
Commentaries | Jul 03,2021
Apr 6 , 2019
By Asseged G. Medhin ( Asseged Gebremedhin, an insurance professional with over a decade of experience in finance. )
Prime Minister Abiy Ahmed’s (PhD) year-long stay in office was full of significant economic, diplomatic and political changes. Building on peace with Eritrea, broadening the political space to include competing parties and economic reforms designed to invigorate the economy by expanding the role of the private sector were just some of the most promising reforms taken in the past year.
The macroeconomic problems nonetheless have remained challenging, if they have not worsened. Inflation is still in double digits, and the foreign currency shortage and growing debt has persisted. Left unattended, these problems will eventually turn into a catastrophe that severely drags back the reforms. It is necessary to have a clear political direction that will encompass change.
In light of the need for sweeping changes, the government is being supported by the international community, technically and financially, to realise private sector engagement, including in projects through arrangements known as public-private partnerships. These efforts will not only improve efficiency in key sectors such as telecom, energy and logistics but also mobilise private capital that will enable Ethiopia to maximise the resources available for development financing.
The effort to ensure that the private sector leads the economy is done in the name of creating competitiveness, by way of better quality services and goods. Ultimately this will help Ethiopia to attract foreign direct investment and raise export revenues.
Why is it that Ethiopia cannot break through the challenges of a negative trade balance, high unemployment, double-digit inflation, a shortage of hard currency and huge debt?
It is a result of poor allocation of resources. An unskilled human capital, inefficient bureaucracy, non-independent institutions, poor infrastructure and misguided economic policies have impeded economic dynamism.
The World Bank’s Doing Business Index of 2019 ranks Ethiopia at 159th place, two points higher than last year, but still one of the lowest levels even by African standards. It is incredible how a country leading the continent in gross domestic product (GDP) growth rate is lagging behind when it comes to how easy it is to do business.
There have to be policy interventions in the short run, including privatisation, and a clear political and economic reform, which is fundamental by nature in the long run. Prime Minister Abiy’s administration should as well come up with a clear economic roadmap, which should be able to demonstrate to the business class the government’s readiness to improve the economic environment.
We need to see a new economic development model that will give diversified investments and innovative solutions a chance. We need an economy that can secure a fairer distribution of resources, where entrepreneurs and investors can thrive.
When private investment is the key driver of economic growth, the existing transformation will be more dynamic and sustaining this positive momentum will mean an economy led by the private sector. This investment climate can be realised through financial reforms, of which the planned liberalisation of banking is a good beginning, continued infrastructure development through private-public partnerships, and the facilitation of market entry in key sectors.
Such efforts should as well be geared to build upon the already impressive advances by African countries, including Ethiopia, toward a continental trade market. Trade is the most successful when undertaken between neighbors, where transport costs will help consumers focus their disposable income savings and investments.
As Ethiopia is becoming more integrated into regional infrastructure networks - with Ethiopian Airlines playing a major role in air travel, a new railway linking Addis Abeba to Djibouti, and the construction of a power transmission line to Kenya - the foundations are being laid.
It is true that in securing social and political stability, enhancing civic engagement is indispensable to creating an enabling condition for sustained economic growth and transformation. This, too, requires a new political outlook, encompassing multiparty democracy, of which the Prime Minister is duly focused on.
PUBLISHED ON
Apr 06,2019 [ VOL
19 , NO
988]
Commentaries | Jul 03,2021
Agenda | Mar 20,2021
Agenda | Jan 25,2020
Commentaries | May 15,2021
Commentaries | May 28,2022
Commentaries | Jun 08,2019
Featured | Sep 28,2019
Fortune News | Oct 30,2022
Radar | Apr 22,2022
Radar | Oct 23,2021
Photo Gallery | 64604 Views | May 06,2019
Photo Gallery | 56450 Views | Apr 26,2019
Fortune News | 51131 Views | Jul 18,2020
Fortune News | 50748 Views | Sep 01,2021
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
Feb 4 , 2023
Rene Lefort is a French journalist with a keen interest in Ethiopia, spanning over ha...
Jan 28 , 2023
It is not common to see an appointment for a senior federal government office stir de...
Jan 21 , 2023
Eyob Tekalign, state minister for Finance, took to social media platforms last week t...
Jan 14 , 2023
The longing for normalcy and a semblance of individual and collective security in Eth...
Feb 4 , 2023
Officials are toiling to radically overhaul the education system after experiencing a...
Feb 4 , 2023 . By MUNIR SHEMSU
The auto market foresees changes as a draft proclamation of excise tax on imported ve...
A ship carrying half a million quintals of urea arrived at the Djibouti ports last w...
Feb 4 , 2023 . By BERSABEH GEBRE
For thousands of Hibret Bank's shareholders who congregated at the Inter-luxury Hotel...