Tsegaye Tegenu (PhD) – Ethiopian Business Review

A Ticking Time Bomb of Resource Scarcity & Ethnic Tensions

Since the early 1970s, Ethiopia’s population has tripled, growing within a subsistence economy and fragile institutions. Today, it is the second most populous country in Africa and 10th in the world, with over 120 million people. Projections indicate it will reach 130 million by 2032, underscoring the urgent need for resource management.

Large populations mean greater overall demand for essential resources like food, water, and energy, even if the growth rate remains slows. This is particularly problematic for countries that already face resource shortages. A country with a population of 120 million will need far more food, water, and healthcare than one with 20 million, even if both are growing at the same rate.

Untangling a Multifaceted Challenge for Long-Term Development

Ethiopia, a nation steeped in rich history and ancient tradition, struggles against a multi-headed hydra. This mythical beast embodies the complex and interconnected problems that threaten the nation’s stability and long-term prosperity. Unlike the mythical creature slain by Hercules, Ethiopia’s hydra has three distinct yet intertwined heads, each representing a critical challenge demanding long-term, systematic solutions.

The first head of this formidable tribulation is the relentless surge of exponential population growth. Since the early 1970s, Ethiopia’s population has tripled, transforming it into Africa’s second most populous nation, exceeding 120 million already. Projections paint a sobering picture – by 2030, this figure is expected to reach 145 million, ballooning further to 205 million by 2050 and a staggering 294 million by the year 2100. This rapid expansion within a subsistence economy’s framework creates immense pressure on essential resources.

The Intertwined Challenges of Building Strong Institutions, Navigating Political Flux, and Empowering a Thriving Middle Class

Exploring the dynamic relationships and interactions among institutional weakness, political instability, and the state of the middle class in Ethiopia is an exciting exercise. The interplay of these three key elements is currently shaping the Ethiopian society. Understanding their relationship is essential for informed decision-making, effective policy formulation, and promoting sustainable and inclusive development in the country.

Historical Opportunity for Economic Self-Reliance

Last August, the 15th regular summit of the BRICS member states held their annual heads of state and governments meeting in South Africa. At the end of the conference, the BRICS group of nations invited six countries – Argentina, Egypt, Iran, Ethiopia, Saudi Arabia, and the United Arab Emirates to join the block. From the beginning of the following year, these six countries will join the current five members – Brazil, Russia, India, China, and South Africa. These countries were among the over 40 countries that expressed interest in accession.

A Population Growth Perspective

Ethiopia has experienced different defining moments that have allowed it to survive for thousands of years. One moment, for instance, was the war against colonialist Italy during the second half of the nineteenth century, culminating in the Battle of Adwa. Today, Ethiopia has to choose another defining moment to ensure the material well-being and unity of the people and the survival of its cultures: Embracing industrialisation-led structural transformation.

On 20 January 2023, Prime Minister Abiy Ahmed made changes to his cabinet and other appointments. The PM announced the nomination of new ministers, including the Ministry of Transport and Logistics, Ministry of Mines and Petroleum, and Ministry of Agriculture. The PM has also appointed new central bank governor.

New appointments are common in political life, and as usual people are discussing the reasons behind the new appointments. Is the major reason of appointment a result of the desire to change economic policy? Is it related to a search for “able, creative, and experienced people” who can manage the bureaucracy. Is it related to a search for loyalty? Whatever the reasons, quality matters for government performance.

Open Letter to the Prime Minister and Government

On August 3, 2022, the Ethiopian government held its annual meeting to review the macroeconomic performance of the country. The session led by the Prime Minster assessed the country’s economic journey and performance in terms of GDP growth and other macro-economic variables such as inflation, employment creation, export, and investment promotion.

Despite higher inflation, incessant conflicts unfavorable to business, the practice of corruption, global recessions, and rapid population growth—which all have a negative relationship with economic growth—the Prime Minster declared that the country’s economy grew by 6.6Pct. That was considered a miracle and gave credit to the government’s plan and effort.

The current democratic movement that has engulfed Ethiopia must be supported by economic reforms and democratic system. The two are intimately connected: you can’t have one without the others. Democracy is the best form of government for economic progress. But if the economy is not improving, the flag-bearers of democracy among the populace will make U- Turn. The Ethiopian youth do not “eat democracy”; at the end of the day they need jobs, income, food and housing for themselves and their dependants.

The Ethiopian economy has been at the same level of growth and productivity for the last four decades. Economic growth, transformation, and development could not keep up with the speed and pressures of population growth. Unless population takeoff is backed by economic takeoff at the same time, the consequence is dire crisis. The population of the country has grown fast in these decades making Ethiopia the second-most populous country in Sub-Saharan Africa with a population of over 100 million. Currently, the Ethiopian population is increasing by over two million people a year.

First and foremost, I would like to thank Ethiopian Business Review (EBR issue no 90) for bringing up Ten-Year Perspective Plan to the reader’s attention. The ten-year plan is about risk of spending a huge amount of money and life changing opportunities for over 100 million people. Since the plan is intended to control and influence the behavior of the national economy for the next decade, it should not be set aside as past concern or old news. I encourage EBR to continue giving coverage to the ten-year perspective plan and educate the public on how they can put their future fate and hope in their hands.

Ethiopia’s Population Boom

A Ticking Time Bomb of Resource Scarcity & Ethnic Tensions

Ethiopia’s Hydra

Untangling a Multifaceted Challenge for Long-Term Development

Ethiopia’s Quest for Equilibrium

Ethiopia & BRICS

Historical Opportunity for Economic Self-Reliance

Structural Transformation of the Ethiopian Economy

A Population Growth Perspective

PM Abiy Ahmed’s New Ministerial Appointments & Ethiopia’s Economic Future

Is the Economy of Ethiopia Progressing?

Bottom-Up Industrial Policy for Ethiopia

Ethiopia’s Economy Needs New Thought and Policy Design

Reflection on the Ten-Year National Economic Plan