Ambitious Plan Can Be Good – a comment

The announcement of the Ethiopian five-year Growth and Transformation Plan (GTP) has already generated an interesting debate, mostly here on Aiga Forum. According to the media, the GTP plan supports infrastructure projects and public investments in social sectors, agriculture, communication, energy and other sectors. The macroeconomic forecast is a growth rate of between 11% and 14%.

I felt that many of the arguments in favour of or criticizing the new five-year GTP plan were genuine and another indication of the growing culture of public debate on government policy. I don’t recall a strong argument suggesting that the GTP is irrelevant to Ethiopia’s national development needs. At issue rather is whether the plan is too ambitious. And my view generally is that an ambitious plan can be good if it is well planned and there is a strong government leadership to implement it. In fact, academics and international agencies have in recent years advocated the development of ambitious plans - the mainstream terminology is “big-push” approach - that promotes development goals in different sectors of society simultaneously.

Nonetheless, plans are theoretical projections of time-bound goals. Whether or not plans are implemented the way they are planned or why some plans get implemented the way they were planned than others, has remained the subject of historical debate in the field of planning science. In practice, however, plans will either 1) fail completely, 2) fail to achieve targets, 3) achieve targets or 4) exceed targets. How you set a target or consider a success may also depend on the context. For example, in Western countries, where markets are saturated, a 3%-5% annual economic growth rate is very much applauded and generates a huge political capital. This is also to say that the Ethiopian government may face many challenges in the implementation of the five-year GTP plan, such as a global economic recession, drought and other natural disasters and regional instability. In a nutshell, one would assume that the Ethiopian economy is growing because of the effectiveness of previous plans. Could the government have done more? Absolutely!

By now the information about the Ethiopian five-year plan – including every public statement made by the Prime Minister and his officials – have been picked up by the global information media for consumption by foreign and domestic investors, traders, mining and real estate speculators, professionals, donors, and so on. Usually experienced analysts (media or corporate-based) tolerate ambitious government plans (as a measure government confidence), but they also assess them critically to determine their feasibility using a set of indicators, such as overall macroeconomic performance, political stability, strength of national leadership and report of international agencies. If analysts buy (like) the Ethiopian government plan, prospects will be good, in that, it galvanizes domestic resource and attracts investors and the attention of donor agencies. If not, Ethiopia will be in trouble. All to say that, regardless of whether we have an ambitious plan or not, we expect the Ethiopian government to have prepared a plan that gets rated favourably by analysts and attracts international and domestic interests.

Another issue that has surfaced during the debate on the GTP plan is EPRDF’s track record. The argument is that, last time EPRDF launched its five-year (2005-10) PASDEP plan, it had forecasted ambitious goals that have not been achieved. This kind of argument is not necessarily political. It is democratic. I personally have not seen a published government report that accounts for the resources used to implement the PASDEP plan and results achieved.

Highlights of PASDEP Sector Results

Energy. Increased power generating capacity to 2,218 MW from 791 MW; construction of 11 electric power stations and 13,000 km transmission grids; and 420 rural electrification service cooperatives.

Training. 25 Training and Vocational Education centres established; 55,000 extension workers trained; 18,000 Farmer Training Centres established; 10 million people to receive training.

Education. 86% coverage in primary education at national level.

Higher education. Construction of 13 additional higher education institutions that offer degree programs, increasing overall annual university intake to 150,000.

Health. Achieve “low-level health facilities within 10 km for almost all of the population”; and construction of 94,000 wells and boreholes and development of 13,000 springs.

Marketing. 70% of rural people organized under cooperatives; 108 warehouse, storage, abbators and other facilities constructed; and 10 agricultural commodity exchange centres opened.

Communication. Reduced average walking distance from a road to 3.2 hours; 7 millions telephone lines (fixed and mobile) and 100% access within 5 km; and increase ITC services.

Resource mapping. Increased geological survey to map resource potentials across the country.

In my part, I have reviewed the previous PASDEP plan as part of the work on one of my recent papers (Rural Industrialization in Ethiopia: Time for Action, 2009). The planned results of PASPEP are highlighted in the Box below. I do not have the information to find out whether or not these results are actually achieved. What I can write here is based on an observation during my visit of Ethiopia two years ago. I saw Indians working on rural electrification in the highland plains of Northern Ethiopia. Road construction activities were everywhere – too many of them. Dams had become a symbol of Ethiopian development. Rural income earning capacity has improved and many farmers could afford to buy electronics. Universities, vocation training centres, elementary and high schools, health centres, training centres and other development benefits are available. Addis and other cities have shown dramatic expansion and growth in infrastructure, housing and services.

On macroeconomic growth, the Ethiopian government persists to claim that the economy has maintained a double-digit growth rate in recent years, while the IMF argues for a single-digit rate of growth; in fact, in its June 2010 mission report, the Fund advised Ethiopian government authorities to make “conservation growth assumption” (the IMF is a conservative institution that always worries about its international credibility and reputation. It does not give out highly inflated estimates). The UN Global Economic Outlook (June 2010) projects annual real GDP growth of 9% and 10% for Ethiopia in 2010 and 2011, respectively. The African Economic Outlook (a joint OECD, Economic Commission for Africa and African Development Bank report) forecasts 9.7% and 10.9% growth rate in 2010 and 2011, respectively. Officials of international agencies now openly say that Ethiopia has potential to meet the Millennium Development Goals, if not all seven of them. All these can be performance indicators that international and domestic analysts use to assess the feasibility of the GTP plan.

There are gaps, however. The government once pledged to connect each Kebele to an accessible modern road – it has not happened. In Bahir Dar, an official of an international organization sat next to me in the Internet Cafe shaking his head (angry) with the slow Internet connection. The wealth remains concentrated in Addis Ababa. Living in rural areas still means being poorer and marginalized. Although the government has got credit for fighting inflation, it has made million of Ethiopians poorer. Governance problems are also common. For example, I heard how ager bekel (home-grown) construction firms had simply become a means to make good and easy money which includes re-selling equipment and spare parts that they imported duty-free. I was told that one of such firms was so confident of its ruling party ties that it did not bother to meet its contract deadline, delaying the completion of a road construction project. At one of its sites, we found the machine turned off and the operator playing with kids. I sketched a short report on this and other issues and handed it to government officials before I left the country.

If you could give me a credit, I have tried to use at least sketchy facts to assess the feasibility of the new Ethiopian five-year GTP plan and government policy in general. I wish others could do the same and also think before they pick up anything negative written on Ethiopia to justify their arguments. Another point that I want to make is that many of the challenges or gaps are in fact common in the development process of developing countries. One recent report that I came across pointed out that one of the Indian States have poor people equal to the number of poor people in ten Sub-Saharan African countries. Over 700 million Chinese still earn less than $3000 a year – the Chinese state has over a trillion dollar (US) in cash. Both the Indians and Chinese reached where they are today (in terms of macroeconomic growth) because they pursued the execution of ambitious plans and learned to do this through trial and error. Ethiopia is going through this stage. Let us reinforce positive experiences and address gaps using the lessons of the past. Thank you.

Getachew Mequanent

Ottawa, Canada

August 22, 2010