According to the IMF, Ethiopia was one of the fastest growing economies in the world, registering over 10% economic growth from 2004 through 2009. It was the fastest-growing non-oil-dependent African economy in the years 2007 and 2008. In 2015, the World Bank highlighted that Ethiopia had witnessed rapid economic growth with real domestic product (GDP) growth averaging 10.9% between 2004 and 2014.
In 2008 and 2011, Ethiopia’s growth performance and considerable development gains were challenged by high inflation and a difficult balance of payments situation. Inflation surged to 40% in August 2011 because of loose monetary policy, large civil service wage increases in early 2011, and high food prices. For 2011/12, end-year inflation was projected to be about 22%, and single digit inflation is projected in 2012/13 with the implementation of tight monetary and fiscal policies.
In spite of fast growth in recent years, GDP per capita is one of the lowest in the world, and the economy faces a number of serious structural problems. However, with a focused investment in public infrastructure and industrial parks, Ethiopia’s economy is addressing its structural problems to become a hub for light manufacturing in Africa.
The Ethiopian constitution defines the right to own land as belonging only to “the state and the people”, but citizens may lease land (up to 99 years) and are unable to mortgage or sell. Renting of land for a maximum of twenty years is allowed and this is expected to ensure that land goes to the most productive user. Land distribution and administration is considered an area where corruption is institutionalized, and facilitation payments as well as bribes are often demanded when dealing with land-related issues. As there is no land ownership, infrastructural projects are most often simply done without asking the land users, which then end up being displaced and without home or land. A lot of anger and distrust sometimes results in public protests. In addition, agricultural productivity remains low, and frequent droughts still beset the country, also leading to internal displacement.