Double digit economic growth and empty plates – By Tamiru Geda

December 12th, 2009 Print Print Email Email

The economic trend in Ethiopia has got different views from the economic analysis and claims by the government. At a time where economic growth claims are diminished by looming famine, Ethiopian government officials are trying to hide the facts on the ground as millions of starving Ethiopians could not afford staving off hunger on a daily basis.

Wondimu Mekonen, a UK-based academician and activist says: “The current economic situation in Ethiopia is in shambles. It is totally negative. Without any mathematical analyses, one could see the number of the unemployed , homeless, street children and number of destitute beggars crowded in major cities. Inflation is very high.

“To give a simple example, at the time of Emperor Haile Selassie one could buy Injera with spicy Key and Alitcha Wat for less than two Birr. Unfortunately now a similar meal is priced more than fifty Birr. That shows the fact that our Birr purchasing value has been significantly degraded,” said Wondimu.

He also disagrees with Ato Melse Zenawi’s recent report about economic development that the latter forecasts more than two digits growth. “That is completely a lie.” Wondimu challenged the assertion by referring to some statements from international organizations about Ethiopia’s economic achievements related to anti-poverty goal in the year 2015. “Lack of good governance, wrong land policy that favors only pro-TPLF investors or foreigners who don’t play direct role in alleviating malnutrition etc…are responsible for the current economic crises in Ethiopia,” according to Mr Wondimu .

Wondimu further noted: “Ethiopia is the main source of the Blue Nile that feeds countries like Egypt throughout the year, whereas we are still suffering because of hunger. Without a political leadership and vision by the ruling party and getting rid off a culture of foreign aid dependency , Ethiopia will never overcome this problem in the near future .

“The liberalization of financial institutions such as banks, insurance companies from party monopoly and the existence of proper free market policy in the country are some of the main questions that should be answered.”

Matyas (not his real name), editor- in-chief a highly reputable private press in Ethiopia , says that it is a bit complicated to reach a conclusion about Ethiopia’s current economic trend, be it positive or negative, for various reasons. Factors like Foreign Direct Investments (FDI) inflow , export earnings, imports, access to finance , inflation, availability of foreign currency , less bureaucracy and equal treatment of businesses will show some insight in the overall economic trend. In his view understanding the actual living conditions, life expectancy and prosperity of individual citizens are the practical parameters.”

In this economical crisis year, FDI to Ethiopia comes from China and Middle Eastern countries. Those companies and countries were not significantly affected by the global economic crunch. In addition to that most of the investment launched this year were those who did their feasibility study and the decision prior to the recession year. Bedsides this most investments from China were highly encouraged by the communist Chinese government through the Sino-Africa or Sino-Ethiopia bilateral economic arrangements. And their finance source is also their government or Banks. The Middle East case is also similar. Matyas said most of the investments are focused on export-oriented agriculture which they planned to export it to their respective country.

“Though it is encouraging trend but favoring certain companies or country’s is not create a health business doing atmosphere at all,” he said.

In terms of Ethiopia’s Export the fiscal year was not pleasing both quantity and earnings. Consumers dissatisfaction for imported goods and declined price rates , in the West is believed factor to the problem.

“Take flower as a good example that are affected by the credit crunch .Though it is now both flower and coffee price increases on the world market, but the fact for the year has put the country at a crossroads.” Matyas further commented that due to shortage of Foreign Currency in Ethiopia the import business was a direct victim of recession. “Companies that even won big tenders to supply goods have failed due to unavailability of adequate foreign currency and unable to open Letters of Credit (LC) .”This leads to high inflation of price of imported supplies in the local market. The increase of fuel price in global market and TPLF’s inability to narrow the huge gap on trade balance are also mentioned as problem.

Some observers also point out the fact that landlocked Ethiopia is spending $1 billion a year only for using Djibouti port. The huge port services cost is believed to the major cause of dwindling hard currency reserve.

According to Matyas, access to bank loan is also made too hard due to complex requirements that might be impossible for the average or low income citizen to engage in business.” Though the government declares about the sufficient amount money through microfinance in states for micro business it becomes a political tool to favor pro-TPLF/ Weyane business. It may even have a small room for independent citizens but not adequate. ”State owned banks are also said responsible for the unhealthy wealth distribution between the rich and the poor. Access to loan in the commercial banks for a simple individual is thoroughly lawless. It is very easy for the rich to get richer and also for the poor to get much poorer.

Despite the propaganda disseminated by the government as if it makes efforts to improve the economic conditions of the majority, practically its policies have been hindering real progress.In other words, the ruling party is creating economically strong and favored members or supporters that bark whenever their interests are at stake.

Many people label her as a pessimistic; however Christine Ogada , a Kenyan who studies Journalism in Nairobi, calls herself realistic. She says that the economic trend in many African countries such as Kenya and Ethiopia is not promising .” According to reports by international media outlets, millions are going hungry due to poor rain and bad governments in many poor countries .” Christine Said, “The ffunny thing is that no one in the government is looking at these problems.”

“Corruption is killing us slowly, look at Kenya for example before the recent violence our economy was on the positive side even though corruption was still thriving .We could support 90%of our budget and the 10% depend on the donor money. We didn’t need much aid,” she stated.

Journalist Abebe Gellaw, a Stanford University fellow and critic of the Meles regime, said that claims of double-digit economic growth is preposterous as millions of hunger-stricken Ethiopians are left to scratch their empty plates. “The only amazing growth which has been witnessed in the last eighteen years has been registered by the TPLF and its partners. The ethnic front is probably the biggest political business empire anywhere illegally siphoning off financial and natural resources to benefit a selected few.”

He asserted that while tens of millions of Ethiopians are condemned to live with hunger and sustaining their lives with alms from the West, making exaggerated claims of economic growth makes little sense. “It is outrageously nonsense. These people are even selling lands that can ensure food security for the nation of hunger. So what sense does it make to the poor if Middle Eastern oil barons invest billions to grow food for their own market? ” he said.

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