According to a recently released report by a research project, Ethiopia is on course to become world’s fastest growing economy.
The report released by The Gates Foundation and compiled by the Overseas Development Institute titled “One foot on the ground, one foot in the air” forecasts that Ethiopia’s economy would significantly accelerate in the coming three years.
It points at massive agricultural investment, a sector which employs three in four Ethiopians, and a government committed to pro-poor spending to halve its poverty. The report also says that the agricultural sector is responsible for the reduction in poverty.
Another factor identified is the doubling of Ethiopia’s road network in two decades, which has allowed more farmers to bring their produce to market. The report has identified as key the centring of government policy on a single goal – poverty reduction.
“Taking a multidimensional approach can encourage ministries to work more comprehensively and consistently,” says the report.
“Integrating social sectors into broader economic planning and high rates of pro-poor spending benefit the economy.”
Also, “long-term planning and a clear division of responsibilities can build the foundation for broader transformation.”
Another key driver of poverty reduction is Ethiopia’s Productive Safety Net Programme (PSNP), Africa’s largest social protection scheme, which pays seven million Ethiopians in food or cash in exchange for work on agricultural-infrastructure projects that maintain food security and reduce the incidence of famine.
“The PSNP mobilises 10 percent of the population (1.5 million households) to stabilise food supply cutting poverty nationally by 7 per cent since 2005.”
The report explores progress achieved in material wellbeing in Ethiopia, measured by reduction in income poverty, and two key contributors to material wellbeing: education and employment.
Ethiopia’s human resource development plan centres on education, which alongside the building of physical infrastructure, is seen as a path to structurally transform the economy and to create more jobs. The country has nearly universalized primary education, flipping primary enrolment from “under one in five in school” to “under one in five out of school”.
From the report: “Ethiopia’s stability and consequent ability to make long-term plans and investments in education, agriculture and infrastructure over the past 20 years has allowed the country to make great leaps in development.”
Even though critics have said that the stability in the country was the outcome of the government’s systematic repressive practices, or restricted contestability of national and local politics, the report says that a lot of significant lessons can be learned from Ethiopia and applied in different country contexts.
Ethiopia has managed to decline extreme poverty vastly making it one of the successful countries in the world in the fight against poverty.
Further key findings have now predicted Ethiopia to be the fastest-growing country in the world over the next three years. Poverty has fallen to 37% from 63% between 1995 and 2011, but unlike other nations, Ethiopia has achieved this growth while maintaining its low level of inequality.
ODI is the UK’s leading independent think tank on international development and humanitarian issues.