The Fate of Birr


In my younger years, when I was more carefree, not to mention naïve, I used to ask myself, “Why does the government keep indebting itself, instead of printing money every time the country needs some hard cash?” I was given several many answers, but none ever sold me. Everyone kept saying that money is just paper, and nothing more. So then, why does it wield so much power?

In my conversations with friends, this question has never crept up. All we ever do is chit-chat about movies and girls. But from time to time, some serious subjects become the focus of our discussions, more so when something significant takes place in the nation, like the announcement of a six-month state of emergency. Politics often goes hand-in-hand with the economy, as observed in the relatively slower GDP growth of 2016, which followed last year’s political upheavals, coupled with the dilapidating drought.

Just after the political climate was believed to have stabilized, the International Monetary Fund (IMF) warned that the nation’s currency is dangerously overvalued. The word on the street was that the Birr would be devalued, so as to boost imports and effectively discourage exports (it has since been reported this would not be happening).

Such national matters are subjects that adolescents, even “cool dudes”, tend to be concerned about. We all know that almost all ‘luxury’ items (electronic gadgets, cars) that Ethiopian suburbanites buy are imported. A lower Birr means expensive smartphones, MacBook laptops, Nike shoes, Calvin Klein pants and Dr. Dre earphones. This is horror to a lot of people I know.

As far as such customers are concerned, the devaluation of Birr should not be carried out by any means possible. A friend opined, echoing my teenage naïve beliefs, if the country is strapped for cash, then print some. Nothing could be easier, he thought.

And nothing could be further from the truth, I thought. But this was not just the opinion of one person, I was surprised to find out that a significant number of Ethiopians do not know why a country could not just up and print money.

Back to our previous point, what is money? It would be very right to say that it is actually just a piece of paper (in some cases, polymer). But that would be akin to saying that a diamond is just another form of carbon, like coal. The difference is subtle, and it all depends on the meaning people choose to give it.

There existed a time when paper money never existed. For Ethiopia, this was just a little more than a century ago. In those times, people used blocks of salt, known as Amole Chewe, and certain coins (Maria Theresa thalers) for trading. A little before that time, folks simply bartered, which was mighty inconvenient.

Say, I was an Ethiopian farmer living and working in those unfortunate times. I may get sick one day, so after dabbing myself in holy water (which was the norm back then), I may want to be treated by the local traditional doctor. If the doctor is nice, he would treat me gratis, if not, he would ask for something in return; maybe a pistol. As a farmer, who grows crops, and does not have need to own a weapon, I would not have a pistol to barter for the traditional doctor’s services, so an impasse is created. I will remain uncured.

But in a world that uses currency, all I have to do is take the money I collect from selling my crops, and give it to the traditional doctor. Then the doctor could take the money I give him and buy a pistol. All paper currency did here was enhance the movement of goods and service. All it did was make our lives a little easier by giving meaning to our estates and skills. On the national level, money is a representation of all that a country owns (natural resources, skilled manpower, goods and services, etc).

Nothing more and nothing less.

It is now obvious why a country simply cannot print money; for the exact reason that increasing the measuring value of a meter does not increase the physical length of an actual meter. The only way to make Ethiopia wealthier is to boost growth, infrastructure and investment; to produce more stuff that money represents. A providential discovery of oil would also do it (the key to 20th century Middle Eastern growth). Printing more money, in effect, only actually devalues money, and creates inflation (which the country already suffers from).

I have no idea what the cure to the current credit crunch is – I would leave that to my economist friends, but I do speculate it would be rather too foolhardy to devalue the Birr so soon – but the more we understand that money is just a commodity the better. Birr facilitates transaction between Ethiopians and foreigners. It can also be sold and be bought by banks, which get their money from customers as a form of a loan. These, I am sure, are new concepts for this mostly agriculture based (with a little bit of an industry sector to boast off) nation. Technology will, nonetheless, take over both the agriculture and the industry sector. That leaves jobs only in the services sector, and for such an employee, an acute understanding of money will surely come in handy.


By Christian Tesfaye
Christian Tesfaye is a Film Critic whose interests run amok in both directions of print and celluloid/digital storytelling. He could be reached at

Published on Feb 07,2017 [ Vol 17 ,No 875]



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