The world has come to a grinding halt because of the coronavirus pandemic. Factories have stopped operation. Corporations that generated millions of dollars every day have ceased functioning. No one seems immune to the health, economic and social hazards of the ongoing crisis. With no end in sight yet, businesses are being forced to lay off their highly valued employees as their expenses surpass the revenues they generate.
In a speech in 1959, J. F. Kennedy famously said “when written in Chinese, the word ‘crisis’ is composed of two characters – one represents danger and one represents opportunity. Maria Langan-Riekhof, Director of the Strategic Futures Group at the National Intelligence, and others have gone so far as saying “sometimes the world needs a crisis” to turn challenges into opportunities.
Economic growth in sub-Saharan region is projected to contract by 1.6Pct in 2020, according to the World Economic Outlook report published by the International Monetary Fund (IMF). The Fund, which earlier forecasted that the region’s economy would grow by 3.1Pct, changed its previous estimates due to the economic disruption from the spread of the Coronavirus.
It has repeatedly been demonstrated that major international events have the ability to shift paradigms. The post-cold war period identified by the emergence of the United States as the sole super power with other regional hegemons roaming their localities pushed neoliberal policies to the forefront of intra and inter-state relations. With considerable external pressure to adhere to these neoliberal approaches along with the theory’s revamped academic acceptance worldwide, states jumped on board. Accordingly, opening up markets and export promotion became widely accepted approaches. The Coronavirus pandemic has, however, shown that the hectic international trade practices centered on import and export in a highly globalized world have left states, both developed and underdeveloped, a long way from self-sufficiency. EBR’s Ashenafi Endale looks into the impending rise of import substitution in a post-COVID-19 Ethiopia.
Tsegaye Kemtsti joined the insurance industry almost half a century ago. After joining the sector at his first employer, The Imperial Insurance, he spent five decades to culminate his career as Chief Executive Office of Awash Insurance, which he founded and led for a quarter of a century, until his departure earlier this year. Although he did not push his formal education further than the College Diploma he received from Addis Ababa Commercial College during the Imperial regime, Tsegaye has the entire history of the sector for an experience. He has also proven himself as one of the most successful CEOs in the insurance industry.
Gross domestic savings are generally very low in least developed countries such as Ethiopia. That paved the way for foreign investment to emerge as an alternative source of bridging the gap between savings and the required investment after 1992. Since foreign firms bring not only financial capital but also managerial techniques as well as entrepreneurial and technological skills, foreign direct investment (FDI) is regarded as one of the major components of Ethiopia’s economic growth over the past decade. However, it’s not all been rosy. Although initial investment by foreign firms improves the current and capital accounts of the host country, in the long run, repatriation of profit, interest, royalties and management fees may harm its foreign exchange position. This is exactly what is happening in Ethiopia. A minimum of USD1 billion is requested by locally operating foreign companies that repatriate profits annually. However, a fraction of this amount is availed by commercial banks operating in the country. This phenomenon traps foreign companies, forcing them either to wait for a long time to repatriate their profits or reinvest it as EBR’s Ashenafi Endale found out.
In the aftermath of free market policies and the subsequent lifting of price caps in Ethiopia, setting the price of commodities seems to be left solely to suppliers and traders. With barely any institutional set ups to protect the rights of consumers, the prices of goods and services has soared in folds with the trend showing no end in sight. The Trade Competition and Consumer Protection Authority established seven years ago seems to be a failure. EBR’s Ashenafi Endale looks into the problems in consumer protection and the road ahead.
The major scare on Ethiopia’s international image is its incessant association with famine. Ethiopia has a cycle of drought that recurs every decade. Despite efforts to break the cycle and rise above the embarrassing and life threatening challenge, drought and famine still creep up. Despite decades of experience fighting the vice, Ethiopia still regularly struggles against food self-sufficiency problems. The lingering problem necessitates keeping dependable food reserves. EBR’s Ashenafi Endale investigates the problems behind this chronic problems and sheds light on the road ahead.
David Phiri (PhD) is FAO Sub-regional Coordinator for Eastern Africa (SFE) and Representative to the African Union (AU) and to the United Nations Economic Commission for Africa (UNECA). Prior to this post, Phiri was FAO Sub-regional Coordinator for Southern Africa and Representative to Zimbabwe, Swaziland and Botswana. He joined FAO in 1991 as Policy Economist and then served in the Cabinet of the FAO Director‐General. EBR’s Ashenafi Endale sat down with him to understand threats to the food security situation in Ethiopia and the Horn of Africa. Originally from Malawi, David Phiri specialized in Agricultural Economics.
Now that Coronavirus has pushed people around the world to dwell at home for months now, engagements that demand physical commotion have been highly restricted. Although there is relatively better movement in Ethiopia compared to countries in lock down, quite a sizable group of people have spent the past month at home. With some businesses such as gyms closed, those who have adhered to the stay at home recommendations need a makeshift venue for physical exercise. EBR’s Kiya Ali explores the various attempts by people to break sweat from the comfort of their living rooms.
Samrawit Fekiru
Ayele Gelan
Ethiopian Business Review
Ashenafi Endale
Samson Berhane
Abiy Wendifraw