BY MENGESHA AMARE
Needless to state, economic growth is closely linked with production and production increase, resource use as well as enhancement of social wellbeing. The ongoing green legacy initiative, homegrown economic move, construction of mega projects is tightly intertwined with economic activities and economic growth across the nation especially these days.
Taking all these facts and the not yet cited accounts in consideration, The Ethiopian Herald talked to Henok Bireda, an economist graduated from Addis Ababa University, to seek viable information about the major steps that can potentially accelerate economic transformation. He stated that in economics, economic transformation refers to the continuous process of moving labor and other resources from lower to higher-productivity sectors applying structural change and raising within sector productivity growth.
As economic transformation emphasizes the movement from low-to-high-productivity activities within and across all sectors, Ethiopia as now capitalized on the combination of agriculture, manufacturing and services. This movement of resources is a key driver of economic development and national transformation. He said, “The Ethiopian economic transformation plan and other political initiatives for a sustainable future require not only technological change but also changes in consumption and social practices.”
He said that the sector productivity growth, which is also termed as sector transformation, entails the adoption of new technologies and management practices that increase the efficiency of production. It can come about as a result of the increased efficiency of existing firms or as a result of the reallocation of resources away from the least productive firms towards more productive firms. As to Henok, growth is culturally, politically and institutionally ingrained. Change requires citizens to democratically address the potential barriers that obstruct the smooth flow of activities towards bringing about transformation, be it social, political or economic ones.
Strong economic growth has helped Ethiopia overtake Kenya to become the fourth largest economy after it recovered from repeated waves of COVID-19 pandemic shock and the conflict broke out in the northern part of the country as well as some sporadic skirmishes here and there. Ethiopia has emerged as the fastest-growing major economy in the African continent and beyond and is expected to be one of the top economic powers in the world over the next decades, but it has required to be backed by robust democracy and strong partnerships with a number of neighboring nations and others across the globe.
The country has planned to have a domestic demand-driven homegrown economy, with an improvement in the economic scenario. It is better for Ethiopia to continue prioritizing lowering inequality while also putting growth-oriented policies into place to boost its economy. In view of this, there have been some developments that have taken place in the recent past, he opined. Ethiopia’s economic story has now been changed into a dramatic epoch as the country capitalizes on various means to boost the sector. Stronger revenue generation as a result of improved tax compliance, increased profitability of organizations, companies and business entities, and increasing national economic activity though all these steps have also contributed to rising capital spending levels.
Over the years, the Ethiopian government has introduced many initiatives to strengthen the nation’s economy. It has been effective in developing policies and programmes that are not only beneficial for citizens to improve their financial stability but also for the overall growth of the national economy. “As witnessed from the myriads of activities and measures taken to make Ethiopia economic sovereign, its rapid economic growth has led to a substantial increase in its demand for exports. All activities centering transformation are aimed at creating immense opportunities in the country. In this regard, some of the initiatives taken by the government to improve the economic condition of the country include homegrown economic strategy, import substitutions and export promotion,” he remarked.
Numerous foreign companies are setting up their facilities in Ethiopia on account of various government initiatives like creating appealing business environment, making conditions suitable and devising a range of means to attract as well as encourage investors. “A fair and transparent competitive environment is essential to the successful development of country’s international economic relations. The energy transition is also one of the government’s key projects for a secure, environmentally compatible and
economically successful future. As a next step in the energy transition, a consistent overall framework is needed to bring together the various fields of action, including energy efficiency, renewables, the electricity market, the grids, and digitization as this is of paramount importance in transforming the economy of the nation,” he added. He said, “We need to rapidly translate words into action to help develop civil society, the economy and infrastructure in partnering countries as without democratic development, there can be no lasting economic success. And without economic success, democratic developments cannot be stabilized.”
He further said that at the same time, Ethiopia needs to engage in intensive political dialogue with the transition countries to work out together how it can best move forward. He said, “I am confident that Ethiopia will retain its great appeal for people in Eastern Africa and beyond. I am also sure that the county can benefit from intensive cooperation with its neighbors and sisterly world countries. Ethiopia can fully grasp the opportunities of historical changes in the region and it could be a defining issue for its common foreign and security policy.”
Yes, he said the economic policy and growth strategy Ethiopia is now entertaining it the right avenue to push the country forward and has helped the nation bring a degree of prosperity to millions of citizens. It has also brought a viable means to combat climate change and push it close to the point of no-return as the green legacy initiative has increased its horizon year by year. As to him, if the economic system has been managed in a very systematic and impartial way, it would be instrumental in fuelling equity, equality and just socio-economic system within the community to levels rarely seen before in human history.
“The good news is that every Ethiopian is now well aware of the untapped resources, economic bases and wealth of the county as the economic system is growing. We still have the collective resources to carry out the paradigm shift that this planet needs so urgently,” he elucidated. Ethiopia has now been found at a road to make its citizens primary beneficiary of the economic paradigm. Here, the government, investors, private sector, the farming community have a primary responsibility to bring about the necessary change in the economic sector to well transform the country and make it livable for the generation to come.
According to Henok, Ethiopia needs an economic system that prioritizes human well-being and ecological sustainability over GDP growth. The country is well endowed with planetary resources and tempting weather condition suitable for sustainable economic growth. That is why it is recurrently heralded that Ethiopia needs a new way to organize its economy. It needs to move away from the exploitation of natural resources and human capital.
He wrapped up his idea stating that cognizant of the fact that economic growth and transformation that helps to realize gender equality and climate justice is decisive in bringing about real change, Ethiopia is working hand and glove with the private sector, development partners and other concerned bodies with a view to declaring trustworthy economic transformation. Ethiopia has to mobilize its collective intelligence to enjoy transforming its economy, and there are also opportunities to do so.
THE ETHIOPIAN HERALD WEDNESDAY 31 MAY 2023
