Being a habitat of more than 120 million people and endowed with abundant untapped natural resources including vast arable land, favorable climate, surface and underground water and sufficient rain, mines and productive labor forces, Ethiopia has registered remarkable economic growth. However, it needs more effort to utilize technology, financial support, and well trained manpower to better exploit its resources and accelerate the growth.
Zerihun Biru (PhD), an economist, is working as a consultant for various institutions. While making an interview with the local media recently, he said that in the last two decades the government strived to achieve economic growth in the sectors such as agriculture, manufacturing and services and some tangible results are registered.
He further said that most investments put on the development endeavor came from the public sector and the role of the private sector in this regard is insignificant. The government spent huge amount of finance on the construction of infrastructure which played pivotal role for the economic growth registered so far. Roads, rail ways, industrial parks and hydropower dams etc can be mentioned in this regard.
The construction sector which is engaged in infrastructure development created job opportunities for hundreds of thousands. It also created market opportunity to cement industries, and the transport sector also engaged to move inputs and outputs to customers.
The expansion of industrial parks enabled to attract foreign and local investments and created jobs for thousands. It also created market linkage to the agriculture and most agro industries could utilize inputs from local sources. The manufacturing sector also played vital role in boosting export and import substitution. It also paved the way to the private sector to play its own part. In order to support the agricultural sector, the government imported agricultural inputs such as fertilizer, pesticides and herbicides and supplied to farmers with subsidized price. Not only these, it supplied selected seeds obtained both from local and foreign sources.
In addition, it encouraged private sector to involve in agriculture by providing land and tax holidays while they import agricultural machineries.
As to Zerihun, 72% the nation's labor goes to the agricultural sector and most farmers plow farmlands with small size which is bellow a hectare and such a situation also has its own draw back on enhancing productivity and production.
He also said that farming activities mostly utilize human and animal labor. In the pre and post-harvest seasons, about 30% crops are wasted. The absence of sufficient warehouses also makes the products vulnerable to insects which reduces the amount.
He further said that the sector is subsistence and vulnerable to the extreme weather conditions and due to the current global warming and climate change, the sector is critically affected. Hence, to withstand the challenge, applying climate smart agriculture must be taken as an option including the expansion of irrigation farm by exploiting surface and underground water, using drought resistance selected seeds and providing extension service to farmers.
Livestock, the sub sector of agriculture, has huge potential. Ethiopia's livestock is the largest in number in Africa. But due to lack of modern cattle rearing system, its contribution to the economy can be said limited. In fact, it contributes 20% to the agricultural GDP. It has a potential for meat and milk production but so far, the nation fundamentally exports live animals, hide, skin and limited amount of processed meat as compared to its potential.
The leather and leather products' sector utilizes local skin and hides in large proportion. Currently, the sector created job opportunity to thousands and plays pivotal role in supplying its products to local and foreign markets.
As to him, though some progress is observed, the unemployment rate is increasing. Hence, organizing the unemployed ones and creating job help to boost the economy. In this regard, paying attention to the small scale enterprises is essential. Providing loan, preparing working areas and facilitating market linkage is equally essential.
As to Zerihun, there are ample of challenges that need to be redressed. Among others are; sustaining the witnessed economic growth, poverty reduction , ensuring good governance, creating more job opportunities both by the government and the private sector, narrowing the gap in income among citizens and minimizing aid dependency.
He further stated that other key challenges that must be addressed which incurred heavy toll on economy are global warming and climate change that critically affect the sectors such as agriculture, health, water and transportation.
The price hike of fertilizer and fuel due to the external factors and the low income in urban centers hampered the efforts for ensuring food security.
As to Zerihun, if the global warming continues in its current pace, Africa's food production will be decreased by 90% by 2050.
He further said that had the manufacturing sector's contribution to the GDP been surpassed the service sector, it would have been better because the employing capacity of the service sector is very small. For instance, in the last budget year, Ethiopia earned 1.2 billion Dollars from the sector. In the contrary in Ethiopia 15 million people earn its living from the coffee through various value chains from planting up to exporting. On the other hand, the Ethiopian Airlines which employed 17 thousand workers earned about 4 billion Dollar by exporting its services in the previous budget year these implies that, though the service sector garnered huge amount of hard currency as compared to the agriculture sector, it employed very few people. Therefore, to change the imbalance, more attention should be given for the agro industry to boost export earnings.
As to Zerihun, currently the government's debt rose to 57% of its GDP. It borrowed money from local and foreign sources and such situation aggravates inflation which hurts the poor segment of the society. Hence, the government should reduce its dependency on money borrowing to meet its development aspiration and better to look other options.
He further said that currently, in Ethiopia the citizens' productivity capacity is 38% which is below the average sub Saharan African Countries which is 50%. He also said that 90% of the labor force deployed its physical capacity rather than its mental capacity. And the figure indicates that how Ethiopia lags behind other developed and developing countries and the level of using technology for performing job is insignificant.
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About 37% of children in Ethiopia are malnourished and this again directly related with the rampant poverty prevailed in the country because malnourishment has impact on citizen's productive capacity. It reduces mental and physical potential of the children in their later age. According to the recent UNESCO report, due to malnutrition, Ethiopia annually loses about 30 billion Birr which could support the GDP.
The recent Hauti rebels' attack on cargo ships on the Red Sea also created anomalies on the international trade. No cargo ships dare to go to the war zone but those interested cargo ships go to the war zone to transport the goods by taking risk incurred heavy price on freight which ultimately aggravates inflation on the importing countries' market.
As to Zerihun, currently, fuel, steel and iron and fertilizer are in short supply. As a result, the construction sector is crippled and many construction companies lay off their workers which in turn affects them and their family life.
Hence, to reverse the situation, the government should work rigorously by taking bold measures particularly on addressing shortage of hard currency, mitigating unemployment, building resilient infrastructure, utilizing social capital, diversifying export, exporting local products by value addition and implementing the homegrown economic reform effectively, he stressed.
