Economic growth in Ethiopia accelerated from the mid-2000s onwards from an average of 5% per year and has now reached double digits, mainly due to very strong growth in industry (12% of GDP) and services (accounting for 45% of GDP). The average annual real GDP growth rate for the last decade was 11%. Agriculture (accounting for 43%) is not growing as fast but the sector’s performance is healthy and can be sustained due to the movement towards commercial agro-industrial activities, improvements in infrastructure (energy grids and roads) and the strengthening of markets. Growth will continue to be strong but a modest slowdown is likely, due to continued weak demand by the main trade partners, foreign-exchange shortages and related constraints in the private sector. State-led development may not be able to sustain the previously experienced levels of growth. The Economic Intelligence Unit’s October 2014 Country Report forecasts a 6% to 7% real growth rate annually up to and including 2018.
According to Oxford University’s Global Multidimensional Poverty Index, Ethiopia is one of the poorest countries in the world. Growth needs to be more inclusive and more broadly based in order to alleviate poverty. It is, however, one of the world’s fastest growing countries and has been hailed as a trendsetter in Africa for social protection and productive employment policy and practice. For example, the World Bank (2012) reports that both rural and urban poverty have decreased due to Ethiopia’s good economic performance. In 2004-2005, 39% of the population lived in extreme poverty, as measured by the national poverty line, and by 2010, this had decreased to 30%. The target of the Growth and Transformation Plan (GTP) is a further reduction to 22% by 2015.
All Ethiopia’s ministries have streamlined their policies in accordance with the objectives of the Growth and Transformation Plan and the National Employment Plan. A National Employment Council, chaired by the Minister of Labour and Social Affairs and made up of the major ministries and decision-making institutions, was set up and entrusted with coordinating employment supply and demand, as stated in the National Employment Plan. The ministries are major contributors to the implementation of the Productive Safety Net Programme (PSNP), Ethiopia’s most important social protection and productive employment programme that focuses on the three pillars of social welfare, economic growth and political stability. It is important to note that the implementation of PSNP (and PSNP Plus) is not uniform, with each federal state adapting it to its own local conditions. While the grassroots of the processes – from conception to implementation and evaluation – are politically centered, the programme cascades from the national level through to the nine states and Addis Ababa to the lowest level of local government (the kabele). Although it can be described as top-down, the process is characterized by considerable freedom of participation at the local level.
With parliamentary elections approaching in 2015, INCLUDE is keen to monitor these processes closely and support them as effectively as possible in the coming few years.
Visit the African Studies Centre’s Country Portal for a list of free internet resources and other information on Ethiopia.