BY MENGISTEAB TESHOME
Over the past few decades, Ethiopia has made significant efforts to ensure economic development.
Yes, Ethiopia’s economy has grown significantly in recent years, making it one of the fastest-growing economies in Africa. According to the World Bank, Ethiopia’s gross domestic product (GDP) grew at an average rate of 9.9 percent per year between 2010 and 2019. However, the COVID-19 pandemic has impacted the country’s economic growth, leading to a contraction in GDP in 2020.
Ethiopia’s economic growth has been driven by several sectors, including:
Agriculture: it is the backbone of Ethiopia’s economy, contributing around 40 percent of GDP and employing around 80 percent of the total labor force. The government has implemented policies aimed at improving productivity and increasing exports which has helped to boost economic growth.
Manufacturing: Ethiopia has implemented policies aimed at promoting industrialization, particularly in the manufacturing sector. The government has provided incentives for foreign investors to set up manufacturing plants in the country, which has helped to diversify the economy and increase exports and substitute imports.
Infrastructure development: The country has invested heavily in infrastructure development, including the construction of roads, railways, and airports. This has helped to connect the country and improve access to markets, which has helped to boost economic growth.
Services: The sector, including finance, telecommunications, and tourism, has also played a significant role in Ethiopia’s economic growth. The government has implemented policies aimed at promoting the development of these sectors, which has helped to increase employment and generate revenue.
Regional integration: Ethiopia has been working to promote regional integration in East Africa, including through the establishment of the African Continental Free Trade Area (AfCFTA) and the development of infrastructure projects that connect the country with its neighbors. This has helped to increase trade and investment within the region, which has helped to boost economic growth.
Despite this impressive economic growth, Ethiopia still faces several challenges, including limited access to finance, high poverty levels, and political instability. However, the government has implemented measures aimed at mitigating the impact of the pandemic, including providing support to affected sectors and households.
Ethiopia has also made efforts to attract foreign direct investment. The government has implemented policies and put in place incentives packages to attract foreign investors in various sectors, including manufacturing, agriculture, and services is commendable. This has led to an increase in investment and job creation. In addition, Ethiopia exerted utmost effort to develop its human capital. The country has invested in education and health care, which has led to an improvement in the quality of the workforce, increase in productivity and innovation, which has helped to boost economic growth.
Ethiopia’s effort to diversify its economy should be appreciated because it identified country’s sectors with growth potential, including textiles, leather, and tourism, and still attention is paid to the development of these sectors. This has helped to reduce poverty and to improve economic stability.
Furthermore, Ethiopia has made efforts to improve its business environment. The government has implemented policies and reforms to make it easier to do business in Ethiopia. This has included the introduction of online business registration and tax payment systems, which has helped to reduce bureaucratic hurdles and improve efficiency.
It also has taken several measures to address the challenges of access to finance, particularly for small and medium-sized enterprises (SMEs) and individuals.
Some of the key ways Ethiopia is addressing these challenges include:
Improving financial infrastructure: Ethiopia has been investing in improving its financial infrastructure, including expanding the banking sector, increasing the number of ATMs, and developing mobile banking services. This has helped to improve access to financial services, particularly in rural areas.
Promoting financial literacy: The government has implemented financial literacy programs aimed at educating individuals about financial products and services. This has helped to improve financial decision-making and increase trust in formal financial institutions.
Encouraging microfinance institutions: Ethiopia has encouraged the development of microfinance institutions, which provide financial services to individuals and small businesses that are often excluded from formal financial institutions. This has helped to increase access to credit for underserved populations.
Strengthening the regulatory environment: The government has implemented policies and regulations aimed at strengthening the financial sector and promoting greater innovation. This has created a more stable and predictable environment for financial institutions to operate in.
Promoting greater financial inclusion: The government has launched initiatives aimed at promoting greater financial inclusion, including the National Financial Inclusion Strategy and the Ethiopian Commodity Exchange. These initiatives aim to promote greater financial access and inclusion for all Ethiopians.
Expanding digital financial services: Ethiopia has been investing in digital financial services, including mobile money and mobile banking. This has helped to increase access to financial services, particularly in rural areas where traditional banking services are often limited.
The government has implemented policies helpful at attracting foreign investment in the financial sector. This has helped to increase the availability of credit and other financial services, particularly for SMEs.
The country has been working to strengthen its legal framework for financial services, including the introducing of new laws and regulations. Yes, this has helped to increase investor confidence and improve the overall stability of the financial sector but it should be strengthened further.
Promoting greater regional integration: Ethiopia has been working to promote greater regional integration in East Africa, which has helped to increase trade and investment in the region. This has created new opportunities for financing and investment, particularly for SMEs.
By addressing these challenges in a comprehensive and coordinated manner, Ethiopia should making significant progress in improving access to finance and promoting greater financial inclusion. These efforts are critical for supporting economic growth and reducing poverty, and will help to build a more inclusive and sustainable economy for all Ethiopians.
To address ascribed challenge’s the government should enhance implementing in more organized fashion to benefit all. It has implemented several measures enable to bring a better outcome. Some of the key measures include:
The government has taken steps to improve political stability, including holding free and fair elections and engaging in dialogue with opposition groups. This has helped to reduce political tensions and improve investor confidence.
Poverty reduction: The government has implemented policies aimed at reducing poverty, including investing in social services, such as education and health care, and promoting rural development. This has helped to improve the living standards of millions of Ethiopians and reduce poverty levels.
Environmental sustainability: The government has implemented policies aimed at promoting environmental sustainability, including the development of renewable energy sources and the protection of natural resources. This has helped to promote sustainable economic growth and reduce the impact of climate change.
Private sector development: The government has implemented policies aimed at promoting private sector development, including providing incentives for foreign investors to set up businesses in the country, and promoting entrepreneurship among young people. This has helped to create jobs, increase productivity, and promote sustainable economic growth.
Technological innovation: The government has implemented policies aimed at promoting technological innovation, including investing in research and development, and promoting entrepreneurship in the technology sector. This has helped to promote innovation and entrepreneurship, and increase productivity.
Climate change: The government has implemented policies aimed at addressing climate change, including promoting sustainable land use practices, investing in renewable energy sources, and promoting reforestation. This has helped to reduce the impact of climate change on the country’s agriculture sector, and promote sustainable economic growth.
In addition to these measures, the government should implement reforms aimed at improving governance and reducing corruption, which has helped to improve the business environment and attract foreign investment. While there is still more work to be done, these measures have helped to address some of the key challenges facing Ethiopia’s economic growth targets and promote sustainable development.
THE ETHIOPIAN HERALD FRIDAY 9 JUNE 2023
