EdItorIal Curbing

sKYroCKEting priCEs

Ethiopia has made substantial progress in recent decades, but is now confronting mounting economic challenges. Ethiopia faces many symptoms of an ill economy, including mounting debt, a shortage of foreign exchange, a swelling unemployment rate, inflation, low productivity, and workforce skills mismatched to the economy’s needs. Policy reforms informed by research findings are required to address the situation.

The economic consequences of the pandemic appear to be more protracted than health-related repercussions. This will reverse economic gains made in the past few years, which have seen large segments of the Ethiopian population lifted from poverty. The number of people living below the poverty line is now expected to increase due to various reasons, according to researches conducted by different scholars and institutions.

More than ever the people of Ethiopia are currently suffering from illogical and unreasonable price hike in almost all types of goods and services. The soaring price in major food items such as sugar, edible oil, cereals and crops as well as vehicle spare parts is becoming severe headache for the majority. This growing cost of living both in urban and rural areas is being fueled by socio-political unrest in various parts of the country. In addition to the economic and political pressures from the Western nations has been exacerbating the situation in the country.

The agriculture sector is the largest employer in the country and generates significant foreign exchange for Ethiopia, particularly coffee and oil seeds. Nevertheless, it has not yet caused either surplus production or even sufficient food supply to the ever-increasing population.

Ethiopia’s hospitality sector has collapsed as travel bans have gone into effect around the world. The collateral damage is significant as hospitality accounts for over 8 percent of the total employment in the country. At the same time, Ethiopia’s manufacturing sector a key focus of the government in recent years has weakened due to the disruption in supply chains worldwide.

While working on strengthening domestic taxation and raising more revenues to finance public goods, the priority needs to be on improving the business environment to attract private capital mobilizing private finance for development. The shift from agrarian to industrial to post-industrial economies required different worker skills.

The Government of Ethiopia along with local and international non-governmental organizations needs to advance a business-friendly and enabling policy environment in order to promote increased private sector investment and growth, and expand trade opportunities. Most importantly, the Government should critically work on boosting agricultural produces, stabilizing the market through sustainable regulatory framework and law enforcement activity and ensure peace and order across the nation in order to pull down the skyrocketing cost of living, and resume the economic growth.