If at all there is one edge that the incumbent government ofEthiopiahad been recognised for since it assumed power in 1991, it had been the liberalisation of the economy
. With that came the birth of the existing business environment and its very players.
However, the waters had not been even in all the years since then. At first, the reconstruction of the war-torn economy took long for the damage inflicted on it during the war years was stern. Then came the challenge of consolidating the economy. It took series of reforms to consolidate the economy into separate but interlinked sectors. As if to rub salt on an injury, putting enough inertia in the sectors to jump start economic growth entailed a huge public investment.
All the efforts seem to have brought fruits. Average growth of the last seven years had been close to 11pc, according to official government figures. A significant leap had been realised in education, health and infrastructures development. The nation that once was known to be the poster child of poverty has moved forward to be one of the top five fastest economies of the world.
Despite the impressive growth records of the last seven years, the contribution of the private sector in the economy remains marginal. Over 85pc of the gross consumption in the economy originates from the public sector. Private credit as percentage of gross domestic product (GDP), a typical identifier of the role of the private sector in an economy, stands at 18.7pc. Participation of the private sector in the productive sectors continues to be dismal.
Several factors contribute to the underdevelopment of the private sector, according to experts. A dominant state that limits the role of the private sector to following its shoes stands tall. Regulatory surprises, burdensome bureaucracy and paucity of entrepreneurial clout are also some of the other reasons for the underdevelopment.
Measuring the state of the sector and its supporting infrastructure for long had been the World Bank’s Ease of Doing Business Report. Constituting 10 indices that show the whole gamut of factors affecting the development of the private sector, the Report provides a boarder overview of the business environment. Of course, it is not comprehensive. But it is indicative.
By ranking 185 countries, the report provides a comparative overview of the business climate of countries. Its latest ranking was no different.
In its latest provision, the report has rankedEthiopiaat 127th place. Its ranking has also provided the detail ratings ofEthiopiain the 10 indices comprising the aggregate index. With a view that it would help readers see the progress of the nation, Fortune has prepared a time series analysis of the development of the indices. Excerpts:
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