Whether Ethiopian PM, Abiy Ahmed, comes out as “liberator” or ‘the “aching hero” of an endless war’, the Ethiopian northern war is costing Ethiopians between 150 and 200 billion birr, not including the human cost, rehabilitation and a billion military spending. While persisting with the current level of political engagement is not a prudent option, the gloom on getting the grip through international community or organizations is complicated due to repeated neutrality claims from both sides.
History teaches the courage and burden of immediate cessation of fire always lies on the leaders than rebels. De Gaulle is well known in possession of leadership for war and moving back immediately to strength the economy. It is time for Ethiopian companies to survive for the long run and create the hardly needed social and economic values needed. That is why, it will be wise for Abiy Ahmed’s term legacy not to be simply defined by this devastating and economic destructive war, will in the end, be proved gone wrong. The swift end of the war not only ensure protection of civilians and restoration of millions of displaced but also gives a little space left for Abiy to embark on hard economic reform choices to survive the post-pandemic and war devastated economy hard hit by inflation, unemployment and forex shortage.
No estimate of the cost of war can ignore the human cost in blood. The human costs of conflict – death, hunger and disease – also have significant longer term economic impacts. However, due to higher scrutiny and uncertainty on the exact numbers, I haven’t included estimates of civilian casualties or deaths.
However, last week’s assessment by the Planning Commission of the Amhara Regional State reveals, due to the destruction of City of Kombolcha-industrial hub of the region, and social services -education, medical facilities and agricultural products, the Amhara region has gone back to thirty years. Hence, it will be difficult for the region to contribute the last year’s $100 billion or 22 percent of the total GDP for the coming two decades.
The state telecom giant, ethio telecom, made official of losing 1.9 billion Birr in revenue due to the conflict in the northern part of the country. As a result, its revenue for the first quarter of 2021/22 Ethiopian fiscal year fell 12 percent short of its planned 15.4 billion Birr.
Over 500,000 hectares of sesame farm, majority cultivated in Gondar and Tigray, 70 percent of Ethiopia’s annual cultivation for the cash crop, skipped a season without being cultivated due to the ongoing war in northern Ethiopia. The production is estimated to be close to two million quintals which are sold 6,000 birr per quintal reaching 12 billion Birr ($ 240 million) market value. The loss of AGOA, 30% more advantage when exporting to the US than non-eligible countries, could mean the loss of at least the earlier year, USD 114 million worth of commodities exported from Ethiopia and 230,000 employees of AGOA benefited sectors of Ethiopian business unless the government takes generous tax cut and incentives measures that could compensate the lost duty free access of AGOA.
Now more than ever, it is quite clear, Ethiopia must make hard economic reform choices to survive over the coming onerous years.