Opinion: Ethiopia’s Growth Myth: Beneath surface lies bureaucracy, corruption, and inequality
By Geabral Ashenafi
Addis Abeba – The government consistently claims Ethiopia is experiencing rapid economic growth. However, beneath this façade lies a dysfunctional economy and governance system, riddled with bureaucratic inefficiency, corruption, and poor decision-making.
While the government continues to push optimistic narratives, the reality is that businesses struggle, public trust in institutions is eroding, and economic policies often serve political interests rather than national progress. This article will analyze the root causes of Ethiopia’s economic instability, explore historical and global case studies, and present solutions for a transparent and thriving economy.
Bureaucracy in Ethiopia is more than just an administrative inconvenience—it has become a deliberate tool for control and corruption. Entrepreneurs, investors, and even ordinary citizens face endless hurdles when trying to register businesses, secure investment approvals, or obtain essential government services.
Instead of facilitating progress, excessive bureaucracy hinders economic growth and drives people toward corruption as a survival mechanism.
Rwanda presents a strong case study in this regard. After the 1994 genocide, Rwanda was in economic ruin. However, by simplifying regulations, digitizing government services, and eliminating red tape, Rwanda climbed to 38th place on the World Bank’s Ease of Doing Business Index in 2023. In contrast, Ethiopia remains in 161st place, discouraging both local and foreign investment.
A major contributor to Ethiopia’s economic failures is the appointment of policymakers based on political loyalty rather than expertise. Many of those crafting economic policies lack the necessary financial, economic, or business background, leading to poorly designed laws and regulations, inefficient resource allocation, and decisions based on political motives rather than economic realities.
A historical parallel can be drawn with the Soviet Union, where bureaucrats dictated economic policies without understanding market realities. The result was inefficiency, stagnation, and eventual collapse. If Ethiopia does not depoliticize its economic institutions, it risks repeating this historical failure.
Ethiopia also scored 37 out of 100 on the 2024 Corruption Perceptions Index (CPI), ranking 99th out of 180 countries—a clear indication of the widespread corruption embedded in its institutions. Businesses must pay bribes to secure government contracts, public officials exploit bureaucratic delays to demand under-the-table payments, and corrupt elites misuse public funds, worsening economic disparity.
Singapore, once plagued by corruption, transformed into one of the world’s least corrupt nations by implementing strict anti-corruption laws, an independent anti-corruption agency, and a merit-based system for government appointments. Ethiopia must adopt a similar approach to dismantle corruption and build public trust.
Rise of Desperation Economy
With rising inflation, low wages, and limited opportunities, many Ethiopians resort to unethical means of survival. This is a direct consequence of a system that blocks economic progress for ordinary citizens while benefiting a select elite.
A major contributor to Ethiopia’s economic failures is the appointment of policymakers based on political loyalty rather than expertise.”
Government employees engage in bribery to supplement their income, entrepreneurs bypass official procedures through illegal means, and the public loses trust in legal economic systems. A similar case can be observed in Nigeria, where despite its vast oil wealth, economic instability persists due to corrupt officials siphoning public funds. Ethiopia risks a similar fate unless it implements strict financial oversight and accountability measures.
Ethiopia’s restrictive policies and inefficient bureaucracy actively drive away investors. Key issues include lengthy business registration processes, difficulties in repatriating profits, and a government-dominated economy that limits private sector competition.
China provides a relevant example of how economic liberalization can drive national growth. By transitioning from a state-controlled economy to a market-driven system, China attracted significant investment and transformed into a global economic powerhouse. Ethiopia must follow a similar path to attract investors and drive economic growth.
Escaping Economic Trap
Ethiopia must remove economic decision-making from political influence by creating an independent advisory board composed of economists, business leaders, and financial experts. Such a board would ensure expert-driven policy recommendations, independent oversight on government economic strategies, and real-time economic data analysis to guide decision-making.
Ethiopia must follow the example of Rwanda and Singapore by implementing paperless, digital government services, simplifying business registration and licensing, and streamlining the tax system to encourage compliance.
The Ethiopian Constitution must be revised to ensure economic decentralization and reduce state overreach, guarantee property rights and fair competition, and promote judicial independence to tackle corruption.
Ethiopia stands at a critical crossroads. The nation can either continue down its current path of corruption, bureaucratic inefficiency, and economic stagnation, or it can embrace bold reforms that lead to transparency, investment, and prosperity.
The choice is clear: will Ethiopia seize the opportunity for transformation, or will it allow itself to collapse under the weight of its inefficiencies?
Now is the time for change. AS
Geabral Ashenafi Mulugeta is a critic with a deep interest in economics. He can be reached at [email protected]
