“What has been achieved in agriculture suggests that the economy will grow by double digit” – Prime Minister Haile-Mariam Dessalegn

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Prime Minister Haile-Mariam Desalegn, on February 10, 2014 responded to questions raised by local journalists. On today’s edition The Ethiopian Herald has carried questions raised and responses given in relation to the over all economic development, and ethio-telecom.

Question: Various financial institutions including the World Bank have confirmed that Ethiopia’s economy is growing. However during the past two years they were saying that the economy was growing by a single digit as opposed to the government’s claim that the growth was a double digit one.

Prime Minister Haile-Mariam: Since the past 10 years Ethiopia’s economy has been growing rapidly. When we look at the growth of agriculture in 2004 E.C it was only 4.8 per cent which is way below what was planned. And as a result of the fact that agriculture constitutes the largest share in the country’s economy, the country’s economic growth in the same year was 8.5 per cent. When we look at the figure of this particular year, yes, it is not a double digit growth. Nonetheless, an economy is considered to be growing fast if it is growing by seven per cent and above. Although agriculture somehow showed decline, as a result of the rapid growth registered in industry and service sectors our economy was still one of the fastest growing.

In 2005 E.C since the performance of the agriculture sector improved the economy grew by 9.7 per cent. This is almost close to a double-digit growth. However, we still do not consider it as double digit growth. If the institutions have to make analysis they have to see the economic growth within the specific year not in comparison with the previous years. I am saying this because in 2006 E.C, if we look at the agriculture sector, it has more than any time in the past. The forecasting for the Meher season alone shows that agriculture has grown by 10 to 11 per cent. The contribution of oil seeds, cereals and irrigation was not included. When it is included it is not difficult to imagine that the average growth rate could be even higher. Given the fact that Ethiopia’s economy is heavily dependent on agriculture what has been achieved in agriculture is indicator of the fact that there will be a double digit economy growth.

Judging by the current rapid growth in the agriculture, industry and service sectors as well as the growing influx of investment, we believe that we can achieve our economic growth target for this year.

So, most often the are discrepancies between our forecast and that of the World Bank. As everybody knows the World Bank’s forecasting method is different from what we commonly know. Anyways most of the time they accept ours. Recently there was an incident in which the World Bank confirmed that Ethiopia’s economy is growing by 10.6 per cent. When it comes to final result we don’t have much difference, however, we most often have differences in forecasting, and it is not surprising that the forecasts of the World Bank and that of ours had discrepancies.

Question: The services of ethio-telecom is declining. In fact over the past few days telecom services were totally interrupted. Is the country’s policy to see the telecom sector continue in such situation? Is there any policy change regarding making the telecom industry play a better role in the economy?

Prime Minister Haile-Mariam: Previously we announced that ethio-telecom started a new operation. Particularly in Addis Ababa it started expansion work two months ago. Obviously there will be ups and downs during this expansion work. For instance the interruption of telecom services last week was caused during replacement of old transmitters with new ones. Therefore, such interruptions may occur until the expansion work is completed in six months. So, priority is given to the replacement of network transmitters in areas as Sarbet, Torhailoch and others. where formerly a company called Erickson tried to do expansion work and which are known until today for having serious network problems.

This, however, doesn’t mean that ethio-telecom did not have other problems related to network congestion. Let alone today when transmitters are being replaced even in the past has had network congestion and quality problems. Basically now a direction is designed to alleviate the problem once and for all. So attention will be given to the completion of these activities based on schedule.. That is when change will come in the telecom services.

By the way, the technology that we are applying in the telecom sector is from the company named Huawei, which is also known to be used by countries such as Denmark, Norway and partly England among others.

Therefore, since the technology that we are using is quite similar with the technology the aforementioned countries use, the issue of quality service is to follow the proper completion of the installation of the technology. What we have to know is that the installation of this technology has nothing to do with the question of privatization of the telecom sector. The fact the there is a network congestion has been mentioned before. So, we hope the quality will improve as the work of the installation gets completed.

My government has a firm stand in keeping ethio-telecom as a state owned telecom company for several reasons. As we all know, one of the most juicy businesses is the telecom sector. It is a cash cow. That is why many insist that we privatize the sector. If we were to allow private companies, it is only three companies that would come for the sector. However, now it is 156 countries that are competing for the three areas. And we know why they are dying for it- it is because this is an area where one gets rich very easily. My government, however, strongly believes that this fortune should not be privatized because it is one of the major ways by which we reach out the rural part of the country. It is with the income we generate from the sector that we can redistribute the wealth in the cities to the rural part of the country.

Therefore, we will not transfer the sector to private companies at least for years to come. We know that it is only the government that can make the rural people equally beneficial with that of the urban population from the sector by redistributing the sector’s wealth in cities to the rural part of the country. In many African countries the private sectors that own the telecom sector do not bother about reaching out the rural people because if they do, they may not be advantageous. But we, as government, can make the people in the rural areas beneficial.

Moreover, transportation cost in Ethiopia significantly affects our effort to be competitive economically. And if this cost continues, the country’s economy would lag behind. Therefore, in order to be competent with world economies speed up the construction of the transportation infrastructure, especially the rail way transport is vital. Accordingly, the government of Ethiopia annually allocates birr six billion to the rail way projects from the income generated from the telecom sector.

Even if we take the six billion birr as a net profit and assume the private sector to pay 70 per cent in the form of tax, it is still not sufficient for us to proceed with our developmental activities that we are undertaking as far a the rail way infrastructure is concerned. So, for us, in order to continue our development activities, we are still determined to keep the sector owned by the government. We, therefore, must understand this economic logic. We, therefore, make sure that we will not privatize the telecom sector until we successfully accomplish our objectives with regard to developing the basic infrastructures. I once again assure you that there is no policy change in this regard as well.

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Sourced  here

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