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According to the IMF, Ethiopia was one of the fastest growing economies in the world, registering over 10% economic growth from 2004 through 2009. It was the fastest-growing non-oil-dependent African economy in the years 2007 and 2008. Growth has decelerated moderately in 2012 to 7% and is projected to be 6.5% in the future – reflecting weaker external demand and an increasingly constrained environment for private sector activity.

Ethiopia's growth performance and considerable development gains came under threat during 2008 and 2011 with the emergence of twin macroeconomic challenges of high inflation and a difficultbalance of payments situation. Inflation surged to 40% in August 2011 because of loose monetary policy, large civil service wage increase in early 2011, and high food prices. For 2011/12, end-year inflation was projected to be about at about 22 percent and single digit inflation is projected in 2012/13 with the implementation of tight monetary and fiscal policies.

 

In spite of fast growth in recent years, GDP per capita is one of the lowest in the world, and the economy faces a number of serious structural problems. Agricultural productivity remains low, and frequent droughts still beset the country. Ethiopia is often ironically referred to as the "water tower" of Eastern Africa because of the many (14 major) rivers that pour off the high tableland, including theNile. It also has the greatest water reserves in Africa, but few irrigation systems in place to use it. Just 1% is used for power production and 1.5% for irrigation.

Provision of telecommunications services is left to a state-owned monopoly. It is the view of the current government that maintaining state ownership in this vital sector is essential to ensure that telecommunication infrastructures and services are extended to rural Ethiopia, which would not be attractive to private enterprises.

The Ethiopian constitution defines the right to own land as belonging only to "the state and the people", but citizens may lease land (up to 99 years), and are unable to mortgage or sell. Renting of land for a maximum of twenty years is allowed and this is expected to ensure that land goes to the most productive user. Land distribution and administration is considered an area where corruption is institutionalized, and facilitation payments as well as bribes are often demanded when dealing with land-related issues. 

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