At a sensitive time when the economy is suffering from inflation, unemployment, debt distress, poverty, conflict, and COVID-19, the nation prepares for the sixth national election to decide who rules for the next five years to end the transitional government that has been in power since April 2018.
Nonetheless, the political space is largely occupied by parties fanning and prioritizing ethnic quests instead of addressing underlying economic constraints. Ideology-based analysis and principled models for Ethiopia’s vicious economic circle are brands scarcely seen in the political parties’ campaigns. Out of the 47 political parties cleared to participate, 18 are competing for federal Parliament seats. While very few of the national parties have manifestos, even fewer have well-defined politico-economic policies to relieve voters of the ongoing economic strife.

Over the last two years the number of entrant banks has proliferated, almost equaling the amount of working banks. Nonetheless, a new directive issued by the caretaker National Bank of Ethiopia has shut the door on the further entrance of new banks, whilst also raising the bar on smaller banks and the close to 20 already in the pipeline.
Banks are now expected to raise their minimum paid-up capital to ETB5 billion within five years from the existing ETB500 million mandated in 2011. Although central bank authorities stress the intention is to discourage unbalanced proliferation and nurture few competitive banks, industry leaders and experts claim that this move is the interest of the leading banks. Up to six existing private banks are forecasted to consider merging, while a substantial number of under-formation banks will either abort their efforts or join hands. EBR’s Ashenafi Endale investigates the implications of the new move. 

In the past, prices of commodities revert to reasonable levels after the end of the harvesting season. However, agricultural products are priced at new heights this year. In fact, the current inflation spike is the second highest after the record year of 2008. A major factor is the widespread instability affecting the mobility of commodities. Foreign currency scarcity and an increased money supply have also contributed. But the lifting of fuel subsidies by the government has brought the acceleration of prices to new levels. EBR’s Ashenafi Endale explores.

The revision of the existing proclamation regulating different level chambers has caught the attention of the business community. In its final drafting stages, it will largely concern the organization and running of Ethiopian businesses under different chambers and sector-based associations. However, the changes offered in the draft proclamation have garnered stiff reservations and displeasure from the private sector. EBR’s Ashenafi Endale explores the business community’s concerns on the draft proclamation.

When the government exclusively ratified and approved the two Growth and Transformation Plan (GTP) editions, independent experts critiqued it as highly ambitious and unrealistic. The administration took ten years to acknowledge the reality. Still, the Council of Ministers approved an even more ambitious Ten-Year Perspective Plan (TYPP) in early December 2020 in a bid to chart out an economic execution plan up to 2030. Strikingly, no independent experts were allowed to forward their viewpoints and solutions regarding major hurdles persisting in Ethiopia’s economy.
Export, structural transformation, and housing are some of the major new wines poured into old glasses. Most of the superfluous figures anticipated in the document, which target achieving quality growth and elevating Ethiopia to prosperity by 2030, are planned to be executed by a similar institutional implementing capacity which was the Achilles heel of past plans. Ashenafi Endale delved into how long-term economic targets become unrealistic under politicized ambitions.

Since 2015, anti-government protests, conflict, and instability have been ravaging Ethiopia. Especially in the past two years, the breakdown of law and order has become the new normal. Thousands have lost their lives and in 2018, 2.3 million were internally displaced—a world record high. In fact, in the last two and a half years, excluding the latest operation in Tigrai, 113 conflicts have erupted across the country. As a result, the federal government’s expenditure to secure public order and security swelled from ETB14.2 billion in 2017/18 to a staggering ETB24.2 billion in 2019/20. Though without a known updated figure, the latest operation in Tigrai is sure to compound Ethiopia’s security bill. EBR’s Ashenafi Endale explores the direct and indirect costs of conflict and instability, as well as the overall economic losses.

As a developing country, the Ethiopian economy is largely characterized by the informal sector with studies indicating its expanding size. The International Monetary Fund estimates that in countries in transition, like Ethiopia, the underground economy accounts for as high as 40.1Pct of GDP. Although the government has been taking different measures to reduce the role of the informal sector, these interventions have failed to materialize. However, the government now says its latest measure of replacing currency notes with new ones is positively working in that direction. But experts disagree with the government’s concision by saying the expansion of the informal economy is highly interconnected with the formal economy’s failure to produce enough goods to satisfy national demand. EBR’s Ashenafi Endale reports.

Ethiopia, which has undergone political turbulence in recent years, has now fired a direct shot at the nation’s lingering macroeconomic imbalances by unveiling a new generation of currency notes on September 14, 2020. In addition to the replacements of the old Birr 10, 50, and 100, a new 200 Birr note was also issued by the government. The five Birr note remains unchanged and will soon be turned into a coin. While the government stress that the introduction of new currency notes is part of the ongoing economic reform in the country, critics argue the move is rather driven by politics and an assertion of power. EBR’s Ashenafi Endale explores.

Ten-year plans are not that common in the national planning endeavors of modern Ethiopia. Five-year plans, on the other hand, spell the standard for the governments that have administered the country since the 1950s. Breaking that tradition, the incumbent has formulated a Ten-Year Perspective Plan (TYPP). Ashenafi Endale looks into the five major criticisms scholars raise against the planning document.  

Cut-throat Moves to Legitimize Cutting-edge Technology

The paramount friction between science and nature resumed afresh in Ethiopia, following the government’s commercialization of GMO varieties through selected farmers and the appreciation report released by the US Department of Agriculture (USDA) in February, 2020. Following the amendment of Ethiopia’s strict biosafety laws in 2015, half a dozen farmers in Gambela and Benishangul regions cultivated Bt cotton in 2019 for the first time. The move is soon to be followed by GMO maize and Enset. Government officials and proponents of the technology argue that GMO is the silver bullet to do away with food insecurity. Nonetheless, growing anti-GMO groups are concerned over what they call ‘the irrationality’ behind the governmental rush for GMO. The poor productivity of the first GMO farms is also a major setback for proponents of the latest GMO manoeuvring around Ethiopia’s millennia old agriculture. EBR’s Ashenafi Endale investigates the debates to offer this report.