The most awakening—not really alarming, let alone disheartening—news of these most recent weeks surrounding the economy of our country, Ethiopia, is that, in the first quarter of the current fiscal year, the country’s revenue that comes from the export of goods and services had shown a marked decline—10 per cent overall—as compared to the same period in the previous fiscal year. The Ministry of Trade and Industry announced this, of course, as bad news to the public in its report indicating that coffee and gold were the two culprits, contributing to the decline in export earnings during the first quarter. The decline in dollar terms was USD 70.1 million out of which USD 61.9 million was related to the decline in the export earnings of coffee. The remainder of the shortfall related primarily to the decline in the export revenue of gold. The Ministry further explained of events unfolded during the period—the period between July and September, inclusive—and said that it had planned to collect USD 880.1 million whereas the collection realized fell short by over USD 250 million, i.e., USD 628 million in actual earnings. This was bad as measured in terms of the large observed planned-actual gap, implying the existence of problems somewhere awaiting immediate correction so that things would get better in the forthcoming quarters. The usual areas of suspicion are: the planning process in which forecasting errors may have been made; the structure of the economy—reliance on products resulting from the most rudimentary forms of production—influencing the export sector unfavourably; and the various circumstances of the world market in which advanced countries enjoy greater command and influence.
Decline in revenue is certainly the last thing Ethiopia can contend with at this critical juncture, a juncture at which the country is making a 90-degree turn upwards in almost all aspects, such as in terms of its rapid and comprehensive economic growth and social transformation. All it needs in the existing circumstances are events that are, at least, encouraging. And yet, the reality being as we have just shared, despair in any form or at any level is hardly the best way to escape from the said predicaments. After all, the first quarter is nothing but the first, meaning that three-fourths of the existing fiscal year is still ahead—if we will, under our very control—allowing all kinds of opportunities for us to influence it, and for it to go where we want it, or to turn things significantly around. In addition, it is possible to think of the long term in light of which we should tighten our belts, take deep breath, learn from past mistakes and challenges, and work toward the permanence, or, at least, the sustainability of the advantages we can possible obtain out of foreign trade.
However, whether we choose short-term measures or their longer-term alternatives in order for us to either turn around the country’s export-earnings trends or place the nation’s economy on a stronger foothold, there remain a few inescapable facts or truths highlighted in the veritable annals of other countries’ history as well as the science of economics. In plain terms, this means that the most concerned parties—i.e., government policy makers, private businesses, and civil society organizations—must draw lessons from these two fields of study, and, thus, act upon the knowledge and skills that would be acquired. This does not mean, of course, that there are no economists skilled in their trade or people who are extensively conversant with the relevant wisdom embedded in historical precedents among the policy makers or the other stakeholders. What it means is that, for some reason or other, we may have taken too much time—a little more or less than a generation, possibly—to apply our respective powers and render the theories we might know into useful or effective actions.
One may rightly ask what point or message we are trying to impart through the kind of discourse we have just had. To give an answer to this, let us get back once more to the point we made earlier with regard to the possible sources of error or problem that led to the decline in export revenue. Was it a planning error? Is there any inbuilt shortcoming arising out of the structural issues surrounding the Ethiopian economy? Or, can there be any factor we might point our fingers at in the global market for commodities, something that is, anyway, out of our control, an exogenous variable? For now or ever, we can ignore the first as a possible suspect, for, even if it is the source or one of the sources, there might be little or no way to prove concretely one way or another, i.e., in the circumstances. The remaining two suspects are easier to discuss, not only because we can discuss them from the angle of age-old economic theories but alongside facts and figures procured as evidence from various empirical data. Thus, according to mainstream economics—specifically, its branches such as international economics or development economics—countries like Ethiopia that are at the lowest rungs of the development ladder rely overly on the production and export of primary products. By primary products we mean generally products which people extract from nature with little or no value added except that which is made possible at a very rudimentary level.
Such kinds of product extraction have customarily involved little or no skill and expertise in the processing of a raw product to an extent or degree of finishedness that make the original product or its transformed version ready for final, ultimate consumption. A good example, at this stage, may be the production of coffee as we know it currently here in Ethiopia.
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