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Fruit of the Ethiopian Double Digit Economic Growth

By Zerihun Nega
Tigrai Onlne - July 23, 2014

As it can be recalled FDRE Prime Minister Ato Hailemariam Desalegn has recently announced a salary increase for more than 1.1 million public servants aimed at improving their living. The new increased salary will be made in a way the takes the government’s financial capacity (to pay) and the economy’s stability into account, and in a way that avoids igniting inflation.

In addition to this, the prime minister has announced that public servants will have a 20% preferential access to the condominium houses under construction by the government. In addition to this, the Premier proclaimed that if members of the public service wish to organize themselves in associations for the construction of houses, the government will provide them with land. Also a transport service will also be facilitated for civil servants who live in the city and the suburbs. These salary increment and benefits will allow for the reform and change programs, designed to create improve and better the situation of the public, be implemented in a better way.

On top of this, the huge of role this will play in building a public servant that is highly motivated, seeks to Serving the Public Interest, endowed with democratic outlook and industrious work ethic, capable with the highest standards of professional competence, and ethical. Here the question, “what’s the driving reason of the government in introducing these salary increment and benefits, which have a hand in bringing the aforementioned result?” In order to answer this question, we’ll start with the international reality. This is because any government improves its citizens living in correlation to its economic development.

With regards to this, our country’s developmental and democratic government has been recoding 11% economic growth for the last ten consecutive years. With this, it has been able to be the benchmark for other countries for a rapid and sustainable economic development. And this has enabled the citizens of the country to be beneficiary of the economic boom, step-by-step. And the civil servant is no exception.

So, I don’t think it’s difficult to understand that the salary increment and the other benefits that was announced by Prime Minister Hailemariam Desalegn is the result of the economic growth the country recorded for the last ten years. And this will help us understand how much this economic growth is playing a major role on the citizens’ personal growth.

                                                       The Economic Growth

As it’s known, for the last two decades there have been many socio-economic development policies, strategies and programs formulated in order help our country break free from poverty and backwardness, and improve the peoples’ living conditions step-by-step. And their success can be seen by comparing today’s Ethiopia with the one that was 22 years ago – as the idiom ‘seeing is believing’ entails. So, in this article I’ll try to walk you, my dear readers, through our country’s economic growth of the last ten years.

In order to probe into our country’s last ten years economic growth, its process and outcome, the ten years performance before that should be raised here. This is because that period has its own irreplaceable role for the current successful run of the economy. As it can be recalled before the demise of the dictatorial ‘Derg’ and its command economy principle, our country’s economic growth was below zero. It was predicted, correct fully so, at the time that it would take uphill an battle and sacrifice to med the economy.

In order to fight this uphill battle, three principals were formulated. The first holds that a principle in which poverty will be eradicated through a rapid and sustainable economic growth that benefits every citizen step-by-step should be set up.

The actions undertaken, to revitalize socio-economic institutions, redirect the economy in a forward path and put it in the right direction, within the period from 1992 to 2001, were not easy. During these years there were huge efforts undertaken to democratically decentralize governmental institutions and administrations, to bring the economy to market based capitalism from command economy, and change the economic policy, which was ravaged by ill-fit policies, war and natural occurrences.

As it can be remembered the transitional government, which took power from 1992-1995, in addition to bringing peace and stability and undertaking government structure and administrative improvements &reconstructions, it also made huge effort to bring about sustainable development by implementing medium term development programs. The consecutive economic improvement programs implemented during this period focused upon four basic principles.

The first focused upon revitalizing the economy that was ravaged by ill-fit policies, war and natural disasters, while the second has to do with creating a suitable environment for the economy by resolving, step-by-step, issues that has hampered the macro-economy health; a result of a command economy procedure and wrong economic policies (of the previous regime). The third focused on implementing human resource utilization and capacity building programs that would strengthen human resource and infrastructural development. The fourth had to do with taking administrative improvement measures that would help the implementation of the economic policy and the success of development programs.

From 1992 to 2001, the economy was able to record minor development by implementing the economy reform programs. In this period, real GDP of the country reached 17.4billion birr from 5 billion birr, with an annual growth rate of 5.1%. As this was more than the rate of the population growth of the country, it helped the rate of personal income increase. Although this growth is better compared to the 2% growth of earlier times, it fluctuated and can’t be said that it grew with the desired rate.

As the result of the rise in imported commodities seen during this period, the inflation rate which used to be 21% in 1992, fall to 6% on average in 2001. Though these measures helped get little growth and help put a stop from backward spiral, it can’t be said that satisfactory results were recorded with regards to realizing the production goal and help citizens get out of low living standards. So, before 2002, as it was found necessary for the government to change the development policies and strategies reforms, there was a need to formulate and implement a post-reform economic policy.

The post-reform Economic policy undertaken from 2002 to 2013 has helped the country record a rapid and sustainable growth. The reason for the success of this policy in recording rapid and sustainable economic growth has to do with the sound development policies and strategies formulated for the economic run. And the effort exerted by the government in its campaign to indoctrinate the public with these post-reform Policies and strategies, was huge. Although there was the situation where it implemented the post-reform economic policy and strategy through an all-inclusive implementation capacity between 2002 and 2003, the expected result was not gained due to lack of adequate preparation and the nation-wide natural famine that occurred in 2003. It was after his time that our country’s rapid and sustainable development start to gather steam. Since 2004, following the adequate preparation and the government implementing the policies and strategies it formulated, the economic growth was promoted to another level. For the last nine years, the government by: encouraging foreign investment, trying to dry rent seeking opportunities through cramming, taking part in sectors that won’t be done by the private sector, utilizing scarce resources on developmental works that can solve basic problems, strengthening public participation, encouraging private investment; it has been able to bring about rapid, sustainable and equitable economic growth and social development.  

By basing on the policies and strategies formulated Post-reform economic policy and strategy, consecutive poverty reduction programs were implemented starting from 2003. The first program is known as ‘Sustainable Development and Poverty Reduction Program’; it was implemented from 2003 to 2005. After the performance of the poverty reduction programs of earlier times were assessed, a second program known as ‘Plan for Accelerated and Sustained Development to End Poverty (PASDEP)’ was implemented from 2006 to 2010. The role these two poverty reduction programs played on the rapid and sustainable growth that was recorded was immense.

Of course these development programs were formulated in a way that is inclusive of the people from kebele to national level and international development partners. As it can be recalled each development plans had their own basic direction as they were formulated by taking local and international realities into account.

One thing that should be mentioned here is that, these poverty reduction programs have served as a benchmark for each other. The second poverty reduction program was formulated based on the first one, while the third one, the (Growth and Transformation Plan/GTP), was based on the first two programs. By executing the government policies and strategies that were implemented between the years 2002 to 2012, adequate economic growth was recorded. During this period, gross domestic product has risen from 10.5 billion birr (1992) to a whooping 506.5 billion birr in 2012. With this, our country’s economy has risen with an 11% growth rate for eleven consecutive years. What makes this achievement (growth) incredible is the fact that it’s recorded at a time where the world’s economy is in crisis and disarray, and also the fact that the rate was greater compared to all Sub-Saharan non-energy based economies. As our country’s economy is a big market and being encouraged by the conducive investment environment of the country, many local and foreign investors are operating in various sectors. If the ignited development is to continue with this steam, our country will have one of the largest African economies within few years; and many information points to this fact.

Rapid and Sustainable Change

For the last ten years, our country our country’s gross domestic product has risen from 8.2 billion American dollars in 2001 to 29.3 billion dollars. Compared to other Sub-Saharan countries and the world’s economy growth, Ethiopia’s economy is garnering basic change by recording huge economic growth.

While, the economic growth was better compared to the world’s average growth rate, which was below zero percent in 2010, our country also had the better economic performance. And it’s obvious that our country recorded this great feat through the success of the policies and strategies formulated by the government. The economic structure reconstruction and improvement programs taken before 2002, not only revitalized the economic activity, they have also put the economic growth; which was going backwards, in the right path.

Since it’s believed that stable microeconomics is important for sustainable economic growth, there were efforts to, within these years, harmonize fiscal and monetary policies, lower government budget deficit, tone the monetary flow with the country’s annual inflation rate, and improve the foreign exchange reserve. 

From the data gathered we can understand that the government was able to grow national product by giving attention to two major economic sectors (agriculture and industry), increasing the productivity and product of the farmers, and by facilitating the path for the private sector get involve in agricultural and industrial development sectors. In the post-reform program, as the government gave huge attention to the public infrastructure work and human resource development, the results gained were satisfactory. And I think the huge finance and skilled labor needed for road constructions, and for improving the electricity, telecommunication and clean water service did not hinder the works as primarily feared - as can be seen from the excellent results gained. As our country’s economy recorded double digit growth rate beginning from 2004, the country has been able to record rapid and sustainable development, making it the front runner from the three African countries that are economically on the rise. The economic development that’s garnered by our country has enabled to lower the number of people living under poverty line and benefit them step-by-step. Although the government during these years was able to already improve the people’s living conditions by making the development sustainable and gearing the country’s economy towards a market based financial system, it has only been three years since the government started to sternly execute to realize the goals set in the five-year Growth and Transformation Plan.

Within the period of the development plan, the economic growth recorded by the country has enabled the public, whether in the rural or urban areas, improve its living standards by benefitting them step-by-step. In addition to this, the number of ‘millionaire farmers’ has risen. The efforts put to transform the country’s agricultural-led economic policy to an industrial-led one, is commendable.

The rapid and sustainable growth is going with its momentum thanks to the joint huge effort exerted by the government and the people for the last ten years. With this, it can be said that our country has adequately performed in the first three year of the ‘Growth and Transformation Plan’.

There are many public infrastructure works being done on the three years of the development plan, and the efforts made top generate job opportunities in cities through Micro and Small Enterprises (MSE) should be mentioned. The economy’s development is guaranteeing rapid and sustainable growth and benefitting the public in major ways. With this, it was able to generate job opportunities for 4.1 million people nationwide.

As the efforts to increase productivity and production of the farmers are becoming hugely successful, it has enabled to create ‘model farmers’. And this will inevitably hasten the transition from agriculture to industrial economy. And the fact that the wide ranging developmental efforts taken by our country, both in the rural or urban areas, has improved public’s income cannot be debated. So, as many economic experts suggests, if the rapid and sustainable economic growth keeps up its pace, the country will be able to part of middle-income countries on the next fifteen years, as planned by the country. The growth has played a major role in increasing the coverage of social services that would help fulfill the public’s demand for basic needs like education, health, clean water etc … Also, according to recent International reports, from the point of fulfilling one of the Millennium Development Goals (MDG) which concerns with reducing the mortality rate of children under the age of 5, Ethiopia has been able to reduce 204 deaths per thousand live births per year in 1990 to 67/1000 in 2012. In other words the mortality rate is reduced by 67% (2/3rd of the rate).

Institutions under the umbrella of the UN like UNICEF (United Nations Children's Fund), WHO (World Health Organization), World Bank Group and the likes have all stated on their reports that the successful works done in the country for the last 22 years has led it to achieve the targeted developmental goals three years in advance.

The developmental FDRE government and the dedicated people of our country must take the credit, as both were able to achieve this grand feat by working hand in hand and closely. This achievement on one side has given happiness to the friends of our country, while also giving despair to the country’s enemies who claim that ‘there’s no development’. Most of all, I believe this is an indication to those who claim the Grand Transformation Plan (GTP) is  ‘too ambitious’, that the goals set by the GTP can actually be achieved.

Here it’s important to ask ‘what’s the secret behind this positive result?’ I believe we can raise many factors for this achievement: strong political commitment, great leadership exhibited by the Health sector, successful organization from the concerned stakeholders and the publics’ strong developmental will have all contributed for this success story. The other thing worth mentioning here is the government’s belief that creating productive people cannot be seen outside of creating healthy people. Also the government health program which is modeled around servicing the vast rural areas along with the urban–dwellers and the fact that the program gives priority to basic health services has contributed to the success.

The basic health services which centers on self-prevention have allowed the government to create people-based health system that is backed by professionals. It has set up one health posts with two female health-extension officers for 5000 people in every kebele. It has built one health station for every 25 thousand people. I believe on top of fulfilling the human and material needs, creating a serviceable attitude on the health professionals and the works done to make the service have a reach within the pastoralist areas, along with the effective work done with regards to fulfilling the Millennium Development Goals have all contributed to the success. Most of all, the positive impact the government’s lucid polices and excellent leadership; be it on the health sector or other developmental issues, had on this success story isn’t up for debate.


This is an implication that, this year like the other years in the past, our country will record 11.4% economic growth and the five-year ‘GTP’ will be accessible; just like FDRE Ministry of Finance and Economic Development Minister Ato Sufian Ahmed recent deliberation to the House of Peoples’ Representatives.

As it’s known, our country’s economy is led by the agricultural sector. And this has created a suitable condition to realize the efforts to transform the country’s agricultural economy to an industrial one, through increasing productivity. The government is pulling huge effort with its formulated five-year Growth and Transformation Plan to make the country an industrial nation and enter the in the list of middle-income countries; by keeping the steam of the economic growth of the last ten years.

                                                     The Outcome of the Growth


As any reader of this article can understand, the economic growth of our country was garnered during which the world is hit with financial crisis. The fact that at the time when the neo-liberal institutions were hit by huge loses and their governments went for subsidizing them, in a way that contradicts their adhered ideology, while our country’s economy showed no sign of regress goes out to show the soundness of the policies and strategies curved by our government and how much they benefitted the wider public step-by-step through their outcomes.

Thus, it should be understood that the same path (of the government) that has made the public beneficiary of the economic development is in play here when we talk about changing the lives of the government civil servants lives for the better as much as possible. I think the salary increment and benefits should be looked from this light. And this action of the government, which is aimed at increasing the benefits of the civil servants, will help the people get their deserved developmental fruits from the government.    

However, some greedy businessmen might make hike the price in correlation to the salary increment. Although, it was thoroughly studied by the government with regards to the salary increment not causing inflation, it should be noted and understood that preventing and controlling these greedy businessmen is the responsibility of every citizen. So, I believe we should all play our own role in identifying and reporting these entities to the concerned authorities in order to help the economic development not lose its steam and continue with its pace.