Gear up for the Long Haul

November 8, 2011

By Messay Kebede

Professor Messay Kebede

What I have grown to dislike is the reading of articles predicting the imminent collapse of Meles and his regime. Often written by people who sound serious, the articles affirm, with a nauseating regularity, that the regime is on its last legs without, however, giving any evidence supporting their prediction, except the state of generalized dissatisfaction of the Ethiopian society. Recently, the tendency to predict has reached a new high owning to the expected domino effect of the Arab Spring, as though some similarities were enough to cause a momentous event as the overthrow of a political system.

ABAY DAM

GRAND ETHIOPIAN RENAISSANCE DAM (THE ABAY DAM) .

Ethiopia has been one of the poorest countries in the World. Above all, the population explosion is amazing. The population of Ethiopia is currently 91 million and Ethiopia is the 13th largest country in the World in terms of population. (See The World Fact Book, July, 2011). Since Ethiopia has the 8th fastest population growth rate in the World, the population of Ethiopia will reach 200 million people in just 25 years, becoming the 9th largest country in the World, surpassing Russia and other countries. This being the case, one of the ways to tackle population explosion is through economic development as in the case of China and India and the Abay Dam is one of the major sources of economic development.

ETHIOPIAN AIRLINES

Ethiopian Airlines is one of the largest and most profitable carriers in Africa. It has 34 aircraft on order, including 10 B787-8s with a network of 56 international destinations and 17 codeshare partners.

It plans to join Star Alliance and in 2010 had an operating profit of ETB1.6 billion (USD92 million). Ethiopian has forged a successful path for its expansion plans and has come a long way since its beginnings as a joint venture between the Ethiopian Government and Trans World Airlines.

The carrier has set an ambitious, but realistic, 15-year strategic plan that includes becoming the single largest airline in Africa. It intends to generate revenues of ETB171 billion (USD10 billion) per year, acquire a fleet of 70 aircraft and improve its Skytrax customer service ranking from three to four stars.

If successful, the plan would make Ethiopian Airlines the largest and most profitable carrier in Africa.

The 2011 Legatum Prosperity Index

Ethiopia’s economy faces severe challenges. Inflation runs at over 8% and the gross domestic savings rate is only 4% of GDP, comfortably placing Ethiopia in the bottom 30 of the Index on the latter variable. The unemployment rate is almost 21%, which is the sixth highest rate, globally**. Ethiopia places 69th* in terms of affordability of food and shelter, and only four out of 10 people* are satisfied with their standard of living, which places the country 91st in the Index on this variable. Only one in three* people believe that job market opportunities are improving, although the average citizen believes that general economic conditions are getting better*; the country ranks in the top half of the Index with respect to economic expectations. This is consistent with an average increase in GDP per capita of almost 8% annually between 2005 and 2009. There is, however, limited potential for additional growth: capital per worker in Ethiopia is the fourth lowest worldwide, and the country places 76th in terms of market size. At 4%, the proportion of manufactured exports that come from high-tech sectors is very low and non-performing loans account for over 5% of total bank loans. The fact that less than half* of Ethiopians have confidence in the country’s financial institutions, reflects this. However, more positively, the country is attractive as a destination for foreign direct investment. No data on self-reported employment were available.

Ethiopia - The 2010 Legatum Prosperity Index

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