BY ABEBE WOLDEGIORGIS
It has been five years since the reformist government led by Prime Minister Abiy Ahmed (PhD) assumed power. The resignation of the former Prime Minister Hilemariam Desalegn due to public discontent as a result of political repression gave way for the birth of the reform which changed the nation’s political economic landscape.
Right after assuming of power, the new Prime Minister asked pardon the public officially to the crime against humanity committed by the previous regime and pledged to redress the past grievances. To that end, it introduced many laws which served to open political space to citizens and liberalized the economy by giving more enabling environment for the private sector.
As it is known, the reform government is burdened with political instability, conflict and public unrest as well as economic instability inherited from the previous regime. Though it was challenging, the government has taken various measures and could stabilize the economy. In his recent response to the parliament, the Prime Minister said that Ethiopia’s foreign debt has reached nearly half of the nation’s Gross Domestic Production.
He also said inflation in Ethiopia is a chronic problem which has been experienced for the past 20 years. Last year, the government allocated 1.9 billion Dollars for debt service. Even though the nation faced crises such as war and COVID 19 and dwindling foreign currency earning capacity in the last three years, it fulfilled its debt repayment duty with no rescheduling.
He further said that, the 59 percent of the Ethiopian Budget is allocated for infrastructure building as a capital budget. The government also allocates budget to meet food demand of the poor who are unable to obtain their daily bread especially in urban areas and for school feeding. On the other hand, to withstand price hike, the government allocated 50 billion Birr as a subsidy. 133 thousand vehicles were subsidized to overcome the increasing price of petroleum in the last two years.
It also provided 21 billion Birr to subsidize fertilizer to farmers. The government also lost about 10 billion Birr by allowing Franco Valuate to import basic food items and edible oil. Solomon Zegeye is an economist working in the Nyala Insurance Company as Micro Finance Manager. As to him, though the government received a very depressing economic situation from the past, it has taken proper restructuring measures and enabled to reverse the situation to the better. By implementing viable macro -economic policies, it could reduce the debt by managing debt repayment schedule. It also tried to withstand the pressure to depreciate the value of Birr against Dollar and other hard currencies. It created enabling environment to open the economy to foreign investment and enable to attract investors and garner hard currency.
Allowing Ethiopian Diaspora to open bank account and deposit money in foreign currency also raise nation’s hard currency deposit though still shortage of currency is there. As to Solomon, while the new government assumed power five years ago, mega projects which used to consume huge amount of hard currency, were not completed as per their accomplishing time and incurred the government additional cost.
The Abbay Dam, the sugar plantation farms and sugar factories, the Koisha hydropower dam and the Yayu fertilizer industry construction are some of the projects which have been delayed for more time due to various reasons. Construction works were delayed by changing of design and some of the projects’ contracts had been given to unfit local companies. The electromechanical part of the Abbay Dam and the Yayu fertilizer industry construction were given to METEC which had no sufficient experience in the field.
To bring remedy to the above mentioned problems, the new government ceased the contract with METEC and handed over the mechanical part of Abbay Dam to the Chinese company. Currently, the Dam is eyeing its completion in less than two years time since most parts of the construction works have been completed. And the credit to this achievement is given to the government resoluteness and public participation.
Some sugar plantation farms and industries located in the South Omo region also began production. According to the recent report of the Ministry of Labor and skill in the last two years, it could create job opportunity for 1.5 million people all over the country through small and medium size enterprises.
While he recently made an interview with local media, State Minister of Finance, Eyob Tekalign (PhD) said that some argue that the economic growth is not trickled down to the poor and did not seen in the pocket of the ordinary citizens but truly speaking the economy is growing. He further said that each year the volume of production is increasing and the amount of consumption is also surpassed the previous years. These can be taken as indicator of the economic growth, he added.
The economic growth witnessed in the agriculture sector particularly in the dry season wheat irrigation farm can be an indicator. Daniel Muleta (PhD) is working as project coordinator in the irrigated wheat farm at the Ethiopian Agricultural Research Institute.
As to him, five years ago, Ethiopia could cultivate about 1.8 to 2 million hectares of land during the main rainy season for wheat production. Even though such large scale land is cultivated, Ethiopia could not meet its wheat demand. So, it used to imports 25 percent of its total wheat demand from abroad.
Four years ago, when wheat farm through irrigation was introduced, it was implemented in 3500 hectares of land and in the following year, it was enhanced to 20,000 hectares land and in 2020/21 the wheat farm was practiced on 187,000 hectares of land.
In 2021/22 the land cultivated for wheat production was enhanced to 404, 900 hectares. Out of this, 88 percent of the cultivation was implemented in Oromia region. By the same token, 40, 000 hectares of land is cultivated in Amhara and 7500 hectares in Afar region, 5000 hectare in Southern Nation and Nationalities Region and 157 hectare in Sidama region for sample production. It is proved that Sidama has huge potential to produce wheat from summer irrigation scheme.
In the second round in addition to irrigation, 257, 800 hectares of land in Oromia region and 28 000 hectares of land in Amhara region was cultivated for wheat production by using the rain season water. In general, it was planned to produce wheat on 693, 350 hectares of land by the end of 2021/22.
Days ago, while responding to questions from the members of HPR, the Prime Minister said that currently, the nation could harvest one million quintals of wheat through dry season irrigation farm and exports the surplus amount to the neighboring countries without impacting the domestic supply. In the past, Ethiopia spent huge amount of Dollars for the importation of wheat but this year, it gave up importation of wheat and this can be taken as a positive outcome for the nation’s effort.
Recently, during her stay with a local media regarding the manufacturing sector, the Minister of Plan and Development, Fitsum Assefa (PhD), underlined that the manufacturing sector which was expected to transform the nation’s economy through job creation, import substitution, boosting export with the involvement of the private sector and play crucial role in linking agriculture with industry, could contribute only seven percent to the nation’s Gross Domestic Production.
As the sector mostly utilizes inputs imported from abroad, it consumes more hard currency and the scarcity of Dollar left the sector to remain weak.
As to her, when the reformist government took power five years ago, it obtained bankrupted economy from the previous regime. Understanding the fact that the nation’s economy was very weak, the government has taken various measures to revive its various economic sectors and to address generation’s long time problems via introducing homegrown economic reform.
The Ethiopian Herald April 2/2023
