Ethiopia needs to tap natural resources more efficiently and set up investment banks to fight rising food inflation, an Ethiopian expert said on Monday.
Costantinos Bt. Costantinos, professor of public policy at Addis Ababa University, said Ethiopia should upgrade its agriculture industry and hedge risk of exchange rate fluctuation to eliminate the negative effect of rising food prices.
“Ethiopia has huge agricultural land we’re not using; the second thing is we have a lot of water. We need to use our natural resources efficiently to be able to produce food in the country,” Costantinos told Xinhua.
“Investment banks with appropriate foreign currency reserves also need to be established in Ethiopia so that can finance farm industries like agro-industrial parks,” he said.
Ethiopia also needs to attract international capital, geared toward the farm sector, to fight domestic food inflation and to earn much needed foreign currency, Costantinos said.
“We need international capital to flow into Ethiopia, so that we could bring in investors who could use these international investment banks to be able to produce food in Ethiopia to not only supply Ethiopia but also export them,” he said.
Costantinos warned that rising food inflation in Ethiopia, if not checked, can trigger mass unrest in the second most populous African country.
“Unchecked inflation and corruption are just the perfect chemistry for a country to slide down into the road of illegality,” he said.
According to the Ethiopia Central Statistical Agency, the country’s annual inflation for June hit 24.5 percent, up from 19.7 percent of the previous month.
Food inflation stood at 28.7 percent in June, up from 23.7 percent in May. Enditem