Ethiopian Review

EDITOR'S NOTE: This is another false or distorted report by a major international newspaper. The global inflation is affecting every country. But it is only in Ethiopia that millions of people are facing death because of it. The reason, which the international media, NGOs and donor nations do not want to talk about, is that the corrupt government in Ethiopia has policies that restrict economic growth in every field other than those that directly benefit members of the ruling party and its supporters. Just to mention one simple example, the Meles dictatorship doesn't even allow private ownership of Internet services so that the people of Ethiopia remain in the dark age and disconnected. The dictatorial regime is afraid of free flow of information. Despite what the international NGOs and media tells us, there is enough food in Ethiopia. But the problem is that food crops, after being bought below market prices from the region where there is famine, are being stored in massive warehouses in the Tigray region where the ruling party considers as its base of power. The stored food is available only to members of the ruling party, not the average people of Tigray region. The solution is for the people of Ethiopia to rise up and eliminate the parasite regime.

By Barney Jopson, Financial Times

ADDIS ABABA — Ethiopia has emerged as one of the biggest victims of global inflation after food prices in the country nearly doubled in the 12 months to July, intensifying a hunger crisis that has already affected millions of people.

The crisis has been magnified by local factors – drought, hoarding, and a splurge of public infrastructure investment that has left the finances of the country’s cash-strapped government under strain.

The food component of Ethiopia’s consumer price index leapt 91.7 per cent in July from the same month last year, according to data released last week by the country’s statistical agency.

High fuel and food prices are threatening to undo the benefits of economic progress made in recent years in many African countries, pushing more families deeper into poverty and leaving them unable to secure enough food.

In Ethiopia – ranked one of the 10 least developed countries in the world by the United Nations – the combination of inflation and a crop-killing drought had left just over 10m people out of a population of about 80m in need of food aid, the World Food Programme said last month.

Aid workers and diplomats in Addis Ababa, the capital, said more recent unpublished surveys indicated that several million more people had slipped into the crisis category since then.

Inflation has sapped the WFP’s own purchasing power, forcing it to reduce the size of the rations it distributes. It has also stopped buying cereals in Ethiopia itself to avoid driving up prices further. Last month it said it would need an extra $420m (€286m, £225m) to meet its food bill across the Horn of Africa for the rest of this year.

The most dramatic increase within Ethiopia’s food price index was for staple cereals such as wheat and maize, whose prices in July were 171.9 per cent higher than a year ago. Food inflation in neighbouring Kenya, by contrast, hit a year-on-year peak of 44 per cent in May and has since slowed.

Ken Ohashi, World Bank country director for Ethiopia, said: “Inflation is no longer driven solely by a domestic supply-demand imbalance and the global trend, but by expectations of farmers and traders who are holding on to crops in anticipation of further price rises, which makes them a self-fulfilling prophecy.”

To cushion the impact of inflation, the government earlier this year removed taxes on grains, flour and cooking oil. It has nearly exhausted its emergency grain reserve and has begun importing an extra 150,000 tonnes of wheat from Europe and North America, but economists say its foreign currency reserves are now critically low.

Ethiopia has not experienced food riots of the kind seen in some other African countries, partly because the government of the prime minister Meles Zenawi has ruled with an iron fist since unrest in 2005.

The government last year began to provide subsidised wheat to low-income families in the cities, where the political opposition is strongest, a policy that dismays aid workers who say the crisis is much worse in rural areas.

Inflation began to accelerate in Ethiopia last year before it took off in other countries. Eyessus Zafu, president of the Addis Ababa Chamber of Commerce, said this was due to the government’s policy of investing billions of dollars in road, dam and power plant construction projects, which add liquidity to the economy and increase demand for various inputs, but do not increase the supply.

“They help you grow sustainably in the long run, but none of them are contributing immediately to the production of food and goods,” he said.