Under-five Mortality (U5MR) in Benishangul-Gumuz is the highest among Ethiopia’s regional states, next to the Afar region. The risk of a child dying before completing five years of age in Benishangul-Gumuz region is 72.8 per 1000 live births. This paper aims to verify the main determinates, socioeconomic, demographic and environment factors, of U5MR in Benishangul-Gumuz Regional State using data from the Ethiopian Demographic and Health Survey (2016). The method of analysis is descriptive and econometric employing Probit model estimation. The result reveals that “Mother’s educational level”“Preceding Birth Interval”, “Duration of breastfeeding”, “Income or wealth of the household” and “Married Marital Status” have a negative and statistically significant relationship on Under-five Mortality. The policy implications of the results of the analysis emphasize that empowering women through education, health and income provide very important instruments to reduce Under-five Mortality in the region.
Although integrated aquaculture has the potential to contribute to food security, it is still among the neglected sectors in Amhara regional state, Ethiopia. This study was designed: (1) to assess the performance of existing integrated aquaculture intervention and its contribution for farmers, (2) to evaluate the current pond management practices, and (3) to identify major obstacles that hinders integrated aquaculture practices. The data was collected from 11 purposively selected aquaculture potential districts of the region. The quantitative and qualitative data were analyzed by using descriptive statistics supported by exhaustive narrations. The study found that only 20.8% of the surveyed aquaculture ponds were functionally good. From these ponds, 25% of the aquaculture owners earned an average of 513.6 ETB per fish pond. However, these aquaculture adopters start harvesting after three to four years of fish stocking in irregular ways. Such irregularities in harvesting arises from farmers’ minimal knowledge on post-harvest processing and lack of fishing nets. In this regard, 80.4% of the surveyed pond owners felt as they had not benefited from aquaculture adoption compared to their expectations. Based on the level of inputs used and degree of management, the current aquaculture practice in Amhara region inclined towards extensive type. In conclusion, aquaculture developmentremains at an infancy stage despite years of adoption in the region.
Increasing agricultural productivity is a major step towards transforming the rural economy and ensuring food security. This paper uses household level panel data linked with climate data to examine the impact of different credit constraint conditions on agricultural productivity under changing climatic conditions. A propensity score matching (PSM) and a difference-in-differences (diff-in-diff) methods were employed to provide unbiased estimates of the production impacts of credit constraints on crop productivity. After controlling for potential selection bias, it found that relaxing credit constraints increases agricultural productivity by Ethiopian Birr 169 per hectare, while the real crop revenue for discouraged and quantity constrained farmers declined by Ethiopian Birr 443 and 275 per hectare respectively. These results suggest that relaxing credit constraints by improving performance of the rural credit market could significantly increase agricultural productivity in rural Ethiopia.
This study analyses money growth - inflation nexus in Ethiopia using annual datasets covering the period 1970-2009. This period was considered due to data limitations. A significant aspect of the study is that it tries to identify the optimal level of money growth using Two Regime Threshold Model. The result from the two-regime threshold model reveals that there is indeed a threshold effect in the relationship between money growth and inflation and the optimal level of money growth is estimated to be 17% which has an important policy implication. Here, money supply creates inflationary pressures only when it exceeds 17%. A percentage increase in money supply above this threshold value is expected to cause 1.47 percent increase in annual inflation indicating that monetary factors are valid sources of inflation in Ethiopia. The results imply keep the money growth below 17%. Hence, a specific monetary policy measures that could be envisaged is controlling broad money supply (M2).Inflation; money growth; two regime threshold model; Ethiopia
This study examines the effect of fiscal policy on capital flight in Ethiopia using time series data from 1970 to 2012, employing the Autoregressive Distributed Lag (ARDL) model. The results indicate that past capital flight, changes in debt, and government expenditure had no significant impact on capital flight in Ethiopia, while external debt, taxation, and expenditure practices under different political regimes did have a significant effect. The study details policy implications emerging from the empirical results.
We examined the impact of micro-credit on female labor participation in income-generating activities in rural households of North Wollo, Ethiopia. The study employed selection and average treatment effect models to determine the effect and impact of credit intervention on the decision of women to participate in income-generating activities and their level of engagement. A total of 460 households, participants and nonparticipants of the credit scheme, from three woredas of North Wollo Administrative zone was selected using systematic random sampling. Using the primary data, the study found that micro-credit has positive and significant effect both on women’s decisions to participate in income-generating activities, and the magnitude of time spent on such activities. In particular, the study showed that, on average, women who had access to credit facilities spent 4.45 more hours of time on income-generating activities than the control group. The average time spent by women in the control group in income-generating activities was 1.39 hours. The average treatment effect (ATE) was found to be considerably greater than the average treatment effect among the treated (ATET) implying that poor women with less entrepreneurial capabilities had been targeted for credit participation. Future policies in micro-credit should consider targeting women with better potential for succeeding in business despite their initial income status. The majority of credit participant women were found to be engaged in better and newly developed income-generating activities such as animal fattening and rearing, poultry, bee-keeping, vegetable cultivation and business-related activities. However, a considerable number of women were also engaged in traditional activities such as fire-wood collection and weeding to generate income. Such activities are borderline cases to influence the status of women in intra-household resource allocation: the study noted that where women engage the choice of economic activities needs consideration.
Promoting an inclusive rural credit market in developing countries is a reemerging and pressing development agenda, given its importance in the poverty reduction and economic growth process. Existing literature mainly focuses on the supply side of the market with little or no attention given to demand aspects. This paper analyzes both the demand and supply side factors affecting credit constraints and borrowing behavior of farmers. Two waves of survey data, which included about 1,200 randomly selected households from four zones of the Amhara region in Northern Ethiopia, were used for the analysis. The Generalized Linear Latent and mixed model (gllamm) was employed to account for unobserved heterogeneity and potential correlations across credit constraint categories. The results show that the probability of quantity rationing increased in the study area between the years 2011 and 2013. Exposure to climatic shocks, age, and lack of education were found to increase the probability of being constrained while female and married heads were relatively less constrained. The results further indicate that borrower's perceived probability of rejection due to strict lending policies and institutional rigidities; the transaction cost of borrowing; and risk aversion behavior of farmers highly reduced the probability of borrowing from the formal credit market. Compared to North Shewa, farmers living in South Wollo zone were found to be discouraged and hence did not prefer borrowing from the formal sector. However, farmers in West Gojjam were less discouraged and had a higher probability of participating in the formal credit market, signifying zonal variation in credit constraints and borrowing behavior. This suggests the need to work on more innovative lending approaches by giving attention to context-specific factors to build demand-driven, climate-smart, and inclusive rural credit market.
Property rights and relationships in Ethiopia, though complex and difficult to define, had been associated with and expressed in terms of land, which had shaped and dictated socio-politico-economic relations and processes. During pre-revolutionary imperial Ethiopia, most debates and discussions on property rights and obligations, including agricultural productivity and efficiency, were expressed in relation to the main existing tenure regime of the country: the rist tenure. This tenure, like most other indigenous tenure regimes and property arrangements in Africa, was flexible and accommodating. This historical study, based on archives, interviews and secondary sources, examines the structure and nature of property rights and relationships. The data collected through different methods was carefully examined in order to reconstruct and document property rights and their implications for agricultural productivity and efficiency in the country based on the objectives of the study. Key Words: land, tributary rights, reversionary rights, property rights, productivity, agriculture, Ethiopia JEL Code: Q15; P14; P17
It is agreed that adopting irrigation technology improves production, productivity, income, and access to food for farm households. However, evidence on nutritional outcomes of small-scale irrigation technologies is quite scant. The existing studies focus on the productivity and poverty effect of irrigation. Thus, this study examines the impact of adoption of small-scale irrigation technologies on child nutritional wellbeing of farm households where nutritional wellbeing is measured through anthropometric indicators. Data were collected from 130 sample households drawn from Dangila and Bahir Dar Zuria wereda’s 3 . The Propensity Score Matching (PSM) method was employed to identify comparable technology adopting and non-adopting sample households. The study found malnutrition to be severe in the study area. Both chronic and acute Malnutrition problems were found to be wider for girls, for children aged below 2 years of age, and for non-adopters of the technology. Results of the average treatment effect on treated participants suggest that adoption of small-scale irrigation technologies has a positive impact on improving the adopters’ short-term nutritional status but its impact on children being chronically malnourished and underweight is insignificant. This study concludes that children of small-scale irrigation technology adopting households have significantly lower acute malnutrition status than those of non-adopting households even after controlling for the potential heterogeneity. Targeting diffusion of small-scale irrigation technology with early nutrition-specific intervention for long-term nutritional improvement is vital to secure child nutritional wellbeing.
This paper investigated the effect of terms of trade growth and its volatility on economic growth in Sub-Saharan Africa. I employed dynamic panel data models of difference and system GMM that could account biases associated with endogeneity of explanatory variables and problems induced by unobserved country specific characteristics. I used both net barter terms of trade and income terms of trade as a measure of terms of trade for the entire analysis of this paper. Using data from 1985 to 2010, I found that the net barter terms of trade and income terms of trade growth has positive and significant effect on economic growth. Furthermore, the result proved that volatility of net barter terms of trade and income terms of trade have negative and significant effect on economic growth. Finally, this result is found to be robust using alternative volatility measures.
This study investigated the probable sources of crisis in the financial sector of Nigeria, over the period, 1960-2014. Two distinct phases of financial crises in the country were enclosed by the scope of the study. Both the policy and economic environments of the country might have contributed greatly to the scale of the crises experienced in the different periods. An analytical approach embedded in allied studies defined the empirical model. The data employed were subjected to preliminary investigations in order to eliminate the possibility of spurious statistical results. Estimates from a regression model were obtained for both endogenous and exogenous factors. Most of the endogenous factors were found to be remarkably consistent in signs and significance. The influence of most of the exogenous factors and closely linked domestic activities found parallels in business cycles of the country. Greater care in policy design and reduced propensity to borrow externally could significantly moderate the negative influence to the determinants of growth in the system. Keywords: business fluctuations; open economy macroeconomics; financial markets and the macro Economy; policy design and consistency; policy coordination JEL Codes: E32; E44; E61; F41
This research investigates the profitability of bioethanol production in Africa, taking Ethiopia as a case in point, and suggests an oil price threshold beyond which biofuels may be profitable. Specifically, the study analyzes the viability of producing bioethanol from molasses in the context of Ethiopia, using data from a biofuels investment survey by EEPFE/EDRI in 2010. We draw on investment theory as our underlying conceptual framework and we employ unit cost analysis for our empirical analysis. Findings reveal that bioethanol production (from molasses) in Africa/Ethiopia can be quite viable and the biofuels industry can be viewed as a way out of poverty. This is a case study involving a few observations because of the small size of the universe of producers studied; hence the need for further analysis as the sector expands.Key words: profitability; bioethanol; oil price threshold; Ethiopia; AfricaJEL Codes: Q56, Q42
This study used co-integration and vector error correction model (VECM) to examine the causal relationship between the growth rate of real Gross Domestic Savings (GDS) and growth rate of real Gross Domestic Product (GDP) for Ethiopia. The estimation was undertaken for the period 1965-2013, using Eview9 software. In the analysis, the time series properties of macroeconomic variables were ascertained by using the Augmented Dickey Fuller (ADF) unit root test procedure. Finally, the long-run relationship between variables was explored by utilizing the Johansen procedure. The ADF test showed that there was unit root after the first difference. The estimated results indicated at most four order of integration or I(4) for the series was considered. From the result, the coefficient of the co-integrating equation indicates that about 73.3 percent of disequilibrium corrected each year by change in aggregate domestic saving with respect to income, money supply and price. Gross domestic savings in Ethiopia are affected by age dependency ratio, real exchange rate, real interest rate, real gross domestic product, foreign capital inflow and money supply both in the short and long run. Elasticity of exchange rate with respect to domestic savings is high and significant in the long run. This implied that continuous depreciation of real exchange rate has a direct impact on encouraging domestic savings. This would improve terms of trade and foreign capital inflow. Addressing institutional (through sensible policies such as formalization of the informal sector) and structural problems (such as infrastructural provision and efficient and relevant education policy) is also noted in the empirical literature as influencing savings mobilization.Key Words: Co-integration, Growth, Model, Saving, Vector Error CorrectionJEL Classification: E21
The objectives of the study were: (1) to quantify the determinant factors of adoption probability, (2) to evaluate the intensity of modern beehive use, and (3) to identify the major constraints of honey production using modern beehives in Wag Himra and North Wollo zones, Amhara region, Ethiopia. Multi-stage sampling methods were employed. 268 rural beekeepers taken from adopters and non-adopters were interviewed thisstudy using the proportional random sampling method. Among the 268 bee-keepers, 97 (36.19%) were adopters while 171 (63.81%) were non-adopters. Descriptive analysis and the econometric (double-hurdle) model were applied using SPSS-22 and STATA- 12, respectively. The first hurdle result revealed that age, number of livestock owned, educational level, number of local hives beekeepers possessed, training provided, total annual income of bee-keepers, credit service, distance to Woreda agricultural office, extension service, and participation on off-farm activities were the main factors that affected the probability of adoption decision. The second hurdle revealed that age, number of local hives bee-keepers possessed, training provided, credit service, and distance to Woreda agricultural office were the main factors that affected the intensive use of modern beehives. Additionally, pests and predators, drought, and lack of bee equipment and accessories ranked first, second and third major constraints of beekeeping, respectively, which led to bee colonies absconding and honey yield declining. Based on the findings, the authors recommend that the major factors in adoption decision and intensive use of modern beehives should be considered by policymakers and planners in setting their policies and strategies of honey production improvement interventions.Keywords: agriculture, adoption, modern beehive, double-hurdle model, intensityJEL Classification: O12, O13, Q16
Theoretical and empirical economic literature has shown the economic growth of countries is related to both liberalization and international trade integration. The main purpose of this study is to apply this knowledge to the Ethiopian case and estimate the impact of trade liberalization on Ethiopian economic growth. The study has employed an Error Correction Model (ECM) for the time series data ranging from 1980 to 2016 to examine the economic effect of trade liberalization on the Ethiopian economy. The empirical results show that there are both short run and long run relationships between liberalization and economic growth. More specifically, trade openness has had a positive and significant impact on economic growth of Ethiopia. Therefore, the government of Ethiopian should have to design a more opened trade policies so as to reap the benefits associated with integrating ones economy with the world economy.
This study aims to find out if the sequential policy interventions by the government to boost domestic savings are among the main factors for the boom in such savings observed during GTPI in Ethiopia and whether the impact these interventions is permanent or short-lived. In addition, it revisits and explores the determinants of gross domestic savings. The study applies (LM) unit root test with a structural break, an ARDL modeling approach, and it also relies on an analytical review. The policy shocks applied to domestic savings have changed the long-term growth path of domestic savings permanently. In addition, macroeconomic instability, capital flight income and urbanization are the main variables that affect efforts of mobilizing domestic savings in Ethiopia. However, features of a vibrant financial sector, including secondary financial markets for an efficient use of available resources, reliability and transparency of the housing agency, and an effective demand for housing, are among the main conditions for sustained positive impacts of these policies. Accordingly, some policy recommendations are forwarded. Key words: Saving, investment, economic policy, Ethiopia, JEL Classification: D91, E21, E62, O16
The government of Ethiopia has been providing financial access to micro and small enterprises through microfinance institutions. Despite the financial services support given to MSEs, lack of access to finance remains the main business challenge limiting the expansion of the self-employment sector in Ethiopia. This paper aims to study what financial sources are available to MSE operators and examine what factors drive access to credit. Quantitative information was collected from a sample of 909 youth MSE operators and a descriptive and econometric model was applied to examine sources of finance, factors influencing access to loan, and constraints of accessing financial services. Only very few operators (about 8.7%) used borrowing from the formal sector as a source of funding their investment. The result of the study shows that inadequate collateral and difficulties in proving their credit worthiness or absence of credit history were by far the main reasons that discouraged youth MSE operators from submitting applications for bank loans, followed by difficulties in processing loans and the high cost of borrowing. The regression results indicate that age, type of enterprise, and possession of a business plan by the youth MSE owners are significant variables influencing the likelihood of taking a loan. In other words, as age increases, the probability of the MSE operator to take a loan tends to increase. Type of enterprise was found to have a negative effect, indicating that operators in microenterprises have lower probability of taking credits than those engaged in small enterprises. The finding of the study also reveals that the age of the owner, the type of the enterprise, migration status, the location of the business, and the presence of a business plan were statistically significant variables influencing the size of credit accessed by the operators. There is a need for a deliberate intervention and a tailored support program by government and development partners, on the basis of size and gender, to improve financial access to the youth MSE operators without distorting the financial market and ensuring the sustainability of the finance providers. Key words : Youth owned firms, MSE financing, Ethiopia JEL Classification: L0, L1, L5, L6
Only less than a quarter of Ethiopian adults have a formal account. In this study, the status, level and determinants of financial inclusion and barriers to financial inclusion in Ethiopia are analysed. We found that better education, financial literacy, gender, age, living in an urban area, living in the capital city, and preference for formal financial services are associated with a greater level of financial inclusion in Ethiopia. Furthermore, we found that involuntary and voluntary exclusion are higher in Ethiopia. We recommend policies that could narrow down gender, religious, and urban-rural gaps and foster financial inclusion in Ethiopia. Key words: financial inclusion; financial institution; Ethiopia JEL Classification: G29, O16, D14
This paper investigated the macroeconomic effects of fiscal policy shocks in Ethiopia using a Bayesian Vector Auto Regression model. We examined the dynamic responses of output, inflation, interest rate and exchange rate to fiscal policy shocks employing quarterly data from 2000/01Q1 to 2015/16Q4. The empirical evidence suggests that government spending shock had a positive impact on output and inflation but effect was too small. Initially the interest rate responded negatively to government spending shocks and was positive with small effect and the nominal exchange rate showed deterioration. In addition, government revenue shocks had positive effect real GDP and exchange rate and then they responded negatively. The inflation response to the net tax was medium and negative whereas its effect on interest rate was positive, and persistent. Furthermore, positive shocks to recurrent expenditure had a persistent positive impact on real output. Recurrent expenditure appeared to be responsible for inflationary pressure. Interest rate picked up slightly as a result of recurrent spending shocks in the short run. The response of exchange rate recurrent expenditure was small and remained negative. In contrast, capital expenditure was found to have an insignificant effect on output. The reasons could the administrative lag and contractual bottleneck that are sometimes involved executing capital projects and that appeared to be responsible for inflationary pressure. In the short term, the interest rate responded negatively and the estimated impact on exchange rate was insignificant. Following indirect tax revenue shocks rise in output and inflation was very persistent. Regarding the effects of indirect taxes on interest rate and exchange rate our results show a clear and negative impact whereas direct taxes were found to affect output and inflation very little and were insignificant. Initially, interest and exchange rates responded positively to direct shock later interest rate and exchange rate become insignificant and negative respectively. The results support the idea of a ‘crowding-in’ effect and when we take into account the feedback from government debt, the results suggest that the effects fiscal shocks on the majority of macro variables is too small except for the real GDP for government revenue shock. Therefore, empirical evidence shows that it important to consider government debt dynamics in the model. Key words : Ethiopia, Fiscal policy shock, public debt, Bayesian VAR JEL Code: E44, E62, C12, C32
Understanding change is critical to policy formulation. Who benefits, who loses from change, and what causes change are core policy questions. Panel data are central to understanding change, and this special issue of the journal is devoted to five papers examining change in wellbeing as measured by two waves of data from the Ethiopia Socioeconomic Survey (ESS). The papers cover changes in consumption poverty, multi-dimensional poverty, food security, malnutrition in the form of wasting and underweight status, and smoothing patterns of nonfarm enterprise activities. The ESS data is freely available for download and immediate use. While the papers in this issue draw from the first two waves of data (2011-12 and 2013-14), the third wave of the ESS (2015-16) is now also publicly available. The ESS is a collaborative effort of the Central Statistical Agency of Ethiopia and the World Bank’s Living Standards Measurement Study – Integrated Surveys of Agriculture program. Keywords: Ethiopia, LSMS-ISA, panel data, poverty, multi-dimensional poverty, food security, malnutrition, nonfarm enterprise
