Senior officials of the Ethiopian government routinely claim the consistent fast-paced economic growth registered over the past six years is the key to realizing the country’s aspiration of becoming a middle-income country before the decade is out.
Opening a forum held to brief international development partners and the diplomatic community on September 2019, a few months after he took the helm, Prime Minister Abiy Ahmed (PhD) announced expectations that Ethiopia would attain middle-income country status through the implementation of de the Homegrown Economic Reform Agenda (HGER), the second phase of which is set to be concluded by the end of 2026.
During his address, Abiy said “I believe that the homegrown economic reform agenda is our bridge to prosperity, enabling us to become a middle-income nation that ensures sustainable development”.
Half a decade has elapsed since Abiy’s announcement of his administration’s plans. Today, Trade Minister Kassahun Gofe (PhD) says Ethiopia is moving steadily towards its ambitious goal, but the achievement could bear risks to the government’s efforts to join the 166-member World Trade Organization (WTO).
During a press brief held in the wake of Ethiopia’s fifth WTO accession working party meeting concluded last month in Geneva, Switzerland, the Minister, who also leads the negotiation team, characterized the persistence in keeping up GDP growth figures over the coming three years as the silver bullet that will finally seal the deal.
Kassahun and his team are determined to conclude all WTO negotiations before the 14th WTO Ministerial Conference scheduled to take place in Yaoundé, Cameroon in March 2026.
The rush emanates from fears that Ethiopia’s probable graduation from Least Developed Country (LDC) status in the coming years could derail the accession process and possibly force negotiators to start again from scratch, according to the Minister.
Underlining the costly outcomes of delaying Ethiopia’s WTO accession past 2026, Kassahun emphasized the importance of acting quickly to take advantage of the benefits extended to LDCs under WTO accession guidelines while the country still can.
He revealed that some of the 44 member countries that sat down with Ethiopia’s negotiating team during the latest meeting in Geneva have already raised questions about the country’s eligibility for categorization under ‘least-developed’.
”We use International Monetary Fund and World Bank annual reports of our economic development to showcase our growth,” said Kassahun. ”Those publications include ranges that help distinguish which country’s economy falls under the LDC status inclusion threshold. If the reports indicate that, relative to its GDP, Ethiopia’s economy has ascended that point of limit, that could result in a profound cost on us. So, we should move in a patriotic dedication to conclude the WTO membership quest as per the deadline set.”
The Minister expressed his belief that looming disadvantages in tariff negotiations outside of LDC status make Ethiopia’s 23-year pursuit of WTO membership a task that can no longer be put off.
”Our GDP is growing by 8.4 percent annually. If we postpone the accession by two or three years, we will be out of the LDC list. Moving towards delaying the process in a bid to benefit from latecomer advantage will bear repercussions across the board,” he said.
Kassahun claimed that Ethiopia saw its GDP more than double to USD 205 billion in the five years since 2018.
”If we decide to deliberately pass on the 2026 deadline we set for WTO membership, take more time and try to join by 2028, our negotiations are more likely to take on another form. That scheme is the kind that would lower our trade negotiation concessions,” said the Minister.
As it stands, Ethiopia can impose tariffs of up to 50 percent on agricultural commodities and up to 35 percent on industrial goods under the WTO.
However, losing LDC status would mean much lower tariffs “all while giving up our right to protect our maturing industries”, cautioned the Minister.
Still, experts have expressed doubts about the economic development indicators and figures cited by senior officials such as the Prime Minister and the Trade Minister.
Analysts inquire whether or not the government is providing an economically feasible, authentic picture of Ethiopia’s timetable for graduation from the LDC status it was assigned by the United Nations Committee for Development Policy (CDP), a group of independent experts reporting to the Economic and Social Council (ECOSOC), which included the country in the LDC list in 1971.
Data obtained from the United Nations Conference on Trade and Development (UNCTAD) indicates that by the end of 2024, Ethiopia still remains far below the graduation threshold in all three indexes—income, human assets and economic and environmental vulnerability.
The country’s gross national income per Capita stands at USD 1,008, far below the USD 1,306 requirement. It also falls short of health and education requirements.
The economy’s continued dependence on agriculture, forestry, and fishing, as well as indices grading remoteness and landlockedness, and the instability of goods and services also count against Ethiopia’s ambitions to graduate from LDC status.
The CDP’s next triennial review of LDC countries is scheduled to conclude in 2027.
The 2024 review found that Rwanda, Uganda, and Tanzania had met LDC graduation thresholds for the first time. All three countries met two of the three criteria, namely the economic and environmental vulnerability index criterion and the human assets index criterion.
They have yet to graduate however, as that would require meeting the criteria for a second time during the 2027 review.
Despite the Trade Minister’s claims to the contrary, UNCTAD data holds no indication of Ethiopia’s graduation in the near future. Experts argue that present conditions are not favorable for a rush towards shedding LDC status.
”Countries with fast-paced growth like China are still insisting they should be considered as an LDC. They are not doing that out of a whim but as a result of well-recognized benefits of the status,” said Constantinos Berhe (PhD), a political analyst and economic expert.
He points out that Ethiopia is still among the top recipients of much needed aid and humanitarian assistance from development partners, which could be put in jeopardy by leaving behind LDC status.
Constantinos recalled an experience with an African government that pressured the UN to report a reduced annual GDP growth rate figure just so it wouldn’t lose LDC status.
Nonetheless, the question of whether Ethiopia should engage in a campaign to stay designated as an LDC and thereby remain able to provide humanitarian assistance to more than 15 million citizens who require daily food assistance, or chase after the political score it might get by transforming into a middle-income country still remains.
Analysts offer arguments for either side. For Constantinos, the answer is bittersweet.
He observes that Ethiopia should have joined the WTO from the start, without negotiations, instead of ignoring the opportunity.
“Even countries like Djibouti are members because they chose to become a member from the beginning. Ethiopia could have done that. For a country that is a founding member of the UN, AU and the United Nations Economic Commission for Africa, this ought to have been an unquestionable endeavor. But, we waited as a result of the belief that joining the organization only to export coffee and khat was not worth the effort. That was a miscalculation on our part,” said Constantinos.
He noted that becoming a WTO member would legitimize Ethiopia’s international trade affairs on the global stage, encouraging investment as well as benefiting the general public in terms of relief from the burden of unpredictable tariffs imposed by the government.
”Becoming a WTO member means that the government would no longer impose excise taxes on the consumer as per its will and the businesses that come to the country would bring in abundant employment opportunities,” said the analyst.
However, he says the notion of WTO accession has its downsides as well.
”In recent years, despite being members of the WTO, we have seen developed countries like the US imposing and easing tariffs on other countries according to their will. These countries protect the businesses of their farmers and provide subsidies all while insisting that the least developed countries pursuing WTO accession should stop warranting subsidies to their farmers. So, in a world where the developed can do whatever they wish, is joining the organization worth it?” asked Constantinos.
In a December 2023 paper titled ‘Has the WTO become dysfunctional? Alternative public policy trajectories that lure in the rewards of globalization to Ethiopian businesses’ Constantinos argued that to balance Ethiopia’s rights and obligations in the multilateral trading systems and fully benefit from the system, the country must improve its capacities to evaluate and link key provisions of the organization’s agreements of particular interest to its specific circumstances and carefully assess their impact on its socio-economic development.
He also added that Ethiopia should consider the political realities of domestic interest groups that can play important roles in assistance during the accession process and the eventual implementation of commitments; and have realistic expectations of the economic benefit from its membership.
The study notes that while the benefits to be gained from WTO membership may be diffused and drawn out, the immediate costs of accession will have to be borne upfront.
”Accession to the WTO is necessary but not sufficient in itself to ensure economic well-being and membership in the WTO alone is not a panacea for all development problems facing Ethiopia. Complementary policies such as investment in physical, human, and organizational capital, and structural transformation including industrialization are required,” reads the paper.
