With the concerted efforts of concerned bodies under the committed leadership starting from the premier, Ethiopia’s economy has registered remarkable progress during the past nine months of the current fiscal year amidst myriads of challenges. Among the challenges the nation has encountered, apart from that is common globally like inflation, Ethiopia has passed through bundle of hurdles incurred from internal conflicts in its different parts especially in Amhara and Oromia regions that are potent to stagnate the developmental progress and external influences.
Defending the nation’s sovereignty with one hand and carrying out the development issue on the other hand, the leadership along with the people has registered notable performances in the economic arena. According to the Ministry of Planning and Development (MoPD), the promising performances witnessed in the macro economy including agriculture, industry and service sectors showcase Ethiopia is in the right position to achieve the estimated 7.9% economic growth.
MoPD Minister, Fitsum Assefa (PhD), briefed the media a couple of days ago about the nine-month performance of the major development sectors in terms of macro economy, infrastructure, public participation and beneficiaries as well as implementation of the reform agenda. The success exceeds the forecast of international monetary fund (IMF).
According to the IMF, 6 out of the top-10 performing economies worldwide in 2024 will be from Sub-Saharan Africa. Ethiopia is ranked 2nd in Africa with the highest GDP growth forecast in 2024 at 6.2% after Ivory Coast at 6.6 %, CNBC (Consumer News and Business Channel) American business news channel owned by NBC Universal News Group reported based on an interview it made with Zemedeneh Negatu, Global Chairman at Fairfax Africa Fund.
Zemedeneh highlighted the remarkable resilience of the Ethiopian economy, despite facing various challenges such as the impact of COVID-19 and internal conflicts.
As of the Minister of Planning and Development, the economic progress registered so far indicates the country’s economic growth surpasses what the IMF estimated by 1.3% growth. The promising performance in the macro economy is a clear indication for Ethiopia’s capability to register the estimated annual economic growth.
“In the agriculture sector for instance, the current performance exceeded that of last year’s same period by 100 million quintals of crop. Of the 100 million quintals, summer wheat production covers around 80 million while rice production has been registered to be 38 million quintals,” the Minister detailed.
As to the observation of Zemedeneh, Ethiopia’s economy has shown resilience not only the COVID-19 impact and internal conflicts, but also the consequences of Russia and Ukraine war that adversely impacted the international community in one or another way.
Regarding drivers of the growth, as of Zemedeneh, even though its macro economy is migrating to industrialization, it is still heavily dependent on agriculture so the performance in agriculture sector will drive the growth. The other sectors like service, investment and even the manufacturing that faces challenges have shown progress. They are also drivers of the economic growth.
Sadly, according to Zemedeneh, inflation has seriously challenged the nation’s economy for the last fifteen to seventeen years despite the effort of the National Bank to bring it down.
Fitsum (PhD) further explained that various economic initiatives have contributed for the economic progress. Under the ‘Ye Lemat Tirufat’ initiative, for instance, it was able to produce two billion liters of milk, 1.4 billion of eggs, 200,000 tons of meat as well as 110,000 tons of honey.
Launched by Prime Minister Abiy Ahmed (PhD), “Yelemat Tirufat” development campaign, which focuses on nutritional opulence in Arba Minch in November, 2022 aims to boost productivity and production of dairy, eggs, chicken, and honey and related products as well as intensify efforts to achieve food self-sufficiency and ensure nutritional opulence at the family and national levels. The program contributes for job creations, increasing exports, and hastening import substitution.
Mentioning that promising results have been registered in the service and transport sectors, Fistum (PhD) highlighted that the production capacity of industries has seen significantly improved and reached 56% on average in six months alone.
According to Market Overview, agriculture has historically been the driver of the Ethiopian economy but recently the service sector has grown to become the largest contributor to GDP. According to the National Bank of Ethiopia (NBE), services, agriculture, and industry accounted for 40%, 32%, and 29% of GDP respectively, as of the report of a couple of years back. Construction of industrial parks aiming to attract Foreign Direct Investment (FDI) and help create employment through the creation of vast jobs will change the manufacturing industry’s performance and it will take over the rest and lead the nation’s economy.
During the Minister’s media brief, it was also mentioned that over four trillion Birr transactions were made through digital payment in the reported period whereas digital loan provision for SMEs and other small businesses was said to be three billion Birr. Also, the digital micro savings was four billion Birr.
NBE Governor Mamo Mihretu said that in 2021, Ethiopia embarked on an audacious journey with the launch of its National Digital Payments Strategy (NDPS). This initiative was more than a policy reform; it was a bold stride towards reshaping the country’s economic landscape into one that is more inclusive, efficient, and prosperous.
“As we edge closer to the culmination of the first phase of the strategy’s implementation in 2024, it is crucial to take stock of the ground we’ve covered, the hurdles we’ve overcome, and the significant strides we’ve made towards a digital-first financial ecosystem,” he stated.
Spearheaded by the National Bank of Ethiopia (NBE), with the support of the United Nations-based better than Cash Alliance, the strategy is steering the nation towards a less cash-dependent economy. From the get-go, Ethiopia’s payment landscape, vast and intricate, presented numerous challenges in the transition to a more digital ecosystem. These challenges included infrastructure deficits, digital literacy gaps, regulatory hurdles, and a growing financial inclusion gender gap. However, the determination to drive greater efficiency in payment service delivery, transparency, women’s economic participation and sustained inclusive growth by leveraging responsible digital payments is paving the way for a financial revolution, the governor added.
Regarding job creation, according to Fitsum (PhD), over 2.1 million citizens were employed over the past nine months of the current fiscal year domestically. Nonetheless, the performance is unsatisfactory due to the increasing number of job seekers. On the other hand, 278,198 citizens obtained jobs abroad.
According to the World Bank in Ethiopia, its rapidly growing young population (60% of Ethiopians are under 30) presents a significant employment challenge. Each year, 2 million new job seekers enter the market, creating a quandary for the government—how to meet this enormous demand for employment. Over the past years, the Government of Ethiopia (GoE) has set up several industrial parks to encourage foreign direct investment into the manufacturing sector with the goal being to attract investments, create jobs, boost foreign exchange earnings, promote sustainable manufacturing, establish linkages, and facilitate technology transfer.
The Minister further highlighted that the government’s revenue in the reported period was 374 billion Birr which showed 15% increase from last year whereas the Federal expenditure was to be 495 billion Birr. Capital expenditure takes the lion’s share by recording 15.5% increment from the previous year.
As to her, Ethiopia has generated over 2.5 billion USD from goods’ export, while it has obtained 5.8 billion USD from the service sector and 275 million USD from gold export. Similarly, the country has collected 264 million USD from oil seeds. Additional 2.8 billion USD was gained from Foreign Direct Investment (FDI).
About the financial sector’s performance, Fistum (PhD) emphasized that the bank’s total savings has reached 2.4 trillion Birr whereas the manufacturing sector is the leading recipient of the banks’ loan and has 37.4% share followed by agriculture 22%.
Though the inflation rate was reduced to 23.3%, food inflation is still 27% and remains to be the major challenge of Ethiopia’s economy.
She said the performance of Abbay Dam, corridor development; ‘Gebeta’ projects as well as digital infrastructure are encouraging. Private sector and public participation on human-centered projects as well as different government initiatives is also said to be satisfactory.
Despite promising results, efforts need to be geared towards increasing investment, creating more jobs and arresting inflation, the Minister emphasized.
BY BACHA ZEWDIE
THE ETHIOPIAN HERALD WEDNESDAY 22 MAY 2024
