Over the past few years, Ethiopia’s economy and politics have been subjected to repeated challenges for a variety of reasons. Admittedly, the pressures of unexpected natural and man-made disasters were great. Coupled with the disruption of trade and commerce caused by the War broke out in the northern part of the country, the destruction of infrastructure and the displacement of citizens, as well as the diplomatic crisis, have had a devastating effect on the economy.
Moreover, the drought posed by global warming and climate change occurred in various parts of the country and the ensuing famine and livestock death has cost the country dearly. Nevertheless, it has been ensured that Ethiopia’s economy is moving better despite domestic and foreign pressures. This was confirmed by the Macroeconomic Council during its performance evaluation period in the last nine months.
According to Minister of Planning and Development (MoPD) Fitsum Assefa (PhD), Coping up with various local and international challenges during the past nine months, Ethiopia’s economy has been exhibiting progress and will mark a 6.6-percent growth by the end of this fiscal year.
Speaking at the economic sector performance evaluation meeting last week, she said that, in addition to internal factors, the economy has been challenged by Russian-Ukraine conflict.
However, though it was hard, progress has been witnessed in various sectors.
As to her, the paramount economic performance that has been achieved during the aforementioned months is indicating that, the economy to be grown by 6.6 percent by the end of this fiscal year.
The minister said that, agriculture and service sectors are among the top performers over the year. For instance, over 336 million quintals of agricultural products including 25 million quintals of wheat have been obtained from summer irrigation in the budget year.
Fitsum stressed that, the country obtained 2.9 billion USD and 4.5 billion USD from export and service sector respectively. However, local factors like the occurrence of drought have been seriously challenged agriculture sector in which exacerbating food inflation.
She stressed that implementing home-grown economy properly can be a remedy for the soaring inflation. “Fellow citizens need to support government in ensuring sustainable peace and security in the country.”
According to the report prepared by the National Macroeconomic Council last week, significant progress is being made in the service sector in which slowly recovering from the effects of the Covid-19. At the same time, substantial efforts are being made to revive the industry sector which has shown a slight decline in growth. Efforts to increase the share of domestic and foreign direct investment, which had been stalled during the war, have also begun to bear fruit.
According to the report increase in credits and savings that are directly related to investment were also recorded. There up on, the total savings of banks has increased by 25 percent compared to the same period in last year reaching 1.6 trillion birr. This allows the country to offer more credit to the private sector. 2.95 billion USD was earned from exports, of which 2.05 billion USD was earned from the agricultural sector which is remained as the backbone of export trade.
After agriculture, the mining sector and the manufacturing industry earned 453 and 378.5 million USD respectively. Despite the fact that the foreign exchange earnings for the past nine months have been slightly lower than the government’s targets. It is undeniable fact that it has shown growth compared to the same period in last year. In addition, under a contract signed by the Ministry of Finance with some importers, basic goods such as edible-oil, wheat and sugar are being imported without having to pay through “deferred letter of credit”.
Various strategies have been devised to reduce the growing unemployment rate. Thus about 1.4 million jobs have been created in the last nine months. Although the number of jobs created in the country is large, the number of Ethiopian citizens who have received vocational trainings and hired in different foreign countries such as in Qatar, Jordan and the United Arab Emirates, is growing. The report also revealed that there is a wide gap between what the government obtains from revenue and expenditure.
Approached by The Ethiopian Herald, Hailemeskel Gezu an Economist stated that in order to balance the disproportionate government revenues and expenditures, it is necessary to implement the ongoing tax reform, such as property tax and excise tax. The government is also working on the functionality of the new Turn over Tax law.
Appreciating the various efforts which are being made by the government to enhance the economic progress, he asserted that performance should be sustainable.
As to him, the government commitment in sustaining the nation’s economy even under the hard challenges are appreciable. Controlling inflation, raising agricultural productivity and supporting the service sectors can be mentioned here.
Allowing importers to import basic commodities such as wheat, oil, baby food, and sugar through Franco valuate played crucial role in stabilizing the economy. He also said that the procurement of medicines, fuel, fertilizers, oil, and other basic commodities need adjustment.
More importantly, the government is working hard to make all sectors effective through the new economic reform. In line with these efforts, the Ministry of Industry announced that it is working to make all sectors effective through implementing the new economic reform. More than 34,000 small and medium enterprises have participated the national training which was organized by Development Bank of Ethiopia in collaboration with the World Bank in the last five days.
The Minister of Industry, Melaku Alebel, said the national training for small and medium enterprises is necessary to fully tap the resources and boost the economy. The youth which is more than 70 percent of the population need to engage in economic activities so that lift themselves out of poverty.
Special attention also has been given to the agriculture, mining, industry, ICT and service sector. He also underscored the registered economic progress witnessed following the reform.
According to Melaku, successful companies and individuals around the world have gone through difficult times. Since business identity is more important than ethnicity, race, religion, gender, and the like there fore, citizens must work together for making poverty history.
President of the Development Bank of Ethiopia, Yohannes Ayalew (P.hD), on his part said that, the Bank, served the nation for the past 114 years and played vital role to advance the economy in various forms.
He said that, the bank has already trained more than 5,000 trainees in the first and second rounds and approved 14 billion birr loans for 1,200 small and medium size enterprises in order to advance their business.
He further said that in the countries such as Japan, Germany, and Italy small and medium-sized enterprises played vital role in advancing the economy and enabled to attain structural transformation. He also said that they have laid the foundation for creating resilient economy.
Scholars agreed that nation’s economic growth needs productive working force. It should be understood that for attaining economic miracle similar to other countries both the private and public sector play their own role and to that end creating enabling environment is essential. Side by side with attracting foreign investment through creating conducive environment is vital. Because as the nation suffer from shortage of hard currency FDI plays pivotal role in easing scarcity of currency. Moreover, it boosts export, substitute import goods, create job opportunity and link agriculture with industry.
BY HIZKEL HAILU
THE ETHIOPIAN HERALD FRIDAY 20 MAY 2022
