BY ABEBE WOLDEGIORGIS
The Ethiopian economy is predominantly agrarian and yet it is a means of living for 80 percent of the population. Sectors such as Industry and service are in their infancy level. The macro economy is characterized by negative trade balance, shortage of hard currency, chronic inflation due to various factors, unemployement and foreign debt.
But against these all backdrops, the reformist government which assumed power four years ago has taken various measures to reverse the situations and some progress are also observed. Improving laws which hamper the private sector’s role in the economy; creating enabling environment for foreign investment; creating jbob opportunities for thousands; adjusting interest rate of banks for depositors and borrowers and widening the role of the private sector in the economy can be mentioned here.
In addition to these, for more than three and half years, the Homegrown Economic Reform that has been implemented brought some glimps of hope. While reflecting her stance with regard to the implementational aspect of the home grown economic reform, Minister of Planning and Development, Fisum Assefa (PhD) recentlysaid that the measures that have been taken to adjust the nation’s economy brought tangible results and enabled to preserve the nation’s political continunity and to take the economy on the right track.
In the past, the economy was at the verge of depression due to mismanagement and negligency of political officials. Problems were pervasive at the macro levels.
As to fitsum, the nation has abundant natural resources be it water, arable land, mining and huge labor force. However, in the past the regimes paid little attention to the nation’s socio economic development and invest their energy to perpetuate their power tenure at any cost. As a result, they left the nation as one of the most pauperized country in the world. Therefore, to improve the situation, the government engaged in development endeavor in inclusive approach and allocated 60 percent of the budget in pro poor projects.
Construction of infrastructure in the last four years has been continued. Roads, hydro electric power dams, industrial parks, air ports, dry ports, modern educational institutions and introducing modern transportation system can be mentioned here. On the other hand, the expansion of telecom brought tremendous growth for the nation’s economy by digitizing the services. Money transaction rate has been dramatically showed advancement. The trade volume both for export and import is boosting.
As to the Minister, with regard to agriculture, new policies are introduced to develop the sector. Importation of agricultural technologies free of tax enabled to expand mechanization. By now, 28 percent of farm land is plowed by tractors and such practice plays crucial role in stimulating the sector.
More than 600 items utilized as inputs are imported free of tax. The budget allocated to the sector also is increased by 100 percent. Public investment also increased and in addition to the belg and meher production irrigation farm during the dry season promoted and the volume of crop such as wheat yield is increased by more than double.
It must be understood that the implementation of the economic reform has faced various challenges both domestically and internationally. However, the challenges differ from one sector to the other. The investment allotted to the tourism is huge but in the past some constraints affected the sector.
There was anomaly in the macro economic landscape. The public sector was unable to service the debt it obtained from forign sources. There fore the main task of the government was recovering the economy and the economic reform played its part to adjust the debt service and to secure additional loan.
It also brought a paradigm shift on attitudinal change by looking other sectors which can surpass the traditional agricultural sector in garnering foreign currency such as mining and ICT. Through utilizing agdditional inputs, improving agricultural productivity is realized. New eco torism sites which can boost the sector are discovered. The ICT also began to play crucial role in providing job creation skill to the youth.
She further said that when talking about economic progress, it must be inclusive and benefit all with no marginalizing some segment of the society. In such a way farming in cluster form through mechanization could raise farmers’ income. Export performance continued largely, investment inflow has grown to 50 billion Birr and these all achievements are the outcomes of the reform.
As compared to other countries, Ethiopia could reduce its debt burden by huge amount. Even it paied the Euro bond earlier than the dead line. But as to her, mitigating inflation still remains as challenge and the government will re double its effort to contain it in the coming years.
There are still unfinished public projects under going and the government expenditure also can pose inflation. As to Fitsum, the pumping of money in the market might bring inflation. It is obvious that after the reform huge investment is carried out in tourism but observing their outcome needs some time. As to her, in the given economy, finance plays crucial role in facilitating growth but the excessive allocation of money in the market also poses inflation. The financial means also might bring opportunity or risks. The homegrown economic reform targeted to reduce such huge debt. But the tourism projects are financed by other innovative means.
As it is known, the emerging tourism sites in which their construction is undergoing by the Prime Minister Abiy Ahmed (PhD) intiative. The first tourism project was locally named as “Gebeta le sheger” followed by the “Gebeta le hager”. The projects were financed out of the government budget by generating finance from local investors and foreign partners. The turism sites’ projects which are under construction in “Koysha” in southern nation and nationalities region, “Wonchi” in the western Oromia region and in “Gorgora” near Gondar town are eyeing their completion and when they become operationl are expected to create job opportunities for thousands and stimulate the economy.
The other thing mentioned by Fistum which threatens the good result of the economy is the rampant corruption pervasive here and there particularly in public institutions. As to her, managers of public offices should live as per their duty. They are appointed only to serve the public and should know their salary derives from tax payers. Therefore, whenever the public comes to their office, they should properly treat and serve their customers in the speedy manner but in contrary to this principle and if they are found guilty of corruption, they will face justice. While recently the Prime Minister discussed with the youth who came from all regions, he announced that the government intends to route out corruption and to that end appealed citizens play their part to fight corruption through cooperating the law enforcement agencies.
As to the Ministry of Planning and Development, the nation still needs money for the construction of infrastructure such as roads, hydro power and irrigation dams to meet the growing demand. Whenever there is population growth, the demand for infrastructure is growing simultaneously. Therefore, any development plan must be public centered from its preparation/ stage. On the other hand, 70 thousand old houses are renewed without allocating the government budget only through using free labour in the capital and in the regions and the labor allocated for this program worth of 7 billion Birr and such venture indicate the economic growth targets in eradicating poverty.
The allocation of budget for the projects is based on its feasibility in terms of benefiting citizens rather than politically driven regional balance. To regulate the economy various measures have been taken. For example, to reduce the pouring of excess money to the market for the completion of projects is declined because it has inflational consequence. The government compromised its income obtained from tax and other means in order to support the ordinary citizens through providing basic products by subsidized price.
There were options for importing basic necessities and the first was the National Bank of Ethiopia to allocate hard currency and the other was the domestic industries to produce more basic commodities but the two options were unable to meet the demand. Therefore, allowing Franco valuta for short term was taken as preferred option and in such a way at least the poor could obtain the basic commodities with reduced price and almost 90 percent of the supply was covered through Franco valuta and the dicisson was vital in this regard.
The government economic ambition is not rest on ensuring food security rather it strives to achive transformation by changing the economic structure from agricultural led to that of industrial one and to that end restrained efforts will be exerted.
The Ethiopian Herald September 9/2022
