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With a more open and inclusive economy and a stable political settlement, the report shows that over the coming decades, sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status.
With a more open and inclusive economy and a stable political settlement, the report shows that over the coming decades, sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status.
A new report, Pathway to Prosperity: Ethiopia Case Study, which is unveiled today by London-based global think-tank, the Legatum Institute, says that “changes in the way Ethiopian governments have operated” are needed if the country is to achieve prosperity.
Dr Stephen Brien, the Institute’s Director of Policy, describes the country as “at a pivotal moment in its history” as it charts its way towards “sustainable economic growth” and “solid upper middle-income status.”
The report also says that “[e]ffective and broad-based allocation of capital is critical to unlocking the country’s economic opportunities” and that “[p]rosperity could also be supported by a robust and competitive financial sector, with domestic and international participants.”
In particular the report proposes that prosperity will require:
The report also finds that the:
The report recommends:
However, the report cautions that whilst “[t]he Government has committed to a privatisation process” it is important that this is “carried out when the judiciary and the rule of law systems in the country have been strengthened, to avoid the risks of corruption in these processes, as experienced in other countries.”
And the report notes that “privatisation itself won’t contribute to prosperity…Ethiopia also needs to shift its broader regulatory order to accommodate an embracing of private enterprise and capital.” To that end the report recommends:
The Legatum Institute’s report on Ethiopia is part of a series of case studies examining the links between a nation’s economic openness and its prosperity. It identifies the constraints to future economic development and the type of actions needed to put Ethiopia on the road to prosperity, with the ambition of achieving global median prosperity by 2050.
The report also finds that:
Recommendations from the report to the Government include:
Dr Stephen Brien, Director of Policy at the Legatum Institute, said:
“Ethiopia is at a pivotal moment in its history. What this report shows is that with a more open and inclusive economy and a stable political settlement, over the coming decades, sustainable economic growth can take Ethiopia on a path to a solid upper middle-income status.
“The Government has committed to more privatisation as the country charts its way towards prosperity, and ministers clearly understand the need to shift the direction of capital away from the state and towards private markets. But privatisation itself won’t contribute to prosperity. It’s vital that Ethiopia also shifts its broader regulatory order to accommodate an embracing of private enterprise and capital.
“When it comes to mobile coverage and banking, for example, the Government needs to prioritise consumer rather than producer interests. This means focussing in increasing rural coverage and banking rather than protecting the interests of state owned enterprises.”
Read the report here.