A Glimmer of Hope

For several reasons, the concluded Ethiopian 2014 fiscal year was one of the most challenging years for Ethiopia. This was mainly due to the war in the northern part of the country and the COVID-19 pandemic, which seriously disrupted the global supply chain. Global warming induced floods, drought, and the spread of swarms of locust that affected agricultural production among others.

Moreover, the Russia- Ukraine war has resulted in a chain reaction of global hyperinflation and exacerbated the global supply chain that has already experienced disruption due to the advent of the COVID-19 pandemic across the world. The skyrocketing of fuel prices and its resultant effect on high prices on food items like wheat and edible oil was a double jeopardy for Ethiopia.

Despite these challenges, unlike some countries whose economy has collapsed, the Ethiopian economy has performed well during the 2014 fiscal year by all indicators except in tackling inflation which is mostly induced by high import prices and exorbitant payments for logistics.

According to Prime Minister Abiy Ahmed, during the concluded the fiscal year the country has managed to earn nearly 20 billion USD, which is a record amount of foreign currency earnings from various sectors including services, exports, Foreign Direct Investment (FDI) and remittances.

The record earning registered during the year has clearly resulted from the implementation of Ethiopia’s Homegrown Economic Reform Agenda, which is a well-coordinated response and blueprint to propel the country’s economic progress.

The reform agenda initiated by the Prime Minister has managed to address key bottlenecks and design of adequate remedies, outlining macro-economic, structural, and sectoral reforms that helped to create more jobs and promoted inclusive growth.

In this article we are going to see some of the results earned over the concluded Ethiopian fiscal year.

Growth areas in the Financial Sector

According to Yinager Dessie, the Governor of the National Bank of Ethiopia, “Over the last four years, the bank has embarked on various policy reforms, which helped to address the bottlenecks and challenges lingering in the financial sector” Proclamations, directives, and other legal instruments were issued, and amended. Besides, exchange rate and interest rate were also among the major endeavors undertaken to improve the sector.” As a result, Ethiopia’s banking sector has registered remarkable growth despite the various challenges it has to face.

The banking sector has continued to register growth in asset, capital, deposit, loan disbursement, collection and other financial growth indicators.

The deposit of banks has reached 1.7 trillion Birr showing 26.7 percent growth.

Loan repayments have increased by 48.7 percent, Yinager said adding loan disbursements to the private sector have increased significantly.

Since the launching of TeleBirr, billions of Birr have been in digital transactions and is ever increasing. The bank’s data shows that the total capital of the banks has grown from 98.9 billion in 2019 to 199.1 billion Birr in 2022 with an average annual growth of 27 percent.

Moreover, the total assets of banks have ascended from 1.3 trillion Birr to 2.4 trillion Birr, registering 92 percent growth. Net income of banks has increased from 22.4 billion Birr in 2019 to 49.9 billion Birr in 2022, registering 122 percent growth, Yinager added.

The number of banks has increased from 18 to 30, and their branches grew to 8,944 from 5,564 four years ago. With the expansion of bank branches, the ratio of branches per population reached 1: 11, 516 (one bank branch serves 11, 516 people).

Besides, the number of deposit accounts has increased from 40.04 billion Birr to 83.3 billion. Hence, the total deposits, over the last four years, have increased from 899 billion in 2019, to 1.7 trillion Birr in 2022.

According to NBE, the banks have continued to operate in a safe and sound manner. The Governor also stressed on the need for strengthening advance preparation for opening the banking sector to foreign investors.

Currently, 29 commercial banks, one development bank, 18 insurance companies, one re-insurance company, 40 microbalance institutions, six Capital goods Finance/Lease companies, and eight payment instrument issuers/system operators are operating in Ethiopia.

Revenue Collection

Tax is a vital source of money for the government to fund public infrastructure, services, social development, welfare programs, education, salary, pension, border security among others.

During the last Ethiopian fiscal year, Ethiopia managed to collect a record amount of tax. The collected tax is over 336.7 billion Birr, which according to the Minister of Revenues has shown a 57.4 billion birr increment compared to the previous fiscal year. Minister of Revenues, Lake Ayalew told ENA that the Ministry has managed to collect 93.5 percent of the planned 360 billion Birr during the year. The revenue collected has shown a 20.6 percent growth compared to the same period last year.

Despite the shortfalls faced in collecting tax in regions like the whole of Tigray, parts of Amhara, parts of Afar and parts of Oromia, due to  security problems, a remarkable performance was registered.

Manufacturing

According to the Minister of Trade and Industry, Melaku Alebel, during the previous fiscal year high improvement has been registered in the manufacturing sector. The nation has earned over half a billion USD from the export of manufactured goods to the world market. The export revenue secured from manufacturing sector shows an increment of 110 million USD compared to the previous fiscal year.

The various reform measures carried out to address financial and human resource bottlenecks in the sector attributed to the revenue increment. In particular, the first four to five months of the fiscal year were challenging as the US government has delisted Ethiopia from AGOA, Melaku said.

In spite of these challenges, the government of Ethiopia has supported factories to improve their performance by 50.2 percent, which has shown an increment from the 43 percent capacity in the previous fiscal year. The Ministry has also supported 179 closed factories to resume production.

 Agriculture

Prior to the introduction of macroeconomic reforms, the performance in the sector used to show a diminishing trend. However, after the reform, economic activities in the sector, including exports, have scaled up. The Minister of Agriculture, Oumer Hussein said as a result of the relentless efforts made over the last four years, the nation managed to change the reality on the ground by addressing the various bottlenecks and lingering problems and the sector has started to pay off.

According to Oumer, exports of agricultural commodities are on the rise.  Export of coffee alone helped the nation earn 1.4 billion USD, which is a record in the country’s history.

Shipping quality coffee in containers has helped to increase net income from export of coffee compared to transporting in trucks to Djibouti port, which also helped to reduce contraband.

In a bid to improve the growth in the coffee sector, the government has helped farmers plant over three billion improved coffee seedlings in various parts of the country as part of the Green Legacy Project.

For years, coffee has been the major agricultural commodity for foreign exchange earnings for the country. However, Avocado is also coming. With the planting of plenty of avocado trees along with the green legacy project, avocado will be among the top agricultural commodity to provide foreign exchange earnings for the country.

During the concluded fiscal year, some 98 percent of the agricultural exports are sent via Djibouti in shipping containers that Oumer said helped to improve the quality of agriculture goods and minimize the loss through contraband.

Out of the total jobs created during  2014 fiscal year, some 43 percent was from the agriculture sector.

The Green Legacy Initiative

Trees help filter clean air, provide fresh drinking water, help curb climate change, and create homes for thousands of species of plants and animals. Planting trees can help to reduce the loss of biodiversity. By restoring and conserving critical forests, we can manage to remove a huge amount of carbon from the atmosphere and support biodiversity.

Realizing this fact, Ethiopia has managed to plant 25 billion trees in the last four years, surpassing the target of 20 billion trees.

According to Prime Minister Abiy Ahmed, the success of Ethiopia’s Green Legacy initiative is a national showcase.

At the turn of the century, Ethiopia’s forest coverage was more than 40 percent. However, through the years it has dwindled to less than 4 percent. Due to the successive tree planting campaigns over the years, the national forest coverage has now reached above 15 percent, which is indeed encouraging.

Ethiopia’s Green Legacy Initiative has encouraged countries around the world to follow suit. According to Weforum.org, Ethiopia’s planting of billions of trees has encouraged countries like Pakistan, India and China to engage in similar initiatives.

Ethiopia’s success in tree planting has also been a lurid headline around the world multiple times, including on western news outlets.

Conclusion

Ethiopia has managed to register several commendable results in various sectors including infrastructure development among others. The aforementioned performances registered during the 2014 Ethiopian fiscal year demonstrates the fact that the country is heading in the right direction.

The State Ministry of Finance, Dr. Eyob Tekalgn, sums it all up, ‘‘over the last few years our enemies have engaged us in internal war, intending to keep us away from planning and executing development projects, to deny us  the prosperity to which we wish to strive. However, even in the darkest of times, we manage to plan, execute and deliver results’’

Source: Ethiopia News Agency