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
The Ethiopian People’s Republic Defense Force (EPRDF) Prime Minister Hailemariam Desalegn have ordered to fix economic problem the government has. EPRDF has been hailed for their financial growth, but with this sort of news. You know the growth and the reality is far from the truth. Ethiopia News Agency: “International Consultant of Trade, Investment and Economic Development, Dr. Taffere Tesfachew said on the occasion the fact that African countries are performing better than the global average is testimony to how far Africa is coming over the decade. He noted that the economic growth of countries like Ethiopia and Ivory Coast is highly impressive at this time when other African countries are struggling with one or two percent growth” (ENA, 2017).
So I have to question the economic growth, as the Forex Woes and the remittance from the diaspora are proving otherwise. Together with the need of more foreign aid to solve the famine of the drought. So the World Bank clearly knows the troubles of the Ethiopian government since they did this:
“The World Bank today approved a $600 million International Development Association (IDA)* grant to support the Government of Ethiopia’s vision of building a national safety net system to provide effective support in chronically food insecure rural areas, including providing cover during droughts. The Rural Productive Safety Net Project (RPSNP) supports the evolution of the Government’s umbrella Productive Safety Net Program (PSNP) that has been in operation for the last 12 years and is one of the world’s largest safety net programs in the world. Run by the Government, the PSNP pools money from 11 donors, including $600 million of World Bank Group IDA funds. The PSNP provides regular cash or food transfers to 8 million people; currently 4 million of them are in areas affected by the ongoing drought. Its food-for-work component supports public works programs related to landscape restoration, irrigation, and agro-forestry” (World Bank, 2017).
So, when the World Bank gives this as a support of the government. You should take it serious and know the problems of the state. The need of financial support and to make sure drought doesn’t affect the starving citizens. EPRDF are doing badly and now the Forex Companies has to pay of the National Bank of Ethiopia (NBE) for the debt to Enterprise in Djibouti. Look!
Foreign Forex Woes:
“The directive of foreign currency allocation entails all banks must sell foreign currency to a sector whose importance is very high. The banks are required to give priority to payments authorized by the central bank such as foreign loan, supplier’s credits, interest, profit, dividend and excess sales of foreign airlines. Hence, all banks are required to sell the currency collected from importers, although the current direction is high, according to a banker with almost two decades of experience. “Even though I agree with the fact that we shared the responsibilities with CBE,” said one of the vice president of a mid-sized bank. “But requesting such amount of Forex in a short time might lead to crisis.” Yohannes Ayalew (PhD), vice governor and chief economist of the central bank, disagrees. “It is a collective responsibility of all banks whether the call was quick or not,” said Yohannes. “There is no reason to ask CBE to cover all the payments.” The Forex shortage in the country has been haunting the country for years. Prime Minister Hailemariam Desalegn, in his press conference with local media nine months ago, admitted that the Forex crunch would last for the coming two decades” (Addis Fortune, 2017).
NBE Directive to pay of debt to Djibouti:
“National Bank of Ethiopia (NBE) gave order to private banks in Ethiopia to pay the 15 million USD bill the Ethiopian Shipping Logistics Services Enterprise (ESLSE) to Djibouti’s company. The banks are, according to Fortune, given 3 days to sell the foreign currency to the Enterprise. The order is said to have come when the entire country is in short of foreign exchange. The shortage came following the drop in the country’s export performance and remittance earnings. ESLSE owes the money to the port of Djibouti and the central bank gave the order for every bank including the government owned Commercial Bank of Ethiopia (CBE)” (Addis Fortune, 2017).
“Beset by the ever expanding informal channels of remittance, Ethiopia may continue to grapple with shortage of hard currency unless swift and collective measures are put in place, ‘Scaling up Formal Remittance to Ethiopia’ report discloses. A billion dollar transaction takes place via informal channels with 78 percent of the total remittance passing through informal networks in Ethiopia. Some experts believe that the transfer of money through unregulated channels will also likely result in illicit financial flow and dealings. The seizure of 541,659 USD around Harar is a recent indication of informal corridors of hard currency. Informal channels happen to be lophooles for global terrorism and corruption. It will open doors for illegal activities, people may use it to collect huge sums of money for their own dangerous causes, says Ethiopian Financial Security Director General Gemecu Weyema” (Gebrehiwot, 2017).
All of these articles proves the problems of the National Bank of Ethiopia (NBE) and their lacking foreign exchange. This has become a problem as the remittance hasn’t come through the formal channels, as the informal economy are big in Ethiopia. Together with drop of foreign exports that has also hurt the amount of exchange.
Clearly, the government of Ethiopia has a bigger problem that they want to reveal, as the NBE and the Foreign Exchange is plummeting. Therefore, the need at the same time for World Banks loans. Shows the dire situation of the economy. It is not like the Ethiopian News Agency would speak ill of own government and their policies. Since, the propaganda of own growth are more important, than actually telling about the weakness of the economy. This is a reality since the financial policy of Forex Exchange is in favor of the NBE.
This can also make it more profitable to for an informal market, instead of in the open market. The Ethiopian government really needs foreign exchange to pay of debt and use all their means. Instead, they are trying to cover-up their troubles, as they have debt to Enterprise in Djibouti and have troubles with the famine caused by drought. Peace.
Addis Fortune – ‘Ethiopian Government Orders Private Banks to Cover ESLSE Forex Needs’ (12.09.2017) link: https://www.ezega.com/News/NewsDetails/4679/Ethiopian-Government-Orders-Private-Banks-to-Cover-ESLSE-Forex-Needs
Addis Fortune – ‘Ethiopia: NBE Ordered Banks to Cover ESLSE’s 15 Million USD Bill’ (13.09.2017) link: http://www.2merkato.com/news/alerts/5220-ethiopia-nbe-ordered-banks-to-cover-eslses-15-million-usd-bill
Ethiopia News Agency – ‘Gov’ts Need to Act Together to Achieve Economic Success: UNCTAD 2017 Report’ (14.09.2017) link: http://www.ena.gov.et/en/index.php/economy/item/3705-gov-ts-need-to-act-together-to-achieve-economic-success-unctad-2017-report
Gebrehiwot, Desta – ‘Ethiopia: Informal Channels Raise Red Flag On Forex Earning’ (14.09.2017) link: http://allafrica.com/stories/201709140729.html
World Bank – ‘World Bank to Help Ethiopia Build a National Safety Net System as a More Effective Response to Droughts’ (14.09.2017) link: http://www.worldbank.org/en/news/press-release/2017/09/14/world-bank-to-help-ethiopia-build-a-national-safety-net-system-as-a-more-effective-response-to-droughts
Pastoralist communities are facing huge losses of livestock.
ROME, Italy, August 11, 2017 – Supporting herders to get back on their feet and preventing further livestock losses and suffering are crucial in drought-hit Ethiopia where hunger has been on the rise this year, warned today the Food and Agriculture Organization of the United Nations (FAO).
Drought has devastated herders’ livelihoods as it exhausted pastures and water sources, leading to a significant number of animals dying or falling ill, particularly in the southern and southeastern regions of the country as other areas recover from previous seasons’ El Niño-induced drought.
Drought-hit pastoralists face reduced milk production, rising malnutrition, and have limited income-earning capacity and severely constrained access to food.
Some 8.5 million people – one in 12 people – are now suffering from hunger; of these, 3.3 million people live in Somali Region.
The current food and nutrition crisis is significantly aggravated by the severe blow to pastoral livelihoods. For livestock-dependent families, the animals can literally mean the difference between life and death, especially for children, pregnant and nursing women for whom milk is a crucial source of nutrition.
With up to 2 million animals lost so far, FAO is focusing on providing emergency livestock support to the most vulnerable pastoralist communities through animal vaccination and treatment, supplementary feed and water, rehabilitating water points, and supporting fodder and feed production.
“It is crucial to provide this support between now and October – when rains are due – to begin the recovery process and prevent further losses of animals. If we don’t act now, hunger and malnutrition will only get worse among pastoral communities,” said Abdoul Karim Bah, FAO Deputy Representative in Ethiopia.
By providing supplementary feed and water for livestock, while at the same time supporting fodder production, FAO seeks to protect core breeding animals and enable drought-hit families to rebuild their livelihoods. Animal health campaigns will be reinforced to protect animals, particularly before the rains set in, when they are at their weakest and more susceptible to parasites or infectious diseases. FAO-supported destocking and cash-for-work programmes will also provide a crucial source of cash for families.
FAO urgently requires US$ 20 million between August and December to come to the aid of Ethiopia’s farmers and herders.
FAO has already assisted almost 500,000 drought-hit people in 2017 through a mix of livestock feed provision, destocking and animal health interventions, thanks to the support of the Ethiopia Humanitarian Fund, Switzerland, Spain, Sweden through FAO’s Special Fund for Emergency and Rehabilitation Activities, the United Nations Central Emergency Response Fund, as well as FAO’s own Early Warning Early Action fund and Technical Cooperation Programme.
Number of people needing humanitarian assistance on the rise.
ROME, Italy, July 14, 2017 – Poor rains across East Africa have worsened hunger and left crops scorched, pastures dry and thousands of livestock dead – according to an alert released today by the UN Food and Agriculture Organization (FAO).
The most affected areas, which received less than half of their normal seasonal rainfall, are central and southern Somalia, southeastern Ethiopia, northern and eastern Kenya, northern Tanzania and northeastern and southwestern Uganda.
The alert issued by FAO’s Global Information and Early Warning System (GIEWS) warns that the third consecutive failed rainy season has seriously eroded families’ resilience, and urgent and effective livelihood support is required.
“This is the third season in a row that families have had to endure failed rains – they are simply running out of ways to cope,” said FAO’s Director of Emergencies Dominique Burgeon. “Support is needed now before the situation rapidly deteriorates further.”
Increasing humanitarian need
The number of people in need of humanitarian assistance in the five aforementioned countries, currently estimated at about 16 million, has increased by about 30 percent since late 2016. In Somalia, almost half of the total population is food insecure. Timely humanitarian assistance has averted famine so far but must be sustained. Conditions across the region are expected to further deteriorate in the coming months with the onset of the dry season and an anticipated early start of the lean season.
The food security situation for pastoralists is of particular concern, in Ethiopia, Kenya and Somalia, where animal mortality rates are high and milk production from the surviving animals has declined sharply with negative consequences on food security and nutrition.
“When we know how critical milk is for the healthy development of children aged under five, and the irreversible damage its lack can create, it is evident that supporting pastoralists going through this drought is essential,” said Burgeon.
Livestock prices have plummeted because of poor animal body conditions and this, coupled with soaring cereal prices, has severely constrained pastoralists’ access to food. Rangeland and livestock conditions are expected to further deteriorate at least until the next rainy season starts in October.
Poor crop prospects
In several cropping areas across the region, poor rains have caused sharp reductions in planting, and wilting of crops currently being harvested. Despite some late rainfall in May, damage to crops is irreversible.
In addition, fall armyworm, which has caused extensive damage to maize crops in southern Africa, has spread to the east and has worsened the situation. In Kenya, the pest has so far affected about 200 000 hectares of crops, and in Uganda more than half the country’s 111 districts are affected.
In Somalia there are unfavourable prospects for this year’s main gu crops, after the gu rains were late with poor rainfall and erratic distribution over most areas of the country. In the Lower Shabelle region, the main maize producing area, seasonal rainfall was about 50 percent below- average and drought conditions are currently affecting up to 85 percent of the cropland.
In Ethiopia, unfavourable belg rains in southern cropping areas are likely to result in localized cereal production shortfalls. Drought is also affecting yields in Kenya’s central, southeastern and coastal areas. In Tanzania, unfavourable rains are likely to result in localized cereal production shortfalls in northern and central areas, while in Uganda there are unfavourable production prospects are unfavourable for first season crops in the southwestern and northern districts.
Cereal prices are surging, driven by reduced supplies and concerns over the performance of current-season crops. Prices in May were at record to near-record levels in most markets and up to double their year-earlier levels.
Released in Kampala today, the ‘Impacts of Climate Change on Food Security and Livelihoods in Karamoja’ found that temperatures have been rising in Karamoja over the last 35 years.
KAMPALA, Uganda, March 20, 2017 – A new study carried out by the Government of Uganda and its partners has found a new weather pattern that threatens to worsen food insecurity in the Karamoja region if no action is taken.
The study found that the average monthly rainfall in the region increased over the last 35 years and that the rainy season is now longer by two months. However, the rains – which now fall from around March to the end of the year – increasingly varied in volumes. This unpredictability was found to undermine agricultural production, thereby threatening to aggravate food insecurity in Karamoja.
Released in Kampala today, the ‘Impacts of Climate Change on Food Security and Livelihoods in Karamoja’ found that temperatures have been rising in Karamoja over the last 35 years.
The rising temperatures threaten to increase the frequency, intensity and duration of heat waves in the region, therefore reducing availability of water for crops and animals. This too undermines food security.
A large majority of people in Karamoja, particularly women, were not aware that changes to the climate had been taking place over decades, the study states. However, most of the people that had perceived changes to the climate had not taken any action to adapt, typically because they did not know how to do so. Where trees were planted as an adaptation measure, the sale of charcoal and firewood were also a common measure that people took in response to climate-related crop failure.
Sponsored by the Swedish Government, the study was carried out in 2016 by the Ministry of Water and Environment with support from the United Nations World Food Programme (WFP) and the CGIAR Consortium’s Research Programme on Climate Change, Agriculture and Food Security.
The Uganda Minister for Water and Environment, Sam Cheptoris, said today, “These are significant findings that threaten any hope for Uganda achieving its Vision 2040 and the Sustainable Development Goals (SDGs), if no immediate action is taken.”
Cheptoris said that his Ministry was already calling for a national and regional response, advocating for climate change sensitive approaches across all Government sectors, educating the population about climate change, and undertaking emissions profiles.
“Karamoja’s population is heavily dependent on rain-fed agriculture, which is highly vulnerable to climate change,” said El Khidir Daloum, WFP Country Director for Uganda. “However, little has been known previously about the impacts of climate change on food security, and in particular, the ability of households in the region to adapt.”
WFP hopes that the findings and recommendations of the study will contribute to efforts toward appropriate adaptation measures while helping to identify policies that will safeguard the most vulnerable communities in Karamoja.
The study recommended that the Government and its partners increase investments in water harvesting and agroforestry schemes, education of the people, improved access to climate change information and the cultivation of drought-resistant crop varieties.
Within the Ministry of Water and Environment, the study was carried out by the Climate Change Department and the Uganda National Meteorological Authority.
“Ask not what you can do for your country. Ask what’s for lunch.”
― Orson Welles
There are worrying signs of higher prices on staple foods, as reports of the added price for Maize and Sorghum. With the likes of Maize that has skyrocketed over the last few months, the same has happen to Sorghum. The Central Government needs to stop the inflation of prices as this is key in the staple and adds strains to many of citizens.
Maize prices per 100 kg was 65,103.5 Tanzanian Shillings in December 2015 and by December 2016 it cost 85,159.8 Tanzanian Shillings. In a years time the prices on maizes has gone up 30 %. That is a worrying sign!
Sorghum prices per 100 kg was 81,638.1 Tanzanian Shillings in December 2015 and by December 2016 it cost 104,545.1 Tanzanian Shillings. In a years time the prices on Sorghum has gone up 28 %. That is not something anyone wants to see.
Just as the prices are rising, the dwindling levels of foods that has no been confirmed by the Minister:
“Reports of food shortages were initially denied by top levels of government, but were later accepted. At the end of January 2017, the Minister for Agriculture, Livestock and Fisheries, Dr Charles Tizeba, told parliament that a study conducted by the Ministry, in collaboration with various partners, had found that 55 districts (out of 169 in Tanzania including Zanzibar) were facing food shortages, and
that “35,491 tonnes of food are required for supply between February and April 2017 to combat a shortage facing 1,186,028 people’’ in these districts” Sauti za Wananchi, 2017).
What is more worrying is the stats from the survey done by Sauti za Wananchi:
“The key findings are:
• Eight in ten households report that their income does not cover their daily needs
• Eight in ten households usually keep a stock of food in reserve in case a food shortage
• A huge majority of Sauti za Wananchi respondents (78%) report food shortages in
• The price of maize has doubled in the past two years, even accounting for general
• Seven in ten households worried about running short of food in the past three months
• The household food security situation has worsened between September 2016 and
February 2017” (Sauti za Wananchi, 2017).
When you have rising staple food prices, little or no reserves in the homes, as well as lacking income to combat the running prices on food. Set the citizens and the inflation into a devastating spiral that no republic want to go through. The United Republic of Tanzania Government needs to act swift and clear on the important issue and lack of safeguard, as the running expenses and lack of food security that is rising. Not only the prices, but this has all happen in the term of President John Magufuli, who needs to take charge and make sure his citizens can eat and earn enough to have a healthy living. The households needs a revamp and the structure with agriculture and food imports needs to change to significantly, these sort of number and amount of people lacking food is a dire situation. Peace.
Tanzania – ‘Sauti za Wananchi – Brief No. 39’ (March 2017)