Monday, July 25, 2011

Inflation the drag on Growth and the potential REAL adversary of Five year GTP

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Strategic Challenges and Opportunities of the Horn 

Man made and natural disasters continue to challenge the cradle of civilization, the Horn and its neighborhoods.  Ethiopia is known to have governed itself for over 7,500 years of recorded governance in the region.  Ecological and human challenges to its survival are not new.  Yet each set of challenge brings with it new set of opportunities to think and act outside the expected norms,  as our perception of perspectives of the different types of norms itself is changing rather rapidly.  

The Ecological and Economic challenges facing the globe and the Horn particularly, demand creative and SMART (Specific, Measurable, Appropriate, Realistic and Time Sensitive) responses and strategies.  First let us understand the science of global climate change as well as our perception and perspective of the climate change as we know it today. 

Aging Planet and Climate Change!

Science is testifying with significant qualitative and quantitative evidence, that both the planet and Solar System are aging with resultant significant changes in the electro-magnetic waves and respective energy distributions that is generating relative changes in the global weather and ecosystem.  Waves of Energy movement in the earth's internal and external environment,  is understood to be the the source of rapidly evolving changes in weather patterns producing unpredictable seasons.  For example, Rivers flood in one sector of the USA, while another nearby sector region,  suffers from prolonged draught, the case of Mississipi and Texas is worth mentioning here. The same story can be repeated in other continents and the Horn is just a reflection of these developments where we have witnessed severe draught in the 1970s, 80s, 90 and now 2011. etc.

Managing the Ecology for sustainable development

Similarly, the Horn Weather patterns have been disrupted for quite some time now, making the usual seasonal agriculture even more difficult.  In effect demanding new tools and technology for an organized irrigation system that seeks to preserve some of the water from the rains and the rivers.  This demand has not been attended to for quite some time resulting in massive damages to the respective communities for quite some time.  Things are changing and the Nile Basin Initiatives is bearing some fruits.

The current Millennium Dam on the Nile and other Ethiopian Rivers is one of the  series potential set of positive steps,  if the hydro-electric dams have collateral irrigation systems developed , with supporting additional productive organic farming technologies..  Seeking to channel other energy systems such as solar, wind and biofuel is yet another opportunity to complement the current energy strategy. The Millennium Development Goals and Growth and Transformation Agenda can be seen from the larger scientific and global response to the changing Global Climate Challenges, etc.  

We cannot change the weather pattern, but can adapt and change the challenges in to new opportunities.  In short, the current series of draught, famine and social dislocation can be preempted and prevented and even converted to new opportunities of harnessing modern technology and productive farming, etc.

Opportunities of Millennium Development Goals and GTP

However, the current opportunities created in the region and Ethiopia in particular, by infrastructure development, successful implementation of the Millennium Development Goals as it relates to the ecology, energy, education and social security cannot be ignored.  At the same time, one cannot ignore the social upheaval created by draught, migration, famine and the series of uneducated youth in Somalia, Eritrea etc.,  continuously being taken advantage of by the global and regional terrorists such as AlQuaeda, Alshabia and AlShabab and their local representatives such as OLF and ONLF, etc., who continue to destroy all human and natural infrastructures. 

The recent rather ambitious ignominious plot of  Converting Addis Ababa into Bagdad by exploding the African Union Heads of State Conference, the largest African Open Market of Mercato  and the famous Sheraton Hotel in Addis, is now confirmed to be a factual information supported by evidence as documented by the recent  the UN Security Council approved report, that the OLF and AlShabia under the command of Genera Taeme Goitom of Eritrea was foiled successfully to the delight of the civilized world.

  Surprisingly, the Ethiopian experience is rather different.  More importantly, the growth and transformation agenda and the renaissance spirit of the youth, and the public at large in Ethiopia is a very powerful force that needs to be harnessed and focused on the immediate and long term challenges and opportunities for sustainable security and transformations.   Sustainable transformation in the face of impending famine and the worst terrorist attacks in the Horn continues to be the challenge of any viable government in the Horn.

Research and Option Apraisals should be based on Scientific facts

Unfortunately, the recent so called research or Risk Assessment by CSIS and Africom is not balanced, nor based on facts on the ground, or evolving realities.  Decision Science led Option Appraisals and Scenario Analysis  demands qualitative and quantitative research based on individual and focus group interviews, satisfaction surveys and productivity reports on differing Global Millennium Goals and AU Governance institutions such as NEPAD, IGAD, etc.  Local and regional as well as international partners such as AFRICOM, AU, UN and World Bank and IMF should utilize first hand information supported by  balanced second and tertiary reports.

Climate Change- challenge or opportunity?

The recent series of climate change and subsequent lack of rain, and cultivation has been the cause of a serious set of social and environmental challenges, where millions of humans and animals (cattle)  were decimated leaving a highly vulnerable society. One can remember 1972, 1977, 1985 and now 2011 as the more recent tragedies of Climate change in the horn.  Yes, we cannot force the rains to shower the fields, but we can protect the ecosystem from being decimated.  Yes, we can manage water shortage in a region where there are more rivers and lakes.  The Millennium Dam might be a potential solution, if used for irrigation as well as hydro-electric generation.  We can also use solar, wind and biogas, etc.   In effect we can convert our challenges in to opportunities by unleashing the creative energies of our youth and the people at large.

Win-Win Partnerships with local and international stakeholders!

Opportunities for Win-Win Partnerships with local and international stakeholders continues to be a new challenge and opportunity for the Horn.  The research generated by Africom, CSIS led Strategy Institutions need to be coordinated,  so that they can have a much more resilient and realistic perspective.  In the end it is all about perspective, perception and image we generate about each other.  We need transparent and accountable institutions that are fair  but realistic, intelligent but wise as what we say about each other can have serious repercussions in the immediate and long term future.  We have a choice to imagine the best or the worst, but it needs to be supported with facts and balanced analysis 

SMART strategies demand hard data!

Win-Win Partnerships need to be developed with appropriate perceptions, perspectives that are able to generate SMART  Strategies for sustainable security and good governance.  They need to be Specific, Measurable, Appropriate, Realistic and Time Sensitive.  Scenarios need to be realistic of the qualitative and quantitative information on the ground.  The process of collecting and analyzing data is important as the scenarios, option appraisals and policy decision options.  In the end we need to avoid Garbage in- Garbage out scenarios and use some critical intelligence to guide our communications.

Managing the climate and and the Market- & potential repercussions!

Whatever we do we should not blame it on the rain, but on our governance style and productivity of our creative people, that continues to wait for opportunities to be unleashed towards development, transformation of the economy.  The current global economy challenges where Europe and the USA are showing lack of resilience is a serious concern.  The 2008 Real Estate Speculators have not learned their lessons, as they are now moving to Food Price Speculations with disastrous results around the world.

Managing Demand and Supply

The recent report of the Ethiopian Central Statistics office summarized below,  is perhaps what Terence Lyons , and  Africom as well as IGAD and AU should be concerned about, as  the potential cause of security challenges in Ethiopia and the horn in general.  The food crisis is not just shortage but price control as well.  The current level of inflation  impacts the lives of over 100 million citizens and neighbors on a rather day-to-day basis.  The   welfare, security and wellbeing of all 100 million Ethiopians as well as the refugees and economic migrants from the neighborhood.  One cannot be sure about these inflations and their potential connections with local and international  Food Price Speculators, that initiated the 2008 Global Economic Crisis.

The Need Demand and Supply Interaction Model

Imagine the impact of such astronomical and growing inflation and the potential  economic insecurity, social disruption it leaves behind, if not addressed rather urgently.
We need to have a market governance structure that addresses the need of the vulnerable people, the demand of the market and its ability to supply the products within reasonable and affordable prices.  The recent Commodity Exchange Institution should come up with ways of matching need with demand and supply as well as facilitating efficient market system.  The SMART part of the the strategy, that is appropriateness and realistic scenario formulations is worth considering here.

Food Price and Market Stability

Food and market security is going to be the real challenge of Ethiopia's Growth and Transformation Agenda.  What is called root cause for all potential scenarios.  It is about basic necessities of life rather than the assumed differences in ethnic and political opinion of the citizens that is a challenge.  Draught creates food production shortage and subsequent increase in the need for nutritious food demand. The market on its own  is not good indicator of  parity, equity and managing accessibility when the supply side of the equation is under serious deficiency.   Managing the Market becomes as critical as allowing the Market to flourish in times of extreme deficiency and plenty.  I trust, that is when Developmental State or Interventionist Government that is led by qualitative and quantitative research is critical.

The statistics needs analysis!

Here is a brief data for The Ethiopian Central Statistic Office that should make all of us get concerned.  It needs to be looked at side by side with the emerging food insecurity,  for some 15 millions in Ethiopia,  and another 20 million in the Horn.  Such alarming statistics,  should be the foundation of analysis about security and well being and potential scenarios in the Horn.  This statistics need to be analyzed on its impact over time by credible institutions.  Compare this data and CSIS and Africcom Scenarios based on wishful evidence.  We need to balance the Qualitative and Quantitative Data at our disposal for a realistic interpretation of events and potential scenario predictions into the future.  In the end even Science demands balace towards an experiential that is tacit and explicit wisdom.

The Africom Study and Food Price Statistics 

Food Price Insecurity and inflation in the  end is  the real challenge of Ethiopia's economic and social security, not party politics or ethnic terror,  or  far fetched chaos and terror of Ethiopians against each other, as Terrence wants us to believe.  What is he thinking? I might ask. Does he and his colleagues think that  a nation of more than 7,500 years governance just disappears into chaos?  Why?  because of few loony liberation fronts and apocalyptic political prophets?  Surely we need to ask what type of   freedom, good governance?  

Can we demand transparency and accountability of these research papers to internal and external stakeholders is the real question.   The Freedom to Publish need to matched the need to be transparent accountable to all stake holders.  In the end security and sustainability demands due diligence and participation of all stake holders.

If in doubt, let Science trump Apocalyptic Scenarios!

 As a community and society in general and policy makers in particular we need ti demand for justification, rational reasons and most importantly scientific theoretical framework that can be challenged or supported with explicit and tacit knowledge or qualitative and quantitative evidence.  All our scenarios should be based on facts that can be measured, that are relevant, appropriate and realistic.  Within this framework, the recent CSIS and AFRICOM study in Ethiopia fails miserably and needs to be challenged fast before it becomes a reliable assumption for any future partnerships.

Apocalyptic Prophecies and the Emerging Realities

We need to challenge apocalyptic prophecies with science, facts and data.  Most importantly in line with Millennia of resilience and creative enterprises of the local population who in the end are the main stakeholders of their respective future.  The concept of Developmental State and Transformational Economic policies need to pay attention on such day-to-day developments and long term potential scenarios that the Africom team is forecasting.

Here is some interesting data to review and you can compare it with the series of communication posted below on Risk Assessment in Africa and the Horn in particular.
I challenge African Scholars and Scientists to review these reports and write your perspective or what should be Africa's Perspective.  The days of silence in the presence of potential calamity is over.  Write to Congress and President Obama and tell them to act responsibly and not allow the Global Economy to collapse due to their minor petty political differences.  Default is not acceptable and this President deserves respect as does the US and the Global Economy,  Let the Tea Party go back to school or we ensure they go back to the people and consult widely.

Surely, let us deal with this data seriously first, then analyse root cause analysis for effective solution scenarios based on facts and Decision Science protocol that promote qualitative and quantitative option appraisal strategies!  Any thing else is sheer apocalyptic and lunatic prophesies that need to be rejected by all.

I look forward to creative and alternative solutions and suggestions!


Inflation caused by Speculators and Apocalyptic Prophets of Doom?

Ethiopia’s Central Statistical Agency Report, June 2011 

Country Level Inflation Rate data. 

The report provides both the monthly and annual inflation rates of food and non-food items. 

Here are summaries and excerpts of the data in the report.


The June 2011 General year-on-year inflation has increased by 38.9 % in comparison to June 2010. Food items prices increased by 45.3 %, while non-Food items were priced 27.9 % more.
The major contributors to the General inflation rate were the price hikes in: Transport and Communication – by 44.6 %, Food – by 45.3 %, and Cigarettes and Tobacco – by 45.0 %
In the food category, the top three price hikes were observed in Coffee and Tea Leaves (113.3 %), oils and Fats (104.7 %), and Pulses (72.6 %).

The three regions which suffered most from the June 2011 General inflation are:
Benishangul Gumuz – by 49.6 % General inflation and 71.2 % food inflation
SNNPR (Southern Nations Nationalities Peoples Region) – by 46.5 % General inflation and 62.1 % food inflation

Oromia – by 41.2 % General inflation and 50.7 % food inflation
Inflation based on comparison of Current vs. Last year’s similar month at Country Level

Inflation rate Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11

Overall 7.3 5.7 5.3 7.5 10.6 10.2 14.5 17.7 16.5 25 29.5 34.7 38.1
Food 0 -1.6 -1.1 1.4 5.4 5.8 8.9 13.6 12.8 25.5 32.2 40.7 45.3
Non-food 19.8 17.7 15.6 17.2 18.7 16.7 22.9 23.7 22 24.3 25.6 26.3 27.9
[The graph and table above show Inflation rate based on last year’s similar month comparison.]

· The June 2011 General year-on-year inflation has increased by 38.9 percent as compared to the one observed in June 2010.

The 38.1 percent rise in General inflation rate is due to the fact that the General Consumer Price Index (CPI) of 253.7 percent observed in June 2011 was higher than the corresponding 183.7 percent General Consumer Price Index (CPI) observed in June 2010.

· The year-on-year Food inflation has increased by 45.3 percent in June 2011 as compared to the one observed in June 2010. The reason for the increase in the food Inflation rate was that the 274.0 percent Food Consumer Price Index (CPI) observed in June 2011 was greater than the corresponding 188.6 percent Food Consumer Price Index (CPI) observed in June 2010.

The total price index of cereals in June 2011 has increased by 33.4 percent as compared to similar month last year which significantly contributed to the rise in the indices of Food and the General Consumer Price Index.

Relative rises were observed in the indices of most of the components of food, especially, Teff, Wheat, Maize, Barely, Pulses, Meat, Butter, Coffee & Tealeaves, Pepper whole, Potatoes, tubers and stems and others in June 2011 as compared to June 2010.

· The Non-Food inflation also increased i.e by 27.9 percent in June 2011 as compared to the one observed in June 2010.

However, the data reveals that the rate of increase in prices of the Food components of the index has been at a slower rate than the one observed in May 2011.

Disaggregated data

General inflation rate disaggregated by goods/services – at national level

The June 2011 Country Level Consumer Price Index has increased by 38.1 percent as compared to June 2010. 

This increase in the General Consumer Price Index is attributed to the rise observed in the indices of:

  1. Food 45.3 percent,
  2. Beverages by 23.4 percent,
  3. Cigarettes and Tobacco by 45.0 percent,
  4. Clothing and Footwear by 35.7 percent,
  5. House Rent, Construction Materials, Water and Fuel and Power by 24.3 percent,
  6. Furniture, Furnishings, Household Equipment and Operation by 26.8 percent,
  7. Medical Care and Health by 11.5 percent,
  8. Transport and Communication by 44.6 percent, Recreation,
  9. Entertainment and Education by 27.9 percent,
  10. Personal Care Effects by 38.9 percent and
  11. Miscellaneous Goods by 12.4 percent .

Food inflation rate disaggregated by items – at national level

Most of the components of Food index showed increases as compared to similar month last year. 

  1. Cereals (33.4 percent),
  2. Pulses (72.6 percent),
  3. Bread and Other Prepared Food (19.0 percent),
  4. Meat (19.1 percent),
  5. Milk, Cheese and Eggs (38.3 percent),
  6. oils and Fats (104.7 percent),
  7. Vegetables and fruits (40.5 percent),
  8. Spices by (51.4 percent),
  9. Potatoes, Other Tubers and Stems (56.2 percent),
  10. Coffee and Tea Leaves (113.3 percent),
  11. Other Food Items (9.6 percent),
  12. Milling Charge by (11.7 percent), and
  13. Food Taken Away from Home (30.0 percent).

General inflation rate at regional level
Comparison of CPI Movements, Current vs Last year at Country and Regional Levels displays that the June 2011 Country level General Consumer Price Index has increased by 38.1 percent as compared to June 2010. 

This increase was attributed to the rise in the indices of its constituent regions:

  1. Addis Ababa 27.6 percent,
  2. Afar 35.2 percent,
  3. Amhara 34.5 percent,
  4. Benishangul Gumuz 49.6 percent,
  5. Dire Dawa 27.9 percent,
  6. Gambella 38.2 percent,
  7. Harari 31.9 percent,
  8. Oromia 41.2 percent,
  9. SNNPR by 46.5 percent,
  10. Somali 37.3 percent and
  11. Tigray 24.7 percent

Food inflation rate at regional level

The rise in the food index by 45.3 percent is due to the rise in the indices of the regions; namely:
Addis Ababa 22.8 percent,
Afar 33.8 percent,
Amhara 36.3 percent,
Benishangul Gumuz 71.2 percent,
Dire Dawa 32.0 percent,
Gambella 47.2 percent,
Harari 34.3 percent,
Oromia 50.7 percent,
SNNPR 62.1 percent,
Somali 42.3 percent and
Tigray 22.7 percent.
Changes: In the CSA’s document: the monthly data of May 2011 is stated as June 2011. It appears to be typo error. Thus, corrected in the graph and table above.

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