Ethiopian government reveals another ambitious economic plan

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Ethiopia’s latest five year development strategy will see the laying of a 2,000 kilometer railway network as well as the construction of a huge fertilizer factory. The government aims to reduce both the country’s dependence on foreign importation and foreign spending.

The strategy, also known as Growth and Transformation beginning next month, prioritizes the Ethiopian railway network as its major infrastructure project in the next five fiscal years.

The railway network will stretch from the Capital Addis Ababa to the Port of neighboring Djibouti, the Afar Region and West to Bedele of Oromia Region, says Sufian Ahmed, Minister of Finance and Economic Development (MoFED).

According to the Minister, although the government plans to construct an overall 5000 kilometer railway to the various regions in the longer term, it has chosen to prioritize the 2,000 kilometer railway within the next five years due to the economic importance of those routes.

The Djibouti line remains one of the highest priorities. It is the most vital trade route for the landlocked country. Potash and coal minerals, the country’s major mineral resource, are mined in Afar and West Bedele, making the two regions of equal importance.

Chinese funding

After estimating that the laying of a one kilometer railway line will require an average sum of 40 million birr, sources from the Ministry have indicated that
most of the funding for the project will come from Chinese banks after the Chinese government gave its green light.

The ambitious fertilizer project is as a result of the country’s current importation of an average 550,000 metric tones of fertilizer per year. An unprofitable venture which also puts a heavy strain on the Ethiopian foreign currency reserve, Sufian said. According to him the factory will reduce the importation and its impact on the country’s foreign reserve.

Another ambitious project within the five year strategy is the increase of the current 2000MW power generating capacity of the country to 10,000MW, according to the Minister.

Nonetheless, the strategic plan concentrates much of its energy on the agriculture sector, as it plans to double the current agriculture output at the end of the program year. This means that the current 18.08 million metric tones of production will reach at least 39.5 million metric tones by the end of the year.


Although Sufian confidently says that “Ethiopia’s dependency on foreign food aid will be history at the end of the strategic year”, observers have hinted that achieving the latest strategic development plan will be difficult for the government judging from its past experience, especially the just ended five year strategic plan.

Termed “Plan for Accelerated and Sustained Development to End Poverty“(PASDEP), the former strategic plan which ended this fiscal year, envisaged an increase in basic crop production from 16.7 million tons in 2004/05 to 38.21 tons by the end of the strategic plan period, in 2009/10. However, production performance stood at 18.08 million tons.

The target set for the industry during the PADEP period was to register an average annual growth rate of 11.5% and thereby increasing the sector’s share in overall GDP from 13.6% in 2004/05 to 16.5% by the end of 2009/10. The overall GDP contribution of the sector, however, stood at 13 percent. A devastating performance that marked a deterioration even by sector’s 2004/05 standards.

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