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Raising productivity through intervening in selected sectors

Raising productivity through intervening in selected sectors

The Ethiopian economy is suffering from chronic structural anomalies. The government is trying its level best to reform the economy through employing indigenous methods. Via such approach, paying attention for the provision of social services is essential.

Recently, the Ethiopian Economic Association, a local none governmental organization, has prepared a platform to discuss issues that focus on the nation’s economic achievements and challenges.

On the occasion, pertinent experts had reflected their views in these regards.

Frehiwot Handamo, a member of think thank group that worked in different organizations and still engaged in research, was one of the presenters.

As to her, the main objective of the current economic reform is improving productivity and producing wellskilled human resources which support the scheme. This in turn creates good opportunities to youth and children.

The budget allocated in the past decade had made citizens beneficiaries.  In the 2010 budget year, the government expenditure has risen to 370.5 billion birr out of it 24.5 percent is allocated to education and 8.9 of it to health. Nevertheless, the pervasive inflation has reduced the budget capacity posing hindrance to effect the intended outcome.

The budget  allocated for social services and education play crucial role in rising citizens’ concern regarding the future. However, the number of children living below the poverty line is much higher. According to the 2010 EC budget year report, children living below the poverty line are 32.4 percent and this is 29.6 percent of the whole population.

When it is measured in terms of income, the population living below the poverty line had dropped from 29.66 percent in the year 2011EC to 23.5 percent in 2016.

The holistic measurement of poverty also indicated that 88 percent of children below the age of 18 are barred from basic social services.

On the other hand, the number of Ethiopian child population will increases from 49 million by the year 2015 to 60 million by the year 2050. This indicates that though it entails a challenge, enhancing social service provision to the population is vital. Unless the investment allocated for child development is utilized on time, its impact on the growth of sectors such as health, ducation and productivity will be insignificant.

According to the World Bank’s report, today’s investment on children education and health enables children to unleash their today’s potential by 38 percent in the future.

As Ethiopia aspires to join the ranks of middle income countries by 2025, investing on human resource development is essential and helps to implement sustainable indigenous Abebe Wolde Giorgis economic reforms.

Due to the absence of strong culture in mobilizing financial resources that could be allocated to the social services currently, the sector has heavily relied on government’s budget and donor’s support.

The experience of other countries shows that measures that had been taken to accelerate reforms ended up compromising social sectors.

Structural development gap between regions also hinders the effort to social equity. Pertaining to education, the expansion of higher educational institutions is achieved at the expense of compromising education quality.

The private consultant Zelleke Paulose on his part said that, currently , the nation’s per capita health budget is 24 Dollar and as compared to the other African countries, it is much lesser. And the budget support from abroad is shrinking from time to time. At the international level, it is common to allocate educational budget up to 20 percent of the GDP. However, Ethiopia has surpassed this average and spends 26.5 percent. Nevertheless, out it 46 percent is allocated to the higher education which is unfair and needs proportional spending to all level. Some kind of adjustment is needed.

Therefore, paying attention for quality of education rather than building institutions is vital. Also proper allocation on budget is vital.

To join the ranks of middle income status countries, rising productivity is key. When it comes to producing human resource attaching attention to competitive skills is essential. Unless the youth get sufficient education and health services their future productivity will be strained.

Though stunting is a growing threat to development, it is not rendered enough policy debate and discussion. Because of stunting, Ethiopia annually loses 16.5 percent of its Growth Domestic Production.

It is estimated that currently from 48 to 52 million of the population is below 18 out of which 37 percent is subject to stunting which resulted in the multifaceted poverty.

Because of lack of sufficient food, education and health services children will be hindered to unleash their physical and mental potential in their respective career down the road.

Stunting has different magnitude and hence subsidizing regional governments must be in the form of blocked and specific purpose grants.

The government should work on its social security programs in line with the fundamental feeding schemes. Implementing the safety net program to improve the community feeding culture is vital. This helps to bridge the social development gap between regions, zones and Woreda.

In addition, it helps to study and gather information in that regard.

Concerning the challenges affecting the education quality and health services, some remedial ideas were reflected.

Though educational participation at elementary level is better, when it is compared to the one at secondary level or at their age level, it pales down.

Attrition is very high and there is high discrepancy between regions.

As compared to other countries, the elementary education level is beyond the learning capacity of students.

A similar situation is observed in secondary schools.

On the other hand, the perception of the society that education has no short term return is pulling down roots from time to time. Unless such mentality is rooted out, the huge public investment on education will not be fruitful as expected.

The government’s total subsidy to the sector should not comprise the specific purpose grant.

The level of stunting is different from place to place and considering this is essential. But to support regions before allocating the resource making right assessment is essential.

The per capita health sector budget is 24USD and as compared to other African countries, even to the neighboring ones, it is very little.

Though significant amount of money used to come from abroad to support the sector, recently it is nose diving.

The per capita health budget is very little but Ethiopia has achieved better results on health sector.

In order to meet its aspiration to reach to the middle income countries by the year 2023 EC, much has to be done. As the government prioritized the health sector to strengthen the effort mobilizing finance from local sources is essential.

Problems that arise from social sectors are not peculiar to the sector they are rather rampant in other sectors. Hence, formulating relevant policies should be considered.

For example, stunt is not caused by simple factor. There are various factors that contribute to that. In addition to the health sector the agricultural and water sectors have their own contribution to stunting. Hence concerted efforts with various stakeholders are needed. This also indicates that the fiscal policy must revisit the social sector.

The experience of other countries shows that donor countries reduce their financial support to developing countries which are moving towards middle income.

After the paper presentations participants reflected their views. One participant said that, stunting affects both physical and mental status of the person.

In our country, 67 percent of the adult population which is 24 million is stunting.

As the result, Ethiopia loses 16.5 percent of its GDP which is 55.5 billion Birr annually.

If the nation reduces the current stunting which is 37 percent to 10 percent by the year 2015 EC it can save 148 billion Birr.


The Ethiopian Herald