Photo : Collected
In a small fashion store in Ethiopia's capital, Medanit Woldegebriel's dresses have almost doubled in price in the past two months, sending customers fleeing.
"Business is slow," admits a downhearted Woldegebriel, whose shop in the sprawling Merkato market of Addis Ababa imports clothes from Turkey and the United Arab Emirates.
On July 30, Ethiopia took the painful decision to let its currency float freely against the dollar, and the birr lost a third of its value overnight.
The decline has continued since then -- it now takes 112 birr to buy $1, compared with 55 birr before the change.
The government had little choice. Its exports (primarily flowers, tea and coffee) brought in just $11 billion last year, compared to imports (food, machinery and fuel) that cost $23 billion.
On the eve of the currency reform, Ethiopia had only enough dollars to pay for two weeks of imports. International investors had long argued that pegging the birr to the dollar was unsustainable.
A $3.4 billion aid programme from the IMF and $1.5 billion financing plan from the World Bank were held back until Ethiopia accepted the inevitable and liberalised the currency. But for regular Ethiopians, a third of whom live below the poverty line of $2.15 a day, the impact has been tough.
Buying a few tomatoes and some school books for his children, one shopper in Merkato said prices were up by a third across the board.
"We have family who live abroad who can send us foreign currency," said Abrish, a civil servant whose name has been changed due to his concerns about criticising the government.
"Without it we could not survive."
Messenger/Disha
