Ethiopia

Ethiopia is the second most populous country in Sub-Saharan Africa. Despite that fact that the country has abundant resources and good potential for development, poverty is pandemic and often linked to environmental and natural resource degradation.

The economy of Ethiopia is based on agriculture, which accounts for half of gross domestic product (GDP), 60 per cent of exports, and 80 per cent of total employment. Coffee is critical to the Ethiopian economy with exports of some $350 million in 2006. In November 2001, Ethiopia qualified for debt relief from the Highly Indebted Poor Countries (HIPC) initiative, and in December 2005 the IMF voted to forgive Ethiopia's debt to the body. Since 2002, the Government of Ethiopia has been implementing its Sustainable Development and Poverty Reduction Programme (SDPRP). The Government has significantly increased poverty-targeted expenditures, including transferring increasing levels of funds to local governments, which have responsibility for basic service delivery. Drought struck Ethiopia late in 2002, leading to a 3.3 per cent decline in GDP in 2003. Normal weather patterns helped agricultural and GDP growth recover during 2004 - 2007.

A successor strategy, the Plan for Accelerated and Sustainable Development to End Poverty (PASDEP), was implemented over the last years 2005/06-2009/10. The PASDEP represented the second phase of the Poverty Reduction Strategy Program (PRSP) process, which has begun with the SDPRP, for three years, 2002/03-2004/05. The PASDEP carried forward important strategic directions pursued under the SDPRP -related to infrastructure human development, rural development, food security, and capacity-building- but also embodied some bold new directions. Foremost among them was a major focus on growth in the coming five-year period with a particular emphasis on greater commercialization of agriculture and enhancing private sector development, industry, urban development and a scaling-up of efforts to achieve the Millennium Development Goals (MDGs).

The country’s long term vision, achievements of PASDEP and lessons drawn from its implementation are the bases for conceiving the next five year (2010/11- 2014/15) Growth and Transformation Plan - GTP. The plan has also been prepared considering growth constraining factors that emerged in the course of implementation and external shocks.

Ethiopia’s long-term vision is “to become a country where democratic rule, good-governance and social justice reigns, upon the involvement and free will of its peoples; and once extricating itself from poverty and becomes a middle-income economy.”

Its vision in the economic sector is “to build an economy which has a modern and productive agricultural sector with enhanced technology and an industrial sector that plays a leading role in the economy; to sustain economic development and secure social justice; and, increase per capita income of citizens so that it reaches at the level of those in middle-income countries.”

Since 2003/04, the economy has shifted to a higher growth trajectory and the growth momentum has been sustained during the PASDEP period (2005/06-2009/10). Infrastructure development and social services has expanded. Involvement of private investors, and the community in general has reached its encouraging level. Domestic resource mobilization effort has increased the capacity of the country to finance development projects. The process of laying-out foundation for democracy and good governance has been given emphasis through several reform programs.

The Growth and Transformation Plan(GTP) is directed towards achieving Ethiopia’s long term vision and sustaining the rapid and broad based economic growth anchored on the experiences that has been drawn from implementing development policies and strategies and undertaking policy measures for the challenges that has been surfaced in the course of implementation. The overriding development agenda of GTP is to sustain rapid and broad-based growth path witnessed during the past several years and eventually end poverty.