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How Abiy Reforms Are Sustaining Ethiopia Economic Growth

Ethiopia’s once tightly controlled political and economic space, has been opened up for President Abiy, the Nobel laureate, take power in April 2018 with plans to open up state-owned industries, from telecommunications to energy, to more foreign investment.

Photography: REUTERS/Tiksa Negeri

An estimated 55,000 social enterprises operate in Ethiopia, the second-most populous country in Africa and fastest growing economy in the region where about a quarter of 109 million people live below the poverty line, according to the World Bank.

The National Bank of Ethiopia has recently stated in a report that the forecasts expansion of 10.8% in the year ending July and the current-account gap narrowed to $4.5 billion last fiscal year. Also the World Economic Outlook database reveals that Ethiopia’s real GDP growth has been (an average of) 9.5% per year during 2010 to 2019 and the highest in the world, the record stated.

International Monetary Fund data for the 10 years from 2010 to 2019 supports this claim. Ethiopia has the highest economic growth rate of 194 countries tracked by the fund. The World Bank placed the country second only to Nauru for average growth rate between 2009 and 2018.

Are Ethiopians  benefitting from this high speed growth?

Ethiopia’s efforts to focus more on industry than agriculture have not been without problems. Some of the reforms have led to civil unrest. For instance, in 2018 opposition to an urban development plan for the capital Addis Ababa sparked public demonstrations against political restrictions, land grabs and human rights abuses.

However, experts is disputing the facts that the claimed growth are not felt by the common man’.The numbers do look brisk, but the growth has not been felt by “the common man on the streets of Addis Ababa or in the rural areas”, said Prof Adugna Lemi, who is the chair of the economics department at the University of Massachusetts in Boston, USA.

Dr Scholastica Odhiambo an economics lecturer in Kenya’s Maseno University who has also written extensively about sub-Saharan African economies claimed,“… the high growth rate of GDP is mostly due to construction and other service sectors that have little impact in terms of creating jobs or a higher wage,” Lemi told Africa Check.

“In other words, there has not been a trickle down of this growth.”. She Ethiopia’s state-led “closed economy model” stifled the private sector, hurting the country’s competitiveness in the global market, Odhiambo told Africa Check. To make the country’s growth more inclusive, there should be a focus on easing policy bottlenecks, she added.

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