Averting prospects of economic meltdown!
Overshadowed by the political upheaval roiling the country the headwinds buffeting Ethiopia’s economy have the potential to turn into the mother of all crises if they are not promptly dealt with. This specter can be averted through a systematic and informed approach that helps settle political differences peacefully and seeks holistic solutions to the challenges taking a heavy toll on the economy. Ethiopia is endowed with, among others, a youthful productive force, a vast arable land, the largest number of livestock in Africa, a substantial surface and sub-surface water resource, climatic conditions suitable to varied agricultural activities, numerous tourist attractions, and a considerable mineral wealth. It’s unforgivable for a nation possessing such riches to wallow in poverty and be the poster child for aid dependence due to bad governance at the hand of weak, corrupt and incompetent politicians and government bureaucracy. It’s high time to embark on fundamental reforms that galvanize the country’s youth, intellectuals and professionals by rousing them from their torpor. Investment and export activities must no longer be blighted with poor planning and execution and instead be informed with policies grounded in sound research. We can’t afford to go on like this.
The high level of government borrowing from both domestic and external sources has exacerbated the debt stress. As a proven tool that helps alleviate the pressure somewhat, preparations are underway to partially or fully privatize certain state-owned enterprises. Prior to commencing the process though, it’s imperative to reach a broad consensus on the benefits accruing from it and undertaken with extra care lest it precipitates unintended consequences. This should be complimented with measures aimed at stimulating trade and investment as well as ensuring political stability so as to boost investor confidence. The actions of the government bureaucracy and irregular structures that drive away investors got to stop immediately. At the same time investors that have halted or cut back production have to be provided with the necessary assistance to operate at full capacity. Furthermore, development packages geared towards job creation for the youth and other sections of the public must be implemented with due regard to financial prudence and sustainability. Failure to carry out these initiatives is bound to have grim ramifications.
The government owes an obligation to regulate the country’s trade regime. Needless to say this does not mean that it should set the price of goods and services, with the exception of basic commodities, given this goes against the principles of a free market system. Nonetheless, the main actors in the trade system, namely the government, consumers and the business community, need to be on the same wavelength. The Ethiopian market is dominated by oligopolists and powerful brokers that make life an ordeal for the masses by creating an artificial shortage and thereby justify spiking in inflation the price of basic consumable goods, accommodation, tuition fee, etc. The nonexistence of explicit standards in terms of floor prices for goods and services as well as the profit margin traders may enjoy has allowed the dominant players to engage in price gouging. Meanwhile, the absence of strong consumers associations and regulatory agencies coupled with the continuous plummeting of consumers’ purchasing power has led to a proliferation of illicit practices and the flooding of the market with inferior quality products. This alarming state of affairs requires the concerted effort of all stakeholders. Otherwise, it will entail serious repercussions that may turn out to be extremely difficult to contend with.
It is incumbent on both domestic and foreign investors to undertake a critical self-examination. Rather than scrambling for the hardly available foreign exchange for the purpose of importing all sorts of products, they seriously need to eye import substitution activities and contribute their share to alleviating the foreign exchange crunch. In this regard chambers of commerce and trade associations should play an instrumental role in filling policy and strategy gaps through the introduction of the appropriate legal frameworks. A country cannot prosper by increasing the volume of imported products; it can do so only when it produces basic necessities in quantities sufficient to not only meet local needs but also export. It’s disgraceful that the bulk of businesses in Ethiopia take pride in taking out an import license despite the fact that they can leverage the nation’s abundant resources to generate substantial foreign exchange from the export of grains, oilseeds, sugar, coffee, fruits and vegetables, flowers, meat and other commodities. Aside from agricultural products, a respectable amount of revenue can be derived from, inter alia, manufacturing, tourism, information technology as well as textile, leather and handicrafts products. The future will not bode well if we procrastinate in exploiting this potential to the fullest.
The current economic woes besetting Ethiopia are a cause for grave concern. A slowdown in economic activity makes forces those who, as it is, are eking out a living to turn to crime to survive. The resulting instability is liable to engender lawlessness and eventually a full-blown crisis. Politicians and other stakeholders have to appreciate that it’s vitally important to breathe a new life into the flagging economy. The youth have to have the opportunity to make something of themselves; peace and stability are needed to inspire investor confidence; citizens living in poverty owing to the spiraling cost of living yearn to be able to improve their livelihoods and provide adequate food, housing and education to their children. All this can be attained insofar as the political temperature is lowered, enabling everyone to devote greater attention to the economy. Fomenting internecine conflicts while the country could buckle under a debt strain only compounds the problem. Therefore, it’s of the essence to do everything possible to ensure that Ethiopia becomes a nation of laws. We cannot afford to waste a single day to extricate Ethiopia from the quagmire it finds itself in by giving priority to the national issues which call for urgent action. All Ethiopians who have their beloved country’s interest at heart owe a solemn duty to avert the prospects of an economic meltdown!