Tuesday, April 05, 2011

International Perspective of the Growth & Transformation Plan of Ethiopia

Global Strategic Enterprises, Inc for Peace and Prosperity- www.globalbelai4u.blogspot.com

Prime Minister Meles Zenawi

Ken Ohashi, country director for the World Bank for Ethiopia and Sudan

Gu Xiaojie, ambassador of the Peoples’ Republic of China

Thomas Staal, mission director USAID.

Antonio Sanchez-Benedito Gaspar, ambassador for Spain.

The Growth and Transformation Plan (GTP), after being presented to various 
sections of the public during the last two months, was finally
 presented to international development partners for two days of
 discussions, beginning Wednesday, September 29, 2010.
Prime Minister Meles Zenawi and high government officials had
 been holding back-to-back meetings with the public all over
 the country, especially during the heyday of the announcement, 
presenting the logic behind the five-year plan, which sets 
ambitious goals across sectors, and fielding questions.
Almost two months after Sufian Ahmed, minister of Finance and 
Economic Development (MoFED), announced the plan on
 August 5, 2010, international development partners  finally
 got the chance to review and comment on it.
“We specifically scheduled the meeting with international
 development partners at the end because we wanted to present
 it to the public first,” Sufian said during the announcement.
This was contrary to previous development plans of the country, 
where donors were consulted ahead of time and the public was 
almost never consulted, at least not on the scale seen in the last
 two months.
The Amharic version of the draft of the widely circulated GTP was
 translated into English and made available to development 
partners on Wednesday, with Mekonnen Manyazewal, state
 minister of MoFED presenting it. The next day, Meles attended 
the meeting, where he also fielded questions from international 
development partners, including ambassadors and representatives
 of donor agencies.
The plan was ambitious but achievable, Meles admitted, as 
with every meeting held with stakeholders on the GTP from the 
very beginning. International development partners showed their 
support for the plan and forwarded their questions to the Prime Minister.
Although the plan, which maps out the macroeconomic future of the 
country, envisages growth in agriculture and industrial sectors 
as well as in infrastructural development, it does not include plans 
for capital markets, such as a stock exchange, or the country’s 
accession to the World Trade Organisation (WTO).
The lack of the mention of stock markets was pointed by Antonio 
Sanchez-Benedito Gaspar, ambassador for Spain, who asked Meles 
if there were any plans for one.
At the current stage, there is no need for a stock market in the country,
 Meles, often weary of the topic, maintained.
“Although the government is not against a stock exchange system in 
the country, its primary focus is on developing the banking 
system,” Meles responded. “Developing the commodity exchange of
 agricultural products in rural areas is another area of focus.”
The National Bank of Ethiopia (NBE) recently made a move to replace 
its manual clearing and payment systems with an electronic clearing system,
 due to come online in June 2011. It also ordered commercial banks to 
implement centralised, online, real-time, electronic (CORE) banking systems
 to enable them to do business with it after its upgrade.
This was seen by some industry observers as a step in the direction 
of allowing capital markets.
If banks are interconnected, not only does it facilitate transactions and
 strengthen their customer base, it also allows for a mechanism to 
determine share values, they believe.
The strengthening of banks and the consequent adaption of technologies
 that support them will make them more competitive, even if foreign 
banks are to enter the market.
The need to liberalise banking is one of the major criticisms levelled 
at Ethiopia in its bid to join the WTO.
“The role of accession to the WTO is missing in the plan,” remarked 
Thomas Staal, mission director of the United States Agency for 
International Development (USAID), during the meeting.
However, since the country is already in the process, it was not
 highlighted in the plan, Meles replied, without denying the importance 
of accession to the WTO.
Ethiopia applied for membership in the trade organisation back
 in 2003 and is currently undergoing negotiations.
What is highlighted in the plan, however, is the doubling of agricultural 
output, the doubling of the economy, and massive infrastructure 
development in the next five years.
The enormity of the goals set by the plan has drawn the concern and 
critiques of the public at large, as to the viability of their accomplishment 
within the allotted time. This surfaced during its meetings with the Prime 
However, despite the ambitious nature of plan, it is doable, Meles 
reiterated in the meeting with international development partners,
 just as he had previously done with the public, citing a similar 
scenario in the previous five-year plan.
The previous Plan for Accelerated and Sustainable Development to
 End Poverty (PASDEP), also had some ambitious goals but was 
accomplished remarkably well, the English copy of the GTP states.
China is ready to share its experience with Ethiopia, said Gu Xiaojie, 
ambassador of the Peoples’ Republic of China, recognising the 
achievements of the PASDEP.
The Chinese government has already agreed to work extensively 
for the transformation of the technology used in manufacturing 
and infrastructure in Ethiopia, Meles revealed, publicly welcoming 
the support of China.
Whether in the previous plan or in the new GTP, few have denied 
the overall pace of economic development, thus far.
In fact, the pace of the country in economic development is as fast
 as its athletes on the track, commented Ken Ohashi, country 
director for the World Bank in Ethiopia and Sudan, drawing smiles 
and laughter from the audience. However, Ohashi also commented
 on the transaction costs that are being incurred due to inefficiencies,
 impairing trade and making the comparative advantages that the
 country has to offer pointless, he said.
There is a need to decrease the transaction costs, Meles admitted,
 but the agricultural products of Ethiopia have not lost their advantages
 and are being sold in international markets, he defended.
The actions that are being taken by the government to address the
 problem include improving rural and urban roads and creating 
easier access to international markets for farmers through the devaluation
 of the Birr, according to Meles. He also cited the improvement of 
network infrastructure and privatisation as a means of achieving efficiency.
Meles pointed out France Telecom’s takeover of the 
management of the Ethiopian Telecommunications Corporation (ETC), 
which the government is in the final stages of negotiating, as an example
 of that effort.
One of the things that the company is expected to do is to build capacity 
in the sector, after which they will return its management to locals.
 If this is found to be successful, the same approach will be implemented 
in the power sector, according to Meles.
Another member of the World Bank, Espen Villanger, senior economist 
at the Ethiopian office of the World Bank, raised the issue of the 
role of women and job opportunities.
“My concern is that Ethiopian women are at a disadvantage, especially 
in the economic sector,” he said.
He backed up his argument by citing the National Labour Force 
Survey that was done by the Central Statistical Agency (CSA) in 2005. 
The unemployment rate for women in urban areas was three times 
more than men, and there was a 50pc wage gap between them for 
the same work with similar educational backgrounds, it stated, which 
was much higher than most countries.
“What is worrying about the situation is that there are many young 
people coming out of higher education institutions with few job 
opportunities to accommodate them,” he said.
If Ethiopia achieves equality in terms of wages and education, its economy 
would grow faster by more than two per cent, a World Bank team of experts
 found, he said.
“Although it is true that we need to do more on this issue, the figures 
mentioned are a very good incentive to enhance the role of women in 
the economic spectrum,” Meles responded.
The World Bank recognises the government’s work so far, but it needs 
to exert additional effort, Espen told Fortune.
He emphasised the necessity of focusing on micro and small enterprises
 (MSE), the road the Ethiopian government has taken. This is the key
 solution to alleviating the problem, as there is no way that the growth
 of formal jobs will satisfy the demand side, and the World Bank will 
support this move of the government, he said.
The government also plans to increase the savings habits of the country, 
which it considers very minimal when calculated as a percentage of its 
gross domestic product (GDP).
The plan is to increase domestic savings to 15pc of the GDP by the end 
of 2015, which, in effect, will support the huge demand for the country’s 
investment, the Prime Minister said.
To this end, the government has plans to introduce new savings instruments
 like social and health insurance schemes and savings bonds that target
 locals at home and the Diaspora abroad.
Also, as one of the pillar strategies, capacity building in the next five years 
will focus on the justice system, especially at the prosecution, police, and
 prison levels, Meles said at the meeting.
The PM finally promised to consult and engage development partners 
at the implementation stages of the GTP.
“The GTP is achievable, I think, but everyone in the government, donor 
agencies, and the private sector have to contribute as much as they 
can,” the senior economist at the World Bank, told Fortune.

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