ETHIOPIA: A Thankless Job, But Somebody’s Got to Do It!

It is gratifying to know that Ethiopian Americans are carrying their fair share of the load in helping the economy of their homeland. It was an eye-opening revelation to learn that Ethiopian Americans contributed a cool $1.2 billion to the Ethiopian economy this past year. That is “only second to the amount generated by Ethiopia’s exports.” Last week Elias Loha, Manager of Reserve Management and Foreign Exchange Market of Ethiopian National Bank, fretting over “a cut in vital remittances from Ethiopians in the United States” told Reuters: “We are concerned and worried that as a result of the financial crisis… some of the Ethiopians may loose their jobs and as a result they may stop sending money to help their families back home.” Could that be a backhanded way of giving us teeny-weeny credit for the much vaunted stratospheric “10 percent a year economic growth” Zenawi gasbags about? Regardless, there seems to be manifest alarm in Zenawi’s officialdom that the Ethiopian-American goose may not be laying as many golden eggs as it has been previously because of the sub-prime mortgage debacle.


The $1.2 billion figure came as a pleasant and unexpected surprise for many Ethiopians who regularly send money to their families or make remittances for other purposes. The official figure most likely underestimates the actual figure since the National Bank does not have the data collection mechanisms to accurately gauge the remittance flow in the informal channels or in the underground economy. For instance, a 2006 World Bank study suggested that if remittances sent through informal channels are included, total remittances in recipient countries could be as much as 50 per cent higher than the official record. What surprised most Ethiopian Americans aware of the staggering contribution was the fact that remittances substantially exceed the total amount of U.S. aid given to Ethiopia. Evidently, such massive infusion of money could have significant and decisive implications for Ethiopian society, but there are few systematic studies on the impact of remittances on the Ethiopian economy. We do not know if the $1.2 billion dollars we sent alleviated poverty or deepened the inequality in Ethiopia between remittance recipients and the vast majority of people who do not receive them. Did our remittances help reduce the poverty rate in Ethiopia or place an added burden on the poor by grossly distorting the local economy? Is the $1.2 billion we sent last year or the hundreds of millions in prior years in some part responsible for the current high inflation, high food and fuel costs and stratospheric housing prices? Is there evidence to show that the billion plus dollars we sent contributed to economic development in Ethiopia? Would a significant decline in remittances by Ethiopians in the U.S. have positive effects on the economy by alleviating inflationary and other pressures? What is the relationship between increased levels of remittances and the “brain drain” of highly skilled workers from Ethiopia? Do our remittances provide economic buoyancy to help keep afloat the doomed ship of a ruthless dictatorship? We just don’t have the empirical data to answer these questions. [Read more]