Dwindling reserves

Our nation, like other least developed countries, relies almost exclusively on imported capital goods and perishable and non perishable consumer items. This is most evident in urban areas where precious few local products occupy shelf space amidst a deluge of imports.
Trade is the cornerstone of civilization and all power to Ethiopia’s efforts to develop economic ties with as many global partners as possible. However, our nation is not benefiting as it should from its trade with almost all of its trading partners. The historically anemic trade balance – the ratio of exports to imports, is getting so lopsided that there are few products that we do not import – including mundane items that require little investment in human, capital and land resources to produce domestically.
Export substitution however, is an alien concept to most of our entrepreneurs, and we will have to wait until they finally see the light long observed by the rest of the world. 
Although nearly all statistical data is subject to conditionality and varied, often partisan interpretation, the discrepancy of Ethiopia’s international trade, in various studies is in unsustainable condition. The lopsided import-export scale renders the registered rapid growth in export volume and value meaningless in the overall scheme of things.
According to the 2008 World Almanac, a 140 year old, highly reputable publication with annual global circulation of tens of millions, the status of Ethiopia’s international trade registered alarming figures entered for 2006 – 2007.
Our nation exported $US1.1 bln and imported $US 4.1 bln or a staggering $US 3 bln more than it earned. As a case example a view of Ethio-Saudi trade is more descriptive in order to illustrate this imbalance.
Exports to Saudi Arabia comprised 5.8% of all Ethiopian exports but imports from the KSA make it Ethiopia’s single largest source of imports – at 18.1%. The story is too similar in Ethiopian trade with China, India, Germany and other major trading partners.
Scrolling back to the figures for 2005-2006, as published in the 2007 Almanac display the following: Ethiopia’s exports were valued at a mere $US 612 mln and imports totaled $US 2.7 bln – an imbalance of a little over $US 2 bln.
In just one year, (2006 – 2007) export growth was more than robust and in fact, nearly doubled. If it were not for the $US 1.4 bln spike in imports, it could have been anticipated that Ethiopia was well on its way to a first trade surplus since 1963.
The scenario unravels in other economic fundamentals such as in the dwindling level of international monetary reserves as well as the nation’s gold reserves.
In 2004-2005, Ethiopia’s international reserves stood at $US 964 mln and gold reserves were tallied at 250,000 troy ounces.
By 2005-2006, international reserves were down $US 179 mln to $US 785mln. Gold reserve data is not available for that year. Perhaps an ominous foreshadow of ‘Goldengate’, the most audacious scam in living Ethiopian memory which is yet to reveal to us its full dimensions. 
In 2006 – 2007, Ethiopia’s international reserves had shrunk by nearly 50% over 2004 – 2005 and stood at $US 553 mln.  
No nation can escape harsh economic reality. A nation cannot for long buy more than it sells. Even the United States with that immense economy is now paying the price of its insatiable appetite for imports which has caused a $US 700 bln trade deficit. 
It is high time that we put our house in order.