18 March 2017

Ethiopia: Currency Shortage - a Short Term Problem

Photo: Addis Fortune
A passerby looks at what's on sale at a sidewalk bookshop.

A vast importation of input and machinery particularly for the manufacturing sector amid the fast economic growth of the country has created a scarcity in foreign currency reserve, said Arkebe Oqubay, Special Adviser to Prime Minister Hailemariam Dessalgne.

In his recent interview with Bloomberg ,he also underscored that the scarcity in foreign currency reserve is a common and short term problem to occur during the early stages of fast economic growth.

According to Arkebe, the current focus of Ethiopia is on export performance which is going to generate a remarkably big revenue. He cited one of the largest industrial parks currently developed which is expected to generate about a billion USD in foreign currency that could relieve the problem.

Moreover, he said Ethiopia has focused on improving the lives of the people, agriculture, food which have resulted in GDP growth at an average rate of 11 % for the last 13 years. "Now we are working to transform the economy from Agriculture led to manufacturing", added Arkebe.

Asked about the ongoing deep reform, the Special Advisor replied: "In the deep reform, we have basically focused on good governance, and accelerating the momentum of the economic growth, since the issue of good governance and economic growth are inseparable." He also added that, the government has now come up with new packages on how to attract new investment particularly in manufacturing as the country aims to create millions of jobs for the youth.

Bloomberg also questions the membership request of Ethiopia to Asian Infrastructure Investment Bank (AIIB). Accordingly, Arkebe said: "Ethiopia is a country which has invested well in infrastructure in fact we spend about 50 % of our federal budget on infrastructural development. Thus, we use multiple sources from, multilateral international organizations, bilateral sources and commercial platforms".

The main focus for the nation from infrastructural point of view is energy, railways, highways, and airways. The GERD is under construction which will be commissioned within two years, few weeks back Gibe III is inaugurated which generates 2000 MW built with an expense of two billion dollars which makes it one of the top three hydro-power plant in Africa at the moment. Energy and transport are key to make Ethiopia a manufacturing hub, as explained by Arkebe Oqubay.

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