The Ethiopian government has unveiled a blueprint for economic reform, the Homegrown Economic Reform, to unlock the country’s development potentials
While unveiling the new agenda for economic reform on 9 September at the UN Conference Centre in the capital of Ethiopia, Addis Ababa, Prime Minister Abiy Ahmed of Ethiopia said, “Several months in the making and spearheading some of Ethiopia’s finest minds, our initiative aims to push Ethiopia into an African icon of prosperity by 2030.”
The agenda outlines the macro-economic, structural and sectoral reforms that will pave the way for job creation, poverty reduction and inclusive growth.
The Prime Minister said that his government has taken many measures to change the economic landscape of Ethiopia, such as investment law and business climate reforms, which have helped to remove regulatory barriers that hinder investment.
Ahmed stated that the private sector was crucial for the next chapter of Ethiopia’s growth and development. As a result, he noted, we “opened key economic activities to private investments,” adding that these measures will “surely be reflected in Ethiopia’s ease of doing business ranking.”
He pointed out that to ensure the success of the agenda, “We are tightening our fiscal belts, strengthening our public sector finances, shedding our debts, and increasing domestic resource mobilisation.”
The agenda prioritises sectors such as agriculture, manufacturing, mining, tourism, and ICT.
The Executive Secretary of the UN Economic Commission for Africa (ECA), Vera Songwe, who noted that the East African country’s aspiration to increase its GDP from 865 to 2219 per capita was “very ambitious” but feasible, citing the success stories of China, Laos and Vietnam.
Songwe warned, however, that Ethiopia currently has a gap of US$10bn – six billion in new investment and four billion in debt reduction per year – that needs to be bridged to meet its reform aspirations.
“If you continue to accumulate debt the way you’re doing now, you will likely fall into debt distress in the next two years and a lot of the structural reforms you’ve put in place will not bring in the private sector because you will not be a credit-worthy country,” she remarked.
She emphasised that the private sector will be looking for credibility in the reform package. It recommended paving the way for IPPs in the reformed energy sector as a quick-win that could demonstrate the country’s credibility.
