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Monday, June 22, 2015

Kenya's hopes of reaching the African Nations Championship were dented by a 2-0 defeat to Ethiopia in the first leg of its preliminary qualifier.

Goals from Aschalew Girma and Gatoch Panom gave Ethiopia the advantage ahead of the return meeting and delighted a huge crowd in Addis Ababa.
To make matters worse for Kenya, Kevin Kimani saw a penalty saved in the closing stages - leaving Bobby Williamson's side with much work to do in the second leg.
Ethiopia is 24 places above Kenya in the world rankings and claimed a deserved lead midway through the first half as Girma found the net.
Panom, a scorer in his country's 2-1 victory over Lesotho last week, was given a chance to extend the lead with 14 minutes remaining when Biniam Assefa was brought down for a penalty.
And the youngster made no mistake, converting from 12 yards to put Ethiopia in control.
Kenya responded swiftly by winning a spot-kick of its own, but Tariku Getnet denied Kimani to ensure Ethiopia remains favourite to progress.
Ethiopia, whose economy is one of the fastest growing in the world, needs to encourage private sector investment to sustain its rapid expansion, the International Monetary Fund said. Hefty state-led investment has kept the economy of Africa's second most populous nation growing at more than 8 percent a year for over a decade, but economists say Ethiopia's rulers need to relax their grip and give room for more private enterprise to maintain momentum.

Foreign investors are also barred from key sectors of the economy, such as banking or telecoms, which is a state-monopoly. The IMF said gross domestic product is set to grow 8.7 percent in the fiscal year ending in June, and 8 percent in the same period in 2015/2016. In 2013, it forecast Ethiopia's economy would expand by 7.5 percent in 2014/2015.

"Looking ahead, the mission identified two key factors to sustain rapid and broad-based growth over the medium term: boosting domestic and foreign resource mobilisation, and reducing bottlenecks to doing business," the IMF said in a press release on Friday. "These should allow for a growing role for the private sector, which holds the key to job-rich growth going forward." The IMF's growth forecasts are lower than those of the government, which expects growth of about 10 percent by the end of the 2014-15 fiscal year.

The World Bank forecast growth for this year at about 9.5 percent, rising to 10.5 percent next year. The IMF urged Ethiopia to maintain its "cautious monetary policy" as food prices are pushing inflation close to 10 percent. Growth in the Horn of Africa country has been propelled by huge public spending on infrastructure, mainly hydropower dams, roads and rail, while an expansion in services and agriculture has also boosted the economy.

Earlier this month, Addis Ababa proposed a 223.3 billion birr ($11 billion) budget for the fiscal year starting on July 8, an increase of nearly 20 percent from the previous year in a bid to fund more development projects. "On public investment, which is to a large extent executed by state-owned enterprises, the team advised that its pace should remain consistent with macroeconomic sustainability, and with allowing for more credit to flow to the private sector," the IMF said.

The Washington, DC-based body recommended that Ethiopia should improve its tax revenue collection, saying its tax-to-GDP ratio was below the average in East Africa. The IMF also called for structural reforms to boost export amounts and diversification. The body said flexibility of the country's exchange rate could enhance Ethiopia's competitiveness and reserve accumulation.
Copyright Reuters, 2015