BY MENGESHA AMARE
Nothing is much more exciting than witnessing own country enlisted among the leading ones to pull African economic trajectory to the forefront, which has long been regarded as incapable of feeding its citizens. Yes, following Nigeria, South Africa and Angola, Ethiopia has maintain the fourth place among the top of Africa’s largest economies in the year 2023, according to the IMF’s January 2023 World Economic Outlook update.
The aforesaid nations are the top five largest economies in Sub-Saharan Africa in 2023. Ethiopia’s coming to the vanguard amid a range of trying scenarios is a miracle indeed. Following the armed conflict in Northern Ethiopia coming to an end in late 2022, the IMF projects the East African nation’s economy to witness the most impressive growth in the African continent this year.
Yes, Ethiopia is set to replace neighboring Kenya as the fourth-largest economy in sub-Saharan Africa, thanks to the Ethiopian government’s ambitious economic reform measures aimed at expanding the nation’s economic activities. Taking this hard fact in mind, The Ethiopian Herald had a stay with Tesfalem Kiros, an economist graduated from Ethiopian Civil Service University. He said, “Beset by copious challenges including the conflict in Tigray, aftershocks of the coronavirus pandemic, multifaceted sanctions, drought as well as other related internal and external factors, Ethiopia’s economy has shown progress to get enlist the nation enlisted among the five largest economies in Sub-Saharan Africa.”
Citing the World Bank report, Tesfalem said the combined consequences of the Ukraine war, massive debts, and climate changes have hampered Africa’s economic progress. Ethiopia is not the exception in this regard. Many economies in sub-Saharan Africa grew at a record pace before the pandemic. Ethiopia and Rwanda, for example, saw some of the fastest expansions in the world an average of more than 7.5% per year over the past two decades. However, it is less clear whether the gains in economic growth have been shared equally across regions, he added.
As to him, Ethiopia’s due emphasis to homegrown economy, attracting investments, be they are local or foreign ones via making the playground suitable, as well as focusing on infrastructure, industrial parks development and renewing its diplomacy with neighboring countries and beyond has helped the nation bring about real transformation.
Ethiopia has also embarked on expanding access to clean water, electricity, and cellphone services and long distance road networkas these are basic necessities which can potentially accelerate growth and change, he added. According to Tesfalem, recognizing the fact that macroeconomic stability, strong institutions and political stability, trade openness as well as well-targeted investments are the key drivers that helped the nation meaningfully reduce poverty and regional inequality, Ethiopia has all the time focused on these thematic concerns.
“True, Ethiopia needs to pursue a broad-based policy framework anchored around clear investment strategy to assist underserved regions, macroeconomic stability to foster inclusive growth, and building institutions to ensure political stability and equitable public service delivery so as to attain its target set—enlisting itself under the category of middle income countries within the shortest time possible as it regenerated remarkable economic growth amid wearisome changelings even,” he opined.
According to Tesfalem, Ethiopia’s economy is reasonably tranquil, notwithstanding it is not as stable as that of Botswana or Ghana, which are with significantly lower populations. This becomes more apparent when contrasting Egypt and Nigeria, too, other major African economies that rely largely on oil prices.
Investments in Ethiopia’s infrastructure have been continuous, and the growth of Ethiopian Airlines, the finest airline on the African continent, is one of the rare examples of a state-owned enterprise in Africa run by a professional management team that is independent of political meddling, has been contributing a lot to country’s economy, he opined. “Both the IMF and World Bank have shown high economic growth rates for Ethiopia though there are many other elements to consider such as the level of development, per capita values, economy of scale, inequality in the country, governance and the openness of market, price levels, and so forth,” he said.
He further underlined that Ethiopia is becoming the fastest growing economy in the world and there should be a focus on easing policy bottlenecks to make the country’s growth more inclusive and sustainable. “Ethiopia’s economic miracle ride is set to turn into a further rosy boulevard, and its rapid economic growth is one of the great stories of the 21st Century, but productivity should be improved, investments must be fruitful and tax revenues increase, to make the Ethiopian economic miracle much more prompt.”
He further said that productivity growth has mostly been replaced by increasing capital investment, most of which has been done by the government or state-owned enterprises. As investment, innovation, policy and finance play a central role in defining the economic growth model of the era, Ethiopia needs to work more and better collaborate with others so as to create a sustainable, resilient and inclusive future.
The challenge is, he said, to recover and rebuild in a way that creates sustained growth and transforms Ethiopia’s economy by overcoming all sorts of growth obstacles and destructive paths of the past. Yes, it must invest and act quickly to get there. Nature-centered transformation, investment-driven growth and innovation, an inclusive approach to access human talent while managing insecurity, and a process of international collaboration that fosters common goals – this will be the growth story of the day.
He further said that much of the fundamental structural change needed lies in transforming the key systems of energy, transport, industry, cities and land via employing private sector involvement, bilateral official finance, multilateral development partners and so on. There are hurdles associated with embracing sustainable economic development in organizations like lack of financial aid, resistance to change, inaccurate information and dishonest business practices, Tesfalem added.
As to him, sustainable economic growth means providing more productive and lucrative possibilities for future generations. A robust economy means people have more disposable income to buy more products, build a bigger house, go on holiday or improve their standard of living in other ways. This boosts many industries, including manufacturing, housing and travel and tourism. Conserving or replenishing resources may enable a country to reduce its imports and increase its exports, too.
Technological developments have created a method of transforming agrarian economy to mechanized one. No doubt, technology captures air, absorbs moisture and filters out dust and pollutants for a better production and productivity. Hence, exploiting the potential of technology is suitable for domestic, industrial and agricultural use.
Harnessing science and technology scientific progress and technological development are major forces underlying improvements in productivity and living standards. Besides, new technologies offer considerable promise for de-coupling economic growth from long term environmental degradation, and Ethiopia has to well exploit what it has had at hand and in its own reach to record a further economic achievement, he added.
Most importantly, the government of Ethiopia needs to create a policy environment that provides the right signals to innovators and users of technology processes, both domestically and internationally and to support private initiatives in an appropriate manner to push the country steps further, he underlined. As providing permanent incentives to innovate and diffuse technologies that support sustainable development objectives via expanding the use of market-based approaches in environmental policy is also of instrumental in boosting economy.
He said, “In addition to all the above cited facts, growth, sustainability, and inclusion—buttress one another and confidently help the nation attain much more change. Therefore, the county has to focus on how to build a future that delivers growth, sustainability and inclusion to take the lead and declare economic sovereignty.”
THE ETHIOPIAN HERALD WEDNESDAY 26 APRIL 2023
