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Counting the fruits - Ethiopia's GTP I



Counting the fruits - Ethiopia's GTP I

(Yemane Haile  01-02-15)

Ethiopia has been working to reach the middle-income status in 20 to 30 years for the last decade. Under a committed leadership and well-crafted policies of a developmental state, a double-digit annual GDP growth has been registered since 2003 under the PASDEP and a preceding poverty reduction plan.

 In 2010, when the peoples showed their approval of the progress made thus far and their endorsement of the developmental state direction through ballot box, the government and the ruling party decided to scale-up the developmental efforts and targets to match the public's hopes and aspirations.

In the week after the election, the late Prime Minister Meles Zenawi publicly promised to come up with an improvised plan that expedites the Ethiopian Renaissance. A few months later an outline of a breath-taking Growth and Transformation Plan (GTP) was presented for public consultations. Ethiopians across the country discussed and provided inputs, which were assembled at the centre and further reviewed by experts. Shortly after that, the government unveiled a fully-worked out 5-years GTP document as a medium term national development framework.

The GTP with almost a Trillion Birr budget and spending more than 60 percent of that on poverty oriented sectors, such as agriculture, education, health care, water and road development is directed towards: "achieving the Millennium Development Goals (MDGs), Ethiopia's long term vision and sustaining rapid, broad based and equitable economic growth anchored on the experiences that have been drawn from implementing pro-poor and pro-growth development policies and strategies undertaken since 1994".

The plan aimed at four main objectives: (1) maintain at least an average real GDP growth rate of 11.2 percent and attain MDGs (2) expand and ensure the qualities of education and health services and achieve MDGs in the social sector (3) establish suitable conditions for sustainable nation building through the creation of a stable democratic and developmental state; and (4) ensure the sustainability of growth by realizing all the above objectives within a stable macroeconomic framework.

The plan was met by doubt and scepticism in the media and some part of the elite. But the government was determined. It even made it clear that Ethiopia will maintain double digit GDP growth until 2025 and join the rank of middle-income countries.

That will mean a significant shift towards industrialization. As projections show, by 2025, the share the agriculture sector would be only 29% of the economy, while industry and service would take 32% and 39% respectively.

As the GTP mostly consist massive plans of expansion and scaling-up as well as mega projects, many suspected it couldn't be attained. But the outcome on the ground was the opposite. Even some foreign financers, who previously expressed their scepticism public, are now pledging to provide the largest amount of fund they ever gave to Ethiopia. Because, most of the targets of the GTP and the MDGs are on track and even ahead of target in some sectors.

The economy continued its impressive growth, maintaining a robust average GDP growth rate of 10.1% for the last four years of the plan making it “rapid, broad-based and double the average growth rate of about 5% registered by Sub-Saharan African countries for the same period.” The per capita income level has also reached near 700 USD which is more than the target set by the GTP.

The manufacturing sector has also recorded 13 % average growth rate, while agriculture and services grew at 6.6 % and 10.7 % respectively. As a result of this, the industry sector’s share of GDP came to 14% in 2012/2013, showing a steady increase from the 10.3% it had in 2009/2010, while agriculture decreased to 40% from its relatively high level of 46.5% earlier and the service sector grew to 46%.

In poverty reduction aspect, the GTP has succeded in achieving the Millennium Development Goal 1 (MDG-1) hunger target – to halve the proportion of hungry people by 2015 as Ethiopia halved the national poverty rate between 1995 and 2011, from 60 per cent to 29.6 per cent. By the end of this Ethiopian year the poverty level is estimated to have further declined to 22 percent.

As contemporary economic history recommends a high rate of savings and a higher rate of investment demonstrate a country’s focus on the future. The development experience of East Asian countries underlines this basic economic tenet. As one observer recently pointed out, seen from this perspective the prospects for Ethiopia’s future economic growth are largely positive. Although the current saving levels are lower than those achieved by East Asian countries’ at a similar economic stage, the saving rate in Ethiopia has shown constant growth. This provides a meaningful addition to an already strong investment growth rate.

The GTP is on track on this aspect. The government took significant measures to increase the level of domestic savings, as a higher rate of saving is essential to boost investment and these efforts have more than tripled, from 5.2% of GDP in 2009/2010 to 22.5%. The rate of domestic investment, which to a certain extent mirrors rates of domestic savings, also showed a significant increase to 40.3% in 2012/2013. This was said to be relatively high compared to countries at similar stage of development with Ethiopia.

The production of major crops, which stood at 193 million quintals has reached 270 million quintals this year enabling Ethiopia food self-sufficiency level. This doesn't include root crops, fruits and vegetables, spices and the like.

The increase in production and productivity of the agriculture sector is expected to continue at even faster rate, given the surge in the coverage of agricultural extension services, which benefitted 14.3 million farmers, agro-pastoralists and pastoralists in the last year.

The industrial sector continued its stride with about 20% growth rate in the past four GTP years.

The performance in terms of job creation is well ahead of the target for each year. About 700,000 jobs were created through micro and small enterprises (MSEs) and housing projects in the first year of the GTP, while more than 1.1 million jobs were generated in the year 2011/2012.

In the second year, about 1.7 million jobs had been created, among which 50% allotted for women. 343,000 graduates of Higher educations and technical and vocational institutions are planned to benefit from the new job opportunities.

The job creation continued at similar rate in the third year as well. Totally about 4.89 million jobs were created across the country in total in the four years of the Growth & Transformation Plan period.

The performance exceeded the target by over a million. The success was attributed to the expansion of micro & small enterprises (SMEs) and a number of on-going huge projects.

 The Ministry of Urban Development & Construction (MoUDC) indicated that about one million of the jobs created during the reported period were temporary and it is striving to make the jobs sustainable.

Town administrations have been facilitating loan service, land for manufacturing and marketing, and technical and vocational trainings for micro and small enterprises. The government has decided construction of infrastructure facilities be labour intensive in a bid to create more jobs.

The progress in mega projects is in line with the schedules laid out in the Plan. The progress on the Grand Ethiopia Renaissance Dam (GERD) has now reached more than 50%, while construction of the Gibe III dam is fully complete.

Another major element of the GTP is infrastructure development and the Electricity coverage reached 53.5% up from the low level of 41% in 2009/2010. The 756 kilometer-long electrification project, linking Addis Ababa to the Port of Doraleh in Djibouti, is another priority project of the GTP. The Ethiopian section of the project is now more than 25 percent complete; and Djibouti launched construction of the 100 kms line within its territory last year.

The installation of modern telecommunication links with landlines and broadband services had continued and the number of users of all types of telecom services is now at more than 30 million and mobile phone users now reached 28.3 million from the pre GTP 6 million, while the number of internet subscribers reached 2.5 million. Nearly 90% of villages are connected to telecom service and in fiber optic laying more than 10,000 kms are on the ground linking to the international routes.

The rural telecom coverage, which means areas within 5 km distance from phone, has reched from 62.1% to 96%.

The expansion of ICT infrastructures and services to schools and woredas is well underway. The School Net program integrated 1000 schools to the national system enabling for video broadcasting and internet services. The Woreda Net program similarly connected 630 Woredas paving the way to build a transparent and accountable system and increase public participation.

In education sector, Ethiopia has reached nearly 95% primary level educational attainments with 20 million students in schools. At the tertiary level, thirty one universities staffed with 23,000 thousand instructors are serving half a million university students, while another 400,000 youth are attending technical and vocational education.

While the long-term target is defined as the construction of nearly 5000 Kms of railway across the nation, more than 2,600 Kms of the railway network were expected to be completed within the GTP period. The target to build more than 2600 kilometres of railway has mostly succeeded as the detailed design works of most of the routes are already complete and advanced training of thousands of necessary professionals is well underway in higher institutions sponsored by the Ethiopian Railway Corporation.

There are promising developments, including signing MoUs and contracts, for the financing of these with loans from India, Turkey and China to finance railway projects. The new Addis Ababa -Djibouti railway project had been completed and is going operational next year. While Awash-Mekelle route construction has commenced.

Track laying for the Addis Ababa Light Railway Transit project was officially commenced in the third year of the GTP putting an end to all the talks of those who have routinely been claiming that the project is a pipe dream.

The now completed Addis Ababa Light Rail Transit project is an electrified light rail transit system with a total length of 34.25-kms (North-South line 16.9-kms and East-West line 17.35-kms).The two lines which are the North-South and East-West lines use common track of about 2.7-kms with a Standard Gauge of 1.435 meters and double track for the whole route.

One of the special features of the Project was that it performs on steep gradient and sharp curves and the fact that it is environmentally friendly as it reduces carbon dioxide emission. Trains with a capacity to carry around 300 people will start work next year. The Addis Ababa Light Railway Transit project, despite its significance, is not the only mega project launched to transform Ethiopia's economy and advance the social-economic stride.

China Railway Engineering Corporation built the 317km segment from Sebeta to Meiso, the 339km from Meiso to the border town of Dawale, and the third 100kms to the port of Doraleh, which most of the work is completed.

The Addis Ababa Djibouti line will have 17 major stations and pass through DebreZeit, Adama, Metehara and Dire Dawa. Of which, the 107kms from Addis Ababa to Adama will be double track and the remaining 549 kms will be single track. It is now certain that the new Ethiopia - Djibouti Railway line will be operational within the next few months.

These project are part of the two-phased plan unveiled in 2010 to construct a 4,850long railway, with 8 main rail routes and expected to connect about 49 towns, under the purview of the newly established Ethiopian Railway Corporation.

A 656 km long rail route that stretches from Sebeta, near Addis Ababa, to Dewele, which is located near the border of Djibouti, is amongst them. Not to forget, the old 781 kms railway line from Dire Dawa to Djibouti that has been maintained and started operations a few months ago.

However, despite what the detractors routinely claim, the main source was not foreign donation. Of the total amount spent, 77 percent was by the government.

One of the major works in that regard is the two roads linking the Addis Ababa-Adama Expressway with Addis Ababa City into two directions. The 28.1-km roads Addis Ababa-Adama Expressway has been constructed and became operational a year ago at a cost of more than 4.2 billion birr allocated by the government of Ethiopia and loan obtained from Chinese Exim bank. Another major example is the construction and renovation of 1,700-kms roads carried out in the Benshangul -Gumuz State with over 172 million birr in the last twelvemonths.

Another key infrastructure, the road development has progressed on schedule with the construction of 100,000 kilometres of road at a cost of some 20 billion birr. Though the government was covering some 90 percent of the cost from its own resources, the 8 bln birr loan of 2013 from World bank ensured the road development meet the targets set in the GTP.

The capital city Addis Ababa, which has long been horrible in its roads network has seen a major leap unprecedented in her recent history. Addis Ababa has constructed more than 1,219- kms road in the last five years with more than 10 billion birr budget. Now, Addis Ababa's road coverage has reached 15.64 per cent raising the network to 4,148-kms of which 2002- kms is asphalt, 727-kms cobblestone and the remaining 1,419- kms is gravel.

In the processes, the city created jobs for more than 50,000 youths and women in cobblestone road construction. The same can be said with regard to other sectors of the transport industry. The government owned Ethiopian Air Lines serving people local and abroad remains as one of the best airline in Africa and continues to be a reputable enterprise in the world.

Now, the Ethiopian Airlines have six dedicated freighter aircraft currently operating two Boeing 777-200 LR freighters, the first to be operated in Africa, with two MD-11, and two Boeing 757freighters out of two hubs — main hub Addis Ababa and Liege, Brussels. The airline operates to 25 cargo destinations in Africa, Middle East, Europe and Asia. Having a vast cargo network — 15 in Africa, seven in MiddleEast and Asia and two in Europe — Ethiopian operates in major trade lanes between Africa and Europe, Middle East and Asia, providing a convenient and reliable cargo service to and from the continent. Boosted by the growth of perishable exports from Ethiopia, the airline is now expanding its cargo network and fleet and aims to set up cargo hubs in Central, West and Southern Africa to cater for the growing need for reliable and affordable air cargo transport to and from the continent. Ethiopian cargo is at the final stage to be one of the seven business units of Ethiopian aviation group.

By 2025, Ethiopian plans to uplift 820,000 tonnes of cargo using 15 jet aircraft. To support the airline’s fast growth and achieve its goal in continuing to be the leading cargo service provider in Africa, existing facilities are also being upgraded and new ones are being built. Currently complete, will significantly improve transport services for the growing population of the city and contribute to its rapid modernization.

The Growth and Transformation Plan also emphasized the significance of the private sector’s and its contribution to the rapid growth of the economy. Hence, private investment, principally in manufacturing and commercial farming has been encouraged and the fundamentals further enhanced over the last five years. Domestic trade and services have realized a great deal of private sector investment over the years and is currently the largest sector in Ethiopia surpassing agriculture. Overall, the contribution of the private sector in the economy has been steadily growing.

The progress made so far in terms of all the 7 pillars of the GTP and their wide-ranging significance for the country cannot be sufficiently presented in a short article like this one.

As the President said last year:

“Ethiopia is undoubtedly moving on the right path towards rapid and sustainable development. The effect of Ethiopia's progress is also beginning to have a trans-boundary impact [and] many continue to express their hope to see Ethiopia maintain and continue on the right path of development in a post-Meles era”.


[To be continued with a review of GTP II]

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