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Ethiopia Approves Five-Year Growth Plan That Targets Farming

    Dec. 2 (Bloomberg) -- Ethiopia’s parliament approved a five-year economic plan today that targets growth of as much as 14.9 percent by expanding agriculture and boosting savings to fund investment.

The government will raise the minimum deposit rate, which is currently below October inflation of 10.6 percent, Prime Minister Meles Zenawi told lawmakers in the capital, Addis Ababa. The average rate is 4 percent, Zemen Bank said in July.

The growth plan aims to expand the road network to 136,000 kilometers (90,720 miles) from 49,000, build a 2,000-kilometer rail network and increase electricity coverage to 75 percent of the population from 41 percent by quadrupling power production to 8,000 megawatts. Agriculture will continue to dominate the economy, Meles said.

It is a “basic fallacy” to believe that an agriculture-led economy is a “backward system,” Meles said, citing New Zealand as an example. Investment in the industry will enable subsistence farmers to start selling to markets, and 3 million hectares (7.4 million acres) of land leased for large-scale farming, he said.

The changes will enable Ethiopia to feed its own population and have a surplus for export, the former rebel said.

Increased savings and improved revenue collection, which will see its share of national income rise to 17 percent from 10 percent, will help finance the growth plan, Meles said.

To contact the reporter on this story: William Davison in Addis Ababa via Johannesburg at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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