Unemployment and the Economy

Addis Ababa has long been plagued by massive unemployment as continuing in-migration floods the local job market. The economy, also disrupted by the thirty year war with Eritrea has suffered likewise. In 1984, only 55% of the working age population of the city was employed, but the city�s economic fortunes have since been on the rise (Tarver 194). The conclusion of the war and the establishment of a capitalist government resulted in a drop in the city�s official unemployment rate from 40% in 1994 to 30% in 1997 ("Region 14 Paints a Good Picture of Unemployment", Addis Tribune 3/20/97).

Behind the Lion of Judah Statue lies the midrise headquarters of the Bank of Ethiopia. Business and government administration are the primary employment secors of Addis Ababa which is the political and economic capital of Ethiopia (Ethiopia: A Country Study, Washington D.C.: US Government, 1980. p. 72.)

Those lucky enough to have "official" jobs acknowledged by the government (A large part of the 30% of unemployed residents are involved in "unofficial" street vending occupations), work in a classic capital city economy. The majority of jobs involve administrative, service or commercial professions, while the industrial and manufacturing sector is a comparatively small part of the local economy. As of 1994, 26% of the employed population of Addis Ababa worked in Public Administration or Social Services (Tarver 194), most of whom were part of the 40% employed by the government (Tarver 194). Another 20% of employees in Addis Ababa worked in the wholesale and retail-sale sector, while only 13% (as compared to over 65% in towns of the Akaki) worked in manufacturing or industrial operations (Tarver 194). 7% were involved in transport and or communications, 3% in construction and only 2% in banking, insurance and business services.

Paralleling the drop in unemployment in Addis Ababa has been recent steady growth in the economy. The national economy has grown 6% in the last four years primarily as a result of managerial reforms and the elimination of price controls. Good weather in the 1990�s and an increase in fertilizer use have boosted Ethiopian agriculture, and further aided Addis Ababa�s economy ("Agriculture and Ethiopia's Development", Addis Tribune 3/28/97).

Addis Ababa and Ethiopia still depends greatly on foreign aid to stabilize the economy. Investment in businesses and government efforts in Ethiopia and its capital city come in the form of donations and loans from foreign governments and The World Bank ("Donors Agree . .", Addis Tribune 3/20/97). Many governments and corporations have resisted investing in Addis Ababa for three primary reasons:

1. The complicated and inefficient bureaucracy of the local and national government makes the whole process difficult.

2. The local land lease system fails prospective investors because parcel sizes are un- recorded by the government.

3. Copycat investors crowd the market and offer competition which discourages further investment.("Absence of Investment Hurts . . ", Addis Tribune 3/20/97).

These foreign interests have organized and made their involvement in Ethiopia contingent on government adherence to the following policy aimed at stabilizing the economy and creating a more laissez faire environment for investment:

1. Customs duties on imports.

2. Investment of tax revenues.

3. Deregulation of fertilizer prices.

4. An initial increase in rents on some categories of government owned housing.

5. Eventual sale of all government owned housing.

6. Privatization of all farms. ("Donors Agree . . " Addis Tribune 3/20/97)

These investors have the upper hand in negotiations with the local and national governments because, as a reporter for the Addis Tribune observed, "Absence of investment hurts the jobless much more than the investor (3/20/97)." Indeed, the investor can always take its money to another market, but the unemployed of Addis Ababa need the opportunities foreign money can provide.

An issue further related to Ethiopia�s economic development, is the legitimacy of government sponsored fund-raising for community improvement and development projects. Ethiopians and particularly residents of Addis Ababa�s tight-knit ethnic communities have a long history of donating money and pooling resources to help their members overcome hardship or even celebrate events such as weddings and funerals ("Fund Raising . ."Addis Tribune 3/28/97).

A few community based organizations, most notably the Gurage Development Association have even financed neighborhood development projects ("Fund Raising . . ", Addis Tribune 3/28/97). But the government�s attempts to raise money through solicitation by telethon in similar community organizations have been met with skepticism by residents. The fund raising amounts to additional taxation according to the Addis Tribune which opposes the policy and suggests that much of the solicited money is either embezzled by the local government, or misinvested ("Fund Raising. . .", Addis Tribune 3/28/97).