Prime Minister Abiy Ahmed (PhD) presented at the House of People’s Representatives (HPR) regular session yesterday to address the questions raised by the members on various issues. On the 6th HPR, 3rd Year, 4th regular session the House of People’s Representatives of the FDRE have raised a number of questions on government’s plans and current issues that need the Prime Minister’s response.
According to the Prime Minister, Ethiopia has crafted a home grown economic agenda to achieve major economic goals. Among the pillars of the agenda; fixing the nation’s broken macro economy and balancing it; advancing the investment and trade environment; and uplifting the government capacity are the spectacular ones.
“The government is working on transforming the economy from grey to green,” the Prime Minister said, elaborating the idea by saying the economy should not only be building concretes rather it should have greenery to some extent.
The Prime Minister highlighted that the world is passing through major economic tides such as war in different parts and Covid-19 that resulted in price hiking of basic goods. On the contrary, for the first time in its history, “Ethiopia is able to double its Gross Domestic Product (GDP) in the past five years.”
When his government assumed the power five years ago, the nation’s GDP was only 84 billion USD Abiy said referring the IMF report. But now, the figure is accelerated to 164 billion USD. Besides, citizens’ per capita income is also increased from 882 USD to 1549 USD. This shows that the nation is at the top list in achieving fast economic growth in the world.
The Premier highlighted the major sectors registered their great accomplishments. As to him, the agriculture sector scored 6.3 percent overall increments in the last fiscal years. Some 20 million hectares of land was covered with crops and harvested 600 million quintals.
This year, Abiy noted that the nation has planned to cultivate more than 22 million hectares of land and expects to harvest 800 million quintals of crops which shows two million hectares more land when compared with last year. In addition, it has planned to cover 3 million hectares with irrigation and summer wheat production.
According to last year’s reports, the premier added that the industry sector has scored 6.9% increase; especially the power generation sector hit the highest increment which is 12%. The construction and manufacturing sector also registered 7.1 and 7% growth respectively.
‘Let Ethiopia Produce’ movement played a vital role for the success of the manufacturing sector. As a nation, the capacity of all factories found in the country is 47 %, and this figure is increased by 8% to be 55%.
Other sectors have also registered notable growth in their production capacity in the past years. To list some: in textile 63%, leather 58%, technology 35%, and chemical industries 68% growth of production were registered. The premiere further elucidated that with the factories operational at the moment; the country can increase its production capacity without adding more.
Regarding the import substitution, the nation produced 30% of the local demand, and now the figure goes to 38%. The nation was able to stop importing products like coal and malt barley and fully substitute them with local products.
Similarly, the service sector, in general, registered some 7.9% of growth. Especially, the transport and telecom sects have showed a 12% growth. The hotel sector also hit 10% percent growth.
Regarding government’s income and expenditure, as to the Premier, it has shown successive increment since 2018. The government had 235 billion Birr income in 2018 and 407 billion Birr last year. This year’s plan is to hit 520 billion Birr. To this end, in the first quarter of this fiscal year, more than one hundred billion Birr has already been generated. The figure shows a 12% rise compared with last year’s similar period. Regarding the expenditure, the government spent 141 billion Birr in the last three months. This has a 20% increase over the previous year.
Speaking on the finance sector, the premier said that the nation has got over 100 finance service providers of which, 31 of them are commercial banks, 48 are small finance institutions, 6 are payment service companies, 6 are on capital commodity import companies, and 7 mobile wallet service companies.
Accordingly, the National Bank of Ethiopia is monitoring huge number of financial institutions. Not only that, the government has taken some reform on the bank by assigning new officials and introducing new systems. The reality on the ground shows that more monitoring capacity will be needed. In the past 5 years, the finance sector scored 20% growth.
In relation to loans, the rate of loan is getting higher from time to time. Just last year, as to Abiy, 547 billion Birr was used for loans. Out of this, 86% was allocated for the private sector. Besides, farmers’ loan rate was grown up to 15%.
Ethiopian banks in general could not give loan for half a million people. Only mobile money services can loan over 7 billion Birr for 3 million people. Some thousands of people are only enjoying the chance. The government will work on curbing such challenges and set in a more inclusive system in the coming years.
On the other part, the capacities of getting hundreds of millions of Birr loan this time become easy and the private sector needs even in billions. Previously, only the government could build industrial parks, but now, individuals have started building their own industrial parks. This shows the uplifted demand regarding loans.
Talking about debt, the premier elaborated that the total debt of Sub- Saharan African countries reached 55% and their foreign debt hit 25%. Ethiopia’s total debt including the local touches 31%. Interestingly, its foreign debt decreased to 14.8%.
It is the fact that foreign currency crunch is Ethiopia’s long lasted problem. Elaborating the foreign exchange inflow, the Prime Minister listed that the nation gets 702 billion USD from the service sector, 6.8 billion USD from money order, and 3.4 billion from foreign direct investment. The total foreign currency inflow in 2021/22 was 21.9 billion USD. In 2022/23, it was 23.7 billion USD. This year, the nation has set to increase the figure to 25%.
Regarding coffee, the premier expressed it as the back bone of the country’s economy. Coffee in Ethiopia has advanced market system compared with other commodities. The major problem in the market system is individuals working on the market chain. Numerous mechanisms have been used to curb the problem. The incumbent allows farmers to export their products by themselves as a part of the solution.
According to the Premier, inflation is currently a major challenge for every nation across the world; it even gets worse to countries like Ethiopia. The government has taken actions to lower the inflation rate from 37 to 28%. In order to lessen the burden from low- income citizens, the government has tried to use bonds and treasury bonds coupled with increasing productivity. Moreover, the government has not ceased subsidizing basic commodities like fertilizer, fuel, and edible oil by spending billions of Dollar. In good truth, challenges are everywhere and imminent, so that the only option is to prepare and face them to lessen their impact.
Similarly, the government is working with the responsible bodies to create job opportunities for citizens. In this fiscal year alone, it has planned to create 3.9 million new jobs. Up to this time, half a million jobs have already been created including 100 thousand jobs in foreign countries.
It is the fact that the purchase of fertilizer was a challenge last year. In order to reverse the previous challenge, the government has bought necessary amount of fertilizer in advance and the shipment has already started.
“We all know that corruption is a cancer that steals ideas from people’s mind. We need to tackle this challenge. To this end, transforming services to automation system will highly help to fight the disease,” the Prime Minister said.
Again, stock market will be started soon. It is a platform that helps to meet the one with the capital and the other with the idea, and the institution they need. It will help to boost the nation’s economy as well, he noted.
BY DANIEL ALEMAYEHU
THE ETHIOPIAN HERALD WEDNESDAY 15 NOVEMBER 2023
