The First Annual Report on the Ethiopian Economy
The Ethiopian Economic Association (EEC) launched Tuesday the first annual report on the Ethiopian economy. The report
was edited by Dr. Befekadu Degefe and Dr. Berhanu Nega, two prominent economists.
Dr. Berhanu Nega, President of the Ethiopian Economic Association, said at a press conference that the aim of the report was
to provide an independent assessment of the challenges the country faced and to assist the government in formulating
appropriate policies. He explained that the first volume would give basic economic data.
The EEC would like to sensitize the public on the economy and to encourage debate, dialogue and constructive criticisms.
There was emphasis – the matter of the economy should be a concern not only to the government but also a concern to the
general public, to the business and to all stakeholders.
Dr. Berhanu added, "The report is to provide a broad indicative assessment of the performance of the Ethiopian economy in
the past seventeen years in general and, in particular, for the period since the Ethiopian Peoples' Revolutionary Democratic
Front (EPRDF) took power in 1991 and briefly to review the various policies that might have contributed towards the
The report exposes the miserable conditions of the Ethiopian people. Ethiopians live in the same world with the rest of human
beings but with a different fate. An estimated 50 per cent of the population lives in absolute poverty. Ethiopia’s real per capita
GNP calculated for 1998 was 100 dollars. Twelve out of 100 children born alive do not celebrate their first birthday. Eight out
of 100 children who survive their first year die before they reach their fifth birthday. Of the millions who die prematurely of
tuberculosis, malaria, measles, tetanus and whooping cough, all but a few thousand live and 34 per cent are expected to survive to the age of 60.
The book encompasses all aspects of the Ethiopian economy and the last chapter deals with the policy challenges. It said, "The
most critical challenge facing the Ethiopian policymakers today and in the years ahead is the urgent task of reducing and
eventually eliminating absolute poverty. The basic objective of economic management and indeed the fundamental goal of
government everywhere and at all times is to see to it that the standard of living of their people improves over time."
The Ethiopian Economic Association in the past few years has played a positive role in organizing forums, seminars and
publishing its quarterly magazines on the Ethiopian economy. Producing the present report is, however, the biggest and difficult
challenge. One of the jokes at the press conference was that both Dr. Birhanu and Dr. Befkadu said that their wives are
witnesses of the difficulties they had gone through – sleepless nights away from wives.
The report suggests that the Ethiopian government would need to formulate a strategy urgently and to develop a policy regime
that is consistent with the objective of rolling back with the wide expanse of the poverty frontier. On the other hand, the report
gives credit to the government for macro-economic stabilization and performance. The present government has lifted the
constraints imposed by the socialist policies and generate a modicum of growth averaging a decent 4.4% annually.
The report makes the following important recommendations:
Investment – The government has taken numerous measures to attract foreign investment, including revising the investment
codes three times. However, the result in the past seven years has been very minimal. In taking account of other countries'
experience, foreign investors are mostly attracted to invest in a stable and growing economy. It urges encouraging and assisting
the domestic private sector. In the same breath, it also recommends, where the private sector is unwilling or incapable of
investing, the government to participate in the economy. The report points out that another potential source of investment are
Ethiopians in diaspora. A lot of efforts should be made to attract Ethiopians living abroad.
Land – Reforming the land lease policy is necessary to encourage investors, both foreign but most importantly domestic
investors. The current policy has proven to be one of the most important bottlenecks to both domestic and foreign investment in this country.
Private sector – Policymakers pay attention to the needs of the domestic private sector and take positive measures to support
and encourage the sector through available means and include the sector in policy dialogue and formulation.
Population – High rate of population growth require commensurate economic growth to sustain the same standard of living.
Ethiopia has a population policy. The success of this policy depends on the degree to which the communities accept and
implement them. It is important to exchange views with religious and community leaders.
Human development – The country is overwhelmed with poverty; shortage of skilled human resources, underdeveloped
socio-economic infrastructure; low level and slow development of technologies and growing unemployment and
underemployment. These problems have been aggravated by more than two decades of civil war and recurrent drought. The
key policy challenge here is to create a national consensus against poverty. All sectors of society, all government and civil
society institutions must be able to speak in one voice against poverty and be committed to its alleviation.
All things said and done, the Ethiopian economists have made it abundantly clear that if Ethiopia is to survive as a people and
nation, urgent mechanism needs to be devised to change the course of th e economy.
The first annual report on the Ethiopian economy is financed by the governments of Sweden and Norway. There is also the
contributions of Fredric Ebert Foundation.
Contributing editors for this report includes Mulat Demeke, Alemayehu Geda, Aklilu Kidanu, Getahun Tafesse, Mengistu
Bediye, Ibrahim Abdullahi Zeidy, Nestanet Wallelign, Addis Anteneh and Admit Zerihun.