Seven Days Update, Vol. 21 No. 9

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Prime Minister Hailemariam Desalegn has called on Egypt to return to the tripartite dialogue with Ethiopia and Sudan to implement IPoE recommendations in the construction of the Grand Ethiopian Renaissance Dam (GERD). The Prime Minister made the call during a parliament session in which he presented a nine-month performance report of his government. Ever since Ethiopia launched the construction of the 6000MW hydroelectric dam on the Nile River, relations between the two countries have soured. Following deadlocks in tripartite discussions, Egypt said it would internationalize the issue and take the case to the United Nations Security Council. PM Hailemariam told MPs that his government is prepared to respond to Egypt's attempt to take the dispute over GERD to the UN (State media, April 24).

Ethiopia's bold decision to pay for a huge dam itself has overturned generations of Egyptian control over the Nile's waters, and may help transform one of the world's poorest countries into a regional hydropower hub. By spurning an offer from Cairo for help financing the project, Addis Ababa has ensured it controls the construction of the Renaissance Dam on a Nile tributary. But the decision to fund the huge project itself also carries the risk of stifling private sector investment and restricting economic growth, and may jeopardize Ethiopia's dream of becoming a middle income country by 2025. So far, Ethiopia has paid 27bio birr  out of a total projected cost of 77bio birr for the dam, which will create a lake 246 km long. It is the biggest part of a massive program of public spending on power, roads and railways in one of Africa's fastest growing economies. Ethiopia's output has risen at near double digit rates for a decade, luring investors from Sweden to China. But economists warn that squeezing the private sector to pay for the public infrastructure could hurt future prospects. Even so, Addis Ababa says the price is worth paying to guarantee Egypt has no veto over the dam, the centerpiece of a 25-year project to profit from East Africa's accelerating economic growth by exporting electricity across the region (State media, April 24).

 Prime Minister Hailemariam Desalegn said Ethiopia’s Gross Domestic Product (GDP) grew by 9.7% last budget year, falling short of the government’s target of 11%. Presenting the third quarter report of the budget year in parliament, Hailemariam expressed satisfaction with the country’s economic performance recorded amid global economic slowdown. In comparison to sub-Saharan Africa’s average of 5.4% economic growth during the period, Hailemariam said the government is encouraged by the country’s sustained growth. The government’s projection for the current budget year stands at 11.3%. The Prime Minister also said inflation remained at 7% during the 12 months to Feb. 2014 (State media, April 23).

In the past nine months of the current fiscal year, agricultural exports recorded a growth of 9%, Hailemariam reported. The export was highly impacted by a decline in global coffee prices, Ethiopia’s long-time leading foreign export earner. Coffee export showed a decline of 25% during the past nine months. However, Hailemariam added, other agricultural exports such as oilseeds, pulses, floriculture and fruits and vegetables showed a growth of 58%, 11% , 7% and 1%, respectively. Overall, the export sector grew by just above 2% during the last nine months, meeting 63% of the government’s projection for the period. The less-than-expected performance of the export sector was also affected by the fall in the price of gold, another major export item, in the global market. The global price of gold dropped nearly 30% at the end of 2013. The manufacturing sector grew by 11.4% during the past nine months with leather and leather products and textile and garments registering a 12% and 14% growth, respectively. Hailemariam’s report also addressed good governance, education, health, and foreign relation and security issues.

Ethiopia signed a $10m loan agreement with the Arab Bank for Economic Development in Africa (BADEA). The loan will be used for upgrading 45.5 km of road in eastern Ethiopia. Ethiopian State Minister of Finance and Economic Development Ahmed Shide hailed BADEA for supporting his government's development activities in the country, describing the bank as Ethiopia's "development partner." The Khartoum-based BADEA was established in line with a resolution of the sixth Arab Summit in Algiers in 1973. It began operations in 1975 (Anadolu Agency, April 25).

Ethiopia is currently carrying out a pilot project on more than 700 ha in the south-western Bench Maji region that officials hope will help turn the country into a major rubber producer. "The pilot project launched in 1994/95 has so far consumed 100m birr from government coffers," Dawit Mesfin, general manager of the Chemical Industry Corporation's National Rubber Tree Development Initiative, told. "Three studies conducted prior to 1989 proved that there was potential in the south-western part of the country to develop 84,000 ha with rubber trees," he said. So far, rubber trees have been planted on only 270 ha. But the project has already begun yielding rubber, said to be up to international quality standards. Ethiopia spends as much as $600m every year on the import of rubber products, including car tires (Anadolu Agency, April 21).