Ethiopia is a landlocked country located at the Horn of Africa. It is the 2nd most populated country in Africa, standing at over 110 million people with 80 different ethnic groups.
Its economy is considered to be growing fast as years go by. Ethiopia’s largest sector is the public, having a mixed economy in consideration. However, its economy is undergoing privatization. The previous economy was mostly under the government’s control during the past regime. This restricted investors and somehow reduced opportunities in the country.
The transportation, telecommunications, and banking sectors are state-owned. Ethiopia’s population is composed mainly of young people who are energetic to work and increase the nation’s output by double.
However, this is not the case despite having a positive story in the educational sector. More young people remain without jobs since the employment sector is not at the same pace as the growing scholarly output.
A Different Story In Ethiopia’s Economy
Due to the previous state of the economy in Ethiopia, many Ethiopians went to the United States for greater opportunities since, in Ethiopia, they were becoming less and scarce.
Recently Abiy Ahmed, the Prime Minister, is encouraging different reforms that are going to favor businesses around the country and improve its GDP just like Ghana did as told by Vera Songwe, the executive secretary of the UN Economic Commission for Africa.
Reforms That Are Planned to Encourage Home Investment
The prime minister announced the need for new economic reforms agenda on 9th September following the United Nations Conference. This will mark a fascinating new chapter on the country’s economy and hence attract more local and foreign investments.
The reforms mainly hit on macroeconomic variables such as inflation, employment, and the balance of payments. He also emphasizes on sectoral reforms whereby he has strategies on strengthening the public sector finances.
Abiy Ahmed is planning on creating more jobs for the youth, reduce the poverty rate in the country, and have a significant growth in overall development. Following the great ideas he has, the World Bank promised its support toward the implementation of development and growth projects.
Review Of Investment Law on Business Climate
The prime minister wants to review investment laws on the business climate. By doing so, the regulatory barriers towards investments might be identified and eliminated from hindering growth.
Off late, privatization processes are being carried out so that investment in the private sector will improve, and this contributes to more economic growth and development.
All these changes taken have started changing the Ethiopians mindset. There is an anticipation that more of them are returning to their country from Washington to engage in business.
Various objectives laid down to improve agriculture, manufacturing, mining, tourism, information, and technology sectors.
Vera Songwe, however, says that the implementation of these initiatives strained due to the gaps involved, such as debts.
“If you continue to accumulate debt the way you’re doing now, you will likely fall into debt distress in the next two years, and a lot of the structural reforms you’ve put in place will not bring in the private sector because you will not be a credit-worthy country,” she says.