Ethiopia seems to be attracting the attention of economists interested in Africa, and for good reason. Except for Rwanda, Ethiopia is the only African country whose economic growth has been consistently high for more than a decade without relying on a natural resource boom.
Between 2004 and 2014, per capita growth in Ethiopia was 8% per year. This was the highest on the continent during this period, and is impressive by any standard.
The international community is lending a helping hand to Ethiopia as a devastating drought affects over 10 million people, according to Voice of America. Six million children face hunger, with 435,000 at risk of severe malnutrition. Ethiopia will need $1.4 billion in aid in 2016 and additional funds for next year. Officials ordered the drilling of wells to counter the effects of the drought.
The World Bank advises that Ethiopia should look for new ways to finance public infrastructure projects, according to Reuters. Public spending grew the economy over 10 percent for the 2014/15 fiscal year, but the government carried a heavy debt burden in the process. The World Bank suggests increasing taxes, boosting domestic savings, and involving the private sector as viable alternatives.
For those who remember commercials from the 1980s and 90s featuring starving Ethiopian children and asking viewers to contribute in order to buy them food, the explosive growth in Ethiopia may seem nothing short of miraculous. However, that growth and development has continued for a prolonged period, and modern Ethiopia now has fewer issues with starving citizens and more concerns about modernization.
In the 1980’s, television shows featured constant interruptions by celebrities asking for donations to feed the starving in Ethiopia. Beset by famine, drought, and civil war, Ethiopia was a hell on Earth with no meaningful plan for development. Fast forward to today and Ethiopia is a country that has experienced sustained growth at a rate of slightly more than 10 percent per year. The change is so great that some have even called it an “economic miracle.”
Astounding Growth at a Cost
The Ethiopian economy has made significant headway in such sectors as infrastructure, energy and agriculture. The East African country hopes to get away from its poverty-stricken image.
When it comes to developing markets in Africa, Ethiopia is a primary competitor. Ethiopia’s economy has grown at an annual 11 percent, which is over double the rate of other nations in sub-Saharan Africa. Ethiopia’s expansion efforts attracted investors for long-term business, creating job opportunities for many locals.
Ethiopia Connects to the World
Ethiopia is a lower income economies coming under Sub Saharan African region as to the classification made by the World Bank on the basis of income and region for the year 2006.
The economy of Ethiopia largely depends upon the traditional agricultural sector, which constitutes around 50% of the total GDP. Agriculture accounts for 80% of the total employment. The Government has undertaken some reform process for the state by privatizing the state enterprises.
Sadly, the economy of Ethiopia has been devastated for a long time. The people of this country rely on sectors for agriculture, fisheries, and farming, with these accounting for almost 60% of the Gross Domestic Product. In fact, these sectors supply jobs for 80% of the labor force. Because this part of the world has been dealt with extreme drought, all sectors have struggled.
