated that to achieve industrialization, the agriculture sector must ensure the nation’s food self-sufficiency in advance and in such a way, citizens’ productivity and creativity will be enhanced which in turn drives the economy on the right track.
In case it is failed to hit the target, the nation will continue to import food items from abroad so that the macro-economy will suffer from instability, he stressed.
According to the economist, some of the indicators of the macro economic situation of the nation are the total employment, national fiscal policy, government revenue and expenditure among others. Money supply, interest rate and the nation’s foreign currency earnings capacity are the back bone of the economy.
The fiscal aspect of the nation also can be mentioned as a major indicator of the macroeconomic status of the country. Whether the total budget of the country is covered by local sources or not or part of it covered by foreign loan or aid, it determines the healthiness of the economy.
Whether the nation is financing its mega projects by local sources or not, it defines the characteristics of the macro economy.
As to Solomon, policy makers, before talking about economic development, they should think how they could feed the population. When there are shortfalls in meeting the basic needs, aspiring big things remains a day dreaming.
Fair food items’ price will be guarantee to the risen citizens’ income. A person who earns 10 thousand Birr per month and spends 5 thousand Birr for house rent and the rest 5 thousand Birr for food and other expenses, it is crystal clear that, he lives in a hand to mouth income brackets. In such a situation, the society will be vulnerable to various economic shocks.
Therefore, to stabilize the living situation of the society, agricultural productivity must be increased, Solomon said.
However, though agriculture remains the main stay of the nation’s economy, it is subsistence, venerable to extreme climate variation, and land fragmentation due to population dense. In addition, as farmers lack a sense of land ownership, raising productivity will be a challenge.
Asked whether there are possibilities to overcome the mentioned problems and uplift the farming sector, Solomon told the paper that, despite the sector is subsistence adapting suitable technology and utilizing more agricultural inputs can be taken as a way out.
He further said that countries which have predominantly arid areas proved the possibility of raising agricultural productivity through adapting technology. Israel can be the case in point in this regard. It has high productivity per unit and as compared to the other developing nations, it produces tenfold per hectare. By now, it exports fruits and vegetables to Europe market. But as to Solomon, utilizing cutting edge technology requires huge amount of money which Ethiopia ill to afford.
In order to achieve structural change, planning strategy to shift the stranded labor force in the rural part to the urban center and get employment in manufacturing and service sectors is essential. Moving the labor force from farming to the non farming also helps to establish extensive farm which utilizes modern farm inputs that helps attain multiplied productivity.
In this regard, cluster farming undertaken by small holder farmers at the moment and its outcome proves that there is a promising possibility of attaining productivity improvement.
As to Solomon, in Ethiopia, there is abundant natural resource which can be used as inputs to agriculture but due to the absence of finance, technology and skill human capital, the nation is unable to fully tap the resources.
Currently, the sector utilizes less input with its comparable output. As a result, it remains subsistence. Has the situation changed to better, the probability of ensuring food security in the near future will be high with no doubt.
To that end exploring and exploiting the water resources of the country is essential. The government’s endeavor in this regard is appreciable.
On the other hand, the current Egyptian conspiracy to bar Ethiopia from utilizing the Nile water is part of their dream to see the population to stay in appalling poverty and under development.
While the Egyptians are expanding their agriculture through the exploitation of the Nile water, they sabotage Ethiopia’s effort to fight poverty through exploiting its own natural resources.
The mega projects currently undergoing such as the GERD have commendable potential to increase the nation’s annual Gross Domestic Production (GDP). The foreign currency that is going to be garnered through exporting electric power to the neighboring countries enables the country to construct up to hundred small and medium size irrigation dams on its various rivers. Upon realizing this ambition, raising agricultural productivity and ensuring food self sufficiency will be realized, the economist noted.
According to water experts, the completion of the GERD enables the nation to gain billions of Dollars annually which in turn plays crucial role to make the macro economy healthy.
THE ETHIOPIAN HERALD JULY 16/2021
