Apart from combating multi-faceted economic sabotages, the Government must engage in strengthening institutional capacities and expand diverse market alternatives for domestic products in order to mitigate the challenges of inflation in Ethiopia, senior economists who talked to ENA suggested.
They noted that economic sabotages can be manifested in various forms but creating artificial shortages on consumer goods can further exacerbate inflation as one form of inflationary sabotages.
The reverse process of economic sabotage is manifested through dwarfing the purchasing capacity of citizens by flooding the market with excess supply beyond market demand, the experts added.
Hoarding of consumer commodities, engaging in illegal financial transactions, contraband, money laundering and exchange of hard currencies at black market are some of the economic sabotages that are conducted on growing economies.
According to the experts, the imperative of ensuring healthy and stable economy for a country requires introducing and implementing pertinent fiscal and monetary policies to avert economic sabotages in a more sustainable manner.
The inflation that has continued to grow unabated in Ethiopia emanates from the disequilibrium between demand and supply, sluggish mode of implementing economic policies and acute shortage of foreign exchange.
Speaking to ENA on the topic, Professor Alemayhu Geda, senior professor of economics at the Addis Ababa University described economic sabotage as the main cause of existing inflation in Ethiopia.
In this regard, he said merchants are the main promoters of inflation and economic sabotage in the country.
He said merchants who wish to maximize their profits create shortage of commodities while there is enough production inflates prices.
Lack of standard profit margins on commodities has prompted these merchants to increase their profits on their own whims and desires, the professor added.
“If we compare our merchants with those in the US, a merchant usually takes a profit margin of 10 percent and if he happens to get 20 percent it is considered that he is in a very good business. In our country merchants engaged in small scale service business up to shopkeepers in the neighborhood get a profit margin of 100 percent. It is therefore not strange to observe such merchants are busy making artificial shortages.”
Dr. Molla Alemayhu, another senior economist said that merchants are the main culprits for market instability in the country.
The main solution to resolve the problem is to engage with greedy merchants and put in place polices and operational systems that focus on the issue.
He stressed that engaging merchants is vital in the effort to addressing the challenges in addition to carrying out policy reforms and improving operational systems.
Dr. Arega Shumete, Senior Researcher at the Ethiopian Economics Association noted that proliferation of conflicts and instability immensely contributes to economic crisis.
He added that the government needs to restore peace and tranquility in the entire country and also curb corruptive practices.
Hence, he added that the government should take corrective measures on undesirable operational activities being observed in government institutions besides the efforts to ensuring peace and stability.
Although suppliers are expected to be part of the solution for reducing shortage of commodities, they in fact become part of the problem in proliferating economic sabotage.
Dr. Arega suggested that producers and consumers need to have direct operational contact while the government needs to boost its capacity regulate the economic process by enforcing the rule of law.
He added that the public needs to fully cooperate with the government to wipe out those illicit traders and mischievous merchants.
The scholar added that it is not fair only too blame the government but the public and business persons need to add up to the efforts that the government is making.
Source: Ethiopian News Agency