Homegrown Economic Reform and Regional Development in Ethiopia

Filed under: Opinion & Analysis |

By Tsegaye Tegenu (PhD)
2019-12-21

The Ethiopian government has recently announced a three-year reform blueprint called “Homegrown Economic Reform” for the purpose of growth, job creation and poverty reduction. The government has also announced that it has secured roughly US$9 billion external finance for the reform package. The main pillars of the economic reform include macroeconomic, structural and sector policies. There is an ongoing heated debate over the purpose, nature and priority areas of the new reform packages.

My purpose in this article is not to engage in a debate, rather point out a critical but often neglected development issue in the country, namely, regional development. There is no reference to the importance of regional development neither in the objectives nor in the outlined pillars of the reform program. This is not surprising in a country where mainstream economic assumptions often used to shape development policies. Mainstream economics is either space-neutral or space blind. The structural and sectoral polices of Ethiopia, both in the current and past governments, focus on specific instruments (such as infrastructure investment) and ignore the geographical concrete patterns in which these instruments are deployed.

Geography shapes the economic development of a country and regions are a policy platform for action and progress. National policy and institutional framework matters for regional development. The nine national regional states in Ethiopia lack their own development strategy. Instead, they adopted the national development goals and strategies formulated by the ruling party. The current top-down and sector based regional development plan has created disparities in regional development in the country. Reports compiled by the technical committee of the House of Federation of Ethiopia revealed that:

  • There is unfair distribution of infrastructure.
  • The southern regional state, which is endowed with rich natural resources, vast land and labor force, could not witness better growth because the central government does not have economic criteria and mechanism for distribution of projects.
  • Federal government claim that projects are approved based on demand and rate of returns in the specific regions. Interviewed officials and experts stated that the reality is very different. Development projects are usually used as a political string pulled and executed from the center based on strategic alignment of political forces or bargaining power of specific regions.
  • There is also unfair distribution in other major projects carried out by the federal government: universities, airports, network infrastructure and industrial parks. The location of these projects is decided mainly by the influence of the regional powers in the political realm, not by economic criteria. “A region which has strong say in the party politics, especially the ruling party, is confirmed to get the large proportion”.
  • Regions with immense potential but no political influence are still stranded in backwardness and poverty.
  • Despite investing hugely in infrastructure, structural transformation in the country has failed because projects were installed in unproductive areas and in unbalanced manner.

The top-down and the sector-based application of national development plan has number of limitations and undesired consequences. There is a need for a paradigm shift in regional development policy in the country. Regional development matters for the country’s future economic progress. For a discussion on the preconditions for a successful design of new regional policy in Ethiopia please read “How Regions can Develop in Ethiopia: The Need for a Paradigm Shift”. You can download it from http://uu.diva-portal.org/smash/record.jsf?pid=diva2%3A1379497&dswid=-5574

For comment I can be reached at tsegaye.tegenu@epmc.se

 

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3 Responses to Homegrown Economic Reform and Regional Development in Ethiopia

  1. Ought not a thought as illustrious have been attired as attractively as to make it, at least, partially visible, at most, shine brightly? Like a drum, words can talk, when played skillfully. They don’t just end up sending intelligible sounds. It is said of Teddy Roosevelt, then a rookie politician that his : “Rasping voice shot out words like projectiles.”

    Meimatungu
    December 22, 2019 at 9:09 am
    Reply

    • Ethiopia’s r economy is based on agriculture . Currently Ethiopia is importing food to feed the people since Ethiopia failed to insure agriculture production due to farmers unions safety concerns plus YARA Norway fertilizer company loan sharks debt issues that are harassing farmers continuously with those that lost their crops to locust, unable to produce since locust prevention spray was not done . Now food for vote is PP / EPRDF way , to get food aid must vote in favor of the food aid carrier messenger delivery cadres party. In Ethiopia currently the unemployed people are close to 50 million people . The courageous Ethiopian government had announced it devised a plan to create twenty million new mostly industrial new jobs in the coming year 2020 , which remains to be seen.

      Edget Behibret Zemecha prosperity Medemer is going to make a big dent by providing twenty million new jobs but many are saying Banks , EAirlines , court jobs , police , military , regional city government jobs and investement land opportunities are all being monopolized by Oromos which shows Querro will take almost all of the twenty million jobs set to be created by leaving the other ethnicities the burden of loans being taken out in their names.

      Tigi Bahru
      December 22, 2019 at 3:19 pm
      Reply

  2. Very Important to Devalue Birr to curb the gap between official and unofficial rate.

    Why devaluation of Birr to 50 to a Dollar imminent indispensable and imperative.

    Assume an IMPORTER over invoices his IMPORTS by 10%.

    So instead of invoicing at $ 100000 he invoices as 110000.

    The FOREIGN EXPORTER will hold 10% on behalf of exporter and pay him dollars where required may be 2% LESS OR FULL 10%.

    Assuming importer gets 10% extra dollars abroad which he can recycle back to Ethiopia 25% + the gap between the bank rate and parrarel rate. Effectively importer benifit heavily by over invoice and duty as such is on GABAYA WAGA so market value for a few items.

    This is the root cause of all economic ills creating havoc in Ethiopia.

    መልካም ቀናት ለኢኮኖሚ
    melikami k’enati le’īkonomī

    HAPPY days for ECONOMY

    The Economic Chaos Corruption and confusion is just the transition to transformation of a New Birth of Ethiopia.

    The present stage of economy is in a state of anarchy and Laise Faire with rampant profiteering and corruption resulting for Forex shortage.

    The Dr. Abiye and his dedicated team aware of present economic injustice and crisis within Ethiopia and believe and have faith and trust that it is only and only Dr. Abiye’s policy of MEDEMER can bring Peace from Ethinicity and Radicalism of Jawar Mohamed and TPLF.

    Once Peace settles all over Ethiopia their other best friends namely PROSPERITY join the party to New Birth of Progress without corruption and ease of economic activity.

    There are lots of structural reforms in pipe line that can be implemented after election.

    Loans amounting to $ 9 Billion from IMF and European countries is a JACK POT for Ethiopia.

    It matters least how money comes under what condition but it keeps opposition mum and Dr. Abiye win in 2020 Election already sealed by the second visit of President of Eritrea .

    One of the hardest economic decision in the offing anti corruption especially in import licencing approval.

    The sharp devaluation of Birr to 50 to a Dollar will make open to all freely available import licence. And parrarel market will be at a discount of 1 or 2% but certainly not heavy premium.

    So welcome the efforts of Dr. Abiye and his team who are working 24×7 for economy.

    Nitin varia.

    Nitin Varia
    December 29, 2019 at 12:47 am
    Reply

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