The Ethiopian government is striving to put the economy on the right track by mobilizing domestic resources and undergoing effective economic diplomacy with strategic partners worldwide. Since the country has felt the effects of multilateral and commercial loans, financial embezzlement, and inefficient foreign trade, the new administration has been aggressively working to reverse the situation.
As a result, the whole country has seen a glimpse of hope. No one can deny that tremendous changes are taking place in the performance of state-owned industrial parks which are supposed to play a pivotal role in stepping up the performance manufacturing sector. Recently, the Ethiopian Investment Commission announced that Ethiopia obtained 103 USD million from export generated by industrial parks in the past nine months.
This shows an increment by 40 percent when compared to last year’s performance of the same period. Industrial parks across the country have created employment for over 70,000 workers and the country has been able to attract 2.5 USD billion foreign direct investments in the reported period. On the other hand, as never achieved before, by widening the areas that have not been covered so far, the Ministry of Revenue has collected the highest amount of tax in the country’s history.
The 2019 IMF’s report about the Ethiopian economy is also highly optimistic. It predicted that Ethiopia will remain to be one of the fastest economies. According to the report, Ethiopia is expected to show a growth of 7.7 percent in 2019/20. In addition, the country has registered remarkable success in economic diplomacy.
Ever since he assumed power, PM Abiy has been striving to make strong economic diplomatic ties to avert a shortage of foreign currency, as well as ensure cancellation of loans/interests or turn them into the concessional base and finding sources of grants. Ethiopia has been aggressively working to draw foreign resources to meet its financial demand. Accordingly, astonishing results have been registered in economic diplomacy. About 13 billion USD has been gained since the new Prime Minister assumed power.
The Diaspora trust fund, grants from the Arab countries, loan cancellation by the government of China and concessional loan agreements with the Korea Republic can be taken as instances of successful engagement in economic diplomacy. Ethiopia has recently secured 1.8 billion USD in investment from China. The country is one of the heavily indebted countries with most of the money coming from China.
During his stay with President Xi Jinping of China, Prime Minister Abiy has also discussed ways of restructuring debt. Reports coming from Beijing show that China has agreed to cancel all interest accumulated from its debt – estimated between 12 to 20 USD billion.
The two concessional loan agreements amounting 264 million USD (equivalent to 7.6 billion ETB that were recently signed between Ethiopia and the government Republic of Korea with a view to supporting power and irrigation development efforts is paramount. The country had passed through difficult times due to loans and interest payments, trade balance deficit, and high level of embezzlement that exceeds the foreign currency obtained from the export trade.
However, various efforts have been undertaken and the government seemed to have changed its stubborn stance in revising its policy and strategy in privatizing certain public enterprise. So that it was able to attract huge Foreign Direct Investment (FDI) inflows.
Thus, the effort to rescue the country from accumulated national debt, and trade deficit, combat embezzlement, invest in to increase the productivity of the manufacturing sector, and boost export trade shall not be left to the government alone. It is rather the responsibility of the public at large. If so, the country will achieve sustainable economic growth and structural transformation.
The Ethiopian Herald, May 9/2019
