Ahmed Sado @AhmedSado4 - Twitter Profile

about 2 years ago

I shall leave it to professionals in the field to undertake serious analysis and engage in rigorous debate on whether the macroeconomic reform policy announced by the government will improve or worsen Ethiopia’s economic crisis. However, one thing is clear even from a layman’s viewpoint: without improving security, any policy change is unlikely to produce the desired outcome. For instance, increasing foreign direct investment (FDI) is said to be one of the main objectives of the policy change. However, it is hard to imagine foreigners willing to take the risk of investing when perhaps two-thirds of the country is unsafe due to ongoing civil wars. Similarly, boosting exports is presented as crucial for the success of this reform. Yet, many of our export items, such as agricultural products and minerals, are severely affected by the ongoing conflict. Hence, increasing both FDI flow and export volume will be unattainable without improving security. The impact of the civil war in the two largest regional states is affecting not just economic activity within their borders but also impeding transportation of goods from relatively stable adjacent regions, as roads often pass through war-torn areas. Moreover, as these two regions surround the capital, the wars have been disrupting the flow of goods into and out of the industrial and financial hub. Therefore, as fiscal policy reform alone is insufficient to revive Ethiopia’s economy, it is essential for the government and its creditors to prioritize restoring security by addressing and resolving the ongoing armed conflicts.

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Ahmed Sado

@AhmedSado4

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