Adam Smith (1723- 1790) and David Ricardo (1772- 1823) classical economic theories emphasized invisible hand’s free market forces of demand and supply, self-regulation plus prioritization of long run growth driving mean reversion to full employment.

Thomas Robert Malthus (1766-1834) posited that exponential population growth unless prevented will outstrip arithmetic growth of food and resources causing poverty, hardship and economic decline.

Joseph Schumpeter (1883-1950) entrepreneurship theories argued that entrepreneurs drive technical progress and innovation of a nation and that large companies use their capital to invest in research and development (R&D) of new products and services, distribute them cheaply to consumers and raise economies living standards.

Roy Harrod (1900- 1978) and Evsey Domar (1914- 1997) model postulates that higher savings increases investment which raises capital stock and economic growth.

Walt Whitman Rostow (1916-2003) five stages of economic growth posited linear transition from traditional society, preconditions for take-off, take-off, drive to maturity and age of high mass consumption.

Daron Acemoglu institutional theory argues extractive institutions which concentrate power and wealth in the hands of a few hinder economic development by discouraging investment, innovation, and economic growth while inclusive institutions which distribute power and resources promote it.

Ethiopia’s Pathway to Africa’s Beacon of Prosperity- Home Grown Economic Reform (HGER).

Ethiopia’s 10-Year Development Plan (2021-2030) proposes home grown reforms to economic, social, administrative, and institutional problems.

Key major economic challenges were identified to include lack of quality GDP growth that creates jobs, reduces inequalities, and fosters sectoral transformation and linkages. FCY public debt distress as exports lag imports. National savings lag national investment creating imbalances.

Persistent and stubbornly high inflation. High unemployment, disguised employment and vulnerable employment in informal sector. Slow national transformation from low productivity agriculture to manufacturing.

Relatively low tax to GDP ratio. Low financial inclusion for banking and insurance plus ‘’crowing out’’ of private sector credit by government and SOEs.

Low quality provision of infrastructure as well as health, education and other social services with wide rural vs urban disparities. Weak government capacity to drive achievement of development targets coupled with waste and corruption.

Economic Growth and Poverty Reduction Targets.

Target for Real GDP growth was set at average of 10 percent over FY2020/21- 2029/30.This double digit growth was expected to reduce poverty level from 19 percent in 2020/21 to 7 percent in 2029/30.

Structural transformation targets for agriculture were set at an average growth of 5.9 percent while GDP share was to fall from 32.6 percent in 2019/20 to 22 percent in 2029/30.Industry average growth target was put at of 13 percent and its GDP proportion rise 29 percent to 35.9 percent.

Export promotion was to be prioritized with exports share of GDP expected to hit 12.9 percent by 2029/30.Agriculture exports were projected to fall from 77 percent to 36.4 percent.

Gross Capital Formation (National Investment) needed to deliver the double digit 10 percent average real GDP growth rate was projected at 36.9 percent of GDP.

Fiscal Policy and Public Finance Targets.

Gross domestic revenue was forecasted to rise by an average of 26.1 annually from birr 395 billion to birr 3.9 trillion with tax revenue (Income, VAT, Excise, Custom duties)  increasing from birr 317.9 billion to birr 3.5 trillion. Tax revenue to GDP is expected to double from 9.2 percent in 2019/20 to 18.2 percent.

                Public expenditure is estimated to increase from birr 480 billion to birr 4.5 trillion. Government budget to GDP will clock 23.4 percent by 2029/30. Recurrent expenditure share of budget will be 64 percent in 2029/30 while CAPEX development will comprise 36 percent.

Fiscal deficit was projected to remain below the 3 percent of GDP global threshold to stand by leveraging fiscal consolidation path discipline of cutting costs, increasing revenues and  growing GDP at 2.9 percent of GDP (birr 556.4 billion) in 2029/30.

LCY fiscal deficit financing will by then comprise 79 percent while FCY deficit financing account for 21 percent.

Medium Term Debt Management Strategy -MTDS was to reduce Public and Public Guaranteed Debt to GDP ratio from 51 percent in 2019/20 to 48.6 percent in 2029/30.

Monetary Policy and Financial Sector Targets.

Inflation single digit bound target will be anchored by annual growth of M3 Broad Money at 21 percent and M1 Base Money 19 percent. Floating exchange rate target was to guarantee a stable exchange rate and increase NBE FX Reserves.

Interest rates to be determined by market demand and supply. Implement digital finance system. Establishment a functioning capital market (money market, bonds and stocks exchange, commodity derivatives market).

Total bank and MFI deposits average annual average growth of 22.4 percent from birr 1.04 trillion in 2019/20 to birr 7.9 trillion in 2029/30 driven by commercial bank deposits rise of 28.6 percent and MFI deposits 30 percent per annum.

Development Financing Plan Targets.

Public budget-related financial planning with domestic revenue (tax and appropriations in aid) plus donor grants covering 88.7 percent and budget deficit financing 11.2 percent.

Non-budgetary financial sources include bank, MFI and other saving options deposits of birr 17.99 trillion (birr 15.565 trillion – 84.5 percent raised by banks, MFIs and loan repayment. birr 2.43 trillion – 13.5 percent from treasury bills, bonds, equity market and other financial sources).Private sector share of credit will be birr 12.2 trillion (87.2 percent) and government birr 1.8 trillion (12.8 percent).

Agricultural Development Targets.

Increase annual crop production from 543m quintals to 925m quintals. Grow crop production through irrigation from 8m quintals to 38m quintals. Raise fertilizers distribution from 16.1m quintals to 32.9m quintals.

Enhance horticulture production for export from 272.8K tons to 1.05M tons and horticulture export receipts from USD$326.1M to USD$950M. Raise milk production from 4.37bn litters to 11.8bn litters. Increase animal meat from 295K tons to 1.7M tons.

Manufacturing Industry Development Targets.

Raise manufacturing average capacity utilization from 50 percent to 85 percent. Import substitution by increasing domestic market share of locally manufactured industrial products from 30 percent to 60 percent.

Grow number of manufacturing SMEs from 2,000 to 11,000. Create 5M new manufacturing jobs by growing them annually from 175K in 2019/20 to 850K in 2029/30.

Construction Industry Development Targets.

Raise the market share of local construction companies to 75 percent. Reduce the time wasted in implementing construction projects by 50 percent.

                Raise Construction direct jobs from 710,000 to 3.3M per year and indirect jobs from 1.78M to 8.3M per year through 16.6% annual growth rate of job creation in construction. Meet 80 percent domestic construction inputs requirement.

Mining and Petroleum Development Targets.

Increase number of mining FDI entrepreneurs from 160 to 660 and domestic investors from 50 to 1,050. Grow number of mining services value chain investors from 1,700 to 6,700. Enhance annual gold production from 3.2 tons to 137 tons.

Foster number of minerals value addition manufacturing industries from 30 to 130. Raise mining and petroleum jobs from 200,000 to 1.8M.

Trade Development Targets.

Grow merchandise export revenues from USD$3bn to USD$18.3bn (USD$6.7bn from agriculture, USD$9bn from manufacturing, USD$2.1bn from mining, and USD$0.7bn from electricity and other commodities. Enhance number of foreign trade destinations from 37 to 96 by concluding WTO accession negotiations.

Raise ease of doing business score from 48 to 80 by removing trade barriers. Implement African Continental Free Trade Area. AFCFTA. Develop 3,055 new demand-based standards from international, continental, and national standards.

Tourism Development Targets.

Grow number of overseas tourists from 850,000 to 7.3M and domestic tourists from 24m to 70m. Increase tourism sector jobs from 1.6M to 5.2M .Expand tourist serving institutions from 1,348 to 2,696. Add 59 new tourist destinations.

Urban Development Targets.

Develop 4K towns and 14K rural development centers.  Establishment 2M MSMEs for urban manufacturing. Raise ratio of urban housing demand satisfied from 64 percent to 80 percent by building more than 4.4M houses. Build 2.8M rural centers standardize houses.

Reduce urban unemployment rate from 18.7 percent to 9 percent by creating 15M jobs through food security system, community works and social safety net support. Increase liquid waste removal from 1 percent to 50 percent and dry waste removal from 30 percent to 80 percent in towns with a population of over 20K.

Transport Development Targets.

Build 102,000 km new roads to expand national road network from 144,000 km to 246,000 km. increase expressways from 301km to 1,650km. Grow Universal Rural Roads Access Program (URRAP) from 56,000 km to 109,000 km. Raise dry ports from 8 to 11.Increase railway length railway from 902 km to 4,199 km. Building 6 airports.

Increase international flight passengers from 10.2m to 48.4m. Developing inland rivers and GERD transport. Grow rural transport coverage from 67 percent to 100 percent and urban transport coverage from 34 percent to 70 percent. Create 1.4M transport sector jobs.

Water Resources Development Targets.

Increase rural dwellers with access to water within 1km from 54.88 percent and urban dwellers from 58.9 percent to 100 percent. Build integrated basic sewerage systems for 100 cities and ensure all rural villages to have access to toilets.

Increase application of modern irrigation techniques from 2 percent to 20 percent. Create 1.05M water sector jobs.

Energy Development Targets.

Increase power transmission lines from 18,400 km to 29,900 km. Grow electricity export from 2,803 GWH to 7,184 GWH. Expand electricity customers from 5.8M to 24.3M.

Raise grid-based electricity coverage from 33 percent to 96 percent and off-grid from 11 percent to 4 percent. Cut electric power wastage (loss) from 19.6 percent to 12.5 percent.

Innovation and Technology Development Targets.

Increase access to mobile and internet from 37.2 percent and 18.6 percent respectively to 100 percent. Increase digital public services from 176 to 2,500. Raise the coverage of public institutions to be included in the government’s electronic network system to 95 percent. Increase national data centers from 1 to 3.

Raise share of private sector jobs in technology and digitalization from 50 percent to 80 percent. Provide support to 3,000 selected tech start-ups. Increase potential workforce in innovation, technology and research to 5.7M

Demography and Human Resource Development Targets.

Limit population growth rate to a maximum of 2 percent. Increase urbanization rate from 21.4 percent to 35 percent. Cut maternal mortality rate- MMR per 100,000 live births from  401 in 2015/2016 to 140 in 2029/30;  Infant Mortality Rate- IMR from 47 to 29 and under 5 years infant mortality from 59 to 25.

Raise medical doctors per 10,000 patients from 0.86 to 2.7.Increase community health insurance coverage from 49 percent to 95 percent. Increase life expectancy from 65.5 years in 2018/19 to 70 years in 2029/30.

Achieve 100 percent net enrolment rate in grades 1-8 and grade 8th completion rate from 62.1 percent in 2018/19 to 90 percent in 2029/30. Increase public higher education institutions from 45 to 55 and private from 238 to 550. Increase public TVETs from 672 to 922 and private from 950 to 1700.

Gender and Social Inclusion Targets.

Increase the share of female decision makers in legislature, judiciary and executive to 50 percent.  Eliminate 44 percent pay differential between men and women for similar jobs

Increase women engaged and benefiting from micro enterprises from 41 percent to 50 percent and women engaged in income generating activities using microfinance loan from 33 percent to 55 percent.

Raise youth with access to credit from 25 percent to 50 percent. Increase the number of persons employed through job placement support systems from 1.96M to 20M.

Grow number of the vulnerable, persons with disabilities, elderly and street dwellers in safety net programs from 1.3M to 1.53M.

Justice and Public Services Targets.

Increase criminal case clearance from 80 percent to 100 percent. Enhance resolution of civil court cases enforcement from 50 percent to 100 percent and arbitration from 70 percent to 92 percent. Grow ICT supported legal services coverage to 100 percent. Implement international human rights 100 percent.

Raise satisfaction with public service delivery from 59 percent to 90 percent. Grow share of women in public institution leadership posts to 36 percent. Employ 50 percent of new graduates.

Peace Building and Regional Development Cooperation Targets.

Build trust between communities and security forces from 40 percent to 95 percent. Enhance level of confidence and understanding between Federal Government, Regional States and between Regional States from 25 percent to 95 percent.

Create 6M overseas employment opportunities. Support Ethiopians in diaspora to create a wealth worth of USD$7bn and 100,000 jobs inside Ethiopia.  

Environment and Climate Change Targets.

Raise Greenhouse Gas-GHGs emissions reduction capacity from 92.7M metric tons of carbon dioxide equivalent (CO2E) to 162.3M metric tons.

Increase terrestrial coverage of protection of wild life against illicit activities from 62 percent to 92 percent.

Buffer national forest coverage from 15.5 percent to 30 percent. Increase number wild life and biodiversity species maintained from 179,285 to 764,361.

Nicasio Karani Migwi is a specialist in banking and financial services, macroeconomics, strategic management, international business  and Corporate Governance (Board Directorship). He currently works as a General Manager- Special Projects and Bank Economist – real economy & financial markets at Equity Group Holdings PLC. He did part-time lecturing for the MBA Global Strategic Management at Jomo Kenyatta University of Agriculture and Technology.