The Structure and Performance of Ethiopia's Financial Sector in the Pre- and Post-Reform Period with a Special Focus on Banking

financial sector development, growth, banking, financial liberalization, Ethiopia, Africa

Openness, Inequality and Poverty in Africa

This paper explores the relationships between openness, poverty and inequality in Africa. The analysis begins with a review of social development on the continent since 1980, followed by a discussion of openness and a lengthy exploration of the patterns of trade and finance that link Africa to the rest of the world. The macroeconomic policy framework that guided African policymaking over the last three decades is the lens through which poverty and inequality are further examined. The paper highlights the major factors underpinning openness and social development, and concludes with policy recommendations.Africa, inequality, income distribution, poverty, social development, globalization, international trade, debt, financial flows, economic growth, structural adjustment, liberalization.

Taxes and Tax Reform in Ethiopia, 1990-2003

tax reform, fiscal policy, distribution of income, incidence analysis, Ethiopia, Africa

Ethiopia's New Financial Sector and Its Regulation

sub-Saharan Africa, Ethiopia, conflict, economic reform

Debt issues in Africa: Thinking beyond the HIPC initiative to solving structural problems

This paper attempts to answer the following question: If the HIPC Initiative is fully successful and managed to write-off all debt that is owed by Africa, will the debt problem be over? The answer is ‘no’. This pessimist answer is arrived at by examining the historical origin of African debt and the structural problems the continent is confronted with. The literature about the origins of the African debt crisis lists a number of factors as its cause. The oil price shocks of 1973-74 and 1978-79, the expansion of the Eurodollar, a rise in public expenditure by African governments following rising commodity prices in early 1970s, the recession in industrial countries and the subsequent commodity price fall, and a rise in real world interest rate are usually mentioned as major factors. Surprisingly, almost all the literature starts its analysis either in the early 1970s or, at best, after independence in 1960s. The main argument in this paper is that one has to go beyond this period not only to adequately explain the current debt crisis but also to propose its possible solution. The conclusion that emerges from such analysis is that the African debt problem is essentially a trade problem. Thus, long-run solution to debt points to the importance of addressing trade and trade related structural problems in the continent. – debt ; trade ; Afric

Ethiopian Macroeconomic Modeling in Historical Perspective: Bringing Gebre-Hiwot and His Contemporaries to Ethiopian Macroeconomics Realm

Much of the macroeconomic analysis in Ethiopia is hardly linked to the country’s pioneer development thinkers. The latter, however, articulated the Ethiopian development problems and what should be the appropriate policy direction to address them nearly a century ago. This articulated development thinkers of the early 20th century Ethiopia had captured the imagination of prominent Ethiopian historians and their students. Ethiopian economists seem to lag behind in appreciating the theoretical insight of these pioneer development thinkers. This article is aimed at bridging this gap. The paper will, first, reviews the economic ideas of theses reformer-intellectuals and then build a linear model based on the synthesis of their development thinking. The model is then solved to render analytically solutions that will give theoretical insights on historic and contemporary macroeconomic issues in Ethiopia. I argue that some important development concepts such as the deterioration of the terms of trade of developing countries, the vicious circle of poverty and structuralist analysis of North-South macro economic interaction has, contrary to the statement in existing development literature, has its origin in early 20th century Ethiopian Development thinking

Finance and Poverty in Ethiopia: A Household Level Analysis

finance, Ethiopia, Africa, poverty, consumption smoothing

Taxes and tax reform in Ethiopia, 1990 - 2003

In 1991 the Ethiopian Revolution Democratic Front (EPRDF) toppled the old ‘socialist’ regime that had ruled the country for seventeen years. In contrast to the previous policy regime of hard control, EPRDF initiated a wide range of reforms that covered not only the tax system but also the exchange rate, interest rates, trade, domestic production and distribution. This paper attempts to explore the contribution of the tax reform, the changes in its structure and institutional reform in order to understand its role in raising revenue

Ethiopia's financial sector and its regulation

Ethiopia is one of a number of SSA economies that adopted state-led development strategies in the 1970s (others include Angola and Mozambique), and suffered from intense conflict (leading to the fall of the Derg regime in 1991). The new government was therefore faced with the twin tasks of reconstructing the economy, and embarking on the transition to a market economy. As part of this process, state banks have been reorganised, the role of the private sector in the financial system has been expanded, interest-rate controls have been liberalized, and the central bank has been given new powers of financial supervision. Financial reform has been gradual, but nevertheless determined despite disagreement with the IMF over restrictions on the entry of foreign banks and the role of the largest state bank. This paper argues that gradual financial liberalization—while simultaneously investing in regulatory capacity—is the appropriate strategy for maintaining macro-economic stability and growth in Ethiopia. In this regard, the Chinese transition strategy—in which significant control was retained over the financial sector—can be a useful guide to strategy design in SSA, provided that rent-seeking can be contained