Need to Leverage Honeymoon Phase




If there is one thing evident in most of Abiy Ahmed’s (PhD) public speeches in regions of the country, it is that he is rarely specific. His promises usually fall in the line of creating a united Ethiopia, and perhaps that is the necessary prescription for a nation that was on the brink of collapse.

But he has to get specific sometime. A feeling of national unity is great, but people have to eat, thrive and prosper for them to remain satisfied with a leader. Abiy has to tell us what he is planning to do to fix the economy.

How is he going to right the forex crunch that was a fallout of the government’s indulgent public spending? By pleading with the business community to repatriate their hard currencies to Ethiopia?

Better yet, how is he going to assure that the nation uses its resources adequately, which is one of the most rankling economic failures of successive governments?

There was over a daylong blackout in Ethiopia last week. The amount of productivity a power outage robs a nation or the cost it extracts from businesses who try to generate electricity alternatively can only be imagined.

The lack of the ability to produce could be ascribed to either not being able to put to use resources adequately or not having them, to begin with. Ethiopia faces the former problem. For long, we have remained a nation that has been incapable of putting its natural resources to good use. For a nation that can generate well over a million megawatts of power, we are currently producing only 4,238MW.

It is not just power. Ethiopia imports millions of tonnes of wheat every year. This is despite the repeatedly reported high potential for producing wheat, by researchers from organisations such as the International Maize & Wheat Improvement Centre. There are indeed dynamics within the sector – more farmers choosing to grow coffee, khat or horticulture products. But that we cannot find a way to feed ourselves adequately and have to depend on imported food items speaks to our dearth of creativity and hard work.

What is most unfortunate about the whole deal is the human capital that has long remained a burden on the economy. We have never been able to leverage it, in that our leaders have not been able to create enough number of middle-class citizens. There was a report that came out recently, claiming that over 700,000 jobs were created in the first nine months of the past fiscal year. While this is good, for a nation where the average age is 17, and the population growth rate is 2.5pc, the number of jobs are inadequate.

There is an estimate of over 100 million of us, but too few are meaningfully productive. They cannot carry the nation into the lower-middle income status by 2025. That requires a concerted effort, where citizens would have to strive to the best of their abilities, as Abiy has hinted in his speech in the southern city of Hawassa. But only the government can jump-start the revolution, where Ethiopians are at least able to use their resources sufficiently.

Abiy should instead be telling us about the pain there is going to be before there is ever a gain. The economy has for the last decade been growing at double digits on the shoulders of government spending in infrastructure. It is true that there are long-term benefits to the investments that have been made, but let us also not forget it was the fastest and most painless means to get the economy going.

At the end of that path though, what we have had is a dilapidating forex crunch and a debt burden. The biggest illness here has been that there is not a vibrant private sector that is able to take the reins from the government when the latter’s drive slackens, as is evidenced by lower capital spending in the past fiscal year.

Abiy’s premiership should be in ensuring that the sacrifices that have never been paid are paid now. We are in dire need of flexible policies in our forex management or land policies. The public sector is too ill-equipped to regulate businesses smartly. And the commanding heights of the economy are monopolised by state-owned enterprises that have blocked positive trickle-down effects on the slew of businesses that depend on them.

Altering this course should be where Abiy is focused, which will be economically challenging in the short term, by causing ailments such as a steep depreciation of the Birr. He must use this time in the office, where he draws great adoration from parts of the public, to good use and make politically painful decisions.



By Christian Tesfaye
Christian Tesfaye (christian.tesfaye@addisfortune.net) is Fortune’s Op-Ed Editor whose interests run amok in the directions of both print and audiovisual storytelling.

Published on May 05,2018 [ Vol 19 ,No 940]


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