Economy

Salient Features: Socialist oriented after the 1974 revolution, with strong state controls. Thereafter, a large part of the economy was transferred to the public sector, including most modern industry and large-scale commercial agriculture, all agricultural land and urban rental property, and all financial institutions: some private enterprise and capital and capital participation permitted in certain sectors. Since mid-1991, a decentralised, market-oriented economy emphasising individual initiative, designed to reverse a decade of decline. In 1993 gradual privatisation of business, industry, banking, agriculture, trade and commerce underway.

GDP ....................... $194.980billion(PPP), $78.434 billion(nominal) / (IMF, 2017 est.)
GDP Rank .................. 69th(nominal), 64th(PPP)
GDP Growth ................ 8%(2016)
GDP Per Capita ............ $2,104(PPP), $846(nominal) / (IMF, 2017est.)
GDP by Sector.............. Agriculture(72.0%), Services(20.0%), Industry(08.0%) / (2015)
Unemployment rate ......... 5.735% (2016)
Exports ................... $3.163 billion (2015)
Imports ................... $15.87 billion (2015)
Gross External debt ....... $19.04 billion (2015)

Structure of the economy

The Gross Domestic Product in 1994 was broken down to:
• Services:♥ 31%
• Manufacturing:♥ 3%
• Industry:♥ 10%
• Agriculture:♥ 56%

Major industrial products: food and beverages, textiles, leather, cement, metal products, paper, plastic products, automotive and tractor assembly, tires, and certain chemicals.

Major agricultural products: coffee, tea, oilseeds, cotton, tobacco, fruits, pepper, sugar cane, fish and livestock.

Major exports: coffee, oilseeds, hides, livestock.

Major imports: machinery and equipment, industrial inputs, pharmaceuticals, chemicals.

Ethiopia is endowed with vast agricultural, mineral, and energy resources, which remain virtually untapped as a result of the civil war and economically stagnant period, which ended when the Transitional Government set Ethiopia on the path toward democracy and economic freedom.

The Government of the Federal Democratic Republic of Ethiopia has introduced an economic reform plan that emphasises the use of free market mechanisms and liberalised trade laws to encourage foreign investment and trade, as well as domestic entrepreneurs.

The new economic plan will speed up the economic and social development in the country through the increase in supply of goods and services and the growth and liberalisation of the private sector. It will encourage foreign investors to participate in the reconstruction efforts of the country, and it will develop and promote domestic private capital to enhance sustainability.

The economic and social development initiatives of the Federal Government involve both local governments and local non-governmental organisations in all stages of the development process in order to encourage accountability among the public and to better address the needs of the Ethiopian people.

Agriculture

Ethiopia is a predominantly agricultural country with over 80 percent of its population farming on about 15 - 20 percent of the arable land. The agriculture sector accounts for over half of the GDP and 85 percent of export earnings, the most important of which is coffee. Some of the finest and rarest coffees in the world are grown in the highlands of Ethiopia, and Ethiopia is Africa's third largest producer of coffee, after Uganda and the Ivory Coast. In addition, Ethiopia has one of the largest livestock resources in the world. Given the key role that agriculture plays in the economic development of the country, the Government has placed special focus on agriculture in its development agenda. Agriculture can be a stimulus to improve land utilisation and productivity, generate income and be used as a springboard for growth in the industrial and service sectors.

Industry

The industry and manufacturing sector plays an important role in the economy by supplying consumer goods, generating employment opportunities, absorbing agricultural raw materials and earning foreign exchange through exports. This sector comprises light manufacturing products such as construction materials, metal and chemical products as well as basic consumer goods such as food, beverages, leather, clothing and textiles. Production is concentrated in and around Addis Ababa and mostly caters to the domestic market, although the number of exported goods is steadily growing.

To help the industrial sector to grow, the Government is making concerted efforts to dismantle barriers to investment and private sector participation caused by excessive regulation from past regimes.

Mining

The mining sector of the economy has immense potential for development. A limited scale of gold tantalum and platinum mining is currently being undertaken. Several North American countries have signed contracts with Ethiopia to conduct gold exploration in certain parts of the country.

The development of Ethiopia's mineral wealth is one of the Government's leading economic objectives. Mining operations are expected to be an important economic catalyst for the Government's export-oriented development strategy. The goal is to get the minerals sector up to 10 percent of GDP within 10 years.

Currency

The local currency is the Ethiopia Birr, made up of 100 cents. Visitors may import an unlimited amount of foreign currency, provided that declaration of such currency is made to Customs on arrival. Foreign currency may only be changed at authorized banks and hotels. The currency declaration form must be retained as this will be required by Customs on departure. Visitors will be able to change back any excess Ethiopian Birr to foreign currency in the airport before departure.

Infrastructure

Roads

In a country five times as large as the UK, but without an extensive rail network, road transportation in Ethiopia is paramount. Over the last seven years there has been a massive increase in funds allocated for road construction. State spending on roads accounts for a quarter of each year's infrastructure budget and the government has earmarked the equivalent of $4 billion to build, upgrade and repair roads over the next ten years under the Road Sector Development Programme (RSDP).

This reflects the government's recognition of the importance of the road sector for national economic growth and for profiting to a maximum from the country's assets. The RSDP was launched in 1997 and during its first five years, the intention is to maintain, rehabilitate and upgrade the main trunk roads, link roads and regional roads. The government will build 3,833 km of asphalt roads, 1,390 km of feeder roads and 5,399 km of gravel roads; recondition 2,613 of asphalt roads; and carry out 'heavy maintenance' on 1,575 km of existing gravel roads. A Road Fund, which is being financed by a levy on fuel prices, is designed to ensure a flow of funds for the maintenance of the road network.

Spending is concentrated on the five main arteries radiating from Addis Ababa toward Jimma, Awassa, Adigrat and Djibouti. To kick-start the programme the World Bank is providing $309 million, the EU $300 million, the African Development Bank $104 million while the Ethiopian government is investing $940 million. Preparations are in progress for the 326 km Addis Ababa-Jimma road and the 513 km Addis Ababa-Woldiya road.

Airports

Ethiopia's new and upgraded airports facilitate the transport of goods and encourage investment. There are now two international airports - Addis Ababa and Dire Dawa - and both have seen an encouraging increase in passenger and freight transport over the last few years. New passenger and cargo terminals have been built at Dire Dawa airport and are now fully operational. Smaller airports such as Bahir Dar have been upgraded. In order to encourage tourism five major airports - Arba Minch, Lalibela, Mekele, Axum and Gondar have been singled out for u pgrading; improvements at the first three airports are already complete and work on the last two will be completed by early 1999. The opening of the new airport at Arba Minch has opened up wide-ranging economic opportunities for the lush south.

Upgrading works have also been completed at Semera, Robe (Goba) and Jijiga airfields. Upgrading of Asosa, Combolcha (Dessie), Shire, Negelle, Kebri Dar, Shilabo, Humera, Gambella and Shire airfields will be completed by 1999.

Telecommunications

Ethiopia was faced with the task of dramatically increasing the number of the existing 160,000 telephone lines and extending the service into rural areas, where most of the population live. In 1996 the Ethiopian Telecommunications Authority was split in two; the new Ethiopian Telecommunications Authority is responsible for regulating the industry, while the job of Telecommunications Corporation (ETC) is to expand and improve the services and revitalise the infrastructure.

In line with the policy of devolving power to the regional states, ETC has been decentralised so that the individual states are responsible for providing their own telecom services; decision-making now takes place at local level.

The main objectives are to support the free-market economy and investment ventures and satisfy the demands of the private sector and to fully participate in the rural development programme. This year ETC launched its three-year Accelerated Development Programme (ADP). Its aim is to increase the telephone density rate from one phone for every 1000 people to one phone for every 100. By the end of the millennium there should be 760,000 lines. The required 600,000 additional lines have been procured and state-of-the-art digital exchanges and transmission equipment for more than 120,000 lines have already been installed in some rural and urban areas.

In addition, more than a thousand villages will soon have phones, thanks to the installation of 470 Very Small Aperture Terminals (VSATs) and about 200 Digital Radio Multi-Access Subscriber Systems (DRMASs). Eighty of the latter have already been installed. Outdated open wire systems will be replaced. By the year 2000 each village will have at least one phone and the rural areas will begin their link into the global information network.

For international traffic ETC uses an earth satellite station. An additional satellite station will begin operating in the northern part of the country by the end of 1999. Internet services began in January 1997 and are currently being upgraded; the number of lines available to internet users recently doubled and a more efficient service will in future be provided to the business community, educational, health and agricultural sectors at competitive rates. In future the VSAT system will provide internet, digital TV services and interactive distance learning access, which will link higher education institutions with many colleges in the more distant regional states.

A 36,000 line capacity GSM mobile telephone service will provide Addis Ababa with mobile phones by the end of the year. They will be supplied to the regional states in the next phase.

The investment required for all these developments will be raised mainly through ETC's revenue and profits as these are now fed back into the company and not channelled to the government as they were under previous regimes. Furthermore the government is now encouraging the participation of domestic and foreign private investment in the telecommunications sector. ETC is one of the most efficient public enterprises and is highly profitable. Its rate of return now averages 17% on total assets, and its average profit margin is 28%.

Health Sector Strategy

Objectives

The main objective of the health service in the future is to give a comprehensive and integrated primary health care in health institutions at the community level. The approach will be to emphasise the preventive and promotive aspects of health care without neglecting essential curative service. The focus shall be on communicative diseases, common nutritional disorders, and on environmental health and hygiene. Maternal and child care, immunisation, reproductive health, treatment and control of basic infectious diseases like upper respiratory tract infections and tuberculosis, control of epidemic diseases like malaria and the control of sexually-transmitted diseases, including AIDS, will receive special attention. Information, education and communication about health and nutrition shall be strengthened. Human and material resources will be developed, deployed and managed in line with these objectives.
Major components of the health care strategy

1. Strengthening the preventive and promotive health service
2. Curative and rehabilitative care
3. Drugs and medical supplies
4. Health information, documentation and processing
5. Organisation and management of the health delivery system
6. Human resource development and management
7. Research and development
8. Financing the healthcare delivery system
Background

The Ethiopian health care delivery system has historically been unable to respond quantitatively or qualitatively to the health needs of the people. It was highly centralised. Its services were delivered in a fragmented way with a reliance on vertical programs and there was little collaboration between public and private sectors. Consequently, the Ethiopian Transitional and Federal Governments have initiated political, economic and social changes resulting in the formulation of the 1993 Health Policy and Strategy. The Federal Government and the regional authorities seek to reorganise health services into a more cost-effective and efficient system, better able to contribute to the overall socio-economic development effort of the country.

The Government plans to realise its health development objective through a twenty-year health development implementation strategy, with a series of five-year investment programs, of which the first Health Sector Development Program (HSDP) covers the period 1997/98-2001/02. The HSDP proposes a sector-wide approach to achieve the government's objectives.

HSDP has eight components:
1. service delivery and quality of care:
2. health facility rehabilitation and expansion:
3. human resource development:
4. strengthening pharmaceutical services:
5. information, education and communication:
6. strengthening health sector management and management information systems:
7. monitoring and evaluation:
8. health care financing.

The Health Sector Development Program, like the National Health Policy, is the result of a critical examination of the nature, magnitude and root causes of the prevailing health problems of the country and awareness of newly emerging health problems. Founded on a commitment to democracy and to decentralisation, it accords appropriate emphasis to the needs of the less privileged rural population which constitute the overwhelming majority of the population and it proposes realistic goals and the means for attaining them. The government thereby accords health a prominent place in its order of priorities and commits itself to the attainment of these goals, utilising all accessible internal and external resources.

Health status indicators

A combination of rapid population growth, poor economic performance and low educational levels has constrained Ethiopia's socio-economic development and impacted on health status in particular.

Vital indicators: The 'crude' death rate is estimated by different sources to be 14.8 per 1,000 population, about double that of Kenya and second only to Uganda in Eastern Africa. Life expectancy at birth (LEB) of males and females is 49.7 years and 52.4 years respectively. The infant mortality rate (IMR) is estimated at 105 per 1,000 live births while the child mortality rate (CMR) is 172 deaths per 1,000. The maternal mortality rate (MMR) is estimated at 500-700 per 100,000.

Burden of disease: The total burden of disease, as measured by premature death from all causes, is approximately 350 deaths per year (D/Ys) lost per 1,000 population. Ethiopia's burden of disease is significantly higher than in neighbouring Kenya (estimated at 170 D/Ys lost per 1,000 population) and in East Africa as a whole (which has a burden of disease of 280 D/Ys lost per 1,000 population).

Ethiopia's burden of disease is dominated by pre-natal and maternal conditions and by acute respiratory infection (ARI), followed by malaria, nutritional deficiency, diarrhoea and AIDS. Indeed, the top ten causes of mortality account for 74 percent of all deaths and 81 percent of D/Ys lost. Diseases that affect children under the age of 5 years (ARI, diarrhoea, nutritional deficiencies and measles) account for 33 percent of deaths. Although largely preventable, childhood and maternal illnesses and communicable diseases are the major causes of death in Ethiopia.

Health Service Coverage and Utilisation

Health service coverage: The overall level of health service coverage is estimated to be approximately 45 percent. The actual coverage estimates for the individual programs are very low.

The major reasons for the poor coverage of health services in Ethiopia are the limited physical access of the population to health facilities and staff, as illustrated by the facility to population ratio. Currently, health facilities for a population of some 58 million people comprise 89 hospitals, 191 health centres, 1, 1 75 health posts and 2,515 health stations. The available health care facilities are also unevenly distributed across regions.

Health service utilisation: Total outpatient utilisation of government health facilities in Ethiopia suggests that, on average, there are about 0.25 visits per person per year. A household survey on health care utilisation found that only 10 percent of persons reporting illness actually obtained treatment for their conditions from any health facility, government or private. Utilisation by the rural population (9.5 percent), as compared to 14 percent in urban areas, is lower than the national average. The findings further show that the three most important determinants of whether treatment is sought are:
• the cost of treatment
• the distance from, or the absence of, the health care facility
• the quality of the facility
• the educational status of the patients, or the mothers in the

Health services quality

Health services quality has been compromised by inadequate and poorly maintained infrastructure and equipment, scarcity of trained health personnel, and the unavailability of drugs and pharmaceutical supplies.

An estimated 20,000 health care workers provide services in Ethiopia, the vast majority through the public sector. Not only are the ratios of health personnel to population substantially less than the average for Sub-Saharan Africa, but the situation is worsened by the fact that a considerable number of staff, (one-third of doctors and one-sixth of nurses), work in Addis Ababa where about 4 percent of the country's population live. Recent efforts to relocate centrally located staff to the regions have started the process of reversing this imbalance.

Health system financing 1

The health sector is financed through a variety of sources in Ethiopia. These include:
• general government revenue
• donor aid/external assistance and foreign loans
• user fees (for services and drugs)
• various types of health insurance
• community contributions

Government financing:The increased share of government financing is the result of a sustained effort to increase the share of health sector expenditure in the total national budget.
• Between 1989 and 1996, health expenditures rose from 2.8 percent to 6.2 percent of the total budget.
• Between 1991 and 1996, the Government health budget has increased from about 1 percent of GDP to about 2.7 percent of GDP.
• During this period, the real value of the health budget increased by 35 percent. Despite this effort, 1996 health expenditures were about US$1.20 per capita, which is significantly lower than the Sub-Saharan African average health expenditure of US$ 10 per capita.
• Since 1992 there have been several major changes in the structure of the government budget to the health sector.

First, the proportion of salaries in the recurrent budget has declined to 53 percent in 1996 as a large share of the recent increases in health spending has gone to drugs and other non-salary items.

Second, there has been a reallocation of resources away from facilities in Addis Ababa and to primary care facilities. Since 1994, capital expenditure on health centres and health stations has risen from 17 to 40 percent of the capital budget.

Third, support for public health services has increased with (in 1994) more than half of total regional recurrent expenditures focused on Primary Health Care-related services.

Fourth, control over health expenditure has shifted to the regions, which have, since 1994, controlled between 83 and 88 percent of the health expenditure and which in 1996 controlled 83 percent of the recurrent budget and 95 percent of the capital budget.

Individual private payments: Studies have confirmed that households in Ethiopia make substantial direct payments to private practitioners, traditional healers, private pharmacies and others in the health sector. Households also make payments to government facilities in the form of user charges, which have been collected by the Ministry of Health since 1950. Since the introduction of the fees, major changes and/or revisions have occasionally been attempted, but unsuccessfully.

Health system financing 2

The Government is firmly enforcing a ceiling of 5 billion Birr for implementation of the first phase of HSDP, and expects to finance this amount through a combination of its own revenues, proceeds from user fees and external resources including assistance and credit. Substantial addition resources for the health sector are also anticipated from local financing through the Health Care Financing Strategy. Among the options under consideration are the Health Care Financing Strategy and the encouragement of private sector/NGO participation in health service provision.

Since 1992, the Government has taken steps not only to increase the overall share of budget for health, but also to reallocate resources away from urban hospital-based curative services toward more preventive care, with an emphasis on the rural population. Despite such measures, the sector suffers from chronic under-funding. Assuming increased demand - from increased access to quality care, increased incomes and willingness to pay for health services, and improvements in the educational status of the population - the health sector will need to find ways to finance both an increase in volume and in quality of service.

The Ministry of Health has drafted a Health Care and Financing Strategy that is currently under review by the Council of Ministers' Office. The document proposes strategies for both improving government health sector efficiency and generating additional and new sources of revenue.

Involving the Private Sector: The government has sought to increase the involvement of the private sector (both for profit and non-profit) in the delivery of health services. Today, practically all drug vendors and drug stores are privately owned, as are more than 70 percent of pharmacies. The role of private health clinics and medical services is growing in importance, particularly in urban areas. There are also just under 200 NGO health clinics and 8 NGO hospitals operating throughout the country, particularly in rural areas. Government recognition of the complementarity of the public and private (particularly NGO) sectors is growing, and it will propose improved regulation in a number of areas, including: hospital autonomy, pharmaceutical distribution and licensing.

Health and related policies

The National Health Policy comprises nine components for achieving its overall policy objectives. These include:
• improving PHC service access to the population
• the technical quality of PHC service provision
• health systems management
• the financial sustainability of the health sector
• encouraging private sector investment in the health sector
• directing attention to the pharmaceutical sector
• developing an IEC implementation strategy to extend Public Health Care messages to the periphery
• investing in expanding the supply and productivity of health personnel
• strengthening the local capacity for evaluation, research and development for Ethiopia's health sector
Strategies to improve health care utilisation and access

The Ministry of Health is concerned about the current extremely low utilisation rates of public health services. It has, therefore, through out the preparation of HSDP, emphasised supply of services by designing a package which both responds to the identified burden of disease and can be delivered by primary health care units located within reasonable distance of the population served. Furthermore, it must be cost-effective.

The Ministry of Health also recognises that increased utilisation rates require the mobilisation of community leaders and communities to promote the quality of health services and the importance of utilising them. In addition to its traditional role of changing the health behaviour of the community, HSDP will publicise the available services to gain the confidence of the population.

Reorganisation of health services: The Ministry of Health has decided to reorganise the existing six tiers of the health care delivery system into four, consisting of:
1. primary Health Care Units, incorporating the former health centres, health posts and health stations. These comprise a health centre and an average of 5 satellite health posts and providing comprehensive and integrated primary care services, as well as minor surgery and life-saving emergency operations;
2. district Hospitals incorporating the former rural hospitals, providing comprehensive out-patient and in-patient services (with a minimum of 50 beds) with some serving as training centres for front-line health workers;
3. regional Hospitals or Zonal Hospitals which provide specialist services in the four basic specialities as well as clinical training for nurses, health officers and paramedics;
and 4. specialised Hospitals which provide sub-specialist care as well as clinical training for health officers, generalises and specialist doctors.

Health service quality: Quality improvement is assured through better training and staffing of health care facilities, adequate and sustained provision of drugs and medical supplies, adequate budgetary allocation and improved management.

Education Best Practices

For up-to-date information, please visit the Ministry of Education website on www.moe.gov.et

Education, The Basis for Development

The economic and social development of any nation depends on education. Education in Ethiopia dates back to the fourth century. For about 1,500 years the church controlled most of the education institutions. However, education in Ethiopia has undergone tremendous change since the 19th century because the government has made an attempt to improve basic education.

Formal education began in 1908. Because of misguided policies and low levels of educational standards even when compared to other African countries, it could not bring about the expected changes. Many people agree that the education system suffered shortcomings in quality, quantity, efficiency and relevance because of four key problems.

Firstly, education and training policies that has been in place for many decades focused only on solving immediate problems, rather than tackling major challenges at the national level.

Secondly, children - especially girls - were not encouraged to attend school.

Thirdly, since there were no specific profiles set for students at different levels, neither the student nor the teacher had a clear vision of what they were learning or teaching, or why.

Fourthly, the number of subjects taught both at primary and secondary level was too great (up to 15 in some cases), which resulted in lessons being too fragmented to develop necessary skills, attitudes and behaviour.

Because of these and other bottlenecks, the educational system was unable to contribute to solving the problems of the country, and so education in this period was marred by high drop-out rates.

The same hypothesis holds true for institutions of further education. Further education teaching started 50 years ago, entrusted with the task of producing capable, problem solving and responsible citizens. Nevertheless, the reality prevailing in higher institutions was far from encouraging. This was especially true in the time of Haile Selassie.

When the regime of Emperor Haile Selassie was removed from power in 1974, the number of elementary schools (1-6) was only 2,754 and the number of students was 859,831. The number of secondary schools and students was 420 and 31,296 respectively. During the time of the Derg, in 1989/90 academic year the number of elementary school students was 2,855,800.

Because of the militaristic policy of the Derg regime, not only were children denied access to basic education in their thousands (if not millions), but also a number of schools were demolished because of the war that was raging in different parts of the country. One of the characteristics of the Derg was its spending spree on armaments, rather than schools and books. In the period between 1987 and 1991, only 8.94% of the annual budget was allocated for education.

After the fall of the Derg, the ruling party, the Ethiopian Peoples Revolutionary Democratic Front (EPRDF), in addition to stabilising the country, facilitated the construction of 1,500 new schools in Afar, Amhara, Oromia, Somalia and Tigray states.

Within three years of coming to power, the number of elementary students increased by more than ten million.

With all the promising developments registered in the education sector, the Ethiopian government in 1993/94 introduced a National Education and Training Policy strategy (NETP) to gradually overcome the aforementioned problems of quality, quantity and efficiency.

One of the priority areas addressed in the policy was the development and implementation of reforms, on a stage by stage basis from 1994/5 to 2002/2003, in Ethiopian primary and secondary schools.

As part of the reformed education system, a new strategy called 8-4 became practical, which introduced 8 years of primary and 4 years of secondary education. Both levels were divided into two cycles - 1st and 2nd cycles.

According to Birhanu Alebachew, Public Relation Head with the Ministry of Education (MoE), after the issuance of NETP, a stark improvement was witnessed in the education system and specifically the rate of enrolment. For instance, the number of elementary schools built and student enrolment levels in the past 10 years, grew by three fold, dwarfing the growth achieved over the course of a century.

The secondary cycle of education, aimed at enabling students to acquire skills and develop interests and decide on an area of specialisation, has also resulted in dramatic changes in the vocational stream of the education sector. The construction, expansion and renovation of schools, has greatly contributed to the success achieved.

Student participation at secondary schools - which was 6.6% in 1994 - rose to more than 22% last academic year.

The basic notion of rapid economic development is hardly imaginable without skilled manpower.

Before the NETP was issued a mere 2368 students were receiving technical training in 14 ill-equipped government technical schools. There are now a number of technical training centres in all regional states. The number of training institutions and trainees have shown marked growth within a short space of time.

In the past, institutions of higher learning were given the least attention. The distribution of institutions and the preparation of curriculi was not carried out in line with the political and economic needs of Ethiopia. The old training policy failed to encourage research and innovation. There were only two universities until very recently; their number has now risen to eight.

Ten years ago, student intake at universities under the Ministry of Education stood at 3,000. This academic year it is now 32,000 - a staggering increase. The government is exerting efforts remove the discriminatory distribution of higher institutions. According to Ato Birhanu, the government, as part of its plan to increase the distribution of higher learning institutions over the next five years, will construct 11 new universities and upgrade 2 existing universities, to enable student enrolment to expand by at least a further 10,000.

The government is working to use every resource at its disposal to improve national infrastructure to bring about a nationwide transformation. The government of Ethiopia believes that capacity building and infrastructural improvement is vital for the implementation of the ongoing development programme, which will help promote peace and democracy. An emphasis is also given to solving the problems that could undermine the expansion and modernisation of the education system, which is crucial for rapid and sustainable development.