Despite Ethiopia’s whirlwind of challenges in the past few years, the World Bank President has cited that the country’s economy has managed to come out of the downturns and is now at a relatively good place.
On his first visit to Ethiopia, and Africa from July 31to August 2, Ajay Banga, President of the World Bank Group, who took office, early June, met with top government officials and visited several economic sites besides having a meeting with private sector professionals.
Whist addressing the media, Ajay pointed out that despite all the natural challenges that Ethiopia has been through, including the pandemic and social challenges, which dented the economy, the country has managed to go unscathed.
Regarding the economic challenges, Banga cited that the case was not only singular to Ethiopia but has affected other countries as well, “All countries today have challenges because of rising interest rates. There are challenges around servicing debt. There are challenges around the future macroeconomic growth projections as well.”
As he put it, “Development with indigenous integration for economic growth with the private sector and farmers is integral.”
“The Finance Minister and the Central Bank Governor were speaking to the idea of bringing in foreign capital and domestic capital into banking. Now, this is not easy. These things take time in an economy that is changing in its construct from what it was for the last few decades to where the Prime Minister and his government would like it to go,” the World Bank president elaborated.
After his visit to the industrial park at Bole Lemi, including the malt factory, he stated that, “It is interesting to see the effort that the government is putting on indigenous development of the raw material that goes into these factories. Not only should we be focusing on importing things and exporting them, but also actually encouraging the local production of these items and not just local production as taking the raw material and exporting it, but value added manufacturing locally so that this is not an extractive economy, but a job creating value added economy for the future.”
According to Ajay, there are opportunities to look at in value added manufacturing attached to the agriculture.
“There are opportunities to look at the private sector and the mobilization of the private sector,” he opined.
As Ahmed Shide, Minister of Finance, pointed out, the World Bank has been associated with Ethiopia’s development as the biggest long term development partner of Ethiopia involving in many sectors, whether it is infrastructure or social development, digital development, or regional integration as well.
“As Ethiopia moves along intensifying its reform activities and expanding growth, we are going to work with the World Bank in diversifying our source of growth in bringing in more private capital into the economy,” he added.
He reaffirmed that his ministry will continue on its reform paths, economic growth, national unity and sustainability of peace building to continue as a regional anchor for stability and unity.
“We believe in the future of this country. So the idea is, what can we do to be helpful as the PM and his government navigates the future of the next few years,” the World Bank President said.
MoF disclosed that the President’s meeting with Ahmed at his office was to discuss on various issues of mutual interest, including Ethiopia’s development priorities and the various areas to enhance the partnership between the World Bank and Ethiopia.
Ahmed briefed Banga on the opportunities and challenges of implementing the Second Home-Grown Economic Reform (HGER 2.0) agenda to accelerate economic transformation through improved productivity and competitiveness.
According to MoF, the Minister requested support from the Bank for the ambitious reform agenda in light of the macroeconomic challenges and development needs of the country.
Ahmed also shared some of his expectations from the Bank’s reform process, including the importance of aligning it with the urgent needs of low-income countries, especially given unprecedented poverty challenges.
According to the President, Ethiopia is the second IDA recipient location in the world.