World Bank To Ethiopia: Finance More Private Sector Business

World Bank To Ethiopia: Finance More Private Sector Business

The economy of Africa’s second-most populous country is on track to grow by 10 percent this fiscal year, but with business and industry accounting for 10 percent of gross domestic product, Ethiopia needs to grow its private sector, World Bank says.

One of the world’s fastest-growing economies, Ethiopia should provide financing for  businesses and move away from a heavy reliance on agriculture, the World Bank said in a report in Euronews.

World Bank is pushing for Ethiopia to achieve middle income status by 2025, which the bank  defines as gross national income per capita of more than $1,025. Ethiopia’s per capita income was $370 in 2011.

“For this country to continue to grow…industry has to take a much bigger role,” said Guang Z. Chen, World Bank’s country director, in a Reuters report. “There is no other country that I’m aware of, aside from these resource-rich countries, that can go to middle-income status with still 50 percent of GDP on agriculture.”

Government-supported energy and transportation projects required financing equivalent to 19 percent of Ethiopia’s estimated $33 billion annual national output last year, squeezing out private business, according to World Bank estimates.

Credit to the private sector was equivalent to 14 percent of GDP compared to a regional average of 23 percent, the bank says.

“Making credit available for the private sector is certainly one area the government can do more on,” Chen said.

Ethiopia hopes to expand its road network to 84,500 miles by 2015. It had less than 31,000 miles of roads in 2010. It also plans to build 3,106 miles of railway lines by 2020.

Ethiopia’s transportation and logistics would benefit from a more competitive environment, even if it’s between state-owned enterprises, Chen said, according to Euronews.

The country would like to get investments from BRICS countries – Brazil, China, India, Russia and South Africa, the reports says. Ethiopia’s main exports include coffee, horticultural products and livestock. Ethiopia is a big aid recipient, according to Euronews.