News / Africa

Despite Fast Growth, Ethiopia Still Plagued by Poverty

People work on the assembly line at Huajian shoe factory in Dukem, Ethiopia, April 19, 2012.People work on the assembly line at Huajian shoe factory in Dukem, Ethiopia, April 19, 2012.
x
People work on the assembly line at Huajian shoe factory in Dukem, Ethiopia, April 19, 2012.
People work on the assembly line at Huajian shoe factory in Dukem, Ethiopia, April 19, 2012.
— Ethiopia has one of the fastest growing economies in the world, but remains one of the poorest countries at the same time.  It might take years before the majority of people benefit from the growth.
 
Ethiopia's economy has grown at an annual rate of nearly 10 percent for the last seven years.  But a third of the population still lives below the poverty line.
 
Samuel Bwalya is the economic advisor for the United Nations Development Program (UNDP) in Ethiopia.  Bwalya says that the country has to be patient while waiting for a trickle-down effect to lift more people from poverty:

"Ethiopia is starting from a very low base in terms of development, so it should actually take much longer for this impact to take root," Bwalya noted.  "So I think we are too much in a hurry to see seven-year growth to start asking questions about how many people are out of poverty.  Ethiopia is still very poor.  But if you look where Ethiopia is coming from, it has made significant progress in reducing poverty."

The late Prime Minister Meles Zenawi was often praised for his approach to helping the poor.  Poverty has declined by a total of 10 percent in the last seven years.  But the country is still one of the largest donor recipients worldwide, receiving over $3 billion annually.
 
Ethiopia ranked 174th out of 187 countries in the UNDP's 2011 Human Development Report.  Life expectancy is estimated at just 57 years, the inflation of 26 percent remains a problem for most people and there are over 12,000 street children in the capital city alone.
 
Bwalya of the UNDP says ongoing measures by the Ethiopian government will benefit the whole of the Ethiopian population in the long run.

"Ethiopia is spending over 40 percent of its budget on infrastructure development, public works, schools, health and roads," Bwalya added.  "That is extremely important in the initial period and these are investments that bring impact, slightly, in the medium- to long-term.  We don't see the impact of actually constructing a road today, to take impact on the lives of people the next day.  It may take a couple of years to do that."

Despite these investments, there are still challenges to make sure the economic growth helps all Ethiopians.  Youth unemployment continues to be a major problem.
 
Jan Mikkelsen is the International Monetary Fund's (IMF) resident representative in Ethiopia.  Mikkelsen believes the country is making progress in the public sector.  But he also believes that the private sector should be able to help the economy overcome some challenges such as the large number of young people who don't have jobs.

"We believe that most of the employment in the long haul will be generated in the private sector," Mikkelsen noted.  "So this will be more dynamic, new jobs in new areas - IT (information technology), trade manufacturing and so forth.  That's where sustainable high value jobs will be."

The IMF also believes the financial sector needs to be developed further to support smaller businesses, especially in rural areas.  But the private sector is given little room to operate in Ethiopia's state-run economy, and there is little direct foreign investment.
 
Wolday Amha is the director of the Association of Ethiopian Microfinance Institutions.  He says that loans needed by micro-enterprises are coming from the poor themselves, and voices support for this approach.

"What you see in these countries in the rural areas and urban areas is huge demand for loans," Amha explained.  "This country is mobilizing resources from the poor people.  If this is hijacked by the private sector, which wants to maximize profit at all costs, that will be a disaster, and it will create economic, political crisis."

The government is implementing its Growth and Transformation Plan, which has ambitious development and economic projects that aim to make Ethiopia into a middle-income country by 2025.
 
Whether Ethiopia will achieve this goal with its current approach remains difficult to say, says Mikkelsen:
 
"There are different models around the world and there's not one development model that is the right one," Mikkelsen said.

Ethiopia predicts its economy will expand by more than 10 percent again in 2013.  The IMF and the World Bank predict slightly less robust growth of seven percent.

You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid