Radar | Sep 04,2021
Dec 4 , 2022.
Last week saw enraged university lecturers’ threatening to stage a strike. They addressed their complaints to Parliament and the Ministry of Education, bitterly complaining about the rising cost of living they find unbearable. Financial woes make them struggle to sustain essentials such as rent, transport and food. Covering emergency expenses such as healthcare reaches beyond their means.
The least paid in the East Africa region, teachers and college instructors have been frustrated and forced to display a rare move in their public protest. They are not alone. Wages have been stagnant for years for the lot in the public service that gets only one percent of the federal budget. Addis Abeba has claimed the top in the list of the 15 most expensive cities in Africa, scoring 58.92 in the index released last year by Statista. Harare, Abidjan and Johannesburg follow despite their reputations as costly places to live in.
Ethiopia’s cost of living crisis goes deeper than a mere change in the prices of commodities moving upward. They are manifestations of the broader political and social turmoil the population has been going through for decades. It is, however, disheartening to see such ills of grave consequences have been granted scant attention by macroeconomic policymakers and political leadership.
The economy has been suffering from inflationary pressure for years. The battle against inflation has been waged for over two decades, with political leaders and economic planners having little to show for it. There were only a few in the 20 years since 2003 where the consumer price index (CPI) was contained in single digits despite repeated resolve proclaimed by successive administrations. The situation has recently become worse.
The modest decline in the inflation rate seen in recent months could disarm the long-lost battle steaming the menace out of the economy. Monthly headline inflation dipped in September compared to what was registered in May this year, although it rebounded last month to 31.7pc. However, year-on-year inflation remains stubborn at above 30pc, revealing how much those in the fixed income bracket have lost the means to support their livelihoods.
The World Food Program (WFP), a UN agency monitoring the economy in its planning to mobilise emergency humanitarian responses, acknowledged this depressing fact in its report released last month.
Says WFP: “While the inflation rate had dropped, the purchasing power of households continues to grow weaker. Price indices of fats and oil, fruits and milk and dairy products registered a substantial increase in September compared to the same time last year.”
In conflict-affected northern Tigray, Amhara and Afar regional states, out of the total national figure, 13 million people are facing severe acute food insecurity due to the impact of the war on livelihoods.
While the impoverished are deep into the sea of poverty, struggling to afford necessities, the disposable income of middle-class households is sinking. The aftermath of the global pandemic, the two-year civil war in the north and continuous militarised conflicts in the southern and western parts of the country have bloated public spending. This has led to an all-time high budget deficit exceeding four percent of the GDP, forcing the administration of Prime Minister Abiy Ahmed (PhD) to resort to deficit financing tools that exacerbate the cost of living crisis.
The rising inflation is in tandem with the growing unemployment rate and degraded societal values, decency and civility in public life.
Unemployment has become a burden to the already fragile state of things. The lack of skilled professionals (the World Bank says Ethiopia’s score on the Human Capital Index at 0.38 was the lowest in sub-Saharan Africa) and administrative support on shaky grounds added to the rising unemployment rate. Latest and most reliable data on the size of the unemployed is hard to come by. However, a national survey on labour and migration the Central Statistics Service released last year showed that Addis Abeba had 22.1pc of its population without jobs, the highest in the country. Dire Dawa followed with 15.9pc.
Even for the ones with job security, inflation has historical obstacles, such as low income. The days that suffice working eight hours as a bare minimum seem to be over, particularly for residents in the capital.
Apart from worrying about making ends meet while working a second job, people have security issues that are not addressed.
Unpaid and unproductive people tend to look for other options to stay alive, taking from others. One exhibit of the decaying of the value compass is seen through crimes disregarding any moral standard. Car robbers have grown more emboldened, with reports of grand theft occurring in broad daylight. It is among the most common crimes the 60 police stations in the city reported to the Organised Crime Investigation Division at the Federal Police Commission.
Theft has been rampant, organised and reached alarming heights. The digital era has made it easy for criminals to share experiences instantly. Thuggery has become a norm, revealing that the social ills are deepening while the state’s ability to ensure compliance with the low eroding.
Robbers are upgrading their ways by the day, but can the same be said about those in the law enforcement community?
The human capital concerning the defence mechanism, particularly at the grassroots level, does not seem to match the perpetrators. A widespread perception shows that far too many have lost trust in the sluggish policing system and law enforcement that is being outsmarted. The degree of impunity with which official corruption is carried out scares many worried about their country’s path.
Prime Minister Abiy has admitted to parliamentarians that many officials under his administration are immersed in corruption, flaunting the “red line” he drew on the scourage “as if it was a red carpet”. The crackdown last week of high-ranking federal officials allegedly colluding with subordinates confirmed that he did not make the statement in a momentary lapse but after ongoing investigations behind the curtain were carried out.
Ethiopia is currently facing a dangerous trajectory. The choice facing its society is between morality and survival. Unemployed and hungry people are like cornered cats. The goal is to escape and get to safety. That is it, and that is all. Whatever damage happens on the way out the door does. If any lesson can be drawn from history, the development of views of morality does not yield survival.
More terrifying should be the complacency the political leadership and macroeconomic policymakers projected in dealing with what has transpired into an existential struggle for millions. Privately, they may confine their feelings that inflation is a scourage that affects almost every country in the world. They may also feel that if it were not for some of the measures they have taken, from policing markets to imposing restrictions on the forex trade, things would have been far worse than they are now.
These are sadly official attitudes showing how much they have lost in the battle against the cost of living crisis. It may have its source in the absence of an overriding ideological underpinning that could have driven economic and social policies. Policymakers in the incumbent administration would be hard-pressed to articulate their policies on driving economic growth and addressing the stumbling blocs such as inflation. That is if they have one.
PUBLISHED ON Dec 04,2022 [ VOL 23 , NO 1179]
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