Highlighting the federal government performance report of the 2016 E.C fiscal year at the 36th regular session of the House of People’s Representatives, Prime Minister Abiy Ahmed (PhD) made a remark and responded to questions posed on him from members of the parliament regarding various national issues including economic scenario and market stabilization.
In doing so, he emphasized that Ethiopia’s foreign policy is centered on fostering mutual development and prosperity with neighboring countries. Speaking on Ethiopian government’s pursuit of access to the sea port, he emphasized Ethiopia’s primary need for access to the sea to support its economic growth.
Ethiopia always seeks to work together, develop together and prosper together with neighboring countries so that economic growth, peace and stability can be achieved through regional cooperation. Unequivocally, the marriage between hard work and individual or group change or national progress through economic growth is attested highly intertwined and smartly interwoven national factors. Yes, economic growth refers to an increase in aggregate production in an economy, which generally manifests as a rise in national income.
The Ethiopian economy has become the first and third giant economy in East and Sub-Saharan Africa respectively, Prime Minister Abiy Ahmed said.
As to him, Ethiopia’s economy has been resilient and continued registering growth amid various manmade and natural challenges including conflict and drought, and the economic growth trajectory has impressed even global economists.
In economics, of course, growth is commonly modeled as a function of physical capital, human capital, labor force and technology. Increasing the quantity or quality of the working-age population, the tools that they have to work with, and the recipes that they have available to combine labor, capital and raw materials will undoubtedly lead to increased economic output. Economic growth is an increase in the production of economic goods and services in one period of time compared with a previous period. It can be measured in nominal or real terms.
Gross national product (GNP) is an estimate of the total value of all the final products and services turned out in a given period by the means of production owned by citizens. GNP is commonly calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, then subtracting income earned by foreign residents. Net exports represent the difference between what a country exports minus any imports of goods and services.
The ongoing corridor development, which is aimed at uplifting the image of the cities by meeting international smart city standards, would also be instrumental in making the nation, at a larger scale, competent with counterpart nations of the world.
The Green Legacy Initiative, the emerging manufacturing capability and import substitution as well as development endeavors in wheat productivity and Ethiopia’s ambition to become a leading wheat producer would contribute a lot to the economic advancement of the nation combined. As to the Premier, about $10.5 billion is expected in financial loan in the coming years once the country wraps up negotiations with international lending institutions, too.
Poverty reduction and sustainable development are central to the budget plan, whose lion’s share of the source is expected to come from tax collection. Besides, a large current account deficit has become a hallmark of the economy, leading to meager foreign exchange reserves.
Factors hindering the economy include inefficient government, excessive regulation, an unsophisticated financial sector; rural land shortages, inflexible labor markets, lackluster urban development strategies, and a largely stagnant industrial sector have to be systematically addressed to help the country bring about change in terms of social, economic and political changes.
Since the outcome lack of coordinating, hard work, poor working culture and disintegration is deepening poverty, growing inequality, eroded purchasing power, mass unemployment, and corruption, all Ethiopians have to be committed enough more than ever before to make an affluent and stable nation. Here economic growth and societal stability matters the most.
The case of the Grand Abbay Dam has to come to the forefront in this regard. Not only will the power secured from the dam immensely back Ethiopia’s economy through energy supply, but it will also power Africa’s Economic Integration. The Premier once said, “The Grand Dam reservoir has created about 70 islands that are about 10 hectares wide, on average. It is a blessing we share with the rest of the world,” he said.
Such an optimistic elucidation holds many more messages, indeed! Building economic muscle well, getting energy secured and building confidence to self-assuredly defeat poverty are the pillars of declaring sovereignty and independence.
Ethiopia is now realizing its potential and capacity via harnessing its natural resources and becoming an economic, political and social powerhouse in east Africa in particular and in the African continent in general. True, Ethiopia has embarked on a comprehensive reform process since five years ago in order to enforce its up word trajectory and achieve even more rapid and sustainable economic growth.
Being committed to opening up the economy to international investors in telecom, logistics, energy, aviation, railways, and industrial parks would also help garner green pasture for the country. Here the role of cooperation is worth appreciating. The Premier said in this regard that the government would continue to foster public-private partnership.
As to him, the second method of producing economic growth is through technological improvements. Improved technology allows workers to produce more output with the same stock of capital goods by combining them in novel ways that are more productive and quite lucrative.
No doubt, economic growth is a precondition for the improvement of living standards and lifetime possibilities for the average citizen of the developing nations like ours.
The government launched a 10-Year Development Plan, based on its 2019 Home-Grown Economic Reform Agenda, which runs from 2020/21 to 2029/30. The plan aims to sustain the high growth achieved under the Growth and Transformation Plans of the previous decade while facilitating the shift towards a more private-sector-driven economy. It also aims to foster efficiency and introduce competition in key growth-enabling sectors like energy, logistics, and telecom thereby improving the business climate, and address macroeconomic imbalances.
Ethiopia seeks to chart a development path that is sustainable and inclusive in order to accelerate poverty reduction and boost shared prosperity. Significant progress in job creation, as well as improved governance, will be needed to ensure that growth is equitable across society.
Doing so requires addressing macroeconomic distortions that constrain private sector development, structural transformation and generation of jobs. Reducing the incidence of conflict that has been having a substantial impact on lives, livelihoods and infrastructure and addressing food insecurity, which is growing due to adverse weather events, locust invasion, conflict, and global conditions leading to high inflation of food prices, is a viable avenue to help the nation ensure food security and market stabilization.
Other lucrative ways along this line are improving human capital and generating good jobs. The country’s growing workforce, with roughly two million persons reaching working age per year, puts pressure on the absorption capacity of the labor market, necessitates improving current jobs, while creating sufficient new jobs.
It was also cited that the country’s economy is expected to grow by 7.9% in the current 2023/2024 Ethiopian fiscal year. Noting that a 7.9% annual economic growth is projected during the current Ethiopian fiscal year, the Premier attributed the growth to adjustments in the country’s fiscal and monetary policy as well as positive performance in the agriculture sector.
As to the premier, job creation is one of his government’s priorities in line with the mounting employment demand as a result of the country’s burgeoning youth population. With regard to regional economic integration, Abiy said that the Ethiopian government’s strong support to strengthen economic integration, with particular emphasis given to energy integration. Ethiopia currently exports electric power to neighboring nations.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD THURSDAY 11 JULY 2024
