You have assumed a new position since the arrival of a new president at the African Development Bank (ADB).

Yes, I am now serving in my new position as Director of the Department of Governance, Economic and Financial Management. The Department is newly created and the new president has given greater emphasis to governance, economic and financial reforms. We have a separate division focused exclusively on governance; with strong linkages to the economic and financial reform aspects of the work.

It is the only department held by an Ethiopian, though. Is it difficult to find many applications from Ethiopia?

We have had several applicants from Ethiopia. However, the number of applications from Ethiopia is low compared to the size of the population. The reason is that information does not trickle down to people, unless you could access the information on the ADB Website. We publish information in The Economist magazine and in Jeune Afrique magazine in French. I am afraid there may not be a critical mass of Ethiopians who read these sources. Similarly, the number of Ethiopians with access to the Internet is rather limited.
 

It is thus fair to say Ethiopia is underrepresented in the ADB.
 

Unlike the United Nations (UN) system, there is no country quota in  ADB. However, there is a deliberate strategy of geographic and gender diversity. But it is true there are fewer Ethiopians when viewed as a percentage of the country's total population.
 

With the arrival of the current president, ADB seems to be enthusiastic about China's involvement in Africa, a country that is also a shareholder of the Bank. One of its main cities, Shanghai, has also hosted its annual meeting of shareholders outside of the continent.

China's involvement in Africa is not a new phenomenon. Many people refer to China and India as the new partners of Africa; but we forget that China built the Tanzanian-Zambian railroad in the 1960s; and Indian teachers educated many Africans in public schools since about 40 years ago.

Of course, there is now a greater push from China and India to invest and to become partners of Africa. The Bank's senior management has said the concern is not whether China is coming, but whether Africa is ready to get what it wants. China has done its homework and decided that Africa is a place where it wants to invest its resources and build its partnerships. It is like a marriage; the other partner also has to know what it wants out of the relationship.
 

To simply embrace China without first understanding the nature of the relationship that we are entering into means we will come out with less than favourable results. However, if we do our homework and know in what sectors we should be partnering with the Chinese and under what conditions, then I think we can have a mutually beneficial partnership and get what we need.

Do you think Africa is prepared?

It is too difficult to speak of Africa in the aggregate. Some countries are more prepared than others. Those that are more prepared will benefit. Others may not have recognised the opportunities available. I believe it is not too late, and I am certain that there are several countries in Africa that are prepared.

Where do you put Ethiopia?

Beginning from March 2006, we have received recognition as a party from the National Electoral Board (NEB) and we have been in existence as a party and have been ably discharging our responsibilities and duties in Parliament and outside as a party. Now we are not actually seeking legitimacy from anywhere. 

Ethiopian authorities are keen to put this country into the middle income group in the next 20 years. What does being a middle income country mean?

In figure terms, it means a country with per capita growth domestic product (GDP) between 900 dollars and 11,000 dollars. I think this is an attainable goal but it requires several prior actions. [Ethiopia's Gross Domestic Product (GDP) per capita is 110 dollars.]

Is it an ambitious vision or would you see it as realistic?

This is a very laudable ambition. Every Ethiopian, not only the Ethiopian government, must debate, discuss, analyse and share this assessment. The core vision of being a middle income country beyond the aspiration, should become a national obsession - pursued with intensity and determination. Every Ethiopian should embrace it, demand it and contribute towards making Ethiopia in this group in the next 20 years. I believe this is good a time to begin building broader consensus toward such a shared vision. 

Should it not be debated?

Indeed. But, Ethiopians born today or entering grade school must subscribe to the vision of becoming a middle income earner in their lifetime and work towards that goal. This national objective is far greater than the government of the day. This is something that state and society, government and citizens alike must jointly subscribe to. Once this vision is firmly rooted, whoever comes to power and in whatever year, will be bound by the commitment to make real this national priority.

There should also be a road plan that maps where we are today and charts where we want to be tomorrow and in 20 years. Efforts will need to be exerted to craft and follow the roadmap. Nevertheless, you need more than a roadmap; you need to define the strategic direction which Ethiopia will take to become a middle income country. Such a strategy should concentrate on everything from environment to population and poverty reduction.

Another step is to develop a business plan; not the traditional poverty reduction type of approach but a corporate type of business plan; one which examines the comparative and competitive advantages of Ethiopia and determines what needs to be done by who, when and how. Realising this vision will invariably take collective dialogue and national consensus.

Do you see Ethiopians being prepared to do this?

Achieving this vision demands building consensus around a strategy wherein every step you take, policy you enact, expenditure you undertake and capacity you build are aligned to that strategy of reaching middle income status within the next 20 years. Partners should also focus on aligning and harmonising their approach and strategy in Ethiopia towards meeting that same goal. If these conditions are met, I have confidence that this country will realise this noble vision within 20 years.

Although many of the international financial institutions have confirmed Ethiopia's economic growth over the past four years, the challenge rather is to sustain it in spite of external shocks and possibilities of natural disaster. 

I think the growth in Ethiopia, particularly in certain sectors, is self-apparent. But it is also backed by statistics; it is undisputed. But this is half the story. As you have rightly pointed out, for the growth to be sustainable, you have to incorporate several exogenous factors. All of those have to be looked at in assessing what this county has and what it needs to become.

The other half of the story is the quality of growth and the source of growth. It is not desirable to have one sector pull the rest of the economy, for example, a growth boom in the construction sector. This is a country where a majority of the population is engaged in agriculture, with a small percentage engaged in the manufacturing sector. The positive thing about the growth in Ethiopia is that it is largely led by the agricultural sector. Agriculture and an emerging industrial sector compose the primary source of growth.

When looking at growth, you also need to see if the growth is widely shared across various sections of society. Because a majority of the Ethiopian population is engaged in agriculture production and the growth is led by the agricultural sector, it is reasonable to conclude that it is widely shared. When you further disaggregate this pattern into urban and rural populations; you will find that there is perhaps some disparity between beneficiaries in the rural areas versus urban beneficiaries - particularly the wage earning urban poor. This incidentally is not a phenomenon unique to Ethiopia; the situation repeats itself in other African countries.

However, Ethiopia needs to ensure that those who are not feeling the effect of this growth begin to do so in the very near future.

Although incidence of poverty declined from 44pc to 36pc in five years in Ethiopia, ADB itself feels that the pace of changes is not adequate for Ethiopia to meet the Millennium Development Goals (MDG).

There is always room for improvement when undertaking such difficult reforms. It is important to bear in mind that reform is not a destination but a process. I am generally confident about the direction of travel, but there are many areas that still require progress.
 

I do not find growth and reform mutually exclusive. The Millennium goals are mostly focused on human development and less on economic growth type activities. In fact, some have argued that economic growth has been neglected. But for me, it is not either or; what Ethiopia needs is both growth and human development. In Ethiopia, several of the eight MDG challenges still persist, and more needs to be done. But we also need to keep things in perspective. Beyond the 2015 MDG target dates, the reforms will have to continue. I am positive about the progress that is being made and recognise that, as challenges persist, sequencing will be very important.

International development partners call for the Ethiopian government to take further reforms in its land policy and the private sector so that the country can address its weak infrastructure, low agricultural productivity, food insecurity, environmental degradation as well as weak human and institutional capacity. Do you share this view?

I believe the private sector must be the engine of growth. It is very much part of ADB's strategy to promote the indigenous entrepreneur class while also working towards creating an environment to attract foreign direct investment (FDI) into Ethiopia.
 

But this government has a suspicion of the role the private sector should play in society. This is the impression you get if you were to read what the Prime Minister has written on the developmental state.

Experience seems to show that it is difficult to have a vibrant private sector without an effective state. We also know that a vibrant private sector requires a capable state; regulating, enabling and enforcing contractual obligations. The state is not in contradiction to the development of the private sector; it is rather complementary to it. 

I do not think there is a clear formula as to what role the state should play. Such a role is decided on a country by country basis. There are, however, some core fundamental rules concerning the role of the state.
 

The state cannot and should not be doing everything, but the rules defining a limited role for the state need to be clearly defined. Where the private sector can efficiently produce and deliver services and products, the state should not, as the general rule of thumb, compete against the private sector.
 

However, the state must be proactive when the private sector is weak. At times, public sector investment is required to jump-start certain sectors of the economy. As the private sector gains more strength, less engagement by the state is needed.
 

A key role for the state here is to crowd-in other partners and domestic capital into a given sector. But only until that sector begins to take-off. Looking at the construction sector in Ethiopia, you are beginning to see indigenous capital, local or remittances from the Diaspora beginning to flow into that sector. When that sector begins to take-off, you should see less of the state's hands and more of the private sector. This is the transition that allows for the private sector to lead and the state to focus on the other core areas.

ADB focuses on infrastructure development, agricultural transformation and governance in its Ethiopia programme. Are you satisfied that these are happening here?

ADB is positively confident about the progress being made in Ethiopia. The Bank is also mindful of the various challenges that continue to persist in the economic and non-economic sectors. For this reason, the Bank is prepared to assist Ethiopia in addressing these challenges while also consolidating the gains achieved to-date. However, at the end of the day, the assistance that ADB and other international partners bring to Ethiopia is marginal; when compared to the domestic resource potential of the country, including resources from remittances. Therefore the role and contribution of international partners and external aid in general, must be understood in its limited context   

However, international development partners are concerned over the massive state expenditure they blame caused inflation in the economy.

While I am not privy to exact inflation figures in Ethiopia, as a general economic principle you can address inflation through supply-side and demand-side interventions. In the short-term, you can manage demand by reducing public expenditure, including reduced public sector investment in non-priority sectors and consumption. In the long- term, you can address it by focusing on supply side management, including consumer goods in the market.

ADB is positively confident about the progress being made in Ethiopia. The Bank is also mindful of the various challenges that continue to persist in the economic and non-economic sectors. For this reason, the Bank is prepared to assist Ethiopia in addressing these challenges while also consolidating the gains achieved to-date. However, at the end of the day, the assistance that ADB and other international partners bring to Ethiopia is marginal; when compared to the domestic resource potential of the country, including resources from remittances. Therefore the role and contribution of international partners and external aid in general, must be understood in its limited context.  

However, international development partners are concerned over the massive state expenditure they blame caused inflation in the economy.

While I am not privy to exact inflation figures in Ethiopia, as a general economic principle you can address inflation through supply-side and demand-side interventions. In the short-term, you can manage demand by reducing public expenditure, including reduced public sector investment in non-priority sectors and consumption. In the long- term, you can address it by focusing on supply side management, including consumer goods in the market.

The government believes that is it possible to continue with its public expenditure unabated and control inflation. Are you convinced?

There is a general agreement about the need to maintain macro stability, while also sustaining the current growth momentum. I believe the need to manage inflation down and the imperative of making progress towards tighter monetary policy and a more flexible exchange rate is also widely accepted. Additional factors such as the absorptive and implementation capacity are also viewed as cross-sectoral constraints.