The Dynamics of Poverty and Vulnerability in Rural Ethiopia

This paper uses the Ethiopian Rural Household Survey (ERHS) panel data of a pool of 2495 households sampled from sedentary farming systems of the country. It investigates the dynamics and determinants of poverty and vulnerability and generates new empirical information on the national dynamics, determinants, and regional distribution of rural poverty and vulnerability. The poverty indices show that depth and severity of poverty were reduced, respectively, from 88.9% and 3.6% in 2004 to 39.2% and 0.7% in 2009, but with increasing poverty incidence. The estimation results from the random effects probit model suggest that determinants of poverty status in rural Ethiopia between 2004 and 2009 were household size, livestock holding, farming occupation, life status, social network, regional dummies, and other exogenous shocks. The marginal effects of these factors on poverty status point out that there were considerable differences in poverty situation among regional states, suggesting that poverty reduction was relatively more enhanced in Oromia followed by Amhara and SNNP regions. The likelihood of households to be poor was about 45.4%. Assuming a threshold of 50%, vulnerability of households in rural Ethiopia was about 43.4%, suggesting that households’ vulnerable to poverty as recued between 2004 and 2009. While many households were escaping from poverty, others were descending into the poverty trap, indicating reduction of relative poverty among the poor and the nonpoor. In order to reduce overall poverty in rural Ethiopia, integrated poverty reduction efforts should be enhanced and spatial differences in welfare effects need to be accounted for.Keywords: Poverty, Vulnerability, Panel Probit, Ethiopi

Economic Welfare in Ethiopia: Growth Scenarios for Exiting Poverty

Poverty alleviation and equitable distribution of benefits among citizens are the overriding welfare objectives of developing countries. Ethiopia has been designing and implementing several development policies and interventions to attain such welfare objectives. However, poverty alleviation is still the primary development agenda of the country and the distribution of poverty across regions and population subgroups is becoming worrisome. In order to generate latest, relevant and reliable empirical evidence on these welfare issues, the third wave (2015) of the Living Standards Measurement Study (LSMS) dataset on Ethiopian was utilized. A sample of 4954 households with 22,296 household members covering all regions and cities were utilized for rigorous distributive analysis. FGT poverty indices and the time taken to exit poverty were estimated and decomposed by population subgroups and expenditure components. A right-censored Tobit model of welfare ratio was employed to identify the correlates of poverty and to predict the intensity and probability of poverty. The result of distributive analysis show that absolute poverty rate in Ethiopia was 22.1 percent with significant variation across regional states. Absolute poverty was also largely different by gender, place of residence (rural-urban), and religion. Similarly, depth and severity of poverty (6% and 2.4%) were varied across regions. Based on different growth scenarios of consumption expenditure per capita assumed (14%, 11%, 8%, and 5), the poor in Ethiopia would take 9.4-26.4 years to exit poverty. The Tobit model outputs indicated that the expected welfare ratio of the poor was 0.783, which was 21.3 percent far below the poverty line (ETB 14758). The likelihood of individuals to be poor was 22.0 percent, which is consistent to the FGT index (22.1%, about 22.1 million population). Poverty decomposition results show that absolute poverty rate in Ethiopia was highly attributable to rural areas (24.1%) with relative contribution of 88.5 percent compared to their counterparts in urban centers (12.7%). Similarly, decomposition of poverty by expenditure components verify  that the absolute contribution of food consumption expenditure in reducing total poverty was 65.3 percent, whereas nonfood consumption expenditure contributed only 11.4 percent. The findings clearly suggest the need to design and implement relevant poverty reduction interventions for attaining Sustainable Development Goals (SDG) of ending poverty and hunger in all its forms by 2030

The dynamics of food price convergence in Ethiopia

This paper examines the dynamics of relative price convergence of nine agricultural commodities among regions in Ethiopia using a panel dataset of 18-year monthly prices collected by CSA in two periods (1996-2004 and 2005-2013). Panel unit root tests, fixe-effects, and half-life method were employed to estimate the rate and speed of relative price convergence of commodities. The findings markedly indicate low rate and speed of relative price convergence and considerably persistent relative price shocks unadjusted among regions, suggesting the need to design proactive market policy intervention in improving convergence of commodity prices in Ethiopia.Keywords: Food price, commodity, price convergence, fixed-effects, Ethiopi

Effects of Tax Audit on Revenue Collection Performance in Ethiopia:Evidence from ERCA Large Taxpayers’ Branch Office

This study examines the effect of tax audit on revenue collection performance evidenced from ERCA-LTO. The objective of the study is to examine the effect of tax audit on revenue collection performance. In doing so, tax audit is measured by nine variables (tax audit resources, audit case selection, capacity of auditors, tax protection system, tax automation, and tax evasion, and tax compliance, amount before and after audit).  The study uses explanatory research design and mixed research approach with secondary data utilized over the study period 2005-2011 E.C (7 years). The data is collected both from primary and secondary source of data. More specifically, the study adopts a multiple regression model. The finding of the study reveals that; tax compliance, revenue protection system, and tax automation has positive and significant effect on revenue collection and statically significant at 1%, 1% and 5% significant level respectively. Furthermore, audit case selection and auditors capacity has a positive and significant effect on revenue collection performance at 10 percent significance level.  Apart from this, the variable tax audit resource, tax evasion and before audit amount has a negative effect on revenue collection and statically significant at 1 percent significance level.   On the other hand the amount after audit has positive and insignificant effect on revenue collection performance. Keywords: Tax audit, Revenue collection, multiple regression analysis DOI: 10.7176/RJFA/11-7-01 Publication date: April 30th 202

Breaking the Black Market: The Case for Legalizing Foreign Exchange Trading in Ethiopia

The foreign exchange black market has been a significant challenge in Ethiopia, affecting the country's foreign exchange reserve, import, and export activities. The Ethiopian government has implemented various measures to curb this problem. However, they have only partially practical. Legalizing the foreign exchange market in Ethiopia could be a viable solution to the problem of the black market for foreign exchange. These would bring the foreign exchange market under government control, increase the availability of foreign currency, boost economic growth, and create more jobs. However, the government must ensure that the market is adequately regulated to prevent illegal activities and that all transactions are conducted transparently and accountable. By looking to other countries that have successfully legalized their foreign exchange markets, Ethiopia can develop a successful model for regulating its market. Keywords: Black market, legalizing foreign exchange, foreign exchange trading in Ethiopia DOI: 10.7176/JESD/14-7-02 Publication date: April 30th 202

Does Exchange Rate Matters for Foreign Direct Investment Inflow to Ethiopia?

This study examines the effect of exchange rate on foreign direct investment inflows in Ethiopia. The aim of the study is to investigate how foreign investors through FDI respond to change in exchange rate level in Ethiopia.  In line with the explanatory variable exchange rate; economic growth, inflation, trade openness, and external debt are added as a control variable in the study.  The study uses explanatory research design and quantitative research approach with secondary time series data utilized over the study period 1992-2017(26 years).  More specifically, the study adopts an autoregressive distributed lag (ARDL) model. Furthermore, the long run relationships of variables are quizzes through bound tests and confirm the existence of a long-run relationship among variables. So, in order to investigate the short run relationship among variables, the error correction model is employed in the study. The finding of the study reveals that; exchange rate level and foreign direct investment have a positive relationship in the short run as well as in the long run and statically significant at 1 percent significance level. So, devaluation of Ethiopian Birr against US dollar affects foreign direct investment positively in both cases. But, the last year effect (one period lag) of devaluation on current year foreign direct investment was found negative. On the other hand, variables like economic growth and inflation have a negative relationship with foreign direct investment in the long run as well as in the short run. But, except economic growth, inflation found insignificant in the long run. External debt found positive and insignificant in the long run.  However, the relationship between trade openness and foreign direct investment were found positive and statically significant.  This study suggests that the government shall ensure the stability of the exchange rate once devaluation is made. Keywords: exchange rate, foreign direct investment, Autoregressive distributed lag model DOI: 10.7176/RJFA/10-11-02 Publication date:June 30th 201

The Influence of Sire and Dam Genotype on Pre and Post Weaning Weight of Horro (Zebu) and Their Crosses with Holstein Friesian and Jersey cattle

The influence of sire and dam genotypes on birth weight (BW), weaning weight (WW), pre-weaning average daily gain (DG), post-weaning average daily gain  (PDG) and  one year weight  (YW)  in calves of  Horro and crosses of these indigenous with Bos Taurus (Holestian Friesian and  Jersey)  were investigated from data collected from Bako Agricultural Research center during the year 1980-2008. Least squares means were analysed using General Linear Model (GLM) of Statistical Analyses System (SAS). Sire and dam genotype, sex, dam age, parity and Julian birth date were considered in the fixed effects model with addition of age at weight measurement as a covariate. Calves sired by pure Holstein Friesian bulls 3.8kg heavier than the sired by Horro bulls and 1.2 kg heavier the calves sired by Holestian Friesian-Horro at birth. The no difference in BW of calves by the Jersey, Jersey-Horro and Horro bulls. The influence of dam genotypes on the pre and post weaning weight of calves was highly significant (P<0.05). Holestian Friesian-Horro dams produced the heavier (P<0.05) calves at weaning than Horro and Jersey- Horro dams, whereas at one year weight no significant difference between Horro and Holestian Friesian-Horro dams. The result also indicated that  pre and post weaning weight of  the calves sired  by pure  Holestian Friesian bulls  were superior (P<0.05) to others. Keywords: Dam genotype, Holstein Friesian, Horro, Jersey, sire genotype

Does IFRS Adoption Improve Financial Reporting Quality? Evidence from Commercial Banks of Ethiopia

The main purpose of this study is to analyze International Financial Reporting Standard (IFRS) adoption and quality of financial reporting by commercial banks in Ethiopia using qualitative characteristics of accounting information such as: Relevance, Understandability, Comparability, and Faith Representation. The study used the perceptions of preparers of banks financial reports (accounting & finance officer, finance managers as well as IFRS implementation team members) to analyze about IFRS adoption in commercial banks. The study adopted mixed research approach and descriptive research design. More specifically, the study used purposive sampling technique to collect a data; the data was collected through primary and secondary source of data. The primary data was collected through questionnaire and secondary data was from different source of documents. The data was analyzed using descriptive statistics. The finding of the study reveals that; the quality of financial report which is measured through (relevance, understandability, comparability and faith representation) was improved after adoption of international financial reporting standards. Keywords: IFRS adoption, financial reporting quality, relevance, understandability, comparability, faith representation, commercial bank, Ethiopia. DOI: 10.7176/RJFA/11-7-03 Publication date: April 30th 202

The Effects of Government Quality and Economic Indicators on Self-employment in East Africa: Panel Data Analysis

Self-employment plays a major role in the economic growth of Africa in general and East African countries in particular. It is a major source of new jobs and a way of employing the entrepreneurial abilities of the population. Moreover, self-employment allows people to do what they want and to follow their passion. However, populations in East Africa face various barriers that hinder their ability to start their own business and/or to become self-employed. Thus, the aim of this study is to examine the effects of government quality and economic indicators on self-employment. Data was taken for this study from World Bank’s World Development Indicators, Worldwide Governance Indicators, African development Bank and United Nations Development Program for eight East African countries for 2010-2018. The countries were selected based on the availability of panel data. The fixed effects result indicated that political Stability, control of corruption indices and Voice and accountability, natural logarithm of electricity access, mobile phone subscriptions, people living below income poverty line and primary education enrolment are favorably affecting self-employment in East Africa. The result also shows that the natural logarithm of employment in industry and real GDP growth have negative coefficients. . These findings suggest that in addition to economic and social indicators government quality have greater effect on self-employment in East Africa. Keywords: Self-employment; fixed effects; Hausman test; Government quality indicators; Panel data; East Africa. DOI: 10.7176/JESD/11-9-05 Publication date:May 31st 202

Foreign Resource Inflows and Domestic Revenue Mobilization in Ethiopia: A Co-integration & Granger Causality Analysis

This study examines the effect of foreign resource inflows and domestic revenue mobilization in Ethiopia over the period 1980 to 2014 using co-integration and vector error correction analysis. All the necessary time series tests such as stationary test, model sufficiency, co-integration test are conducted. The variables in the model are co-integrated and show long run relations. The empirical result from the model shows that aid and grant have positive effect on domestic revenue mobilization in the long run. Also, the granger causality analysis reveals that there is a bi-directional causal relationship between real GDP growth and domestic revenue mobilization in Ethiopia. This implies that the country has to give strong emphasis on domestic revenue mobilization for the sustainable economic development of the country. Therefore, aid recipient country like Ethiopia has to work hard on how to enhance  domestic revenue raising capacity of the country which is at the heart of meeting the capital required for the sustainable economic growth and development in times of short falls and precariousness of external sources of finance. Keywords: Domestic Revenue; Foreign Aid; Foreign Grant; External Borrowing; Ethiopia