Fortune News | Nov 21,2020
December 5 , 2018
Since April 2018, a new optimism is visible in urban Ethiopia. Local intelligentsia and alike have warmly welcomed the change in the national leadership. Ethiopian press seems to be enjoying new found freedom by printing “suggestive write-ups,” which is a good sign of the nation’s march toward matured democracy.
During the past nine months, the new leadership has followed a pointed agenda of upholding the supremacy of law, institution building and undertaking a grand corruption and human right's abuse probe. Prime Minister Abiy Ahmed (PhD) has appealed to unite the nation with love and forgiveness. Only time will tell the effectiveness of his appeal. Nevertheless, the ills of yesteryears cannot be overcome unless the administration refocuses on microeconomic growth and development.
Ethiopia today has the distinction of being the second most populous country in sub-Saharan Africa but ranks seventh in gross domestic product (GDP). A large population is always a wealth rather than a hindrance in growth – some of the world’s fastest-growing economies, especially India and China, have taken the top ranks when the population is concerned.
Only human development leads to economic growth though. Unfortunately, Ethiopia’s erstwhile planners have attached great importance to the macro scene rather than micro challenges. The result has been uneven annual per capita growth, thereby reducing the competitiveness of the population.
A growing population needs skills, training and employment. An unskilled population pushes the nation into a downward slide. While the World Bank has complemented Ethiopia for the reorientation of the budget from recurrent expenditures to capital improvements and a significant devolution of resources from the federal government to regions, its heavy spending on infrastructure, especially out of borrowed funds, has resulted in a skewed socio-economic transformation.
Public infrastructure has not been productive simply because users' ability to pay is low. Alternately, higher spending on education and health should create a class of people that contribute to faster economic development.
An analysis of a decade of historical budgetary provisions reveals a sad picture of amounts provided and spent on health and education. For instance, between 2009 and 2014, recurring and capital expenditures as a percentage of GDP have declined. This evidence suggests that the quality and quantity of funds spent so far did not have adequate potential to meet the development challenges of the growing youth population.
The situation is also reflected in the growth of the services sector, which has been contributing negatively to overall economic growth. No economist propounds growth of the services sector at the cost of the agriculture sector. Nevertheless, the stark reality is that the importance of the services sector, comprising financial services, hospitality and transportation, has gained all over the world at the expense of traditional sectors.
The process of development usually coincides with a growing role of services in the economy. For Ethiopia, the question is not whether to move into services, but how and at what speed to move into services. By introducing dynamic human development measures, Ethiopia’s service sector can easily increase GDP growth by two to three percentage points with the service sector occupying 60pc to 62pc of GDP. Moderate liberalisation in the financial services sector alone can generate thousands of opportunities and jobs locally.
The new administration of Prime Minister Abiy has an amazing opportunity to reverse Ethiopia’s historic economic trends and lead the country into a development era that will encompass the young population. A robust national skills program will not only develop a class of entrepreneurs, but it will also multiply sub-sectors within the services sector like education, health, water, sanitation, housing and other quasi-government service providers.
From this point on, the government has to be focused on microeconomics and notably the common man. Such a process will automatically create a vibrant private sector. The first and second editions of the Growth & Transformation Plans (GTPs) focused overwhelmingly on the needs of the macroeconomic sector and in the process failed to take the fruits of applied resources to the common man.
This gave rise to monolithic state enterprises that soon burdened the economy with debt and mismanaged projects. Higher incomes in the hands of the masses will increase the tax base leading to fiscal sustainability. More importantly, the optimism generated by the coming of the new administration will be channeled into productive areas, lending support to the government in its effort to address economic ills.
PUBLISHED ON Dec 05,2018 [ VOL 19 , NO 971]
Fortune News | Nov 21,2020
View From Arada | Apr 17,2021
Editorial | Dec 19,2021
Radar | Oct 03,2020
Editorial | Sep 27,2020
Sunday with Eden | Oct 10,2020
Commentaries | Feb 20,2021
Radar | Jul 13,2019
Viewpoints | Sep 04,2021
Editorial | Sep 11,2020
Fortune News | 43403 Views | Jul 18,2020
Fortune News | 36826 Views | Sep 01,2021
Photo Gallery | 32764 Views | May 06,2019
Photo Gallery | 29637 Views | Mar 17,2019
Commentaries | Jan 22,2022
Life Matters | Jan 22,2022
My Opinion | Jan 22,2022
Sunday with Eden | Jan 07,2022
Agenda | Jan 22,2022
Editorial | Jan 22,2022
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
Queuing for in-demand basic goods and services is not an unfamiliar occurrence in Eth...
Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...
When the country’s most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or tw...
January 22 , 2022
The relationship between fuel price shocks and politics needs no introduction. As a f...
January 15 , 2022
Foes and friends of Prime Minister Abiy Ahmed (PhD) agree that his administration is...
January 7 , 2022
There has not been much research to put a number on high costs wars inflict on Africa...
January 1 , 2022
It is a norm to emphasise grand structural changes to address the myriad political pr...
PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize
May 6 , 2019
I lived in Tanzania some time ago, working on a project. I met new people who came f...
There is a popular saying in Ethiopia. It goes, “esuma aquam yelewim,” referring to a person without a firm stance on a given issue. The...
January 22 , 2022
The faithful lean from a Sidist Kilo sidewalk in bright white threads to catch a whiff of frankincense. The occasion was Timqet, a religious...
January 22 , 2022 . By HAWI DADHI
The federal government will likely toss fuel subsidies entirely by the middle of next year. The Council o...
January 22 , 2022 . By TSION HAILEMICHAEL
Abay Bank has availed 50 million Br in short-term loans to two cooperative unions, pioneering lending ser...
January 22 , 2022 . By HAWI DADHI
Ethiopia wants to know the whereabouts of a businessman abducted in Nairobi two months ago. Ethiopian aut...
Or see contact page