the ethiopian national synthesis report berhanu nega

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The Ethiopian National The Ethiopian National Synthesis Report Synthesis Report Berhanu Nega Berhanu Nega

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Page 1: The Ethiopian National Synthesis Report Berhanu Nega

The Ethiopian National The Ethiopian National Synthesis ReportSynthesis Report

Berhanu NegaBerhanu Nega

Page 2: The Ethiopian National Synthesis Report Berhanu Nega

The real story: Broad ConclusionThe real story: Broad Conclusion

Not much positive externality in almost all the Not much positive externality in almost all the modules coming from Ethiopian agriculture as it is modules coming from Ethiopian agriculture as it is currently operatingcurrently operatingThe few positive externalities are largely a result of The few positive externalities are largely a result of the backwardness of agriculture, which are likely to the backwardness of agriculture, which are likely to change with development.change with development.These positive externalities include:These positive externalities include:Environment: Low external input, thus forex saving Environment: Low external input, thus forex saving (in the enset culture) less water contamination, (in the enset culture) less water contamination, existence of genetic diversity (coffee, enset), existence of genetic diversity (coffee, enset), landscape amenities (open field agriculture…etc. a landscape amenities (open field agriculture…etc. a reminiscence of 17reminiscence of 17thth century Europe?) century Europe?)Low rural urban migration: Although the opposite is Low rural urban migration: Although the opposite is what is desirable under Ethiopian circumstanceswhat is desirable under Ethiopian circumstances

Page 3: The Ethiopian National Synthesis Report Berhanu Nega

Factors inhibiting positive roles and Factors inhibiting positive roles and externalitiesexternalities

Structure of production: micro and decreasing size Structure of production: micro and decreasing size holding, low technology, low skill, rain dependent holding, low technology, low skill, rain dependent agricultureagriculturePolicy and institutional configuration: land policy Policy and institutional configuration: land policy (insecurity, absence of land markets, diminishing size (insecurity, absence of land markets, diminishing size holding, inhibiting migration, powerlessness); the nature of holding, inhibiting migration, powerlessness); the nature of liberalization, (effect on output prices and inputs); liberalization, (effect on output prices and inputs); Agriculture Development Led Industrialization (only Agriculture Development Led Industrialization (only technology improvements emphasized without institutional technology improvements emphasized without institutional and structural change)and structural change)Population pressure: land holding size and environmental Population pressure: land holding size and environmental implications (farming marginal areas, hill sides, implications (farming marginal areas, hill sides, deforestation…etc.)deforestation…etc.)Spatial Imbalance: very low urbanization affecting demand, Spatial Imbalance: very low urbanization affecting demand, and thus agri.prices. and thus agri.prices.

Page 4: The Ethiopian National Synthesis Report Berhanu Nega

  1960/61-73/74

1974/75-90/91

1991/92-02/03

1960/61-02/03

Agriculture & allied activities

68.1 55.6 47.9 57.9

Industry 9.2 11.4 10.7 10.5

Distributive services 11.6 14.2 14.3 13.3

Other services 11.1 18.7 27.1 18.2

Public Administration & Defense

3.4 7 12.1 5.1

Agriculture’s share in GDP

Page 5: The Ethiopian National Synthesis Report Berhanu Nega

  1960/61-73/74

1974/75-90/91

1991/92-96/97

1997/98-02/03

1991/92-02/03

1960/61-02/03

Agriculture & allied activities

2.1 0.6 3.5 -1.5 1.7 1.4

Industry 7 3.6 7.4 4.7 5.6 3.3

Distributive services

7.8 2.5 8.2 4.9 6.5 3.5

Other services 6.9 4.8 6.4 7.3 7.5 5.6

GDP 3.7 1.9 5.1 2.5 4.5 2.6

Per capita GDP 1.5 -0.9 2 -0.13 1.5 -0.1

Per capita GDP: Agrarian

-0.08 -2.2 0.7 -3.4 -0.9 -1.2

Per capita GDP: Non-agriculture

4.3 0.2 2.3 1.6 2.4 0.8

Long Term Growth Performance

Page 6: The Ethiopian National Synthesis Report Berhanu Nega

  1960/61-73/74

1974/75-90/91

1991/92-02/03

1960/61-02/03

Agriculture & allied activities

38.5 16.5 18.5 30.8

Industry 17.5 20.8 13.4 13.5

Distributive services 24.4 17.8 20.6 17.9

Other services 20.4 44.9 47.2 39.4

Public Administration & Defense

6.4 20.7 28.2 18.4

Agriculture’s Contribution to Growth

Page 7: The Ethiopian National Synthesis Report Berhanu Nega

Trends in Per capita Income in the Agricultural Sector

0

50

100

150

200

250

Yeat

Per capita value-added in the agricultural sector has Per capita value-added in the agricultural sector has

been declining by about 1.2% for the last four decadesbeen declining by about 1.2% for the last four decades

Page 8: The Ethiopian National Synthesis Report Berhanu Nega

II. Policy moduleII. Policy module Objectives: Objectives:

to examine the policy setting in the 1990s to examine the policy setting in the 1990s

to study the impact of new policies on to study the impact of new policies on selected roles of agricultureselected roles of agriculture

The contribution of The contribution of agriculture to food security agriculture to food security has continued to deteriorate in Ethiopia. has continued to deteriorate in Ethiopia.

The disparity between urban and rural The disparity between urban and rural productivity has increased from 4.4 in 1987 productivity has increased from 4.4 in 1987 to 4.7 in 1997.to 4.7 in 1997.

Page 9: The Ethiopian National Synthesis Report Berhanu Nega

The impact of various economic policies and The impact of various economic policies and reforms of the 1990s hasn't been satisfactory. reforms of the 1990s hasn't been satisfactory.

Although government development strategy Although government development strategy favours agriculture over other sectors, actions are favours agriculture over other sectors, actions are not commensurate with rhetoricnot commensurate with rhetoric

The economic reform program (ERP) has failed to The economic reform program (ERP) has failed to direct available credit to the agricultural sector. direct available credit to the agricultural sector.

B/N 1991-98 Credit to Agriculture(14.7%), domestic B/N 1991-98 Credit to Agriculture(14.7%), domestic

trade ( 32.2%), industry (13.2%).trade ( 32.2%), industry (13.2%). The volatility of prices for agricultural products is The volatility of prices for agricultural products is another problem. another problem.

Prices fell by up to 25 percent, during the 1996 and Prices fell by up to 25 percent, during the 1996 and 2001 bumper harvest years2001 bumper harvest years

Page 10: The Ethiopian National Synthesis Report Berhanu Nega

Government expenditure for and revenue from Government expenditure for and revenue from agriculture have not been satisfactory. agriculture have not been satisfactory.

share in total government expenditure was share in total government expenditure was 27.6% in 2000/01 and share in total 27.6% in 2000/01 and share in total government revenue was 2.3% in 1999/00.government revenue was 2.3% in 1999/00.

The Sustainable Development and Poverty The Sustainable Development and Poverty Reduction Program (SDPRP) has been Reduction Program (SDPRP) has been implemented.implemented.

Components: ADLI, Judiciary and Civil Service Components: ADLI, Judiciary and Civil Service Reform, Decentralization and Empowerment, and Reform, Decentralization and Empowerment, and Capacity Building. Capacity Building.

ADLI and PADETES have been criticized ADLI and PADETES have been criticized theoretical/conceptual and empirical grounds. theoretical/conceptual and empirical grounds.

Page 11: The Ethiopian National Synthesis Report Berhanu Nega

institutional factors (land policy, land institutional factors (land policy, land administration…etc.) have significantly affected administration…etc.) have significantly affected the performance and role of agriculture.the performance and role of agriculture.

The input and output markets and The input and output markets and extension and extension and research systems research systems are not generally in favor of are not generally in favor of agriculture.agriculture.

Three areas that need attention to boost the Three areas that need attention to boost the agriculture sector including ag. exportsagriculture sector including ag. exports

raising the income of producers of raising the income of producers of agricultural exports by reducing the gap agricultural exports by reducing the gap between export prices and farm gate prices.between export prices and farm gate prices.

encouraging modern technologies.encouraging modern technologies.

developing the interface between the rural developing the interface between the rural and urban sectors.and urban sectors.

Page 12: The Ethiopian National Synthesis Report Berhanu Nega

III. Environmental Role moduleIII. Environmental Role moduleObjective: to identify and capture the positive and Objective: to identify and capture the positive and negative roles of agriculture in Ethiopia.negative roles of agriculture in Ethiopia.

Research activities involved two elements: Research activities involved two elements: national level assessment and farming system national level assessment and farming system based case study.based case study.

Five Environmental externalities were assessed:Five Environmental externalities were assessed:

Soil erosion and off-site impacts (-)Soil erosion and off-site impacts (-)

water availability and water contamination (+)water availability and water contamination (+)

on-farm conservation of bio-diversity (+)on-farm conservation of bio-diversity (+)

air quality (+)air quality (+)

landscape amenities (+)landscape amenities (+)

Page 13: The Ethiopian National Synthesis Report Berhanu Nega

Two case studies: the enset-coffee-livestock Two case studies: the enset-coffee-livestock based system and the highland cereal based system and the highland cereal system.system.

Findings:Findings:

Major positive externality: Conservation and Major positive externality: Conservation and management of agricultural bio-diversity management of agricultural bio-diversity

The Economic valueThe Economic value: :

1)Avoiding fertilizer use and foreign 1)Avoiding fertilizer use and foreign exchange saving.exchange saving.

USD12,505,813/year saved from USD12,505,813/year saved from fertilizer avoidance in the inset culture.fertilizer avoidance in the inset culture.

Page 14: The Ethiopian National Synthesis Report Berhanu Nega

2) aversion of coffee production loss due to coffee berry 2) aversion of coffee production loss due to coffee berry disease (CBD) resistant varieties disease (CBD) resistant varieties

An estimated loss of 830 million was averted during An estimated loss of 830 million was averted during the world’s three CBD years of 1970 1976 and 1982.the world’s three CBD years of 1970 1976 and 1982.

reducing the degree of soil erosion reducing the degree of soil erosion Estimated annual income loss due to soil erosion : Estimated annual income loss due to soil erosion : US $150 million in 1998.US $150 million in 1998.

The Ethiopian coffee population provides genetic stock for The Ethiopian coffee population provides genetic stock for crop improvement breeding worldwide.crop improvement breeding worldwide.

Other externalities: Other externalities: Agricultural use of water does not cause water Agricultural use of water does not cause water scarcity for non-agriculture. (traditional, rain fed scarcity for non-agriculture. (traditional, rain fed agriculture with very little irrigation) agriculture with very little irrigation) limited concern about the harmful environmental limited concern about the harmful environmental effects of fertilizer use. (20 kg per ha.)effects of fertilizer use. (20 kg per ha.)Agriculture in Ethiopia is more of a sink than a Agriculture in Ethiopia is more of a sink than a source of green house gases. source of green house gases. The aesthetic value of agricultural landscape. (Tourist The aesthetic value of agricultural landscape. (Tourist identification of the exotic nature of traditional ag.)identification of the exotic nature of traditional ag.)

Page 15: The Ethiopian National Synthesis Report Berhanu Nega

Major negative externalities: deforestation Major negative externalities: deforestation and soil erosion. and soil erosion.

soil erosion inflicts external or off-site costs soil erosion inflicts external or off-site costs through the process of sedimentation. through the process of sedimentation.

An estimated loss of Birr 60 million was An estimated loss of Birr 60 million was incurred as a result of siltation. incurred as a result of siltation.

Policy recommendationsPolicy recommendations::The need for land use policyThe need for land use policy

Reduce deforestationReduce deforestation

Favourable policy on tenure securityFavourable policy on tenure security

Catchment protection to Catchment protection to reduce reservoir reduce reservoir siltationsiltation

Page 16: The Ethiopian National Synthesis Report Berhanu Nega

IV. Food Security Role ModuleIV. Food Security Role Module

The food security role of agriculture is The food security role of agriculture is investigated at two levels: at the national and investigated at two levels: at the national and household levels.household levels.

The various approaches in the study include:The various approaches in the study include:

Review of indicators of national food security:Review of indicators of national food security:

Measures of the risk of national consumption Measures of the risk of national consumption shortfall beyond a certain level of trend shortfall beyond a certain level of trend consumption;consumption;

Page 17: The Ethiopian National Synthesis Report Berhanu Nega

During 1999/2000 average cereal supply per During 1999/2000 average cereal supply per person ranged between 122 to 158 Kg person ranged between 122 to 158 Kg

Average yield of major cereals didn’t improve Average yield of major cereals didn’t improve from its level of 1ton per hectare 25 years ago.from its level of 1ton per hectare 25 years ago.

Famine affected population during drought Famine affected population during drought years increased from about 1.5 million in years increased from about 1.5 million in 1972/73 to about 7 million in 1984/85 and about 1972/73 to about 7 million in 1984/85 and about 14 million people in 2002/0314 million people in 2002/03

The structural deficit is about 6 million peopleThe structural deficit is about 6 million people

Projection of famine affected population will Projection of famine affected population will reach about 42% by 2020 (i.e 3.4% growth reach about 42% by 2020 (i.e 3.4% growth rate/annum)rate/annum)

Page 18: The Ethiopian National Synthesis Report Berhanu Nega

Trend of per capita cereal and pulses productionTrend of per capita cereal and pulses production

0

50

100

150

200

250

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Year

Kg/p

ers

on

Per capita cereal + pulses (kg)

Page 19: The Ethiopian National Synthesis Report Berhanu Nega

The national level food security situation: The national level food security situation: average daily energy supply:1880 kcal/cap, average daily energy supply:1880 kcal/cap, 44% of the population is undernourished; and 47% of 44% of the population is undernourished; and 47% of under 5 children are underweight. under 5 children are underweight. Ethiopia heavily relies on food aid which averages at about Ethiopia heavily relies on food aid which averages at about 800,000 MT/ year.800,000 MT/ year.

The benefits of increased domestic production:The benefits of increased domestic production:Supply response of cereals to own price is estimated at Supply response of cereals to own price is estimated at 0.38%0.38%

A 40% price increase, for example, will reduce A 40% price increase, for example, will reduce expenditure for food imports by 50%expenditure for food imports by 50%

Foreign exchange is a very important constraint for food Foreign exchange is a very important constraint for food security in Ethiopiasecurity in EthiopiaThe country relies on limited export earning base (e.g. The country relies on limited export earning base (e.g. coffee) for commercial food importcoffee) for commercial food import

Page 20: The Ethiopian National Synthesis Report Berhanu Nega

Food import average at 199 and 172 million USD Food import average at 199 and 172 million USD during 1990-1995 and 1990–2000, respectively.during 1990-1995 and 1990–2000, respectively.These amounts relate to 65% and 44% of export These amounts relate to 65% and 44% of export earning less debt repayment.earning less debt repayment.

Household level food securityHousehold level food securityRural households spend 61% of their income on Rural households spend 61% of their income on food, while in urban households it is 46%.food, while in urban households it is 46%.74% of total earnings in rural households comes 74% of total earnings in rural households comes from agriculture and 17% from remittances.from agriculture and 17% from remittances.Rainfall and soil fertility explain the largest share of Rainfall and soil fertility explain the largest share of variability of rural income.variability of rural income.In rural areas average per capita nutrient intake per In rural areas average per capita nutrient intake per day is 2032 Kcal of energy, 55gms protein and day is 2032 Kcal of energy, 55gms protein and 60gms of fat while these are 2300 kcal, 63gms and 60gms of fat while these are 2300 kcal, 63gms and 40gms respectively in urban areas.40gms respectively in urban areas.

Page 21: The Ethiopian National Synthesis Report Berhanu Nega

Agricultural growth impact on povertyAgricultural growth impact on poverty

Poverty Situation:Poverty Situation:

Proportion of people in food poverty is 52% in Proportion of people in food poverty is 52% in rural and 36% in urbanrural and 36% in urban

1995/96 poverty level was 45.5% and 44.2% in 1995/96 poverty level was 45.5% and 44.2% in 1999/2000 1999/2000

Current poverty estimate is 47.5%Current poverty estimate is 47.5%

Page 22: The Ethiopian National Synthesis Report Berhanu Nega

Seven channels through which agriculture Seven channels through which agriculture affects poverty are identified affects poverty are identified

Food Channel

Income Channel

Price Channel

Non-farm employment channel

Off-farm employment channel

Wage Channel

Government revenue channel

Four are major transmission mechanisms: Food, Four are major transmission mechanisms: Food, income, price and employmentincome, price and employment

Page 23: The Ethiopian National Synthesis Report Berhanu Nega

Growth elasticity of Growth elasticity of poverty = -0.76 poverty = -0.76 (previous (previous estimates)estimates)

Agricultural growth Agricultural growth elasticity of GDP elasticity of GDP growth = 0.32growth = 0.32

Agricultural growth Agricultural growth elasticity of poverty elasticity of poverty

= -0.24= -0.24

Growth elasticity of Growth elasticity of poverty = -0.4 poverty = -0.4

(Actual)(Actual)

Agricultural growth Agricultural growth elasticity of GDP elasticity of GDP growth = 0.32growth = 0.32

Agricultural growth Agricultural growth elasticity of poverty elasticity of poverty

= -0.13= -0.13

Agricultural Growth Elasticity of PovertyAgricultural Growth Elasticity of Poverty

Page 24: The Ethiopian National Synthesis Report Berhanu Nega

Rural Poverty Estimates for 2000 under different Rural Poverty Estimates for 2000 under different assumptionsassumptions

Growth Growth rate – rate – annualannual

Implied Implied change change in 5-yearin 5-year

Estimated Estimated PoPo

ChangChang. in Po. in Po

ElasticityElasticity

Actual 1995-2000 trend Actual 1995-2000 trend in agr. Percapitain agr. Percapita

(considering inflation(considering inflation))

-3.4-3.4 -15.9-15.9 63.663.6 58%58% -3.62-3.62

Actual 1995-2000 trend Actual 1995-2000 trend in agr. Percapitain agr. Percapita(assuming no inflation)(assuming no inflation)

-3.4-3.4 -15.9-15.9 53.753.7 34%34% -2.12-2.12

Long-term trend in Long-term trend in agr. Percapita growthagr. Percapita growth(assuming no inflation)(assuming no inflation)

-1.6-1.6 -7.8-7.8 46.546.5 16%16% -0.98-0.98

Page 25: The Ethiopian National Synthesis Report Berhanu Nega

Rural Poverty Estimates for 2015 under Rural Poverty Estimates for 2015 under different assumptionsdifferent assumptions

PoPo

Simple forecast (trend)Simple forecast (trend) 39.039.0

Based on long-term Agr. Percapita Based on long-term Agr. Percapita value added growth (-1.6)value added growth (-1.6)

65.265.2

Under best scenario (using first half Under best scenario (using first half EPRDF period (0.04)EPRDF period (0.04)

34.334.3

Page 26: The Ethiopian National Synthesis Report Berhanu Nega

The results of the calculation of elasticities The results of the calculation of elasticities shows that if agriculture grows, it would have shows that if agriculture grows, it would have significant impact on poverty reduction.significant impact on poverty reduction.

Page 27: The Ethiopian National Synthesis Report Berhanu Nega

VI. Buffer Role ModuleVI. Buffer Role Module

Objective:Objective:

to assess the potential of Ethiopian agriculture as to assess the potential of Ethiopian agriculture as a buffer in times of crisis. a buffer in times of crisis.

Analysis is made based on the aggregated Analysis is made based on the aggregated national data and household level data. national data and household level data.

At macro data from Published materials and data At macro data from Published materials and data from agencies and institutions: CSA, MoLSA and from agencies and institutions: CSA, MoLSA and others .others .

The household level data from rural and urban The household level data from rural and urban surveys of AAUsurveys of AAU

Specific data regarding remittances and migration Specific data regarding remittances and migration could not be obtained.could not be obtained.

Page 28: The Ethiopian National Synthesis Report Berhanu Nega

Problem of unemployment has become a serious issue in Problem of unemployment has become a serious issue in urban Ethiopia. urban Ethiopia. Sharp decline in the rate of growth of urban based Sharp decline in the rate of growth of urban based employment opportunities employment opportunities The highest rate of unemployment was experienced by the The highest rate of unemployment was experienced by the youth (43.1%) while adult job seekers took the next youth (43.1%) while adult job seekers took the next position (41.4%) in 1984.position (41.4%) in 1984.The direct way of assessing the contribution of rural The direct way of assessing the contribution of rural households to non-agricultural dependents is not possible households to non-agricultural dependents is not possible in the Ethiopian case. (No remittance from rural to urban in the Ethiopian case. (No remittance from rural to urban house holds could be identified both from national data house holds could be identified both from national data and from survey conducted for this purpose) and from survey conducted for this purpose) For brevity, using the data on remittances from urban to For brevity, using the data on remittances from urban to rural areas, a rural areas, a TobitTobit model is used to examine the purpose model is used to examine the purpose of remittance flows from urban areas to rural to check if of remittance flows from urban areas to rural to check if self interest or altruism explain the reasons for self interest or altruism explain the reasons for remittances.remittances.

Page 29: The Ethiopian National Synthesis Report Berhanu Nega

Conclusion: Conclusion:

the ability of agriculture to act as a buffer hinges the ability of agriculture to act as a buffer hinges on the sector’s performance during a crisis. on the sector’s performance during a crisis.

Poverty is getting serious in urban areas but the Poverty is getting serious in urban areas but the situation in rural areas is more daunting. situation in rural areas is more daunting.

The low level of urban-to rural migration, and the The low level of urban-to rural migration, and the virtual absence of remittances going from virtual absence of remittances going from agriculture to urban households indicate the agriculture to urban households indicate the low low capacity of the agricultural sectorcapacity of the agricultural sector to support to support urban households in case of adverse economic urban households in case of adverse economic circumstances in urban areas. circumstances in urban areas.

Self-interest motive doesn’t dominate in urban Self-interest motive doesn’t dominate in urban households’ decisions to remit to rural households’ decisions to remit to rural householdshouseholds

Page 30: The Ethiopian National Synthesis Report Berhanu Nega

VII. Social Viability Role ModuleVII. Social Viability Role Module Overall Objective: Establish the contribution of Overall Objective: Establish the contribution of

agriculture to social viability in the form agriculture to social viability in the form of spatial population balanceof spatial population balance

Data Sources and Method: Use of existing macro-Data Sources and Method: Use of existing macro-level data and primary data generated for the level data and primary data generated for the purpose of this study through surveys and focus-purpose of this study through surveys and focus-group discussions carried out at two representative group discussions carried out at two representative sites of the two farming systems (enset-coffee sites of the two farming systems (enset-coffee complex farming system and highland cereal complex farming system and highland cereal farming system).farming system).Secondary sources of data: CSA census, statistical Secondary sources of data: CSA census, statistical abstracts and published and unpublished reports.abstracts and published and unpublished reports.Primary data generated through: survey and focus-Primary data generated through: survey and focus-group discussions in two representative4 sites of group discussions in two representative4 sites of the highland-cereal and enset-coffee complex the highland-cereal and enset-coffee complex farming systemsfarming systems

Page 31: The Ethiopian National Synthesis Report Berhanu Nega

To this effect the study has:To this effect the study has:Assessed the spatial distribution of the Assessed the spatial distribution of the population, as well as the features of the population, as well as the features of the population and migration at the national an d population and migration at the national an d city (Addis Ababa) levelcity (Addis Ababa) levelUsing the Harris-Todaro Model, identified the Using the Harris-Todaro Model, identified the main determinants of rural-urban migration, main determinants of rural-urban migration, and estimated their respective contributionand estimated their respective contributionEstimated the social costs of migration to Estimated the social costs of migration to urban administrationsurban administrationsEstimated the optimal rate of rural to urban Estimated the optimal rate of rural to urban migration, and looked into how this relates to migration, and looked into how this relates to the actual level.the actual level.Illustrated the interplay between land tenure, Illustrated the interplay between land tenure, farming system and agricultural production farming system and agricultural production and transformation.and transformation.

Page 32: The Ethiopian National Synthesis Report Berhanu Nega

Recent population estimates for Ethiopia: 70.7 Recent population estimates for Ethiopia: 70.7 million of which 83.8% resides in rural areas.million of which 83.8% resides in rural areas.

44.7% of the total urban population and 9.2% of 44.7% of the total urban population and 9.2% of the total rural population consist of migrants.the total rural population consist of migrants.

In 1994, of the four major categories of internal In 1994, of the four major categories of internal migrations the rural-rural migration ranked first migrations the rural-rural migration ranked first (48.9%), followed by rural-urban migration (24.8%). (48.9%), followed by rural-urban migration (24.8%).

Addis Ababa is by far the only truly metropolitan Addis Ababa is by far the only truly metropolitan city with more than 3 million residents amounting city with more than 3 million residents amounting to 24% of the total urban population.to 24% of the total urban population.

Page 33: The Ethiopian National Synthesis Report Berhanu Nega

From the estimated model, rural-urban income From the estimated model, rural-urban income differentials affect migrationdifferentials affect migration

Fertilizer use, investment in agricultural Fertilizer use, investment in agricultural machinery, investment in livestock and machinery, investment in livestock and education all have the capacity to increase education all have the capacity to increase productivity in agriculture and hence productivity in agriculture and hence minimize implicit wage differentials and minimize implicit wage differentials and thus reduce rural-urban migration.thus reduce rural-urban migration.

Page 34: The Ethiopian National Synthesis Report Berhanu Nega

A simultaneous 1% increase in the use of these A simultaneous 1% increase in the use of these three agricultural inputs would result in the three agricultural inputs would result in the reduction of the rural-urban migration by about reduction of the rural-urban migration by about 6.2%.6.2%. Estimated per capita marginal urban absorption Estimated per capita marginal urban absorption cost is Birr 5,139.cost is Birr 5,139.The average rate of migration measured as a The average rate of migration measured as a proportion of the rural population for the years proportion of the rural population for the years 1980 to 2001 was about 0.25%.1980 to 2001 was about 0.25%.The equilibrium (optimal) rate of migration (where The equilibrium (optimal) rate of migration (where the present value of future expected real income in the present value of future expected real income in both areas is equalized) measured relative to the both areas is equalized) measured relative to the rural labor force is about 1.96%. rural labor force is about 1.96%. This implies that the optimal number of migrants This implies that the optimal number of migrants to be about four times (485,000 per annum) to be about four times (485,000 per annum) compared with the actual number of migrants compared with the actual number of migrants (114,000 per annum) for the period 1980 to 2001. (114,000 per annum) for the period 1980 to 2001.

Page 35: The Ethiopian National Synthesis Report Berhanu Nega

One reason for the low rate of migration is One reason for the low rate of migration is the land tenure policy. the land tenure policy. This was supported by evidence from the This was supported by evidence from the different farming systems where different different farming systems where different tenure security prevails (largely owing to tenure security prevails (largely owing to differences in social organization rather than differences in social organization rather than differing de jure tenure arrangements.)differing de jure tenure arrangements.)It would be erroneous to consider this very It would be erroneous to consider this very low rate of rural-urban migration a positive low rate of rural-urban migration a positive externality of agriculture. externality of agriculture. But, this was made possible because of food But, this was made possible because of food aid that made up for the chronic food deficit. aid that made up for the chronic food deficit.

Page 36: The Ethiopian National Synthesis Report Berhanu Nega

ConclusionConclusion

Positive externalities from agriculture are hard to Positive externalities from agriculture are hard to

come by in the Ethiopian context.come by in the Ethiopian context. An archaic production system with a suffocating An archaic production system with a suffocating property rights regime and a population pressure property rights regime and a population pressure partly owing to very low urbanization responsible partly owing to very low urbanization responsible for the sector’s poor performance.for the sector’s poor performance.

Structural transformation of agriculture (from Structural transformation of agriculture (from traditional to modern) along with the traditional to modern) along with the transformation of the economy (from transformation of the economy (from predominantly agricultural to non-agricultural) is predominantly agricultural to non-agricultural) is crucial.crucial.

Page 37: The Ethiopian National Synthesis Report Berhanu Nega

THANK YOU!THANK YOU!