The United Nations Industrial Development Organization (UNIDO) will continue to assist the Second Home-Grown Economic Reform and is eager to diversify its support to Ethiopia, the representative and director of UNIDO Regional Hub in Ethiopia, Aurelia Patrizia Calabrò, said.
In an exclusive interview with the local media, Calabrò said this reform plan has been quite new when compared to the GTP plans that implemented in the past. To this end, “We are very interested and closely observing the implementation of this plan. We think it is a very important achievement,” she added.
The representative noted that her organization is very much encouraged by the results even if the Ethiopian economy has been facing lot of challenges in the last four years. “We are working with the government very closely. We will continue to work more and more to assist the country to implement this reform plan.”
Elaborating on the challenges the country has been facing, Calabrò said that among the challenges, inflation and shortage of foreign currency should need special attention. But at the same time, export earnings have grown in some sectors like coffee for two consecutive years. It has shown increment and is very important in earning revenues.
There are very positive results which are witnessed currently. But more an effort is needed. That is why the organization is looking forward to seeing the Second Phase of the Home-Grown Economy Reform plan. The representative also said that UNIDO is looking forward to supporting Ethiopia’s efforts in areas of tourism, digitalization, among other sectors. One of the sectors that gained momentum is tourism which was not there in the past. Tourism industry is very important and it needs providing the necessary capacity building to the sector.
According to her, it is a kind of focal area that is underlined and hope in the months to come, the institute also works very closely with the government. For Calabrò, the other important thing is digitalization which is an area that the world looking at very important because it is already seen that it has been improving in the financial sector with the creation of tele-birr. There are of course certain areas that need some corrections on the macroeconomic level, especially to put some balances in place for inflation and scarcity of foreign currency, she said.
Moreover, the representative pointed out that there are a lot of opportunities, particularly from the private sector. The private sector should involve and invest in the construction and the manufacturing sector because it is really need to go into one of the bases of this reform which serves for import substitution, technology and knowledge transfer.
Calabrò finally said that, Ethiopians have to create their own brand products, because they have the inputs which can be availed locally. In line with this by cultivating irrigation farms they can be food self- sufficient. It is to be recalled that the International Monetary Fund (IMF) also has reaffirmed support for Ethiopia’s economic reform agenda, which aims to address foreign exchange shortages and macroeconomic challenges.
Authorities are crafting a second round of economic reforms after the first could not met the aspired goal to spur meaningful changes, according to reports. Ethiopia’s economic woes have worsened due to war, drought and global challenges stemming from the pandemic and Russia-Ukraine conflict.
Sources say Ethiopia is seeking at least USD two billion in IMF assistance, which the lender is willing to provide within certain preconditions. Financing assurances from creditors and donor commitments will likely be essential for any IMF aid to be approved and disbursed, officials say.
IMF Communications Director Julie Kozack confirmed on June 8, 2023 that Ethiopia has requested financial support to address economic shocks. The economic challenges are significant for Ethiopia including food insecurity, humanitarian needs, post-conflict reconstruction, high inflation, shortages of foreign exchange, and assorted shortages of some imported goods.
Discussions are ongoing with Ethiopian authorities on policies that could support an IMF program, according to her. Kozack noted a potential program aiming to support the authority’s reform agenda, address macroeconomic vulnerabilities and unlock economic potential.
The new program would require a clear commitment from development partners and financing assurances from creditors under the G20’s common framework to ensure that it can meet objectives. The reform agenda currently drafted by the Ethiopian government aims to liberalize key sectors like banking and retail trade in order to ease the foreign exchange shortage. It also seeks to correct macroeconomic imbalances.
However, Kozack said a new IMF program for Ethiopia would require “a clear commitment from development partners and financing assurances from creditors under the G20’s common framework” in order to succeed.
The World Bank Group’s (WBG’s) strategic focus is to assist Ethiopia in forging a more inclusive and sustainable growth path, supporting the objectives of the Home-Grown Economic Reform Agenda and the current 10-Year Development Plan. It supports a more spatially inclusive approach to development, one that leverages national programs to provide quality services to all areas of the country.
The WBG is helping to promote structural and economic transformation through increased productivity in rural and urban areas by focusing on basic education, access to markets, and job opportunities for youth. It is also helping to build resilience and inclusiveness (including gender equality) by improving safety nets, investing in productive landscapes, and focusing on the Early Years agenda.
The WBG also supports institutional accountability and assists in combating corruption by focusing on improving governance and promoting social accountability. The private sector is expected to be a key contributor to Ethiopia’s future development, and prominent roles are being played by the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) towards supporting private domestic firms and foreign investors.
WBG programming has been adjusted in the past year and a half towards a more people-centric approach that focuses on delivery of basic services, food security, and addressing the needs of vulnerable populations (especially Internally Displaced People (IDP) and women, including survivors of gender-based violence) while retaining a long-term development focus.
As of March 22, 2023, the World Bank’s portfolio consists of 42 lending operations with $12.88 billion in commitments, complemented by $880 million in trust fund financing. The portfolio includes financing for conflict-afflicted communities and IDPs, national programs on agriculture, sustainable land management, basic service delivery (including health, education, and water and sanitation), as well as support in the energy, transportation, trade logistics, digital development, and financial sectors.
The International Development Association (IDA), the World Bank’s fund for the poorest, also provides analytics and advisory services to support evidence-based decision-making and stronger implementation on a wide range of development issues. IDA is Ethiopia’s largest provider of official development assistance.
It has committed more than $26 billion to nearly 155 projects in Ethiopia since 2000, most notably: Enhancing Shared Prosperity through Equitable Services Program, COVID-19 Emergency Response Project, Rural and Urban Productive Safety Net Programs, Urban Institutional and Infrastructure Development Project, Flood Management Project, Locust Emergency Response Project, Agriculture Growth and Food System Resilience Projects, Response –Recovery –Resilience for Conflict-Affected Communities Project, Digital Foundations, as well as several important Energy, Water, and Transportation sector projects.
As it is understood, Ethiopia aspired to achieve development goals and to that end it put plans including the home grown economic reform program. To achieve the goals, the government mobilizes both local and foreign financial sources. In the past, the government properly allocated the budget particularly allotted for infrastructural development.
The roads, airports, rail transport construction are some of the developments witnessed today. The stretching of infrastructure contributes a lot for accelerating economic growth and convinced the donors that Ethiopia allocated its loaned money cost effectively and showed green light to provide additional loan. Hence, to meet the development endeavor all stakeholders should exert their efforts to the common goal.
BY ABEBE WOLDEGIORGIS
THE ETHIOPIAN HERALD WEDNESDAY 26 JULY 2023
