Mr. Minister could you please give to our readers, a brief picture of Ethiopia socioeconomic development?
As you know, Ethiopia in the last few years has been known as one of the poorest country in the world, which was mainly caused by 30 years of civil war. Ethiopia had 3 distinct pictures at the end of the war.
These were: a country that has been in war for a long period of time, its repetitive draughts and a socialist oriented government. There were economic disorders and disabilities.Ethiopia was seen as a country that can not feed its people, that was continuously helped, that was experiencing malnutrition, and budget deficit. So in every economic measurement, a total crisis was present. The other problem faced was the misplaced 500 000 Ethiopian soldiers. We had to stabilize them and give them temporary shelter. Actually, we succeeded in creating peace and stability. The remaining issues, are yet important matters to discuss.
What are the measures and efforts taken to mitigate the economic problems and look forward to development?
As the first thing was to be able to design the development, we came up with a sound and systematic development strategy. Our strategy was the agriculture dense industrialization, which concerns strictly our rural development. For us, the rural sector is the one that employs 85% of our population, that prevents malnutrition, that provides food for our people, raw materials for exportation and resources for our development. Therefore, we believed on emphasizing the rural development, to be able to change the light of socialism. I think, we will have a better chance, if we manage to change our agricultural sector, which are about 50% of our domestic product. Additionally, if our agricultural industrialization is a success, the requirement of investment to increase the out put of agriculture will not be high. Our second strategy, was to be able to put in place the economic reform program. As I said earlier, during the Derg regime, there were obscure policies, that needed to be changed. During this period, prices have been highly regulated and everything was centralized. In 1992 wee were able to install, our economic reform program with the assistance of the World Bank and the I.M.F. We stabilized our economy through the exchange rate adjustment. As our exchanges were very highly overvalued we had to re value them by over 142%. In the experience of many 3rd world countries the amount of the exchange rate is very difficult to be certain with. Therefore, we had to put in place different sector policies and programs. But the infrastructure of our economy is still jeopardized, because we have not enough roads and the road network is very limited. Compared with our population, we have indeed the lowest road density in the world. About 70-75%, of the population has to travel half a day to reach the roads. There are not enough roads to take the output of the farmers and provide them the needed inputs. Taking this into consideration, we have planned to spend 3-5 billion and 50% of the national budget for the maintenance and upgrading of roads. As you can see, we wish to change the agro-area and the rural life of this country. Therefore, we welcome all major contractors coming from outside to build and upgrade our roads. Our job will consist in preparing tenders, signing and administrating contracts. We have built our management capacity. Our projects are financed from 3 sources. Theses are, the world bank ($ 700 million), the European Union and our government (30-40% loans). We have a plan of ten years for road development. Thus this year we are planning to give over 2 500 km for different foreign contractors.
Q. But don't you agree that there is still a need of foreign investment in this area?
Yes, there is. However, as our economy is very poor, foreign investors who come into the road sector may not benefit much. This prevents private investors to take serious interest in the road sector. At the moment, our economy is not that responsive but we believe this will change in the future.
Are there any foreign investors involved in the road sector?
Yes, there are. But there are still coming in as contractors not as investors. A company from Spain has already started constructing the road from Addis Ababa to Awassa, which is 275km. In the coming 2 or 3 weeks the same company may be awarded another road from Addis Ababa to Jimma that is 335km. Additionally, other European countries, have completed a road construction from Addis Ababa to Weldiya, that is 500km. All mentioned constructions are being financed by the European Union. The important roads that still need to be constructed are the ones that go from Addis Ababa to Gondar, from Weldiya to Webero (Tigray region) and from Addis Ababa to Mile, that is about 466km. After 10 years, if we go according to our plan, only 25% of our population will be 6 hours away from the roads. The other significant matter in Ethiopia is power generation. Eventhough we have the potential of 30 000 megawatts from hydroelectric, we are only generating 360 megawatts. If we were able to generate this high potential electricity, we could even have exported it. Additionally, only 10% of the population have access to electricity. In this issue the government has planned and has already put in place a policy, that allows the involvement of foreign investors. There is a high potential and a great demand for electricity. Investors should take interest and invest on generating hydroelectric power and sale it for the distribution to the government. We have planned to increase the total generation distribution and transmission capacity by over 200% in the coming five years. For this, we have kept aside $1-2 billion, and we have already started to construct a hydro-electric generation power, by the name of Gededile. It will generate 180 megawatts. There are also some two other big hydroelectric generation projects that will be constructed in the future. These are the Tekeze (North) and Gojeb (South). A program of rehabilitating the existing hydroelectric power generating skims is also planned. Furthermore, we are thinking of other thermal energy potential that might be a new other area for investment.
| It's true that in Ethiopia there are a lot of potential and opportunities. But what has to be done to make the country more visible and attractive to foreign investors?
This is an appropriate question. Some might be interested on power generation investment, while other might be interested on export services or other industries. The most significant attractive instrument for foreign direct investors is the availability of the infrastructure. Therefore, before concentrating on attracting forms, we should be able to provide the basic necessities. For example, let's take foreign direct investors, attracted by agriculture sector investment. If we do not have power on that specific area, or any other necessities in place, whatever tax benefits we may provide, the absence of these will definitely affect their investment. From what I know, the benefit we are providing for foreign investors is good enough to attract many of them. What remains is having the right type of investment. We are concentrating on power expansion, on health development sector and on education program, because we believe, these are the most important areas for development. Our first process is to mobilize foreign grants and loans for the investment program. Secondly, it is to prepare the development programs and policies, and make proposals for implementation. Additionally, we prepare budgets for the investments of the country. The other important issue, I have not elaborated yet, is the food security program. In this country, as I have said it earlier, we have been importing food for our population for the past twenty years. While putting our agricultural development in place the first thing we did was to be able to put a package of agricultural development. The regional states are taking the lead in this program. We are providing farmers: fertilizers, variety seeds, credit and extension programs. This extension program had the aim of teaching farmers, how to saw their seeds, how to prepare their land and how to harvest. When this program started participants were very few, but later on, we witnessed a great increase. We have benefited from this program. This year and the year before we have managed to produce food that was beyond our assumption and we are even prepared to export. While saying this, we do not mean that our whole population is food secured. Production of food and access to it, are two different things. At the moment, only 40-50% of the population are secured. We have put in place this program in order to create food access for every one. The framework was presented to our consultant and approved by the donors. Primary, we will take into account the people living in dry places. We will then concentrate on teaching them to generate employment, that will lead them to access of money and food. Apart from this, we will continue in sustainable food production. So when I say that the production of food was high, it is in terms of calculation of calories. It is true, that what we have produced could have been enough for all of us but the access to food supply is limited. For this, the food security program main aim will be accessibility.
Mr. Minister as a personal issue what has been your satisfactory achievements?
During the transition period, I was deputy minister of defense. By profession I am an economist, I have done my studies here in economics. For my second degree, I went to the Netherlands where I studied economics policy and planning. At the beginning of 1992, I was in charge of administration and logistic in the ministry of defense. As it was an institution who had been taken too many resources during the previous regime, my task was to put it in shape. Then, I moved to the ministry of revenue. Finally, in 1995, I came here to my actual place. I can say, I was part of the development process. It is true that it is not very easy to pull up a country that is so poor and highly populated (60 million people). The country also shows a low capacity because of the previous civil war. But, through all this, the development process has been clear. When we started this issue, we had planned 3-4% of growth. Fortunately, in such short time, in 1995 we reached 7% of growth. This achievement reveals that we are on the right truck. The other very convincing achievement is the right and the will to discuss matters, everyone is free to suggest or object. The public has build confidence on our leadership. We had also achieved good relations with our neighbors, until last May when we had our conflict with Eritrea. With these combinations, even though there has not been any dramatic change, surely there is a great improvement in every standard. However, with all these continuous efforts, we still remain the poorest country. We believe that, we will soon succeed in our efforts.
As a final issue what will be your final message to our readers?
We recognized that we must involve the private sector in our development. The message I have is particularly for private sectors. In terms of investments, there is a tremendous opportunity in Ethiopia, starting from our local market. Even though we are not that rich, and have 60 million people, the consumption potential is very good. Also the absence of infrastructure is being abased. Furthermore, we are a member of C.O.M.E.S.As being near the gulf and Europe, any exporter willing to invest will not have difficulties of market. The other important matter is our cheap labour that can be considered as an advantage. Any help will be granted not only by our words but by other international institutes. There is a guarantee of investment from the world bank and we are one of the signatories of MEGAdditionally, we have signed agreements with bilateral countries to protect individuals' investments. I would then say, no one has a serious problem to worry about and the private sector can invest with confidence. |
