Tag: ethiopia inflation

Abiy Ahmed’s dedication only to war insures greater poverty for Ethiopians

The cost of war for Ethiopians is not just felt on the battlefront or even the millions now displaced but in the ransacking of the future of young Ethiopians who once believed in future prosperity. The dream of Ethiopia to escape poverty is rapidly fading.  While Ethiopian diaspora who are rarely Tigray and Oromo tout Abiy Ahmed as a prophetic bringer of fortune and power the opposite is becoming clear.  The economy of Ethiopia is diving into a bottomless abyss beginning when Abiy Ahmed took power in 2018 with an increasingly accelerating progression downward. 

The Ethiopian birr has fallen in value by almost 50% since 2018. Noted Johns Hopkins economist Steven Hanke as well as others note that the current inflation rate of 31% which predicts will lead to an unbearable circumstance for the average Ethiopian.

The birr continues to decline vs the dollar

Total Ethiopian gold reserves were at over $ 400 million when Abiy Ahmed took power in 2018 but now are likely below $100 million after payments to Eritrea, United Arab Emirates, Iran and others for weapons.

The Biden administration has clearly stated that it no longer considers the government under Abiy Ahmed a democracy. The free trade agreement, African Growth and Opportunity Act, with Ethiopia was dependent upon Ethiopia following democratic principals mutually agreed upon which were violated. Similarly many Western democracies are taking a similar view.

Although the Ethiopian government falsely claimed economic growth rates of 6% the real number is more like -2% and dropping. The  human rights violations and the instability of the Ethiopian state by an ongoing war with no end coming on the horizon severely inhibits foreign investors from participating in the Ethiopian economy which at this point has no future.

Rising prices and lack of medical supplies now affecting all of Ethiopia

The Djibouti to Addis railroad was plagued with problems before the war has been shut down by its proximity to fighting, lack of exports, and low electricity flow

Those that say life is going on as “usual” in the parts of Ethiopia not directly involved in combat are denying reality. As of October 21, 2021 the inflation rate was 34 to 35% which is up by two thirds what the rate was before the Ethiopia Tigray conflict began. Although the Ethiopian government is no longer publicly announcing the Consumer Price Index it has nearly doubled at 243 points since the onset of war as well. 

Meanwhile in discussions with various sources about the condition of medical supplies in Ethiopia in regions even far remote the report is that supplies of medical consumables, medications, and others are back logged at best due to lack of available funding and constraints at supply lines to Djibouti. Apparently private truckers do not want to take the risk of going near or through a war zone. From everything to food, clothing, medicines, and electronics where there is already a shortage worldwide of supply Ethiopia is faring far worse. Pretending life is normal will not help.

Famine, Inflation, loss of regional autonomy expanding armed opposition to Ethiopian central authority

Nationwide food shortage, inflation, and lack of regional autonomy in all of Ethiopia are driving a new coalition from many regions to act against the rule of Abiy Ahmed’s Prosperity Party. Although the Tigray conflict gets the most attention armed resistance is now active in Oromia, Amhara, Afar, Somali, and Gambella regions of Ethiopia. These other actions are clearly becoming more aggressive given the recent advances of the Tigray Defense Force.

Food security forecast for Tigray and Ethiopia by the World Food Program

Since 2018 the government of Abiy Ahmed and the Prosperity Party has focused on city improvement in Addis Ababa to make it a “true capital city of Africa” Meanwhile food production and agricultural improvement projects throughout Ethiopia have been put on a low priority. Many local government leaders were pushed aside or forced to join the Prosperity Party which obligated them to this Addis Ababa first policy and abandoning local concerns.

The World Food Program forecast for food security extending to January 2022 of Ethiopia sees famine to crisis level conditions continuing in not only Tigray but also the whole south regions of Ethiopia. Somali region will have below levels of food supply. The worst area remains southeastern Tigray.

Recurring drought over the past decade without real attention to improving overall production has added to the need for necessary food imports to have remained at least 15% and may grow. Higher prices for seeds and agricultural materials like fertilizer along with inflation (now at 45% this year -the birr trading near 50 per US dollar) means it will harder for farmers to be ready to plant their crops or at least do so in lesser volume. Lesser rains limit the amount of pasture grazing available to raise livestock such as goats, sheep, and beef. Sheep are the most demanding and its availability is now sharply curtailed.

Rainfall patterns of Ethiopia compared to normal (From WFP)

Ethiopia has major growing season and minor growing season extremely dependent on rain patterns. Belg is the shorter season from February to April, and meher is the main season from May to September (they have different names in different regions). These patterns have become increasingly unpredictable.  Total annual grain production (including mainly corn, wheat, sorghum, barley, and teff) greatly depends on rainfall patterns during the belg season.