Economy Progress in Ethiopia


Bonne Gelchu 07/08/09


Ethiopia as a land locked country is faced with the staggering development challenges in the region coupled with frequent drought and food shortages and hobbled by inadequate road and communications system. In spite of the challenger however, the country managed to reach and maintain a double digit growth for consecutive years.


The healthy economic performance in the country is mainly attributed to the reforms aimed at transforming Ethiopia from a centrally planed economy to a market- oriented one which was launched in 1991 after the overthrow of the former Pro-soviet derg regime. The reform boosts the overall GDP growth rate to an annual 4.0 percent in 1991-2003 from 2.8 percent during the derg rule (1974-91). The structure of the economy also changed. Ethiopia has its own economic road map that mainly depended on its domestic realities and is not dependent on dominant economic policy of the developed nations. As a result Ethiopia managed to minimize the spill over effects of current economic crisis of the grand economic power houses or by their respective economic policies. The agricultural transformation, services development and transformation, private sector transformation and industry resulted in a rise to the development of the country with a remarkable double digit economic growth for the last consecutive six years.


Generally, the country’s National Development Policy Framework is designed to fight and eradicate poverty through achieving broad-based and pro-poor growth.



To this effect medium term plans/programs such as Sustainable Development and Poverty Reduction Program (SDPRP) which is now enhanced by Accelerated and Sustained Development to end poverty (PASDEP).


These are the primary vehicles designed to bring overall Socio-economic transformation in the country and for achieving the Millennium Development Goal (MDGs).


The SDPRP which spanned for three-year period lunched in 2002 effected a public  consultation on Agricultural development, rural development, food security, decentralization and empowerment, capacity building in the public and private sector and reform in both the justices system and the civil services. The plan for Accelerated and Sustained Development to end poverty (PASDEP) on the other hand is a five-year strategic framework that builds on the directions pursued under the SDPRP.


Overall, the implementation of these strategies for poverty reduction has been associated with positive trends in macro-economic as in well as socio-economic transformation of the country. Attesting to this is the registered economic growth.   


In 2007/08 for example GDP was 11.6% with Agriculture contributing 7.5, Industry 10.4, Manufacturing 7.1, Construction 11.3, Services 17.0 ,Banking and insurance 24.9, Distributive services 15.2, and other services 14.2.


By any standard the economic and social progress in Ethiopia has been extraordinary.  The Ethiopian farmers are put at the center of the development policy which is agriculture lead industrialization. 


The government is building amazing network of infrastructures, like road, hydro electric power to connect modernize the whole country, telecommunication technology potable water for rural and urban areas, health care extension agricultural development and education development programs to name but few. 


The progress of the investment climate saw the growth of the middle class. The Ethiopian Economy is on a higher growth trajectory (over 10 percent real GDP growth rate) and this momentum needs to be maintained.


IMF must ensure the success of Ethiopia’s National Development Policy in order to achieve UN Millennium Development Goals (MDGs).


The Obama administration, to underline that Ethiopia’s National Development programs especially in the agricultural sector has said it will expand its development aid.  Deputy Secretary of State Jacob Lew spoke about the Obama's administration desire to broaden the development aid programs and an increased share of resources going into sustainable development. Ethiopia no doubt is an Emerging economy that could definitely set an example for other developing economies.