Seven Days Update, Vol. 18 No. 36

von Gerd Kösters

Ethiopia has registered an impressive growth record in the last fiscal years, according to the Carnegie Endowment report. According to The Economist, the double digit economic growth has helped Ethiopia attract global attention in 2010 and stand among the five fastest growing economies in the world. It reported the country has made significant strides in bringing down the rate of rural poverty, raising education level, improving life expectancy, all of which have contributed to its remarkable growth performance. However, it is unclear whether the services sector would continue to boost economic growth, which it has been doing since 2004. The service sector in Ethiopia has been driving economic growth for the past seven years, though the economy relies heavily on agriculture. - The remarkable growth can be attributed to favorable external conditions and policy changes. In fact, fiscal deficit has declined significantly in the country. Further, regulated government measures, including better institutional frameworks, have boosted investor confidence. There has been a significant increase in infrastructure investment, which has reached more than $6 billion and thus fueled domestic demand and boosted economic growth. - Moreover, there has been a rise in the international commodity prices. Exports have grown exponentially, with a range of special incentives contributing to the economic boom. Improvement in the livelihood of common man is a clear sign of rapid economic growth. The headcount poverty ratio has fallen down to 39% in 2005, which was 55% five years back. - Inflation in the country has reached about 40%, with the prices of food products increasing by 46%. Agriculture share has declined to 42 % from 49%; however, the country has not seen a shift toward industry. In fact, as far as employment is concerned, agriculture sector employs nearly 80% of the country’s workforce. - The industrial sector could contribute only 10% to the GDP since 2004. In 2005, the service sector, which has grown exponentially over a period of years, accounted for 10% of the GDP. There is lack of essential ingredients in the country’s services sector, such as skilled labor force, well-integrated domestic market. Developing infrastructure, promoting specific skills, building stronger market institutions, improving transport and communication as well as access to land and markets would help the economic growth further, especially in the service sector (, Oc. 31).

The United Nations Development Program (UNDP) launched the 2011 Human Development Report in Addis Ababa. The theme of this year's report is "Sustainability and Equity: A Better Future for All." The 2011 Human Development Report presented the 2011 Human Development Index (HDI) values and ranks for 187 countries and UN-recognized territories. UNDP Resident Representative, Eugene Owusu said Ethiopia has shown a marked progress in the HDI over the past couple of years. Owusu, who is also UN Resident Coordinator and UN Humanitarian Coordinator, said Ethiopia’s life expectancy at birth increased by 15.3 years and expected years of schooling increased by 5.4 years between 1980 and 2011. The Coordinator said Ethiopia’s Gross National Income per capita also increased by about 92 percent between 1985 and 2011. The Legatum Prosperity Index has made its 2011 report official where Ethiopia is ranked 108th out of 110 countries, only coming before Zimbabwe and the Central African Republic. The report used six criteria to rank countries based on economy, where Ethiopia was ranked 104th, health 107th, security 106th, education 107th, personal freedom and social capital 86th. The report indicated that Ethiopia is facing strong economic challenges and that its national reserve is at 4%, and unemployment at 21%. Out of ten people, only four have food and shelter. Ethiopia is included among 30 countries which have a very low standard of life (Fitih, Nov. 4).

Ethiopia has secured 753m USD from the export of various commodities in the first quarter of the Ethiopian fiscal year, the Ministry of Trade said. The amount of foreign exchange earnings obtained exceeds that of last year’s by 189.6m USD. 275,611 tons of agricultural products and commodities, namely, coffee, cereals, oilseeds, live animals, gold and other minerals, khat, flower and horticultural products were exported. Ethiopia shipped its products mainly to Germany, Somalia, China, Sudan, Saudi Arabia, America, Japan, Middle East and Europe. The country plans to obtain 4.7 bio USD from exports in 2004 E.C. (State media, Oct. 30).

Total Ethiopia has initiated a solar powered gas station in the Djibouti corridor according to Haileyesus, Communications and Public Affairs Manager of Total. The gas station will be the first solar powered station in East Africa. Total selected the Diciotto area for constructing the gas station because it is a busy section that has high temperatures and sunshine. Diciotto used two generators previously but now generates power from solar panels during the day and power supply from the Ethiopian Electric Power Corporation as back up, explains Haileyesus. The solar batteries provided for the gas station can supply power for 12 hours. The Diciotto solar powered gas station was built at a cost of 900,000 birr.