* Government expects economy to grow 10 pct in 2012/13
* Industry accounts for only 10 pct of GDP
* Ethiopia seeks middle income status by 2025
By Aaron Maasho
ADDIS ABABA, June 21 Ethiopia should ensure
private industry and business has sufficient access to finance
in the state-dominated economy to keep growth rates up and shift
from a heavy reliance on agriculture, the World Bank said.
The Horn of Africa nation with its strongly
state-interventionist policies has one of the world's
fastest-growing economies. The government expects growth of 10
percent in the fiscal year ending next month, boosted by rising
Industry, however, accounts for only about 10 percent of
gross domestic product, while major sectors of the economy such
as banking and telecoms remain in state hands.
Guang Z. Chen, the World Bank's country director, said
Ethiopia should adjust policy to expand the private sector to
meet a goal of middle-income status by 2025. The bank has
defined a middle-income nation as one with gross national income
per capita of more than $1,025 per year and put Ethiopia's at
$370 in 2011.
"For this country to continue to grow I strongly believe
industry has to take a much bigger role because 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," he told Reuters.
"But unfortunately it (the industrial sector) has been
rather stagnant, at about 10 percent of GDP," Chen added.
State-supported energy and transport 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.
In the five years to July 2012, private consumption declined
from 85 percent of GDP to 77 percent, bank figures show. The
total investment rate rose from 16.4 percent of GDP to 25.5
percent between 1987 and 2011, but the proportion of private
investment fell in that period.
"The trend that worries us is that while the public
investment as a share of GDP is increasing, the private
investment as a share of GDP is decreasing," Chen said, adding
adjustments could made to the "interventionist model".
Ethiopia, Africa's second-most populous nation after
Nigeria, aims to expand the road network to 136,000 kilometres
(84,500 miles) by 2015 from below 50,000 kms in 2010. It also
plans to build 5,000 kms of railway lines by 2020.
Addis Ababa says it wants to tap the BRICS countries -
Brazil, China, India, Russia and South Africa - for investment.
Chen said the nation's transport and logistics would benefit
from more a more competitive environment.
"Logistics is mostly controlled by state-owned sectors,
that's why we emphasise that there needs to be more
competition," Chen said, adding that competition could even be
between state-owned enterprises.
Growth has been driven by an expansion in services and
agriculture. The main exports include coffee, horticultural
products and livestock. Ethiopia is also a big aid recipient.
(Editing by Edmund Blair)