BY ABEBE WOLDEGIORGIS
Hearing the ordinary citizens’ complaint with regard to the sky rocketing of commodities price on alarming rate has been common. At the same time they demand immediate action by the government to reverse the situation.
As to the standers, currently due to various reasons, the government faced huge budget deficit as a result of complicated sabotages at micro and macro levels of the economy. Shortage of hard currency also has been a headache to the economy. Inflation is rising in a weakly base and according to the Central Statistics Agency, in the last month food price index showed higher increment.
The statistical survey conducted in last month in 119 selected places all over the country indicated that as compared to last year, the commodity inflation increased by 41.9 percent. Particularly the food price is alarmingly increasing.
In contrary, the ordinary citizens’ daily or monthly income has not increased which could enable to withstand the crises. Hence, unless the government involves in stabilizing the market, the situation might be worse. The government pre occupation must be on economy than other issues.
According to Wasihun Belay, an economist, though the Statistics Agency’s monthly report on inflation created no consensus by all, the inflation rate which still rests on 30 to 40 percent is surprising because the Ethiopian economy is severely faced local and international pressure. As to him, the question how the statistical work on price index conducted should be addressed.
Conducting the evaluation of commodity price by comprising more than 300 goods including teff, wheat and other vegetables in one and reporting does not go in line with the reality on the ground and is not convincing because some time the price might be artificially lower. However, if the study is conducted on teff, barely, edible oil, sugar and other similar commodities, the average price hike might be reached to 100 percent. In other countries the price inflation report compiled from different places because the commodity price is varied from place to place.
For, example, the house rent price in Minjar and Addis Ababa is not similar but when the information is reported, it is reported as if it is from the whole country. In general, with regard to inflation, it must be conducted based on the information obtained from each region and based on the information, the national average must be compiled and in such manner the difference with regard to the price index will be reconciled, Wasihun said.
As to him, the price hike is posed by various factors and among others, the decreasing of the amount of products due to the increasing of cost of production and shortage of supply to the market; the high demand of commodities and services due to the population growth. “Imported inflation also aggravates the matter that resulted from the declining of the purchasing power of Birr due to official devaluation. However, increment in some agricultural outputs also witnessed in some regions due to the expansion of plowing lands. Nevertheless, as compared to the demand the increment is negligible,” Wasihun underscored.
In three regions of the northern part of the country regular production activities are curtailed due to the war. Regions such as Oromia and Somali also are hit by critical drought. Cultivable areas of Kamashi zone in Beneshangul Gumuz Region are abandoned due to conflicts in the last budget year.
It is expected that the price hike of commodities will continue in the month of March this year too. The current war between Ukraine and Russia also puts its own pressure on the economy.
Solomon Zegeye is an economist who is working as an economics analyst in Nyala Insurance Company. As to him, role of the government in stabilizing the economy is immense and had it not been of its involvement, the inflation would have been beyond the capacity of the ordinary citizens.
Aiming to stabilize the inflation, government allowed importers to import basic commodities with tax free and it subsidizes the petroleum price, as a result, the rate of inflation rests on 30 to 40 percent.
As to Solomon to mitigate the price inflation and economic crises resource allocation by the government should be economical and focuses only on feasible projects is essential. He further said that currently Ethiopia is find itself economically in the state of emergency and every plan and actions should consider such situation.
He further said that with no economic stabilization, attaining political stabilization and peace is impossible. In addition to these, showing patience for attaining political goals and stressing on easing economic instability is vital.
Amanyihun Reda is a policy consultant working for various firms. As to him, less attention paid by the government to the agriculture sector in the past brought its own negative consequence and the gap currently witnessed between supply and demand of agricultural products is related with that.
He further said that, had the government prioritized the sector and measures that are relevant to the sector had taken in the last four years, improvement would have been achieved.
Through modernizing the sector, providing surplus products to the market and to industries as inputs is robust. However, as to him, it seems that the government is pre-occupied by politics and stabilizing the statuesque.
It is crystal clear that agriculture plays pivotal role in the economy. It supplies food to consumers, covers 70 percent of export commodities and is the means of living for 80 percent of the population. Hence, paying maximum attention to the sector is vital.
According to Amanyihun, as price hike is the burning issue of the public, government should not render its resource for renewing offices and street yards.
In the last ten years Ethiopia annually earned 3 billion Dollars from export whereas and its annual import bill is 15 billion Dollars. Hence, to close such huge gap between import and export bills, enhancing productivity is essential. As to him, the government’s argument that devaluing Birr against Dollar helps boosting export is illogical. Rather, it exacerbates inflation because the past experience did not prove this.
The policy consultant explained that in the last four years Birr is devaluated by 82 percent but the devaluation intention has not achieved its objective. It was unhelpful to stabilize trade deficit and encourage exporters.
“Shortage of products and container; the price hike on shipping services and logistics; the increasing of oil price due to war ignited between Ukraine and Russia and the increment of food items including wheat and edible oil further aggravates the economic crises. These all need the government to devote its time and energy on reversing the situation” Amanyihun added.
He further said that, countries that previously donate money to poor countries are preoccupied by their own problems related with COVID and Ukraine – Russia war. hence; expecting aid from them is not feasible. Therefore, doing things as business as usual must be halted.
As mentioned above, Ethiopia is busy in squashing the terrorists’ acts in various parts of the country that cause calamity against the country backed by local and foreign enemies. The government is devoting its time and resource to bring sustainable peace but did not get sufficient time to deal with corruption and illegal trade which add fuel on the fire that exacerbates the economic grievances.
Taking such situation as a fertile land, illegal traders continued their clandestine activities to enhance their ill-gained wealth via sabotaging the economy. Therefore, to bring a long lasting solution and to defuse economic trauma, citizens in collaboration of the government must fight all mal practices.
The Ethiopian Herald March 22/2022
