Ethiopia hails new poverty reduction data; World Bank expresses concern inflation is undermining progress By Keffyalew Gebremedhin

March 18th, 2012 Print Print Email Email

Ethiopia Friday announced 29.6 percent of its population, or 30 million, subsists below the poverty line, compared to 38.7 percent in 2004/05. This is based on results of the official 2010/11 Household Income Consumption and Expenditure Survey (HICES), the fourth in a series.

For entirely different reasons, today’s announcement has taken by surprise both economists and political analysts. Economists concerned by the persistence of double-digit inflation seemed puzzled how this has worked out to this outcome, seemingly vowing to go back to the drawing board to review the details.

At the launching of the interim report on the Survey, Minister of State for Finance and Economic Development Abraham Tekeste also seemed to share that preoccupation, when he said considering the persistence of inflation the decline in poverty level is a “remarkable achievement”, according to VOA.

Nevertheless, World Bank Country Director for Ethiopia Guang Chen is more straightforward in expressing concern that inflation is undermining further progress. The table here shows the extent of inflation, going into third year and its severity. It shows that from 2010 into the first two and a half months of 2012, the country has gone through 17 months of uninterrupted and still rising double-digit overall inflation, averaging about 30.0 percent. At the same time, it has recorded 14 months of double-digit food inflation, which in February reached 47.4 percent making not only the price of food beyond the reach of ordinary citizens but also creating shortages of food items such as cereals,oil and sugar, etc.

VOA’s Peter Heinlein quotes Guang Chen saying, “The trend is very positive [shown by HICES results], but at the same time, as the state minister says, still we’re talking about 30 million people below the poverty line, and this is a very poor country, and when we’re talking about rural poverty line, their poverty line is actually below the world accepted average. So there’s still a lot of work to be done.”
In all this, the ebullient Associate Professor Tassew Woldehanna takes the survey results as confirmation that Ethiopia can achieve the Millennium Development Goals by reducing poverty by half, according to ENA.

For political analysts, more intriguing now seems to be the timing of this announcement. They say, it is coming as it does, when the country is extremely busy with security problems in many corners at the same time, citing as example, in Somalia, while they are also standing in readiness to ward off reprisals from Eritrea on the northern border, which Ethiopia claimed days ago it had made incursions into that country and destroyed training camps.

These analysts are concerned that the longstanding no-peace no-war situation with Eritrea is now changing, as tensions are also exacerbated by low intensity conflicts and insurgent activities in the Ogaden, onto which Gambela has become another addition. If not undermining the country’s stability in a serious way, these would still be nuisances that compete for attention and scarce resources, creating difficult environment for continuing the task of poverty reduction and ensuring to make economic growth broad based, beneficially contributing to every citizen.

VOA reports that Finance Ministry officials saying they had made progress in narrowing the inequality gap. However, the World Bank’s lead economist on poverty reduction in Africa Chorching Goh noted that the history of developed countries teaches temporary inequality is a necessary result of growth. She urged Ethiopian officials to be patient when it comes to inequality, and impatient when it comes to the eradication of poverty, although the Bank’s role in poverty eradication is barely one of the best models to follow.

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