World’s Fastest Growing Economy on the Brink of Starvation

The fastest economy is the world is of course Ethiopia. Wait what?

Africa boasts a few of the fastest growing economies with Congo, Ivory Coast, and Mozambique in the top 10 with Tanzania and Rwanda at 11 and 12 respectively. That is great news for Africa but how great is it? A very poor country like Ethiopia can grow fast but it is so poor that it is still a very poor country. Much of the growth in Africa is resource driven but not Ethiopia’s and its growth has been in the double digits for over a decade. China has got nothing on Ethiopia. But then why is the country on the brink of mass starvation?

The government finally admitted in December at over 10 million citizens are in need of emergency aid. The same El Nino that is slamming Southern California right now appears to picked all that rainwater from Ethiopia. Here El Nino causes heavy rains, there it causes drought. But that isn’t the full story.

The economic gains that are clearly coming to Ethiopia do not seem to be trickling down to the people. The poverty rate has decreased from 55% to 33% which is good but far from the effect it should have had. China decreased its poverty from 84% to the teens. It took then longer than a decade and they weren’t quite as poor as Ethiopia when they started but the difference is enough to see that Ethiopia is lagging.

In Africa, not just Ethiopia, you need money and connections to be successful. The poor don’t have those. In Ethiopia all land reverts to the state. You are not allowed to buy and sell land. When 90% of the population is in agriculture are the people going to invest in the land they don’t own? The government is quite aggressive in their eminent domain, in effect making sure the poor stay on undeveloped land.

So when drought comes, no improvements in the land have been made and yields drop. Just as important there is less work to be done since there is less yield. The poorest workers are landless workers that see big drops in their wages when famine comes. In some cases there is enough food but people don’t make enough money to buy because there is no work outside of agriculture because the government makes it so tough to do so.

Ethiopia may be growing fast but you can be sure that the government will secure most of those gains. Africa is far too good at assuring that.

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