ethiopia an african

Reflection on the Ten-Year National Economic Plan

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.To begin with the Ten-Year Perspective Plan is not just any kind of plan such as social, physical or implementation plan. It is a strategic plan on national economic policy intended to enhance growth and development in the country. The plan is formulated, administered and implemented by the government. Since there are multiple policies to achieve a given vision (say making Ethiopia a middle-income country) that raises basic questions as to the objectives of the policy plan, what strategies are used to achieve the objectives and how is their mix chosen.

Ingredients and packages of long -term economic policy plan
Compared to annual and medium-term plans, as a rule ten-year plan is classified as long-term national plan which expresses the general directions of the country’s economic growth and development. The plan is a dynamic roadmap that helps get the country’s economy where the government wants to be later (in this case middle income country).

Technically speaking, a plan is a method or a step of achieving something which the government has worked out in detail beforehand. The question is what is that the government wants to achieve within a specific ten years timeframe. The intended future course of action (scheme outlined in the plan) is not separable from the goals or objectives that are going to be achieved. In other words, the blueprint for the country’s economy for the next decade includes new goals to be achieved and the steps that detail the timing and resources of the intended actions.

Developing long term plan includes five components: vision (what the country aspires to achieve), mission (motivation and purposes of the vision or who do we do it for), strategic goals (how to progress, sequencing), objectives (specific measures to achieve the strategic goals) and activities (planned actions to achieve the objectives). Figure 1 illustrates a framework I used for reviewing the proposed government ten-year plan. It contains two parts: the vision and the mission part dealing with principles of action and values and the second part containing strategic goals and main priority tasks. The outlined ingredients are not exhaustive for reasons of simplicity and space.

Evaluating and reviewing the ten-year perspective plan
Unfortunately, the ten-year plan document is not released for the public even in its short form for making a fair assessment of its missions. From the media we learned that the vision is to make Ethiopia middle income country by 2030. According to the World Bank, Middle-income economies are those with a GNI (gross national income) per capita of more than $1,045 but less than $12,736. Ethiopia’s current GNI per capita is $850 and is expected to triple by 2030. The vision for the ten-year plan is aspirational and acceptable if we understand the present and want to optimize the future. The question is how to measure such bold level of growth and development. What are the right indicators that measure progress towards the vision? How do you know when it’s achieved? What are the solid evidences?

The ten-year plan does not provide information on vision progress measuring indicators. I do not know what the staff involved in making the plan had in mind when they said “improving living standard”. If improvement means lowering production costs and increasing wages, then there should be an objective of job creation and productivity growth in the country. According to my framework of assessment, the right quantitative and qualitative indicators for measuring the vision should include: i) increase in GDP per capita for the work force, ii) job creation for the unemployed, iii) transforming the productivity level of subsistence, non-farm and informal economies, iv) local and regional development, and v) environmental sustainability.

Job Creation, Industrialization,
Structural Transformation
When it comes to the overall objective of job creation, there is no direction as to which sectors facilitate this process. While economic growth is good for job creation, it is important that growth occurs in sectors that have the potential to absorb surplus labor at a large scale. A literature review by many researchers identifies an extensive body of evidence which suggests that growth in manufacturing has a particularly positive impact on employment. The question is what is in the name of industrialization; one must find answer to the four Wh questions (what, how, why and where questions) of industrial policy choices, practice and methods. To find answers to these questions, there is a need for the participation of stakeholders in the industrial policy process. Unfortunately, the public has dropped out of the policy participation process.

The ten-year plan basically reflects the goals and objectives of public sector actors that participated in the planning process. This approach misses intra- and intersectoral objectives such as job creation, structural transformation and cross-sectoral objectives such as regional development (see figure 1). The implementation and success of sectoral policies does not guarantee job creation, structural and spatial transformations. The rationale of sector-based approach policies is to define the mandate and objectives of sectoral agencies. Sectoral policies aim at providing comprehensive, integrated and balanced frameworks for the quantitative estimates of future demand and the probable total available supply of resources to meet the sector’s objectives. More than that, sector approach may help find equilibrium among sectors and create some order and balance in the economy. Job creation, structural transformation and regional development is not their concern. Those objectives are tackled at different levels.

It is beyond the scope of this article to discuss policies of job creation, structural transformation, and regional development (see earlier EBR issues). What can be said is that the successful achievement of these objectives requires design of strategies that have butterfly effects among sectoral policies. For instance, in the case of structural transformation, there is a need for linkage transformation strategies which include issues related to urban-rural linkages, market linkages, backward and forward linkages, productivity linkages, production linkages and intersectoral linkages. Linkage transformation is outside the rationale of sector approach and that is why we do not find these issues addressed in the policy plan document. The country’s economy is fragmented among millions of self-providing households (both producers and consumers at the same time), non-farm economies (which are unproductive) and urban informal economy (mainly non-tradable). There is a need for the creative transformation of these unproductive fragmented economies. These economies, which roughly constitute about 40% of GDP, are not addressed in the policy plan.

In politically stable countries, there are two major areas in which states fail. The first area is policy choice, and that emanates from the desire to benefit powerful economic interest groups such as multinational companies or ethnic entrepreneurs. Policy choice can also be value driven related to the political ideology of the party holding government offices. The second area for states to fail is service delivery. There are constraints when a chosen policy is implemented and combating those problems depends on the policy implementation capacity of the government.

My conclusion is that the ten-year perspective plan is designed mainly to address the second failure, namely government capacity to implement policy. The plan is not prepared to design strategic goals of job creation, income increase, economic transformation and regional development. The ten-year perspective plan and the Homegrown Reform program show that the interest is on implementation, not on policy goal formations. The assessment of past economic performance (mainly through sector approach) convinced the government to prioritize and undertake implementation reforms in three major areas: a) establishing macro-policy climate to improve performance and ensure stability; a good example is the Homegrown Economic Reform Program, b) adjusting sectoral policies to encourage efficiency and competitiveness and c) improve bureaucratic constraints to accelerate economic interactions. God knows if these three reforms can create jobs, increase income and promote regional development in the coming ten years. That is why we have a lot of ifs in the ten-year perspective plan.

Because the government is mainly interested in the process of turning policy into practice and proper service delivery, there was no need to collect more evidences and ideas to balance policy objectives and priorities. Consensus on policy choices is not seen as a problem or assumed to be given. The main drive and interest behind the ten-year perspective plan is in remolding the developmental state (top-down implementation approach). That is why there was no consultation with independent experts, NGOs, local organizations and community members, who should be part of the process in specifying policy provisions and whom it benefits. Catchwords such as middle-income country, improving living standard or green growth need specification in terms of beneficiaries (employed, unemployed, local people, regions, rural and urban areas), priorities (productivity growth, private sector development, urban cluster, infrastructure development) and strategic goals to achieve stated benefits (industrialization, spatial and structural transformations). Details of intervention activities to attain the stated objective and sector responsibilities can be mapped out during the implementation plan after building the forward view policy document.

My view is that the government should not be the only leading think tank group to decide on the winners and losers of the policy. Everyone who wants to help should get the chance to voice their views about our collective future. A well-researched and reasoned planning document is of immense value to a country in identifying beneficiaries, setting priorities and the allocation of its scarce resources. Not only that, a plan that is formulated on the perspectives and voices of the public has greater chance of successful implementation. Within participation, there is an ability to work together for a common goal and commitment and the energy to carry forward into implementation. The process of building a forward viewing document generates an understanding and knowledge that the success of one aids the success of all. Unfortunately, that did not happen; early adjustment advices are ignored.

9th Year • Oct 16 – Nov 15 2020 • No. 91

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