economic performance of ethiopia
TRANSCRIPT
Evaluation of Economic Performance of Ethiopia
By:
Mekuanint Abera
Contents
1. Ethiopian profile( Briefings on what and where about)
2. Unique features of Ethiopia(USP)
3. Economic sectors profile4. Measurements of economic
performance Ethiopia profile
Economic sector
Agriculture ServicesIndustry
Overview of the Agricultural Sector in Ethiopia
The economy is predominantly agrarian
Agriculture accounts for about
46.3% of GDP
85% of Employment
83.5% of Export Earning,
Since 2004/5 the average growth rate of
agr. has been about 8% per year
Of the total agral value added: crop,
livestock and forestry, respectively,
contribute 60%, 27% and 13%.
CONT…………..
A large part of commodity exports are provided by the small agricultural cash-crop sector.
Major agricultural products: coffee, tea, oilseeds, cotton, tobacco, fruits, pepper, sugar cane, fish and livestock.
Exports are almost entirely agricultural commodities.
coffee is the largest foreign exchange earner.
Con…………
TIFF PRODUCTION TERCING
Agriculture sub sectors contributions to total agriculture GDP
1992 1999 2000 2001 2002 (1999-2002)
Crop 73.73 76.57 77.69 77.56 77.49 77.36 Livestock 18.52 19.28 18.36 18.53 18.71 18.70 Forestry 7.74 4.15 3.95 3.91 3.79 3.94
Total 100 100 100 100 100 100
Industry
The industry and manufacturing sector plays an important role in the economy by supplying consumer goods, generating employment opportunities, absorbing agricultural raw materials and earning foreign exchange through exports.
Con………………….
The industrial sector in Ethiopia has been characterized by a low level of development, even by the standards of many least developed countries.
It accounts for 11% of the GDP, 9.5% of total employment 21.2% of export earnings.
CON,,,,,,,,,,,,,,,,,,
This sector comprises light manufacturing products such as construction materials, metal and chemical products as well as basic consumer goods such as food, beverages, leather, clothing and textiles. Production is concentrated in and around Addis Ababa and mostly caters to the domestic market, although the number of exported goods is steadily growing.
Con…………..
Major industrial products: food and beverages, textiles, leather, cement, metal products, paper, plastic products, automotive and tractor assembly, tires, and certain chemicals.
SMALL AND MEDIUM SCALE INDUSTRIES
Small and medium scale industries as well as handicraft and cottage industries play vital roles in economic development by utilizing local resources, producing essential goods and services of mass consumption, generating employment opportunities and promoting balanced regional development.
Food, beverages and tobacco
The beverage industry is comprised of breweries, soft drink plants, mineral water and plants.
There are four breweries at present with an aggregate annual capacity of 900,000 hectoliters.
The soft drink plants bottle coca-cola lines and Pepsi-cola lines and are geographically dispersed in several towns
Con…………..
wines of international standard but are largely consumed domestically.
The only cigarette producing factory is located in Addis Ababa and produces annually about three billion pieces of different brands of cigarettes
Other sub-sectors
Textiles and garmentBasic metals and engineeringLeather and footwearChemicalsNon-metallic mineralsPaper and printing
Con…………..
Cement factory Textiles
Sub sector Industry sub Sectors contribution to the total industrial sector GDP
1992 1999 2000 2001 2002 (1999-2002)
Mining and Quarrying 1.34 3.42 4.04 4.39 6.63 4.74
Manufacturing 19.60 39.64 32.94 31.68 28.66 32.85
Construction 60.81 49.07 54.69 56.42 56.61 54.47
Electricity and Water 18.26 7.87 8.33 7.51 8.10 7.95
TOTAL 100 100 100 100 100 100
service sector
The service sector contributed to about 40.4% to real GDP while recording 9.2% growth in 2005/06.
The Share of the service sector has been growing up slowly but steadily in recent years reaching 40.8 percent in 2006/07 from its level of 36 percent in 1996/97.
Con………
This mainly the result of the fast growth of education; real state; renting and business activities; whole sale and retail trade; and hotels and restaurants sub-sectors, which In the last five years registered an annual average growth of 11.6%, 10.2%, 11.3% and 13.7% respectively
con,,,,,,,,,,,,,,,,,,,,
Jimma university National bank ETHIOPIA
Service sub sectors contribution to total service GDP
1992 1999 2000 2001 2002 ( 1999-2002)
Trade 11.77 31.27 31.06 36.46 38.23 34.65
Hotel and restaurants 0.68 0.87 0.85 0.96 1.01 0.93
Transport and commu 23.33 19.29 18.24 17.36 16.80 17.80
Other services 64.22 48.56 49.84 45.22 43.96 46.62
Total 100 100 100 100 100 100
Structural Composition of Economy
Measures of Economic Performance
Economic Measures
– Inflation– Unemployment– Growth (GDP)– Balance of Payments– Exchange Rate
Non-Economic Measures
– Quality of Life– Environment– Health– Education
Economic Growth (GDP) IN ETHIOPIA
Gross Domestic Product
– The value of output of goods and services produced in the Ethiopia during one year
– Primary, secondary and tertiary sectors– Real versus nominal output– Can be viewed as being national income,
national output or aggregate demand (AD)– GDP per capita – GDP divided by the
population (GDP per head)
Inflation
• A persistent rise in prices in an economy over a period of time
• Now measured by the (CPI) • Inflation does not fall – it slows down or
speeds up! (If inflation in 2003 was 3% and in 2004 is 2% it still means prices have risen by an average of 2% over the last year!)
• A fall in the price level is termed ‘deflation’
Inflation
• Causes of Inflation:– Demand-Pull – where aggregate
demand (AD) rises at a faster rate than aggregate supply (AS)
– Cost-Push – increases in costs (labour, raw materials, imported costs, etc.) that cause a leftward shift in AS
Selected Economic Indicators (High Frequency)
Sep Oct Nov Dec Jun Feb Mar Apr Inflation (Year-on-Year): % 18.9 15.9 15.7 12.9 12.5 10.3 7.6 6.1
Food 17.6 13.2 13.4 11.8 11.3 7.9 5.2 1.6
Non-Food 21.0 20.4 19.4 14.7 14.4 14.3 10.5 11.5
Inflation in AA (Year-on-Year):% 18.3 15.3 15.4 12.4 12.4 12.3
Traded Goods 6.8 4.9 5.1 2.7 3.6 1.7
Non-Traded 22.5 19.1 19.2 16.0 15.6 16.2
Unemployment
• Various definitions:– The number of people of working age
who are without a job– The Claimant Count – those actively
seeking work and claiming benefit– ILO (International Labour
Organisation) measure– the number of people available for work and actively seeking employment
Unemployment
• Causes of unemployment:– Frictional Unemployment – where people become
unemployed between jobs– Demand Deficient Unemployment – where AD is less
than AS– Technological Unemployment – caused where people
are put out of work by changes in technology– Seasonal Unemployment – caused by the seasonal
nature of some types of employment – e.g. holiday resorts
– Structural Unemployment – caused by changes to the structure of industry in the economy – e.g. the decline of the coal, iron and steel industries
Cont.…………..
• Costs of unemployment to the economy:– Lower tax revenues– Higher benefit payments– Social costs: crime, vandalism,
family breakdowns and social welfare support, regional decay
– Opportunity cost of lost potential output
Balance of Payments
• Measures economic transactions between Ethiopia residents and the rest of the world:– Trade in goods– Trade in services– Income flows from investments– Financial flows – shares, loans– Foreign aid
Exchange Rates
• The price of one currency in terms of another – the amount of one currency that has to be given up to purchase another currency
• Exchange rates determined by the demand and supply of a currency on foreign exchange markets
• Demand determined by the purchase of exports, supply by the purchase of imports
Non Economic Measures
Social Investment
• Infrastructure – roads, communication networks, bridges, railways, airports, ports
• Education – schools, colleges and universities
• Hospitals/Health – primary and secondary care, health education, disease and accident prevention, number of doctors per head, access to health care
• Water/Sewerage• Housing – affordable and accessible housing
to meet the needs of those in search of homes and employment
Con……………
Ethiopia has made impressive development in the health sector
The number of health posts and health centers increased from 4,211 and 644 to 14,416 and 1,787, respectively
while the number of public hospitals increased from 79 to 111 during the same period.
Over 33,000 health extension workers were trained and deployed in the rural areas.
Environment
• Pollution – land, air, sea and noise• Waste – waste disposal and waste
management• Nature – areas of outstanding beauty,
national parks, wildlife, ecology, sites of special scientific interest
• Land Use – planning regulations, building regulations
Taxation
• Tax Burden – the amount of tax paid by the population – direct and indirect taxation
• Incentives – aimed at encouraging enterprise, business development and creativity
Quality of Life
• Material Wealth – telephones, fridges, computers, cars, etc.
• Mental State • Stress – caused by employment,
unemployment, travel, etc.• Crime – crime prevention, crime
reduction, monitoring of crime and perceptions of crime
Summery and Recommendation
Ethiopia economic system require an adjustment in economic policy to phase in the private sector as an additional engine of growth
Ethiopia needs to make progress on two related important fronts: enhancing domestic savings, and, resolving the bottlenecks of the trade logistics system.
Ethiopia’s fast growing economy compared to other countries (Source: IMF; The Economist, quoted from CRGE)
Thank you
Questions and Comments