Following the mid-2018 political reform in the country, Ethiopia has implemented several domestic economic measures to promote development and economic growth. Through various strategies, including infrastructure development, industry, tourism, and agricultural modernization, the goal is to create sustainable and inclusive growth.
The Industrial Development Strategy, which highlights industrialization and the manufacturing sector as crucial drivers of economic growth, is a key component of the policy. This strategy aims to improve business environments, attract foreign direct investment, and support the growth of local enterprises. Additionally, industrialization is seen as a catalyst for economic expansion, promoting growth in the manufacturing sector, attracting foreign investment, and creating job opportunities across various industries.
As part of its domestic economic policy, the government has identified and prioritized development areas. Notably, agricultural development programs such as the Agricultural Transformation Agency (ATA) and the Agricultural Commercialization Clusters (ACC) program are in place to increase agricultural production, improve market access for smallholder farmers, and foster the growth of agribusiness.
The transformation of the agricultural sector is essential for boosting productivity, enhancing food security, and improving the livelihoods of smallholder farmers. Industry reform focuses on upgrading agricultural practices, adding value to products, and expanding market access for agricultural goods.
Moreover, the policy recognizes sustainable development as a critical element in economic policy. The strategy aims to achieve sustainable economic growth that is environmentally friendly and socially inclusive, balancing economic progress, environmental protection, and social equality.
Considering these factors, the government recently reviewed the performance of the 2016 fiscal year’s last 100 days and outlined plans for 2017. Based on key macroeconomic sector performances over the past ten months, indicators suggest a 7.9 percent economic growth in the current fiscal year.
Effective execution in agriculture, industry, mining, and other sectors is crucial for meeting economic growth targets. For instance, the main season crop in agriculture exceeded the previous year’s by 100 million quintals. Additionally, initiatives like the summer irrigation wheat program and the ‘Bounty of the Basket’ (Ye LematTirufat), a national development program launched by Prime Minister Abiy Ahmed, have shown promising results. By the end of May, 106 million quintals of summer irrigation wheat were harvested out of an anticipated 117 million quintals.
In the manufacturing sector, productivity has increased with the ‘Made in Ethiopia’ campaign, providing manufacturers with input and financial support to operate at full capacity. As a result, gold and cement production have risen, with cement output surpassing last year’s by over 1 million tons.
To stabilize the cost of living, the government has taken steps such as boosting local output and productivity, allowing duty-free imports of essential products, and expanding market infrastructure, leading to a decrease in total inflation to 23 percent. The service sector is also showing gradual improvement.
With the results from the previous fiscal year in mind, Ethiopia aims for an 8.3 percent economic growth in the 2017 Ethiopian fiscal year. This target considers current capabilities and future potential, with extensive preparations made, from policy changes to budgeting.
Ethiopia’s Minister of Planning and Development, FitsumAssefa, has set the goal of 8.3 percent economic growth for the 2017 fiscal year. Achieving this target will require increased coordination in agriculture, industry, mining, tourism, and the digital sectors. The strategy also emphasizes developing economic and social infrastructure to significantly reduce poverty. Efforts to control inflation will continue in the next fiscal year through operational improvements, increased output and productivity, and modernization of market infrastructure.
While the government’s efforts through homegrown economic policies to achieve economic growth, stabilize the market, and promote overall development are commendable, other pressing challenges must be addressed. Increasing infrastructure development is crucial to ensure and promote economic growth, as infrastructure plays a vital role in transportation, energy development, and communications, facilitating commerce, attracting investment, and connecting rural and urban centers.
Although the homegrown economic policy recognizes the importance of investing in human capital, the government should also focus on human capital development through education, skills training, and healthcare to build a skilled workforce, drive innovation and entrepreneurship, and engage the private sector in job creation, fostering a favorable business environment, promoting competition, and supporting the growth of small and medium-sized enterprises.
Given the country’s comparative advantages, the government should work towards promoting national unity and regional integration, as regional cooperation brings mutual benefits by enhancing market access, stimulating trade, and attracting investment from neighboring countries.
Overall, Ethiopia’s homegrown economic policies aim to address the country’s specific challenges and opportunities, focusing on long-term and inclusive growth that benefits all sectors of society. By leveraging both internal and external advantages, Ethiopia can achieve sustainable and inclusive economic growth that benefits not only the country but also its neighboring nations.
BY EPHREM ANDARGACHEW
THE ETHIOPIAN HERALD SATURDAY 29 JUNE 2024
