Abstract
Following the near collapse of the Ethiopian economy in the early 1990s, as well as unsustainable internal and external imbalances, high inflation rates, negative interest rates and very high debt ratios, Ethiopia implemented a Structural Adjustment Program (SAP), with the support of multilateral and bilateral donors. The goals of SAP include the stabilization of the economy in order to restore macroeconomic and financial stability, as well as the stimulation of medium and long-term growth. The Ethiopian structural adjustment policies were aimed at eliminating financial repression, encouraging the development of the private sector, fostering competition throughout the economy, and promoting the process of market-determination of all prices, including exchange rate and interest rate (African Development Bank Group, Ethiopia Structural Adjustment Programme Project Performance Evaluation Report (PPER)).
While SAP has spurred a robust and an unprecedented economic growth in Ethiopia for over two decades, there has been inadequate assessment of the impact of that growth on sustainable development (Ethiopia’s economic growth rate has averaged about 10% within the past decade, making it one of the fastest-growing countries in the world.). Most of the studies of the Ethiopian SAP have focused mainly on economic growth and macroeconomic stability. This chapter uses a Triple-Bottom-Line (TBL) analytical framework to evaluate the impact of SAP on the three dimensions of sustainability: economic, equity and environmental sustainability (A Triple-Bottom-Line (TBL) analytical framework transcends economic growth per se, but also considers equity and environmental sustainability). Information and data for the TBL analysis were gathered through secondary sources, content analysis of Ethiopian media publications, interviews of a cross-section of Ethiopians, and visits to different regions of the country. Results from the research suggest that, while Ethiopia’s structural adjustment has satisfied the economic dimension of the TBL, it has not been socially inclusive and environmentally sustainable.
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- 1.
Africa has had a number of “success stories” in the past four decades. They include Ghana, Mauritius, Botswana, South Africa, Tunisia, Morocco and Senegal. Quite often, those success stories quickly turn into disappointments, as in the case of Tunisia, Morocco, Ghana and South Africa.
- 2.
The coup was said to have been motivated by the fact that, compared with the newly independent African states, Ethiopia was “far behind in economic development, education, and living standards.” (Clapham 1968, p. 502).
- 3.
Socialist-oriented regimes sometimes embrace neoliberal economic and financial sustainability policies for pragmatic reasons, as in the cases of Ghana under Jerry Rawlings, and Brazil under Luiz Lula da Silva. With the Soviet Union no longer in existence to provide financial support, these regimes turn to the West and its affiliated multilateral financial institutions, who in turn demand implementation of neoliberal policies as a quid pro quo for support.
- 4.
These days, bilateral and multilateral donors tend to support only economic reforms undertaken by democratic regimes. Financial support is mostly conditioned on the implementation of political reforms, democratization and good governance.
- 5.
Ethiopia’s economic growth plummeted to an all-time low of about 1.9% in 2020, due to the COVID pandemic. The country’s robust economic growth is expected to rebound in 2021 and reach an impressive rate of about 9% by 2022 (IMF database: https://www.imf.org/en/Publications/WEO/weo-database/2020/October/weo-report?)
- 6.
Gebregziabher (2013) argues that Ethiopia’s economic growth was facilitated mainly by the massive infusion of aid in the country. If so, it may suggest that SAP does not by itself spur economic growth. It has to be combined with aid in order to be successful.
- 7.
See Ethiopia: Agricultural Risk Assessment Study, Platform for Agricultural Risk Management (PARM), December 2016.
- 8.
See A. R.A. Shaban, “Ethiopia central bank announces 15% devaluation of Birr,”
Reuters, October 10, 2017 (https://www.africanews.com/2017/10/10/ethiopia-central-bank-announces-15-percent-devaluation-of-birr//)
- 9.
K. Salam, “The Blue Nile Is Dammed,” Foreign Policy, July 24, 2020 (https://foreignpolicy.com/2020/07/24/the-blue-nile-is-dammed/)
- 10.
J. Marsh, “Skyscrapers, trains and roads: How Addis Came to Look Like a Chinese City.”
CNN Report, September 2018 (https://www.cnn.com/style/article/addis-ababa-china-construction-style/index.html)
- 11.
The decrease in growth in the late 1990s was a result of the war with Eritrea in 1998–2000, as well as a severe drought during 2002–2003.
- 12.
Ethiopia’s structural adjustment policies and high growth rates have resulted in persistent increases in the rate of inflation, from just 0.7% in 2000 to almost 16% in 2019 (Table 8.3). To slow down inflation, the Ethiopian Central Bank raised interest rates by 2 percent in October 2017.
- 13.
World Bank Report, Ethiopia Poverty Assessment: Poverty Rate Declines, Despite Challenges, April 2020 (https://www.worldbank.org/en/country/ethiopia/publication/ethiopia-poverty-assessment-poverty-rate-declines-despite-challenges)
- 14.
United Nations Children’s Fund (UNICEF) Report, Multi-dimensional Child Deprivation in Ethiopia, 2018 (https://www.unicef.org/ethiopia/reports/multi-dimensional-child-deprivation-ethiopia-first-national-estimates)
- 15.
World Bank Report, Poverty and Equity Brief, April 2020 (https://databank.worldbank.org/data/download/poverty/987B9C90-CB9F-4D93-AE8C-750588BF00QA/SM2020/Global_POVEQ_ETH.pdf)
- 16.
United Nations Development Programme (UNDP), Human Development Index Ranking, 2019 (http://hdr.undp.org/en/content/2019-human-development-index-ranking)
- 17.
Habitat for Humanity, Great Britain, “Slum Housing in Ethiopia.” https://www.habitatforhumanity.org.uk/blog/2017/11/slum-housing-ethiopia-modernise/
- 18.
Literacy rate applies to people 15 and above. See World Bank, World Development Indicators (https://data.worldbank.org/indicator/SE.ADT.LITR.ZS)
- 19.
D. Botti, and M. Phillips, “Record numbers of refugees and migrants arrive in Yemen amidst intensifying and complicated war,” Relief Web, August 2019
- 20.
A report by the Global Forest Watch (GFW), an organization that uses an open-source web application to monitor global forests in near real-time. See GFW’s report on Ethiopia at www.globalforestwatch.org/dashboards/country/ETH/?category
- 21.
One evidence of this is the sight of monkeys abandoning their natural habits and hanging around highways, as well as mingling with tourists. The highway between Addis Ababa and Bahir Dar in Northern Ethiopia is filled with hundreds of monkeys trying to adapt to human-induced disruptions of their natural habitats.
- 22.
A. Evans, Resources, Risk, and Resilience: Scarcity and Climate Change in Ethiopia, August 2012. Center on International Cooperation, New York University. https://cic.nyu.edu/sites/default/files/evans_security_ethiopia_2012.pdf
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Onyeiwu, S. (2022). The Nexus of Structural Adjustment, Economic Growth and Sustainability: The Case of Ethiopia. In: Antoniades, A., Antonarakis, A.S., Kempf, I. (eds) Financial Crises, Poverty and Environmental Sustainability: Challenges in the Context of the SDGs and Covid-19 Recovery. Sustainable Development Goals Series. Springer, Cham. https://doi.org/10.1007/978-3-030-87417-9_8
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