Ethiopia: The Economy is struggling, not a rising lion as previously forecasted!
For as long as I can remember there gone stories of the amazing rise of the Ethiopian economy, the financial markets and the outputs out of this world. Where the money would grow ten-folds within minutes of its arrival. Like a mirage the number’s must have appeared in front of our eyes and stories that, we are told over the recent years. The Ethiopian powerhouse and the serious contender with Nigeria and South Africa. With their railways, banks and development projects, the powerful dam and all the others. It must have been a ride for the Ethiopian People’s Revolutionary Democratic Front (EPRDF), Prime Minister Hailemariam Desalgn, must be so proud of his achievement.
Why I say that, because a booming economy does not do this:
“Ethiopia and World Bank have signed a 1.3 billion dollar grant and loan agreement to enhance equitable services and reduce food insecurity. The agreement was signed by Abraham Tekeste (PhD), minister of Finance & Economic Cooperation (MoFEC) and Carolyn Turk, World Bank’s country director for Ethiopia, Sudan, and South Sudan” (All Africa, 2017).
So when a booming economy, that has such magnificent rates and growth prospects should not and no need for extensive borrowings from the World and subsidiaries, to say they need so is a lie. The debt and the international support for projects and food security is not a sign of a sound and strong economy. More of the latter if I beg to differ. On that, alas the recent weeks has proven this. World Bank was ushered in the end of September, but it is now cash-crunch time.
Not the jolly Captain Crunch, but the credit is due.
“Ethiopia will devalue its currency to attract foreign investment and close the gap in foreign trade, President Mulatu Teshome said at the opening of the bicameral parliament on Monday. He said his government is faced with a serious shortage of hard currency and export trade has dwindled in last three years. Mulatu said major projects like the construction of railway and universities will not be carried out this budget year due to a serious shortage of finances” (ESAT, 2017).
The seriousness is there and it is bleak, when the President Teshome shows up and spread enlightenment to the world. That the economy is fragile and not at its peak, is clear when all the prestige and the giant projects are now put on hold until further notice. Clearly, the financial strains have hit the economy, as well as their exports has given them less hard currency.
It does not go well, when just days ago, when this hit the fan as well:
“Double-digit inflation keeps threatening the macroeconomic conditions of the country as the headline inflation rate hit 10.8pc last month, according to the Central Statistical Agency (CSA)- the highest since October 2015. It is in contrary with the target of the government in the second edition of Growth & Transformation Plan (GTP II) to keep inflation in a single digit. The hike in the price of cereals such as teff, maize, wheat, barley, beans and sorghum coupled with holiday-driven price upsurge is the primary reason for the inflationary pressure last month, keeping the food inflation stagnant around 13pc.“As September is a time of multiple holidays, it is believed to influence the increase in the inflation rate,” the report of CSA reads” (Berhane, 2017).
That the cash crunch and the double-digit inflation hits the Republic is not a good look. The proof of the currency value falling, lack of hard currency and new Multi-National loans proves that the Financial Sector and Financial Institutions are strained. There is nothing more to give, it is just bones and not meat. It is just a matter of time before the boiling bones gives no taste to stew as well!
In addition, you the economy is bonkers when their agency spread out this sort of tales, at the time the devalued currency is told to the public on other platforms.
This is from the Ethiopian News Agency:
“The diplomats, who observed the government’s direction at the joint session of the parliaments, whom ENA has talked to also forecasted the country`s economic growth to be amplified in better manner referring the current stability of the nation. Ambassador of Bangladesh to Ethiopia Monirul Islam said the growth that Ethiopia’s economy has witnessed was ‘wonderful’ despite the drought and other problems. “It was 10.9 percent and this year I hope it will be more than that because there is a good rain, everything is good, the state of emergency has been lifted and everything is normal”. “So I think the economy should perform better especially in the agriculture sector as well as in the industry sector”, he pointed out” (ENA, 2017).
I do not know if Ambassador Islam lives in alternative reality or trying to sugarcoat the situation of the dire economic state that the Republic is facing, but it makes good propaganda for the ones who still want the fantastic picture spread around the globe. That the Ethiopian economy is sound and still growing. However, it is hard to grow when you lack currency, you have growing inflation and you are borrowing more funds. I do not know, which economy or financial system that it works splendid in. Certainly not this one.
In addition, the news of the financial rising tiger or lion of Ethiopia has been a mirage, a fraud and play for the world to see. At this stage and in time, it is far from it. The Ethiopian economy is plummeting and at amp speed. If you eat up the crap the ENA serves you, it must certainly serve your kind, but it is not reality. The President even said so, the reports are striking and the added loans proves the dire state.
The ones who is the most hurt. It is the citizens who needs the hard currency to buy food and live, they are punished for the reckless care of the financial system. They are the ones who suffers, because of how the state decided to conduct their affairs. They are the ones who feels the inflation, the rising prices and still has to get by. It is not right, but that is how it is. The Ethiopian government should subsidize and make sure the people get enough. However, do not expect that. This is from the same government that sent Agazi squad to Amhara and Oromia to kill and destroy. They do not care, unless they have too or if it keep them in power. Peace.
All Africa – ‘Ethiopia: World Bank Assents U.S.$1.3 Billion Finance to Ethiopia’ (30.09.2017) link: http://allafrica.com/stories/201710090243.html?utm_campaign=allafrica%3Aeditor&utm_medium=social&utm_source=twitter&utm_content=promote%3Aaans%3Aabljpw
Berhane, Samson – ‘Gov’t Sees Double Digit Inflation, Again’ (08.10.2017) link: https://addisfortune.net/articles/govt-sees-double-digit-inflation-again/
ESAT – ‘Ethiopia President Says Country is Broke’ (09.10.2017) link: https://www.tesfanews.net/ethiopias-president-says-country-financial-crisis/
ENA – ‘Diplomats Laud Economic Performance of Ethiopia’ (10.10.2017) link: http://www.ena.gov.et/en/index.php/economy/item/3814-diplomats-laud-economic-performance-of-ethiopia