Ethiopia needs $10bln per year to achieve goals


The country might need USD 10 billion a year to achieve its ambitious programs and planned reforms.
In a discussion with international partners and the donor community at the Home Grown Economic Reform designed by the government to be implemented in the coming three years. Vera Songwe, Executive Secretary of the Economic Commission for Africa, said that the donor community should get behind a USD ten billion ask in order to support Ethiopia’s attempt to create 2 million jobs in fields like ICT, agriculture and transportation.
“Ethiopia currently has a USD 10 billion gap – 6 billion in new investment and 4 billion of debt reduction per year – that must be bridged in order to achieve its reform aspirations,” she said.
The Executive Secretary of ECA said Ethiopia’s aspiration to grow from USD 865 to 2219 in GDP per capita was “very ambitious” but that it was doable, citing the success stories of China, Laos, and Vietnam.
International partners like the World Bank, International Monetary Fund, and other donor community members appreciated clearly stated past evaluation and future challenges.
“I appreciated the government’s honesty at looking at the past and challenges in the future,” Carolyn Turk, Country Director of the World Bank for Ethiopia said.
She said it was a deeply ambitious and achievable program.
“Quite ambitious program and even though it is ambitious it is a doable,” Songwe said.
“Several months in the making and spearheaded by some of Ethiopia’s finest minds, our initiative aims to propel Ethiopia into becoming the African icon of prosperity by 2030,” said Prime Minister Abiy Ahmed of Ethiopia.
He made the remarks on 9 September during an event to unveil the Reform Agenda at the United Nations Conference Centre in Addis Ababa.
The Agenda outlines macroeconomic, structural and sectoral reforms that will pave the way for job creation, poverty reduction, and inclusive growth.
Abiy stated that the private sector was crucial for the next chapter of Ethiopia’s growth and development. Consequently, he said, we have “opened up key economic activities to private investments,” adding that these measures will “surely be reflected in Ethiopia’s ease of doing business ranking.”
The PM pointed out that to ensure the success of the Agenda: “we are tightening our fiscal belts, strengthening our public sector finances, shedding our debts, and increasing domestic resource mobilization.”
The Agenda prioritizes sectors such as agriculture, manufacturing, mining, tourism, and ICT.
“If you continue to accumulate debt the way you’re doing now, you will likely fall into debt distress in the next two years and a lot of the structural reforms you have put in place will not bring in the private sector because you will not be a credit-worthy country,” Songwe said.
She recommended paving the way for independent power purchases (IPPs) in a reformed energy sector as a quick-win that can demonstrate the country’s credibility.
The homegrown economic reform has three major pillars; macroeconomic, structural and sectoral reforms. “The economic reform should have holistic and comprehensive approaches that the macroeconomic reform will see foreign exchange imbalance, inflation, access to finance and debt stress, and structural reform will also solve the bureaucratic challenges, doing business and sectoral reform looks at specific problems in every sector,” Eyob said.
Recently Eyob Tekalign, State Minister of Finance, said that the National Bank of Ethiopia under its reform program is working to improve the financial sector regulation. He said all banks including the two public financial firms would be seen equally by the NBE based on the experience of international banks.