How likely will Ethiopia transform from poverty to prosperity in ten years?It seems a question the current government is expected to provide details of its plans on how to achieve that in such a wavelength political orientation.
However, for the past ten years, the national economic planners have lingered to attain structural transformation in the economy, and they named their national economic proposal, the Growth and Transformation Plan (GTP) and spent much time and energy in making songs and dancing about the GTP until they come to their senses to realize that the set targets were sealed in a high ceiling that no one could reach to implement them and reap the fruits. In fact, to the most part, the plans remained tigers on papers. The inscribed tantalizing projects have delivered some achievements. However, most of the massive projects withered away. It is critical to question how much of the targets the two GTPs set out have been achieved? What are the aggregate accomplishments of these economic plans? Did they have achieved 20, 30 0r 40 percent of the targets?
Well, these are some of the exhausting question at this point of time where no more the GTPs are a talking factor and are silently sliding into nothingness.
Before the GTP came into play,some 20 years ago politicians had planned how to reduce and eventually eradicate poverty from the land. They couldn’t and the economic plans fell short of targets. In fact, the coming of EPRDF to governance has brought close to five national economic plans at various stages in the past 25 years or so.
However, since its inception, theGTP has been on constant disparages and urging. It took a few years to popularize the plan and the targets inscribed in the document. When the GTP was brought to light,experts didn’t hesitate to callthe GTP as“government’s magic plan”.Others opted to refer to it as “imaginary” or “idealistic plan”.Many commentators, and evenlater, the government consolingly accepted to the GTP as an ambitious plan.
In fact, GTP was full of ambitions. It is difficult to find out how much of the targets set out have been achieved over the course of ten years. The first term or the GTP-I erawhich ended five years ago, sliding into nothingness before we knew how much of the planned targets had been achieved and what really went wrong to achieve the targets set by then. That would be one of the questions many want really to have answers for. As President Kagame argues, it might be good to be ambitious and plan too high. But also, is good to note the fallbacks and the real outcomes of the plans.In 2016, the second term of the GTP-II was rolled into implementation and concludes this year. But with what outcomes and achievements? Thatprobably is a billion-dollar questionone mightwant to know the ripostes. We will see how the targets has been evolving around.
From ending poverty all the way to transformation
Before the two GTPs have been introduced and lived through the past ten years, the national economic planners have lingered to achieve the eradication of poverty and all the way to lead the society to the passages of structural transformation. It’s unfortunate that the economic structural transformation that primary sought about changing the agriculturesector andthe rural economy into an industry-based manufacturing economyhas not yet transpired.
Earlierthan the GTPs, “Program for Accelerated and Sustainable Development to Eradicate Poverty (PASDEP)”, was implemented for five years antecedentto the GTPs. PASDEP came into playas five-year term and remained until 2010. Before PASDEP,another national economic plan: “Sustainable Development and Poverty Reduction Program-SDPRP” which had been in effectgoverning the economic life of the country.
Unfortunately, neither SDPRPnor PASDEP had been instrumental to eradicate poverty. They didn’t either helped to undisputedly accelerategrowth or development of the economy. Arguably, the plans might haveabetted to slow down the severity of extreme poverty and steer gradual changes in the economic structure. Some economic figures will be mentioned here qualify the argument.
GDP growth rate under base case scenario (in %) valued at 2010/11 price
| Sector | Average Performance |
Base year | Forecast | average | ||||
| 2010/11 – 2014/15 |
2014/15 | 2015/16 | 2016/17 | 2017/18 | 2018/19 | 2019/20 | 2019/20 | 2015/16 2019/20- |
| Agriculture and allied Activities |
6.6 | 6.4 | 8.2 | 8 | 7.9 | 7.9 | 7.8 | 8 |
| Industry | 20.2 | 21.7 | 21.8 | 20.6 | 20 | 19.1 | 18.4 | 20 |
| Manufacturing | 14.7 | 15.8 | 20.2 | 21.3 | 22 | 22.7 | 23.4 | 21.9 |
| Large and medium scale Manufacturing |
19.2 | 20.3 | 20 | 21.3 | 21.8 | 22.6 | 23.4 | 21.8 |
| Small and micro Manufacturing |
4.2 | 2.9 | 21 | 21.3 | 22.6 | 23 | 23.5 | 22.3 |
| Service | 10.8 | 10.2 | 10.3 | 10.2 | 10.1 | 10 | 9.6 | 10.1 |
| Gross Domestic Product (GDP ) |
10.1 | 10.2 | 11.2 | 11.1 | 11.1 | 11 | 10.8 | 11 |
Source: National Planning Commission, GTP II plan document
GDP growth and GDP of economic sectors in (%)
| sector | 2015
base line performance |
2016/17 | 2017/18 | ||
| Planned targets | Actual performance | Planned targets | Actual performance | ||
| Total GDP Growth | 10.4 | 11.2 | 8.0 | 11.1 | 10.9 |
| Agri and allied sectors | 6.4 | 8.2 | 2.3 | 8.3 | 6.7 |
| Industry | 19.8 | 21.8 | 20.6 | 20.6 | 18.7 |
| · Manufacturing | 18.2 | 20.2 | 18.4 | 21.3 | 17.4 |
| · Construction | 31.6 | – | 25.0 | 16.0 | 20.7 |
| Service | 11.2 | 10.3 | 8.3 | 10.2 | 10.3 |
| GDP share | 100 | 100 | 100 | 100 | 100 |
| Agriculture | 38.7 | 37.5 | 36.7 | 36.4 | 36.3 |
| Industry | 15.1 | 16.6 | 16.7 | 18.0 | 25.6 |
| Service | 46.3 | 46.0 | 47.3 | 45.6 | 39.3 |
Source: National Planning Commission, midterm performance report, GTP II
For instance, the level of extreme poverty has declined from 43 percent in the early 2000s to 23.5 percent in 2015. Economic experts such asTasewWoldehanna and MeseleW.Araya wrote in “The Oxford Handbook of the Ethiopian Economy”, that the status of poverty during the turn of the millennium was almost that one in every two persons of the society was poor. But during 2015 and 2016, it was noted that the poverty status was declining and was occurring in one out of four individuals. That means, out of the 100 or more million population, currentlysome 25 million are living under the poverty level. A quarter of the population that makes up a total size of Rwanda, Djibouti, Seychelles, combined (check numbers).
One of the qualifiers for the case, however, like the great extent of PASDEP, the GTPs had intended in transforming Ethiopian economy from agrarian base into industrial ground. That winded up short of reality. Ten years after, during the two GTP periods, Ethiopia remains being classified as a predominant agrarian economy with some 80 percent of the entire population being dependent on subsistence farming. For instance, GTP II targets to achieve universal electricity by 2025. However, at the ending year of the plan, 56 percent of the Ethiopian population does not have access to electricity.
In fact, it’s incontestable that both of GTPs’had come up with very bold targets. The plans incorporated massive projects that required huge financial, capital and human resources to be outlaid.It was during the GTPs that Ethiopia was introduced with the standard gauge railways (SGRs) the Kenyans often allude as a major rolling in the infrastructural path. It was during the GTPs that the country had become one of a few countries in Africa that implemented the service of light transit railway. It was again during the GTP passé that Ethiopia has introduced a grand power project on the Nile riverto launch constructions. It was named the Grand Ethiopian Renaissance Dam (GERD) that has advanced 70 percent of the civil and mechanical edifices with a view generating some 6,000-megawatt hydro power. One of the achievements of the GTPs with regards to infrastructures is the total network of roads. A decade ago close to 40,000 kilometers of all-weather roads have now stretched to cover 130,000 kilometers. We can go on. The education sector has shown elapsed growth and expansion and currently there are close to 50 universities as oppose to a few a decade ago.
Sugar projects, fertilizer processing plants, several hydroelectric dams, agricultural sector growth leading into having a surplus export merchandize trade, considerable reductions of poverty rates, schoolings and expansions of health care systems, availabilities of potable water across rural and urban areas, massive infrastructural expansion and spending were planned and projected during the GTP periods.
However, let alone lack of financial and capital requirements, the government didn’t have the right ingredients to implement GTP targets and it starts with inappropriate human resources and expertiseto begin with. The widely admitted set back is related to its inefficiencies in areas of project management and executions. For instance, the ambitious GTP-I was supposed to laydown some 6,000 kilometers stretching railroad.Later readjusted and the targets were set at 2,000 kilometers to make the plan somehow have realistic footings. Yet, that was not achieved either. Reasons are many but one economist provides outlooks as to why the targets failed to be achieved.
Eyobe Tesfaye (PhD), senior macroeconomist, in one of his interviews with The Reporter newspaper, argued that the scope of the national plans and the lack of resources required with the inadequacies of proper project management skills, the country has lost a weighted amount of wealth. He maintains to say, “by looking at the scope of the national economic plans, one can infer that they have been over stretched without the proper backing of resources required to achieve the targets”.
“The plans have been derived without having prudent sources of financing. Some of the projects have not been feasibly evaluated. Hence, some of the hiccups we have seen during the first GTP are still lingering in GTP-II. When compared with the first plan, GTP-II lacks political commitments and probably is faces weak oversight.”
A comparative analysis on the SDPRP, PASDEP and GTP by Tewelde Gebresselase, a scholar at Adigrat University who published his article on Global Journal of Business, Economics and management in 2015, argues and finds two major outcomes in his analysis. He summaries the findings suggesting, those the previous EPRDF was displaying radical changes and shifts in its political and economic philosophy which was arguably the developmentalism model, as the scholar assumes copied either from Japan or Taiwan. This ideology gave central government the maneuvering pretext to intervene in the economic system when market failure happens. The ideology, according to Tewelde mirrors it was antagonized and criticized for creating the room for corrupt civil servants. “Because the government could not handout from the market, there will be inefficiency in national resources utilization that means that privatization is more efficient than public organizations.”
the researcher goes on to give his perspectives of the failures of developmentalism and its devotion in the government of system. The central government in most instances manipulated thenational economic plans which Tewelde calls “poverty reduction document” more for political profits and highly propagated that through its monopoly media. Adding on, the two-digit economic growth according to Tewelde which Ethiopia has been recorded throughout each policy direction and implementation periods remain to beone of the contentiousinferences in terms of the actual development in economy, infrastructure and other developmental indicators.
Well, as this year concludes the breath of the GTPs, a new ten-year national economic plan is in the making by the Office of the Prime Minister, who is self-assured that Ethiopia’s economic prosperity is about to be happing in ten years. Prime Minister Abiy Ahmed (PhD),has highlighted and inculcated the economic reform agendas in his recently published “medemer” a book which he translates as “synergy” that codes his thoughts of political, economic and social cohesions in Ethiopia.
Although, the government didn’t disclose any policy document towards that, however has initiated a three-year economic reform, dubbed: Homegrown Economic Reform Program. The homegrown program seeks to address macroeconomic, structural and institutional gaps. Now implemented, the homegrown economic program has secured most of the financial requirements. It was required to have some USD 10 billion and nearly that amount is currently secured under the coffer of the government.
The GTPs and now the prosperity agendas are ambitious in their nature. The current administration through its technocrats as described pragmatic seems to be pulling all resources and elevating measures that kept many between hopes and skepticism.
Concluding with what Rwanda’s President Paul Kagame about being ambitious perhaps will help us to have a bit deferent perspective. PresidentKagame says ambition is an essential driving force to achieve certain goals.
Telling journalists about the journeys of his country, Kagame said: “20 years ago, no one really seemed to be sure that Rwanda would survive even as a nation. People were not sure. But it survived. What we did was just like drawing a wish list. It’s like writing, I want to go there and despite these problems, my vision is to achieve this. Towards that you put everything you have, your thoughts and your actions. But there were no guarantees. That didn’t stop us from being there or wishing to be there. Some things were seemingly unsurmountable. You would even have to say no we can’t be there, be realistic”.
But according to Kagame “being ambitious has its own values. It pushes you as hard it can. If you are there so much the better. If you are not there, then you fall for the realistic position and accept it. You would say I aimed too high and I can’t reach there. But it is not a bad thing to aim too high. It pushed you to go higher than where you could have been otherwise”. And it is hoped that Ethiopian leaders are also pushed harder to do much the better in their derive to achieve economic prosperity as they vow to bring about that.
What motivation didn’t help the Ethiopian economy and its architects to recourse the passages. The economy has not been accomplishing what had been undertaken: borrowing a phrase from Joseph Stiglitz, the renowned economist affiliated with previous Ethiopian regimes, “although there was growth in GDP, most citizens were seeing their standards of living erode”, in the US. Well, that corresponds to the realities of the Ethiopian case. Double-digit economic growth sustained for years while millions of youths remaining unemployed, cost of living rising, inflation unchecked, severe structural backwardness stifling the very nature of the economy with widespread corruption and embezzlement, it has now come to the responsibilities of Prime Minister Abiy and his leadership to exhibit real and tangible economic deliverables so that citizens would rejoice the reform outcomes.
