Ethiopia in 2030 Prediction Based Off 12 Key Areas.
For the past 20 years, Ethiopians have relied on the principal port of its neighbor Djibouti
for their foreign trade.
Ethiopia will be able to once again access the Eritrean ports of Assab and Massawa thanks
to the new peace agreement with Eritrea.
The nation is also looking into other options, such as Berbera, Port Sudan, and Lamu, in
addition to the possibility of developing the southern corridor via Dewele to reach
Djibouti.
With a gross national income of 890 dollars per person, Ethiopia is clearly a low-income
country.
Now let’s look at how Ethiopia & Ethiopians will rise to be a middle-income country by
20 30 and some challenges they might face along the way.
Ethiopia's economy has had some of the world's quickest growth during the last 15 years.
Growth was driven, among other things, by capital accumulation, particularly through
investments in public infrastructure.
Due to COVID-19, real gross domestic product growth in Ethiopia slowed down in the 20 20
fiscal year and more in 20 20 20 21 fiscal year, with industry and service growth slowing
to single digits.
The COVID-19 pandemic had little impact on agriculture, where more than 70% of people
work, and its contribution to growth slightly increased in the 20 20 20 21 fiscal year compared
to the prior year.
12-Positive trends in poverty reduction have been observed in both urban and rural areas
over the past 10 years as a result of the consistently high economic growth.
From 30% in 20 11 to 24% in 20 16, the percentage of the population living below the federal
poverty line declined, and over time, human development indices also increased.
Gains, however, are small in comparison to other nations that saw rapid growth, and inequality
has grown recently.
Based on the 20 19 Home-Grown Economic Reform Agenda, the government has unveiled a new
10 Year Development Plan that will run until 20 30.
The goal of the plan is to maintain the impressive growth that was attained under the preceding
decade's Growth and Transformation Plans while easing the transition to a more privately-driven
economy.
Additionally, it intends to boost productivity and competitiveness in important areas that
support growth, enhance the business climate, and deal with macroeconomic imbalances.
But in order to reach its development goals, Ethiopia must overcome its current challenges.
11-The key issues facing Ethiopia are sustaining its good economic growth and speeding the
decrease of poverty, both of which call for considerable advancements in job creation
and stronger governance to ensure that growth is equal across the society.
The government is investing and funding pro-poor programs with a significant portion of its
budget.
The cost of pro-poor programs will continue to be mostly financed in the short term by
large-scale donor contributions.
Ethiopia has been dealing with the COVID-19 pandemic's enormous social and economic effects,
just like the rest of the world.
While jobs have been recovering and exports and foreign direct investment have recovered,
certain long-lasting scars are probably still present.
Urban employment levels haven't entirely recovered, some households and businesses are still reporting
revenue losses, and estimates place an increase in poverty.
10-Food security is threatened by frequent extreme weather events, long-term effects
of climate change, and pastoral livelihoods.
The country's southern and eastern regions will be badly affected by the greatest drought
in forty years, which will affect 7 million people.
Since November 20 20, there has been an increase in the frequency of war, especially in the
North, which has had a significant negative impact on infrastructure, way of life, and
human life.
The one and only major factor that has contributed to Ethiopians' famine for the past 50 years
is a repressive government that is unconcerned with the needs of its citizens.
The Ethiopian People’s Revolutionary Democratic Front did the opposite.
Surprisingly, despite its growing authoritarianism, the government's drought relief programs have
not yet been jeopardized, and neither have food insecurity and hunger.
Examples include the crackdown on the opposition in 2006 and the harsh, security-led response
to widespread protests in 20 16.
The government's relief effort appears to have garnered some grudging acceptance from
the populace, but not overwhelming support, which is the other side of the coin.
Famine prevention must be a part of a democratic process if it is to become a real social-political
contract with the people.
That is not taking place.
The repressive shift, however, raises concerns due to both its own nature and the possibility
that the leadership would back away from its commitment to preventing famine.
This commitment is, of course, only as strong as the leadership's historical assessment
of the political and national security risks posed by famine.
There are no additional assurances.
There is a need for vigilance even though policies that prevent starvation have not
yet been abandoned.
9-Ethiopia has recently been caught up in a political revival enthusiasm and a resurging
optimism for its future.
Most significantly, a protracted battle has come to an end thanks to the recent peace
agreement with Eritrea.
Free movement of people and access to Eritrean ports might open up a lot of commercial prospects
for both nations.
As a result, this is the ideal time to get together and talk about ways to boost the
non-farm rural economy of Ethiopia.
Creating equitable and sustainable jobs for a population that is expanding at a rate of
two million new employees per year remains a serious task for the nation.
It will take further education and training improvements, continuous legislative and regulatory
reforms, particularly in the agriculture sector, as well as increasing efforts to promote innovation
to get over structural limitations like land scarcity.
8-The government has mostly focused on industrialization as part of its job development plan up to
this point, but in order to address the employment crisis and better support sustainable job
growth within many of its secondary cities and towns, it must go beyond manufacturing.
In order to increase citizen welfare and maintain peace and stability, the government has made
permitting sustainable job creation a primary priority.
Each year, two million Ethiopian adolescents are expected to enter the workforce.
7-Ethiopia's aims to become the primary exporter of electricity in East Africa are supported
by nearly unequaled hydropower potential.
In order to improve energy availability, control costs, and increase electrification rates.
Urban regions like Addis Ababa stand to benefit the most from this.
The main project under construction is the Grand Ethiopian Renaissance Dam, which has
a capacity of 6,450 Mega Watts.
Because electricity prices are among the lowest in the world and the lowest in Social Security
Association, operating businesses in the nation may operate more cheaply.
Given the government's emphasis on creating hydroelectric projects, which typically require
little maintenance and have cheap operating expenses once the initial sunk expenditures
have been amortized, this is expected to continue.
The expansion of Ethiopia's manufacturing industry will depend heavily on reliable and
affordable energy supplies to maintain its cost competitiveness in the region.
Nevertheless, due to Ethiopia's substantial reliance on hydropower, changes in rainfall
patterns, droughts, and dropping water reservoir levels might affect the country's electricity
supply.
Additionally, because of the inadequate transmission and distribution infrastructure, businesses
frequently experience power outages, necessitating the development of pricey backup power generation
facilities to reduce productivity losses.
If Ethiopia took advantage of its abundant geothermal, solar, and wind resources and
made significant investments in the domestic grid network, this situation might change.
6-Ethiopia lacks the capacity to refine crude oil, hence all refined petroleum products
must be imported despite the country's small proven oil and gas reserves.
Given that 80% of the fuel is domestically produced in Sudan, the price of fuel is quite
low on a regional scale.
But relying heavily on imports increases the chance of supply chain breakdowns.
Because of this, although though Ethiopia offers businesses low fuel costs, there may
be fluctuations and the actual cost of fuel may be much greater than the official price
shows, especially during times of scarcity.
With four oil depots currently under construction or planned across the nation as part of the
Depot Construction Master Development Program, Ethiopian Petroleum Supply Enterprise is expanding
the network of fuel depots and shipment infrastructure in response to rising fuel consumption and
rising fuel supply volatility.
These will contribute to boosting the fuel supply and market security locally.
5-Ethiopia will gain from many of the planned or recently completed transport infrastructure
projects in East Africa by strengthening its supply chains, lowering trading costs, and
improving access to international markets.
For instance, the 752-kilometer railway that runs between the capital cities of Ethiopia
and Djibouti, which was completed in early 20 16, has reduced the time it takes to move
products from two days to just ten hours.
In order to improve Ethiopia's linkages with Djibouti, land-based transportation infrastructure
is also being developed.
This includes a new railway that will run from the region of Ethiopia that produces
potassium, close to Mekele, to the port of Djibouti, where potash is exported.
As part of attempts to strengthen bilateral relations and commercial linkages, progress
is also likely to be made on cross-border train and road connections between Ethiopia
and Eritrea.
A recent feasibility study for a railway connecting Addis Ababa and the Port of Massawa in Eritrea
was funded by the Italian government, and other road improvements between the two nations
are also being considered.
Long-term gains in regional interconnectedness are predicted by the building of the Lamu
Port South Sudan Ethiopia Transport Corridor, and more Ethiopian goods will probably travel
through Kenya's ports.
Ethiopia continues to rely largely on road transportation despite investments in rail
transportation.
Even though Ethiopia's roads have significantly improved over the past ten years, and continued
investment in transportation infrastructure will reduce the risk of accidents and delays
in the medium term, many roads are still unpaved, which lengthens travel times and increases
the likelihood of delays.
As part of a road expansion and maintenance program suggested by the Addis Ababa City
Roads Authority, numerous road projects are now underway in Addis Ababa.
China will continue to actively contribute to the construction of Ethiopia's transportation
infrastructure.
The new railway line connecting Addis Abeba and Djibouti as well as the infrastructure
at the Port of Doraleh, in which China Merchants Ports Holdings has a 15.7% share, were already
funded by China.
4-Ethiopia is a landlocked nation that relies heavily on the Port of Djibouti for about
95% of its trade because it lacks any seaports.
Except for the Bardo, which is only passable occasionally depending on water levels, Ethiopia
does not have any significant river ports.
Due to its proximity to both the Red Sea and the Gulf of Aden, Djibouti serves as both
Ethiopia's primary export and import route and a major commerce hub for the region.
Due to its reliance on the Port of Djibouti, Ethiopia is currently subject to significant
hazards, including delays brought on by traffic and strikes, as well as excessive expenses
in customs and trade bureaucracy because of a lack of competition.
With intentions to use the Port of Sudan, Mombasa Port in Kenya, Berbera Port in Somaliland,
and maybe the Port of Massawa in Eritrea if diplomatic relations improve, the nation has
taken moves to broaden its options for trade.
Major downside risks for the nation's supply chains stem from an overreliance on the road
network for both goods and passengers as well as years of underinvestment in the nation's
transportation infrastructure.
Long lead times raise import and export costs, which are greater in Ethiopia than the norm
for the region.
However, as more rail and road improvements are made throughout Ethiopia and the wider
region, connecting major trade routes with special economic zones and important economic
hubs, lead times and prices are projected to be decreased in the medium- to long-term.
3-Ethiopia's economy slowed down from 6.1% growth in 20 20 to 5.6% growth in 20 21 as
a result of the civil war and COVID-19's effects on travel and hospitality.
On the supply side, industry and services, as well as private consumption and investment,
were the main drivers of growth.
Due to domestic credit growth to boost the economy and supply chain disruptions brought
on by COVID-19, inflation soared to 26.7% in 20 21 from 20.4% in 20 20, much beyond
the central bank's 8% objective.
In 20 21, the budget deficit, including grants, decreased to 2.6% of GDP from 2.8% in 20 20
as a result of reprioritizing expenditures and an increase in tax collections.
Although stable, the banking industry is not open to outside competition.
State-owned banks account for 51.8% of the banking sector's assets, followed by microfinance
15%, insurance 9%, and leasing 9%, which together make for 76% of the financial sector's total
capital.
In June 20 21, it was predicted that public and publicly guaranteed debt represented 32.8%
of GDP and 57.8% of external debt.
Due to lower imports, the current account deficit decreased marginally from 4.4% of
GDP in 20 20 to 4.3% in 20 21.
Foreign direct investment and remittances paid for the current account deficit.
In 20 20 and 20 21, the amount of foreign reserves needed to cover imports was 2.5 months.
The 408 million dollars Sales Development Representative allocation, which was recorded
at the central bank and represents 0.4% of GDP, will increase global reserves.
The number of individuals in need of humanitarian assistance surged from roughly 8 million in
20 20 to close to 15.8 million in 20 21 as a result of conflict and the COVID-19 epidemic.
2-The GDP is expected to rise at a rate of 5.7% in 20 23, picking up to 4.8% in 20 22
due to industry, private consumption, and investment.
The telecom industry's liberalization and a pickup in tourism are anticipated to improve
the GDP prospects.
COVID-19, debt vulnerabilities, and the civil war in northern Ethiopia are the main threats
to the growth prospects.
The conflict between Russia and Ukraine is predicted to raise food and oil prices globally,
causing inflation to reach 32.6% in 20 22 before falling to 24.9% in 20 23.
Due to the implementation of the fiscal consolidation strategy and improvements in the mobilization
of tax income, it is anticipated that the fiscal deficit will be constant at 2.6% in
20 22 and 20 23.
In 20 22, the current account deficit is predicted to increase to 4.8% of GDP before declining
to 4.1% in 20 23.
This is due to weaker capital input imports and a gradual rebound in exports of goods
and services as well as Foreign Direct Investment.
1-Ethiopia ranks 72 on the Global Conflict Risk Index for 20 21.
Droughts, flooding, desertification, water scarcity, and a rise in insect activity are
some of its climate change vulnerabilities, which have an impact on the agriculture, energy,
and health sectors.
About 10.2 million people were impacted by the 20 16 El Nio-induced drought, which necessitated
a 1.9 billion dollars humanitarian response.
The productive safety net program covers 8 million to 10 million individuals at a cost
of 440 million dollars annually and was implemented in 2005 to lessen susceptibility to climate
shocks.
For reducing GHG emissions, the 2011 Climate Resilient Green Economy Strategy offers a
framework.
Ethiopia set emission objectives under three scenarios business as usual, unconditional,
and conditional in its update to its Nationally Determined Contribution for 20 20 to 20 30.
According to the latest estimate, emissions will drop from 347.3 million tonnes of carbon
dioxide in 20 20 to 125.8 million tonnes of carbon dioxide in 20 30, a 68.8% decrease.
The Strategy's implementation would require creative climate finance.
Ethiopia's Nationally Determined Contribution requires 316 billion dollars in financing
over the period of 20 20 to 20 30 that’s 275.5 billion dollars for mitigation and 40.5
billion dollars for adaptation; 63.2 billion dollars will come from local sources and the
remaining amount from international sources of climate finance.
Ethiopia is on track to achieve SDG 13 on addressing climate change.
The 13th Sustainable Development Goal One of the 17 Sustainable Development Goals created
by the United Nations General Assembly in 20 15, SDG 13 or Global Goal 13 is about addressing
climate change.
Take immediate action to mitigate climate change and its effects, according to the goal's
stated mission statement.
By 20 30, SDG 13's five aims must be accomplished.
They discuss a wide range of topics relating to climate change.
"Output targets" are the first three goals.
Build knowledge and capacity to deal with climate change; increase resilience and adaptive
capacity to climate-related disasters; and incorporate climate change measures into policies
and plans.
The UN Framework Convention on Climate Change must be implemented, and procedures to increase
planning and management capacity must be promoted.
These two aims are "means of attaining" targets.
There are "indicators" that go with each target and give a way to evaluate how well each target
and SDG 13 as a whole are progressing overall.
The principal international, intergovernmental venue for discussing the world's response
to climate change is the United Nations Framework Convention on Climate Change.
Ethiopia will look a whole lot different come 20 30 if all the major problems it faces today
are mitigated.
We can expect to see sprawling infrastructure, wealth and job creation, zero famine and enough
electric power supply for the entire nation and its east African neighbors.
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