GTP: The Great Leap Forward In Improving Social Security of Ethiopians

Articles and Analysis

GTP: The Great Leap Forward In Improving Social Security of Ethiopians


Fanowedy Samara

Dec 12, 2010


Ethiopia is the oldest independent country in Africa and one of the oldest nations in the world. The oldest remains of a human ancestor dated some five million years old were discovered in the Awash Valley in Ethiopia. Moreover, Ethiopia was the early home of civilizations such as the civilizations of Damat, Yeha and Axum. These civilizations had significant external relations with the then civilizations of the world. Particularly, Axum developed various external relations with the then Middle and Far East Asian and European civilizations. That is why Ethiopia is said to be the origin of human beings and the cradle of ancient civilizations.

The country is also the origin of certain edible plants such as enset, nug, teff etc. Thus, domestication of plants and taming of animals started in Ethiopia before 6000 years. These edible plants ensure nation’s contribution in the domestication of plants in early periods of human history. And a lot-both negatively and/or positively- have written about the country and its peoples as well.

Ethiopia contributed a lot the world civilization particularly, during the Aksumite period. Its glorious period reached during the Aksumite civilization, of course. The Aksumite Empire was an important trading nation in northeastern Africa, growing from the proto-Aksumite period ca. 4th century BC to achieve prominence by the 1st century AD. It was a major player in the commerce between the Roman Empire and Ancient India and the Aksumite rulers facilitated trade by minting their own currency.

Ethiopia was not colonized by European colonial powers even though several of them had interests and designs on Ethiopia in the context of the 19th century Scramble for Africa. Thus, Ethiopia is the only African nation which kept its independence without any external aid even during the periods of Scramble for Africa.

Though these are some of the historical facts about Ethiopia, the nation had remained poor and destitute for more than centuries. The countries economic development got retarded almost with the demise of the Aksumite civilization. As a result, the nation had become the place of civil war and civil unrest particularly right the era of princes up to the end of the unitary military rule in 1991. In these periods, Ethiopia and Ethiopians had been attached with poverty and backwardness. The then administration systems along with the then administrators are responsible for nation’s retrograde social, economic and political route.

Stefan Dercon (1999) in his poverty assessment study in Ethiopia stated that “Ethiopia is one of the poorest countries in the world. It has a per capita GNP of only $110. Infant mortality is currently 118 per 1,000 children; child mortality stands at 173 per 1,000. About a quarter of adults can read and write. Ethiopia is the second most populous country in Africa. Population is growing at a rate close to 3 percent per annum. About 86 percent of the population depends on rain-fed agriculture. In recent years, economic growth has been well above population growth, but agricultural growth has only just kept up.” This was the external image of the nation for a longer period of time.

Dercon further stated that “Poverty is closely linked to the lack of assets in the form of human, physical and social capital. Poverty alleviation will have to start by assisting household and community asset formation. In general, continuous land reform since 1976 has meant that most of the poor own some land, even though the poor typically appear to have less land and of poorer quality. The poor have very few productive assets: they lack oxen, a crucial asset for farming in the dominant ox-plough system, and in general, they lack livestock, a source of fuel, livestock products and manure, and the most important store of wealth. The poor depend relatively more on the environmental resource base for water and fuel.”

After 10 year, the Economist magazine in its 23 November 2009 edition predicted Ethiopia to be the world’s 5th fastest growing economy in 2010.The magazine predicts Qatar to top the fastest growing economies in the world with a GDP growth of 24.5% followed by China, Congo (Brazzaville), Turkmenistan and Ethiopia. It also indicated that the IMF has rewarded the government's economic management with financial support, and a strong performance in agriculture, the mainstay of the country, will make Ethiopia as one of the fastest-growing economies. Ethiopia's GDP is expected to reach $35 Billion in 2010 and inflation is estimated at 12%. Kenya which is the biggest economy in East Africa is predicted to have a GDP of $38 Billion in 2010. If Ethiopia's GDP growth forecast is accurate, Ethiopia could soon surpass Kenya, to become East Africa's biggest, according to the magazine. This shows the changing economic and political reality of Ethiopia, in fact.

Moreover, the press release by UNDP on 4 November 2010 in Addis Ababa stated that Ethiopia is rated among these ”top movers” at rank 11 out of the 135 countries which registered improvement in Human Development Index that stretched the rating between 1970 and 2010. While assessing the achievement status of same countries between 2000 and 2010, Ethiopia’s status goes up to put the country 2nd rank. According to the measurement done between 2005 and 2010, Ethiopia’s position comes at the top of the top movers of the development achievers. The report states that between 2000 and 2010, Ethiopia’s life expectancy at birth increased by almost 5 years, GNI per capita increased by 75 per cent, expected years of schooling increased by 4 years. This report indicates that Ethiopia is making new economic history thereby ensuring its renaissance.

The changing reality of the nation is the manifestation of the unreserved efforts of the Government of the Federal Democratic Republic of Ethiopian which has been struggling to improve the economic condition of the nation right the demise of the military rule in 1991. That is why article 43 of the FDRE constitution ensures that the Peoples of Ethiopia as a whole, and each Nation, Nationality and People in Ethiopia in particular have the right to improved living standards and to sustainable development. Moreover, it stipulates that Nationals have the right to participate in national development and, in particular, to be consulted with respect to policies and projects affecting their community. And practically, Ethiopia is securing rapid, successive and equitable economic growth in the last successive seven years. All the Nations, Nationalities and Peoples of the country are equally benefiting from the rapid economic growth on the basis of their participation and contribution to the development efforts. Hence, development has become constitutional right of citizens. Of course, the FDRE government, being responsible government, is working hard to ensure economic security of the nation.

Furthermore, the government is continuously working to achieve better economic goals particularly, right the 2000/2001 onwards. As a result it adopted various development facilitating policy and strategic devices. The next five years (2010-2015) Growth and Transformation Plan (GTP) is among the notable strategic devices which the FDRE government has been formulating and implementing so far. This plan would enable the nation to double its macro economy by registering average annual growth of 14.9 percent. This GTP plan targets to construct more than 2,000 km of railway networks in different parts of the country. It also aims to generate 8,000 to 10,000 MW from water and wind resources with in the next five years. Definitely, this GTP would enable the nation to emancipate from foreign food aid. Of course, every citizen should play his/her level best to make this GTP real.

Enhancing culture of saving is among the prominent elements of GTP. GTP encourages citizens to save their income in saving institutions and banks. The National Bank of Ethiopia (NBE) is taking progressive measure to encourage citizens to save. Hence, the interest rate for savings has been increased from 4 percent to 5 percent effective starting from the 2nd December 2010. This measure has been taken to guarantee continued financing, thereby contributing share for the efficient realization of the five-year Growth and Transformation Plan (GTP) and sustainability of ongoing speedy economic growth. Moreover, the bank has also begun a new bid bond saving to encourage low-income citizens starting from a price of 500 Birr. Furthermore, the saving scheme for housing would be implemented at a pilot level at the Commercial Bank of Ethiopia (CBE). This scheme will make homeless citizens owners of residential houses within relatively short period of time. The saving scheme for housing will be executed through a housing project to be established by the government. Eventually, the scheme will also be introduced at other banks.

This scheme would eventually improve the life standards of Ethiopians for citizens who save 40% of the total cost of the houses they need to construct can borrow the remaining balance (60%) from banks and own their own houses. Surprisingly, citizens would pay the 60% loan with in 17 years. Thus, saving has two prominent and supplementary functions. On the one hand it facilitates the implementation of the five years GTP; and on the other hand it makes citizens owners of their own houses. That is, housing problem of citizens would be substantially alleviated with in relatively shorter periods of time.

To gain the maximum possible benefit out of the saving scheme, citizens should actively participate in the project. By so doing, every citizen should maximize his/her opportunity. Needless to say, saving enables citizens to get divorced from poverty and destitution and vice versa. Housing is among the main question of citizen particularly, urbanite. Thanks to the GTP, it would not be serious problems after relatively shorter periods of time. And it would become a matter of choice-save to have one’s own house or otherwise not. Of course, the FDRE government encourages citizens to save and own their own houses.

The Government also commits to improve the Civil Service Fund Contributions in GTP. Previously, the amount of the contribution payable to the Civil Service Fund had been six percent (6%) by the employer and four percent (4%) by the public servant respectively (as indicated in article 5 of the "Public Servants Pensions Proclamation No.345/2003).

However, amount of the contribution payable to the Civil Service Fund would be increased to ten percent (10%) by the employer and eight percent (8%) by the public servant respectively. Not only the increment of the amount of the payable contribution, the GTP also makes every employed individual be him/her administered under the civil service law or not beneficiary of the program. Hence, GTP is looking forward to improve the life standards of every Ethiopian citizen in much better than what had been done so far. This also implies that Ethiopia is continuously working to ensure better life for its citizens. And every Ethiopian citizen should actively discharge his/her responsibility to make the GTP real for it the right route to make the nation realize its Renaissance.


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