Ethiopians Worried By Persistent Economic Woes

By Yohannes Ruphael, Panafrican News Agency, 21 November 2000

Addis Ababa—The World Bank’s most recent report ranking Ethiopia, with per capita income of 100 US dollars, as the poorest country in the world, has come as a shock to many Ethiopians.

We have the honour of being the poorest country on earth Berhanu Nega, a professor of economics, said sarcastically.

The World Bank report corroborated by the Ethiopian Government figures, indicate that over 30 million people out of a population of 63 million, are considered poor in absolute terms, for not being able to earn a dollar a day.

If you doubled the figures to the 2 dollars per-day poverty line, some 50 million people (Ethiopians) earn below the 2 dollars, Berhanu said.

According to him, the Ethiopian economy grew on average by 2.6 percent between 1960/61 and 1998/99, while the population grew by roughly the same proportion, leaving the per capita income of the population at the same level in real terms, or in fact slightly less.

He put the net per capita GDP growth over the period at 0.006 percent per annum.

If we divided the performance between the three political periods of Emperor Haile Selassie, the Derg and the post Derg periods, we will see that the worst performance in terms of per capita GDP, was during the Derg period with an annul per capita decline of -0.7 percent.

Berhanu explained that under Haile Selassie, the GDP grew by 1.8 percent, while the period under the current government (1991-2000), shows a growth rate of about 2.6 percent achieved mainly because of the expansion of the service sector.

Agriculture, which has always been the dominant sector in terms of its overall contribution to GDP, (55 percent on average), grew by annual average rate of 1.2 over 40 years, with and a decline in the share of industry in GDP from 13.3 percent during Haile Selassies’s period, to 10.8 percent now.

The inability to diversify exports which led to a ...decline in terms of trade, has increased the balance of payment problems, Berhanu argued.

He said the current account deficit is reported to have reached over 250 million dollars, while the debt stock has risen to over six billion dollars.

What is interesting about foreign aid to Ethiopia over the past three or more decades is that it was really inconsequential to the overall development process of the country, Berhanu noted.

According to a recent report by two Ethiopian economists, the total amount of foreign aid that came to Ethiopia in the 1965-97 period had no serious impact on the economic growth.

Inadequate economic policy, natural calamities, absence of a properly functioning legal system, lack of an efficient and neutral bureaucracy, corruption and tribalism are some of the factors blamed for the poor performance of the economy.

These have impacted negatively on the quality of life of Ethiopians.

According to the UNDP’s Human Development report, the life expectancy at birth for the average Ethiopian was 50.7 years in 1994.

But more recent data show that life expectancy at birth in 1998 dropped to 42 years for males and 44 years for females.

I think, the combined weight of poverty in all its manifestations, bad governance, repression..., over the past forty decades or more have created a social psychology of hopelessness among Ethiopians, including the relatively well to do, Berhanu said.

You need to have a relatively efficient and clean government to allow private economic actors make rational decisions that would ultimately benefit the overall economy, he explained.

According to him, one obvious manifestation of hopelessness in Ethiopia today, is migration, with many people especially the young ones, looking forward to the day when they leave the country for abroad.

I am waiting for an invitation from my brother in California, USA. As soon as I get there and work for some time, I will then send for my sister, says 28-year-old Elias Mume, echoing the sentiment of thousands of his compatriots.

The urge to migrate seems no longer restricted to the poor or even the middle class.

It has become common practice even among rich Ethiopians to send their pregnant wives to the US for child bearing, and for such children to eventually obtain US citizenship.

When ever my wife becomes pregnant, I will send her to the USA. My six children are now Americans enjoying all the amenities in that rich country..., declared an Ethiopian businessman who asked not to be named.

To stem the drift, he urges the authorities, to increase investment and implement people-oriented policies through good governance.