Ethiopia’s Economic Miracle Is Running Out of Steam

Africa's Next Hegemon Behind Ethiopia's Power Plays File Photo: Construction workers are seen in a section of Ethiopia's Grand Renaissance Dam Reuters

Ethiopia’s Economic Miracle Is Running Out of Steam

Why it’s time for East Africa’s big success story to change the way it does business.

By Robert Looney

Just over 30 years ago, Ethiopia’s famine regularly made the news. Gruesome accounts of up to a million deaths stemming from drought and civil war captured the attention of aid agencies, sympathetic governments, and humanitarian groups around the world. Contrast that with the past decade, when Ethiopia averaged an economic growth rate of slightly better than 10 percent. The about-face has been so dramatic that some seasoned observers have gone so far as to call Ethiopia’s progress an economic miracle, dubbing the country an “African lion” whose success recalls that of Asia’s economic tigers.

Encouraged by its accomplishments, the governing Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF) continues to focus on a high-growth strategy aimed at making Ethiopia a middle-income country by 2025. To the casual observer, this goal appears increasingly within reach. Ethiopia is not just growing, but has already met or is coming close to meeting some of its important Millennium Development Goals, including universal primary education and reductions in infant mortality. The country’s poverty rate fell from 44 percent in 2000 to 30 percent in 2011. Unemployment rates, though still high, have been coming down. And the number of Ethiopian millionaires has increased faster than in any other African country.

But these successes have come at a price. The government’s obsession with meeting high growth targets at any cost has resulted in widespread popular anger and discontent, much of it along regional and ethnic lines. The Ethiopian government claims its practice of cheaply leasing out large tracts of land to major agribusinesses after resettling or displacing the local population are necessary to sustain economic growth. Instead, these “land grabs” have led only to disappointing output levels, human rights violations, and abuses of power. As a result, despite the economic boom, if the EPRDF claims victory in the upcoming May 25 national and regional elections, it will be due only to its repressive political tactics: harassment of the opposition, harsh crackdowns on protests, and jailing of critical journalists in record numbers.

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