Ethiopia is exposed

[Idilinaa]

Exports are good it means u produce something and creating jobs. Gerd dam has plenty of electricity it can export and still expand to rural areas and rest of country. That additional cash from other countries can be used to build more distribution line. Ethiopia is one of fastesr growing economy in Africa. The imf places them in category called emerging giant. They are African power in making many Somalis don’t want to see it because of rivalry but it’s true a giant is emerging many parts of Adis indistinguishable from west

There’s nothing wrong with exports , the issue is priorities. They should be building up the domestic market first, then targeting external markets second.


What’s the point of GERD if most of the population can’t even access or afford electricity, and the main focus is just exports? That doesn’t actually lift people out of poverty.


And about Ethiopia being an “emerging giant” even the World Bank put their economy as ''unclassified'' because there’s no reliable data. A lot of the growth numbers are basically inflated PR from the government, not the reality on the ground.

@novanova @Aseer @Midas @Barkhadle1520 @Thegoodshepherd

You know the economy is really fried when this happens

Ngl i kinda wish they actually did this with Somalia , instead of accepting half baked data from SBS

 

[Idilinaa]

It really is looking bleak for Ethiopia. You have world renowned economists from John Hopkins trashing Abyi Ahmed's economy . You know it's bad when you seize to report money supply data to save face. Because PR is more important. Money supply data is crucial because it helps track inflation risks, liquidity, and economic health .

Having an inflation like this in an already poor economy is just nuts. Especially since there is limited foreign currency supply for Ethiopians to use which means they can't really switch over. So the average Ethiopian is trapped, their money buys less and they can't easily protect themselves by using other currencies, this makes real cost of living skyrocket even if nominal wages stays the same. This weakens domestic market because people can't simply afford goods and this ties back to my earlier points about why an export heavy economy without strong local purchasing power is problematic.

 

[Hilmaam]

There’s nothing wrong with exports , the issue is priorities. They should be building up the domestic market first, then targeting external markets second.


What’s the point of GERD if most of the population can’t even access or afford electricity, and the main focus is just exports? That doesn’t actually lift people out of poverty.


And about Ethiopia being an “emerging giant” even the World Bank put their economy as ''unclassified'' because there’s no reliable data. A lot of the growth numbers are basically inflated PR from the government, not the reality on the ground.

GERD is one of Africas greatest and most imprtant achievements iA one day it will be connected somalia. Also need build bardheere dam it will be good start but wont be nearly as impactful as gerd due to smaller sizes of rivers in somalia

this is current prices in somalia. last week people in Boasaso were protesting about the 70 cents kwh.

GERD allows for one of cheapest rates in world they pay betwen 5-10 cents

Ethiopia electricity prices, December 2024 | GlobalPetrolPrices.com

The residential electricity price in Ethiopia is ETB 0.000 per kWh or USD . These retail prices were collected in December 2024 and include the cost of power, distribution and transmission, and all taxes and fees. Compare Ethiopia with 150 other countries. Historical quarterly data, along...

www.globalpetrolprices.com

 

[Midas]

Im not one to fully subscribe to geographic determinism. But there is something to the idea of how the despotic medieval culture that developed in ethiopia as a result of their geography with the pouplation always bring exploited by soliders and the government isnt something that can just dissappear. It seems to just constantly reappear.

 

[Midas]

GERD is one of Africas greatest and most imprtant achievements iA one day it will be connected somalia. Also need build bardheere dam it will be good start but wont be nearly as impactful as gerd due to smaller sizes of rivers in somalia

this is current prices in somalia. last week people in Boasaso were protesting about the 70 cents kwh.

View attachment 370534

GERD allows for one of cheapest rates in world they pay betwen 5-10 cents

Ethiopia electricity prices, December 2024 | GlobalPetrolPrices.com

The residential electricity price in Ethiopia is ETB 0.000 per kWh or USD . These retail prices were collected in December 2024 and include the cost of power, distribution and transmission, and all taxes and fees. Compare Ethiopia with 150 other countries. Historical quarterly data, along...

www.globalpetrolprices.com

Yh i don't buy it. First mega projects as the source of economic development have neve really ever been a good idea and two something about the gerd dam doesnt add up. I mean its supposedly completel but the official ethiopian office in charge of the gerd say they need another $80 billion birr ? How does that even make sense

 

[Hilmaam]

Yh i don't buy it. First mega projects as the source of economic development have neve really ever been a good idea and two something about the gerd dam doesnt add up. I mean its supposedly completel but the official ethiopian office in charge of the gerd say they need another $80 billion birr ? How does that even make sense


View attachment 370537

80 billion birr is not that much. this is good achievement for black africans. cheap electrcitiy for millions and breaking free of colonial agreeements. Egypt is crying to west to no avail. Final inauguration later this year somalia should attend.

 

[Idilinaa]

GERD is one of Africas greatest and most imprtant achievements iA one day it will be connected somalia. Also need build bardheere dam it will be good start but wont be nearly as impactful as gerd due to smaller sizes of rivers in somalia this is current prices in somalia. last week people in Boasaso were protesting about the 70 cents kwh.

View attachment 370534

GERD allows for one of cheapest rates in world they pay betwen 5-10 cents

Ethiopia electricity prices, December 2024 | GlobalPetrolPrices.com

The residential electricity price in Ethiopia is ETB 0.000 per kWh or USD . These retail prices were collected in December 2024 and include the cost of power, distribution and transmission, and all taxes and fees. Compare Ethiopia with 150 other countries. Historical quarterly data, along...

www.globalpetrolprices.com

Where is that graph from?

Prices in Somalia in most places have come down a lot, its only Bosaso that's an outlier mostly due to the merger of two companies caused the increase in prices but that's probably going to go down. It used to be 1.25 per KWh in Somalia just to put in perspective how far it's gone down across most of Somalia

Additional price cuts will be made between now and 2027.

But here is the main difference. In Somalia most people have access to electricity and can afford to pay for it.

Stats from 2022:

Reporting from 2020:

Now imagine the amazing leap Somalia has made when it had only 15% electricity access in 2012 and now it has 60- 80% after it's rebuilt it's energy sector.

I would reckon that probably by now 85% of Somalis have access since it is 2025 and how rapidly it is expanding. But i am waiting for updates though.

With Ethiopia it's the complete opposite despite the dam , millions are without electricity.

On top of that in places they do have access like in Addis there is constant outages ,this year it was 25.000 outages identified. Also they have surging electricity costs they can't even pay for or afford.

Whats deeply ironic about this is that they could power themselves and give the whole of Ethiopia electricity without the dam and do it a lot cheaper and quicker.

 

[Idilinaa]

Yh i don't buy it. First mega projects as the source of economic development have neve really ever been a good idea and two something about the gerd dam doesnt add up. I mean its supposedly completel but the official ethiopian office in charge of the gerd say they need another $80 billion birr ? How does that even make sense


View attachment 370537

Yaab aleyk, this was launched 14 years ago, and Gerd has turned into a giant cash sinkhole.


Think about the economics here with all the money spent on this, they could’ve done so much to expand basic services to all Ethiopians. At the same time, they could’ve offered loans to small and medium businesses, or even microfinanced them, creating markets, malls, and local commerce. That’s how you really build an economy

 

[Midas]

Yaab aleyk, this was launched 14 years ago, and Gerd has turned into a giant cash sinkhole.


Think about the economics here with all the money spent on this, they could’ve done so much to expand basic services to all Ethiopians. At the same time, they could’ve offered loans to small and medium businesses, or even microfinanced them, creating markets, malls, and local commerce. That’s how you really build an economy

That book by acemolgu on institutions while it has its flaws is generally correct. People dont realize that somalia was a merchant based society which function off trade. The most basic economic activity somalis engaged in was the buying and selling of goods (mainly livestock). That is what we built or society around . In contrast our neighbors ethiopia and yemen are mainly societies of subsistence farmers with a small aristocratic class that exploits the farmers eith ethiopia being a more exploitative society as a resukt of the soliders and nobles living off robbing the farmers.

Our nature as a merchant society amd rhe scale of it was obscure because of our lack of knowledge the economics of 19th century somalia. This has begun to change wirh somalis digging up ans posting more sources describing this time period. Some of the richest merchants in 19/20th century arabia were somalis.

 

[Midas]

Our main problem over the last a t century has been the lack of ability to accumulate large amounts of capital as a society. Since we dont border any truly large societies/economies trade as been as fruitful as it could have potentially been and during the colonial period we didnt receive any of the capital investment that was necessary to develop colonies at the time.

This situation only really began to change into the 70s when due to saudi Arabia's oil wealth it created a massive market especially for livestock and somalia began to accumulate capital at a much faster rate as a result of livestock exports. Many of those somali companies that formed in the 70s and 80s as a resukt of this woukd go on to become massive business decades later after the collapse in 1991.

Much of somalis development today can attributed to us being integrated into a global economy and a global diaspora allowing us to accumulate capital from diaspora buisness. This is the underlying engine behind somali's development. You can see the scale of this trade and how much its expanded in recent years buy looking at Nairobi which is one of the main nodes in this global somali network. All of these massive expensive buildings built in the last 7 years show us how much capital somalis all over the world have accumulated.

 

[Idilinaa]

Our main problem over the last a t century has been the lack of ability to accumulate large amounts of capital as a society. Since we dont border any truly large societies/economies trade as been as fruitful as it could have potentially been and during the colonial period we didnt receive any of the capital investment that was necessary to develop colonies at the time.

This situation only really began to change into the 70s when due to saudi Arabia's oil wealth it created a massive market especially for livestock and somalia began to accumulate capital at a much faster rate as a result of livestock exports. Many of those somali companies that formed in the 70s and 80s as a resukt of this woukd go on to become massive business decades later after the collapse in 1991.

Much of somalis development today can attributed to us being integrated into a global economy and a global diaspora allowing us to accumulate capital from diaspora buisness. This is the underlying engine behind somali's development. You can see the scale of this trade and how much its expanded in recent years buy looking at Nairobi which is one of the main nodes in this global somali network. All of these massive expensive buildings built in the last 7 years show us how much capital somalis all over the world have accumulated.

One of the clearest signs of this capital accumulation is the rapid expansion of Somalia’s financial sector. You can actually see how many services and institutions have sprung up just to handle the sheer volume of capital flows, transactions, and investments coming from both diaspora and exports. This isn’t just about banks existing , it’s about the constant movement of money, reinvestment, and the multiplier effect it creates for private businesses and wages. The IMF even pointed this out recently in their piece on how financial conglomerates are shaping Somalia’s tax system:

Navigating the impact of financial conglomerates on Somalia's tax system

blog-pfm.imf.org

Compare that with Ethiopia: the state keeps a tight grip on banking, private banks aren’t allowed in, and most capital gets locked into mega projects or debt repayment rather than flowing into the private sector. As a result, there’s very little financial intermediation farmers, small businesses, even doctors don’t get the kind of access to capital that Somalis do. That’s why Ethiopia has low wages and weak domestic purchasing power, while Somalia’s private sector and service economy are far more dynamic despite all its challenges

I actually explained it somewhat in the Kenyan President thread i made:

Despite this, Kenyans online still recycle this myth, even though there’s no evidence linking Somali capital to illicit or criminal activity. Most Somali investment stems from legitimate family or community-run businesses that reinvest across sectors and borders.

The key driver behind this? The financial system , particularly Hawala networks and cooperative financing.

I’ve come to understand now that for other Africans, like Kenyans, the lack of access to capital due to weak financial systems makes it hard for them to grasp how Somalis are able to build houses, run malls, finance hospitals, or move huge sums across borders. Since in their economies those financial channels barely exist, they can’t imagine it happening through legitimate means

That book by acemolgu on institutions while it has its flaws is generally correct. People dont realize that somalia was a merchant based society which function off trade. The most basic economic activity somalis engaged in was the buying and selling of goods (mainly livestock). That is what we built or society around . In contrast our neighbors ethiopia and yemen are mainly societies of subsistence farmers with a small aristocratic class that exploits the farmers eith ethiopia being a more exploitative society as a resukt of the soliders and nobles living off robbing the farmers.

Our nature as a merchant society amd rhe scale of it was obscure because of our lack of knowledge the economics of 19th century somalia. This has begun to change wirh somalis digging up ans posting more sources describing this time period. Some of the richest merchants in 19/20th century arabia were somalis.

Somalis didn’t actually sell livestock in large numbers until the late 19th century. That demand was created by the British in Aden and then sustained by the Gulf countries after the oil boom. Before that, Somalis earned from a variety of products, including significant revenue from exporting manufactured goods from major cities like textiles, leather, and jewelry. Pastoral products were mainly meat, milk, clarified butter, and hides.

In many ways, it’s similar to now there’s money being made through agriculture, mining, fishing, frankincense trade, and also livestock.

It’s not much different from today where Somalis build wealth through wage labor, business, trade, services, and logistics. That wealth then goes into towns, housing, and construction, and eventually the wealthiest cities begin reinvesting into manufacturing industries. It follows a sequence: production → trade → towns → reinvestment → industry.

Most trade was handled internally at first, through exchanges between the coast and the interior and between different settlements. Exports came later as a secondary expansion, but everything started with production and domestic trade before that.

The reason I contrast Somalia with Ethiopia is to show that Somalia’s approach is the right path for tackling poverty and expanding services to the wider population. I plan to use this line of argument in the future to explain Somali economics and back up some of the claims I’ll be making.

 

[Midas]

One of the clearest signs of this capital accumulation is the rapid expansion of Somalia’s financial sector. You can actually see how many services and institutions have sprung up just to handle the sheer volume of capital flows, transactions, and investments coming from both diaspora and exports. This isn’t just about banks existing , it’s about the constant movement of money, reinvestment, and the multiplier effect it creates for private businesses and wages. The IMF even pointed this out recently in their piece on how financial conglomerates are shaping Somalia’s tax system:
View attachment 370576

Navigating the impact of financial conglomerates on Somalia's tax system

blog-pfm.imf.org

Compare that with Ethiopia: the state keeps a tight grip on banking, private banks aren’t allowed in, and most capital gets locked into mega projects or debt repayment rather than flowing into the private sector. As a result, there’s very little financial intermediation farmers, small businesses, even doctors don’t get the kind of access to capital that Somalis do. That’s why Ethiopia has low wages and weak domestic purchasing power, while Somalia’s private sector and service economy are far more dynamic despite all its challenges

I actually explained it somewhat in the Kenyan President thread i made:


I’ve come to understand now that for other Africans, like Kenyans, the lack of access to capital due to weak financial systems makes it hard for them to grasp how Somalis are able to build houses, run malls, finance hospitals, or move huge sums across borders. Since in their economies those financial channels barely exist, they can’t imagine it happening through legitimate means



Somalis didn’t actually sell livestock in large numbers until the late 19th century. That demand was created by the British in Aden and then sustained by the Gulf countries after the oil boom. Before that, Somalis earned from a variety of products, including significant revenue from exporting manufactured goods from major cities like textiles, leather, and jewelry. Pastoral products were mainly meat, milk, clarified butter, and hides.

In many ways, it’s similar to now there’s money being made through agriculture, mining, fishing, frankincense trade, and also livestock.

It’s not much different from today where Somalis build wealth through wage labor, business, trade, services, and logistics. That wealth then goes into towns, housing, and construction, and eventually the wealthiest cities begin reinvesting into manufacturing industries. It follows a sequence: production → trade → towns → reinvestment → industry.

Most trade was handled internally at first, through exchanges between the coast and the interior and between different settlements. Exports came later as a secondary expansion, but everything started with production and domestic trade before that.

The reason I contrast Somalia with Ethiopia is to show that Somalia’s approach is the right path for tackling poverty and expanding services to the wider population. I plan to use this line of argument in the future to explain Somali economics and back up some of the claims I’ll be making.

Exactly. One thing that really made change my perspective was realizing that somalia didnt actually import anything from yemen. But our merchants arrived at their ports because that was where we could meet European and Indian merchants bringing in goods from the Indian ocean and the Mediterranean. Also these European and Indian merchants were actually buying goods from us and not yemenis. There wasn't actually many yemenis involved in this trade it just took place in their ports becuase that was the most convenient place to do trade.