Government Trains Economic Forecasters at Home

  • UNDP, EU and Other Development Partners Sponsor MoFED

For fast growing economies like Ethiopia, economic forecasting is very crucial. Making strategic decisions with uncertainties means that nations are frequently in need of forecasts. This effort can be put into practice at the macro level for country’s GDP, inflation, unemployment or fiscal deficit. It can also be applied at the micro level for specific sectors in the economy or even specific firms. But doing this is not as such an easy task, especially, in developing countries. The lack of analytic forecasting experts of their own, forces least developed countries to rely on global institutions such as the World Bank and International Monetary Fund (IMF).

The government of Ethiopia has expressed an interest in acquiring local economic forecasting professionals. The recently signed agreement between Addis Ababa University (AAU) and the Ministry of Finance and Economic Development (MoFED) to educate selected students in ‘Master’s Degree in Economic Modeling and Forecasting’ shows that the government has become serious about doing this.

AAU has already accepted 32 trainees, 24 from MoFED, National Bank of Ethiopia (NBE), Ethiopian Revenue and Customs Authority (ERCA) while the rest were sponsored by the University.

When MoFED and other public institutions acquire the human resources they need to train,  it is likely that the program, which  started as a joint project with MoFED, will be owned by the University. This will give self sponsored applicants further opportunities to pursue the discipline on their own.

MoFED has received financing from the UNDP, EU and other development partners to cover the cost of training for the next three years.

The University decided to launch the program after MoFED, NBE, ERCA and other public institutions expressed their need for training of their staff in the requisite concepts, policy instruments, and tools essential for policy analysis. Moreover, the school also considered the private sectors’, think-tanks’ and others demand for economic analysts with strong quantitative skills.

The one year intensive three semester program aims to equip students in the analytical knowledge and abilities essential to the challenges of changing economic settings by bringing visiting professors in the areas of macroeconomics and development economics from European and American Universities in addition to using the faculties the School of Economics already has.

Why MoFED took the initiative to train economic forecasters seems obvious. “The institution is engaged in managing the overall economy by designing long term and medium term development plans and allocating resources on an annual basis. Monitoring and evaluating these plans requires highly qualified personnel who are equipped with strong analytical skills. These skills are essential to understand the dynamic economic settings to provide strong policy recommendations,” an expert in the ministry reflected. The Ministry took the initiative and approached the university to persuade them to launch the program after assessing the skill gap of its employees. There are also other public institutions, which showed an interest,” the expert added.

Previously, the Ministry has been training a few of its staff in Economic Forecasting and Modeling under long and short term programs abroad. However, the small number of trainees coupled with high skilled labour turnover, has challenged its ambition of becoming a stronger institution in its national planning, budgeting and macro economic policy analysis, as well as impact evaluating activities, according to sources in the Ministry.

This has reduced MoFED’s activity down to cash management of the federal government with limited activities on economic planning and forecasting, an external assessment by the USAID indicates. When the trainees finish their studies, it is expected that they will change this.

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