Prime Minister Abiy Ahmed (PhD) has briefed Members of the Parliament (MPs) on various economic issues of the country yesterday, February 22, 2022.
The economic progress in the last six months should be weighed in light of the operation in the north, droughts and floods, as well as impacts of Covid-19 pandemic.
Prime Minister Abiy said that the war economy has its own challenges. Donors possibly delay their grants and aid. “Also, we have been through various challenges following the war such as human displacement,” he said. Regarding the Covid-19 posed challenges he said, “Though we faced the Covid-19 induced challenges, we decided not to impose lockdowns considering our economy.”
Significant macroeconomic measures are required to close the budget imbalance, he said. When exports exceed imports, Ethiopia will be benefited. Banks’ net value, which was 1.8 trillion Birr six months ago, has increased by 2 trillion Birr, while stakeholders’ wealth has increased as well. Close to 159 billion Birr belongs to the shareholders, close to 7.8% of the total amount.
There are still a lot of activities to be discharged in terms of developing a saving culture, he said. Over the last six months, loans to private investors have improved. Saving has increased to 1.5 trillion from around 1.3 trillion similar period of last year.
Provision of loans
The banks in the country have also disbursed a total loan of 147 billion Birr within the first six months of the year, of which 70 billion went to service; 50 billion Birr to industry, and the remaining went to agriculture sector.
Foreign banks entry to Ethiopia
Abiy further said that the government is engaged in policy revision to invite foreign banks into Ethiopia. He further told domestic banks to modernize their systems with information technology (IT) and prepare themselves for the completion that will be coming from foreign banks.
“We will bring foreign banks because we need additional hard currency,” he said.
The cost of living has been skyrocketing. PM Abiy said in this regard: “Our country’s major challenge is inflation, which manifests itself in rising food costs.”
It has a number of factors, including the Covid-19 pandemic impacts, increase in fertilizer costs, and consumer and market discrepancies. We need to encourage family planning, take steps to prevent businesses from stockpiling key commodities, and boost consumer confidence while seeking to keep costs down, he added.
Regarding agricultural sector, he said, “Cluster farming is a productive and profitable method of mechanized farming that has to be widely adopted by our farmers”.
Abiy indicated that during the last rainy season, Ethiopia has covered 13 million hectares of land with major crops and collected 336 million quintals of crops.
Abiy indicated that in two rounds so far using irrigation the country has covered 600,000 hectares with wheat farms. During the current irrigation period, some 25 million quintals wheat is expected from the current irrigation farms by mainly the smallholder farmers.
Pertaining to industrial sector, he stressed encouraging indigenous production and reduction of imports should continue to be emphasized in the industry.
With regards to the developing lakes, he told the parliamentarians: “We’ll finish the projects we’ve already started, such Gorgora, Koisha, and Wonchi, and continue to work on others. The two will be completed this year, with the exception of Wonchi. We need to reconsider the way the public is reimbursed from such public-funded projects”.
Foreign Direct Investment
“Foreign Direct Investment (FDI) has surged by 23% in the last six months,” said Abiy. The number of business licenses increased by 10%, and 8% renewed already existing business licenses. Our systems, however, need to be upgraded and modernized, he opines.