Ethiopia is heading to a ‘demographic bonus’, Berlin Institute

Ethiopia is one of the world’s least developed states. Yet for the past two decades, the country has been making extraordinary progress. Targeted investment in health, education, and employment has improved the standard of living and triggered a rapid decline in the fertility rate. If it succeeds in consolidating these achievements, Ethiopia could become one of the first sub-Saharan countries to benefit from the “demographic dividend” and demonstrate how development can work in Africa. A new study by the Berlin Institute shows how the country has already managed to come such a long way and which challenges remain to be overcome if it is to serve as a model country on the African continent.

By African standards, Ethiopia is already doing well. With the second-largest population in Africa, it is one of the world’s fastest-growing economies. Together with assistance from abroad, the government’s long-term development plans have already improved the lives of many people and more than halved the share of the population living in poverty. Through the expansion of the health system, child mortality has decreased. The rate of school enrolment has more than doubled thanks to increased investment in the education of up to 30 percent of national budget expenditure. In less than 20 years, the number of schools has risen by a factor of 25. Grain yields have more than doubled since 1990. At the same time, Ethiopia is increasingly becoming a target country for foreign investors, whose financial commitment should help to create jobs for the growing population.

The path is pre-determined

Every country in the world goes through a demographic transition in the course of its socio-economic development. In Phase 1 both mortality and fertility rates are high and the population barely grows. In Phase 2 the mortality rate falls owing to improved living conditions; because fewer children die the population increases rapidly. This development is followed in Phase 3 by a decline in the fertility rate. In Phase 4 fertility and mortality rates stabilize at a low level and population growth eventually comes to a standstill. Most of the countries of sub-Saharan Africa are at the beginning of this transition. Schematic diagram depicting the development phases of birth and mortality rates as well as the overall population.

Development progress to date has also ushered in another positive trend. The fertility rate is falling rapidly, putting a brake on population growth and changing the country’s age structure. Because women are having fewer children, the population of working age has been growing faster than the population as a whole since the early 2000s. Ethiopia is thus heading for a “demographic bonus”, which in many other countries worldwide has paved the way for more growth and prosperity. Given the right framework conditions, this bonus could be transformed into a demographically determined spur to development. Like the Asian tiger states before it, Ethiopia could benefit from its demographic dividend provided it manages to consolidate its progress to date.

Helpers for better health

In order to reach as many people as possible, the government set up more than 15,000 health posts within the framework of the HEP – one in each kebele (community) – to provide for an average of 5,000 people. In order to have two health assistants for the patients in each of these facilities, more than 30,000 women were trained in 40 new training centers for medical personnel.43 The idea was, on the one hand, to give women with secondary education an opportunity to have an income and, on the other, to strengthen the acceptance of health measures in the community

The declining number of children born is likely to mean that Ethiopia’s population pyramid will take on a tear-drop shape in the future. This age structure – the so-called demographic bonus – could give the country a demography-related development boost, as experienced by the Asian tiger states. The prerequisite for this, however, is that the growing number of young workers with increasingly better education can also be employed. Population breakdown by age group and level of education, according to the middle education scenario (GET), in millions, 2015, 2030 and 2060.

The race to catch up Ethiopia’s race to catch up with respect to access to education, which began after the introduction of the National Education Strategy, is all the more impressive if one considers that the starting point was very low. While sub-Saharan enrolment rates increased by only about 20 percentage points between 1995 and 2015, they rose by more than 60 percentage points in Ethiopia – a quadrupling in just 20 years. For girls, the enrolment rate almost quintupled during this period.

Despite all its achievements, the country still faces enormous challenges. The development process has been marked by ethnic tensions and ruthlessly driven forward, often with little regard for human rights. The expansion of basic infrastructure has barely been able to keep up with population growth, and the number of people of working age is still growing faster than the number of jobs. Hopes are now pinned on the young prime minister, Abiy Ahmed, to introduce the necessary reforms and measures with which to overcome these challenges.

In terms of economic growth, Ethiopia has far outstripped the other sub-Saharan countries. For more than ten years, the annual growth of gross domestic product averaged more than 10 percent. No country in sub-Saharan Africa can report similar achievements. In contrast to other African countries such as Angola and Nigeria, Ethiopia achieved this growth largely without the exploitation of raw materials such as oil and minerals.

The hoped-for further progress is unlikely to happen without international assistance. Ethiopia is depending on foreign help to achieve its goals. Were the engine of development to stall, there would be far-reaching consequences. “If Ethiopia fails, the stability of the entire region in the Horn of Africa will be endangered,” says Reiner Klingholz, director of the Berlin Institute for Population and Development. Flight and explosions would be inevitable. The European Union should, therefore, give Ethiopia as much financial support and advice as possible so that the country can break out of the vicious circle of poverty and rapid population growth, the study concludes.

The stabilizer in the Horn

The progress Ethiopia has made since 1991 – in particular, its rapid economic growth – has turned it into a positive example in Africa in the eyes of Western governments. Over the years, they have secured the Ethiopian government the financial support of the industrialized nations. Between 2005 and 2015, a total of 37 billion US dollars in development aid flowed into Ethiopia. During this period, no other country in sub-Saharan Africa received greater financial support from the international donor community. The EPRDF government is internationally not only a reliable and popular partner in development cooperation; as the largest military and Western-oriented power in the Horn of Africa, the country is also a key partner in peacekeeping efforts in the region. Since 2012, Ethiopia, despite its modest defense budget, has made a larger peacekeeping contribution to UN missions on the continent than any other African country.

In addition to operations in South Sudan, Darfur, Liberia, and Côte d’Ivoire, the Ethiopian UN peacekeeping forces are mainly involved in the Amisom peacekeeping mission in Somalia. Ethiopia is also an important partner of Western countries in combating Islamic terrorism in the region through its involvement in the neighboring country and its proximity to the only African US military base in Djibouti. Compared to its neighbors, Ethiopia has remained to a large extent politically stable in recent decades. This circumstance makes the country a haven for thousands of people fleeing from crisis countries such as Somalia and South Sudan. At the end of 2017, Ethiopia was giving shelter to around 890,000 refugees, most of them from immediate neighboring states, making it the third-largest host country for refugees on the African continent after Uganda and Sudan.

The study was financed by the Austrian Development Agency (ADA) with funds from the Austrian Development Cooperation as well as by the DEG (Deutsche Investitions- und Entwicklungsgesellschaft) and the GfK Verein. You can download the study free of charge as a PDF under:

https://www.berlin-institut.org/en/publications/studies-in-english/from-land-of-famine-to-land-ofhope