Recrutement d’un cabinet d’étude pour l’analyse diagnostique sur les sources des pressions inflationnistes en Éthiopie

AFRICAN DEVELOPMENT BANK

Ethiopia Country Office

P.O. Box 25543 Code 1000

Addis Ababa, Ethiopia,

Email : COETEthiopia@AFDB.ORG

Tel : +251 115 177268

Fax : +251 115 546335

Request for expression of interest to undertake a diagnostic analysis on the Sources of inflationary pressures in Ethiopia

 

Introduction :

The African Development Bank hereby invites individual consultants to indicate their interest in the following assignment: ‘Sources of inflationary pressures in Ethiopia’. Over the last 15 years, Ethiopia’s economy has expanded at rates exceeding 10% annually and poverty declined from about 28% in 2011 to 23.5% in 2016. Structural transformation is occurring, albeit at a slow pace. However, inequality is rising, and emerging macroeconomic imbalances and structural bottlenecks are putting a break on the high rates of growth as well as its inclusivity.

Ethiopia has experienced a period of high and volatile inflation, especially over the last four years to 2020. During 2017-2019, inflation remained in double-digits, partly on account of increased money supply, and in 2020, inflation reached around 25%, in part due to the travel, production and consumption disruptions caused by the COVID-19 pandemic. Although the government’s policy target is to maintain inflation in single digits, the outcomes have been mixed. Different researchers have studied inflation developments in Ethiopia (Durevall et al. 2013; Osborne 2004). However, a lot has changed – external environment, expectation formation, and response capacity to shock – since the publication of the afore-mentioned studies and the inflationary pressures have increased since 2017.

The services to be provided under the assignment include :

• Undertaking detailed review of literature on inflation in Ethiopia relative to other low – income countries, data gathering and a systematic analysis of the trends and sources of inflation in Ethiopia, in order to underpin the key drivers of inflation in Ethiopia ;
• Examining the contribution of external factors (e.g. international food and oil prices), structural constraints (supply side impediments), policy variables (e.g. fiscal, monetary, and exchange rate policy), and expectations to inflationary pressures in Ethiopia ;
• Identifying the channels through which food and non-food inflation has evolved in the last 15-20 years and estimate the magnitudes of their impact on overall inflation ;
• Reviewing the experience of monetary policy compared to inflation targeting regimes in low-income countries to investigate the effectiveness of different regimes to shocks; and
• Preparing the analytical report capturing, among others: trends in inflation, sources, and recommendations to mitigate inflation and its impact on growth.

The assignment is expected to be completed within four months, starting on 15^th November 2020 and be completed by 31 March 2021. The consultant will need to commit effort equivalent to at least two person months. The consultant may work from any location and no mission is expected.

2. The African Development Bank Ethiopia Country Office invites individual consultants to indicate their interest in providing the above-described services. Interested consultants shall provide information on their qualifications and experience demonstrating their ability to undertake this assignment (current CV; a 3-5 page proposal with indicative cost; reference to and experience on similar assignments; etc.) ;

3. The eligibility criteria, the establishment of a short list and the selection procedure shall be in conformity with the Bank’s Procurement Policy Framework under projects financed by the Bank Group, October 2015 Edition, available on the Bank Website at http://www.afdb.org. Please, note that interest expressed by a Consultant does not imply any obligation on the part of the Bank to include him/her on the shortlist ;

4. The estimated duration of the services is two person months, with expected start date of ^th November 2020 ;

5. Interested individual consultants may obtain further information at the address below during Bank’s working hours: 8am – 5pm

6. Expressions of interest must be received at the address below no later than 25^th October 2020 at 6am GMT and specifically mentioning Sources of inflationary pressures in Ethiopia.

For the attention of: Ms. Netsanet Hussen

African Development Bank

Ethiopia Country Office,

P.O. Box 25543 Code 1000

Addis Ababa

Ethiopia,

Tel : +251 115 177268

Fax : +251 115 546335

Email : n.hussen@afdb.org; p.mpuga@afdb.org

Annex 1

Terms of Reference (ToR) – Sources of inflationary pressures in Ethiopia

1. Purpose and objectives of the assignment :

The purpose of this assignment is to revisit the sources of inflation to understand the key drivers (external factors, structural bottlenecks, and policy variables). In this context, the assignment seeks to identify a skilled consultant to generate that evidence and recommend policy options based on sound research.

The specific objectives of the assignment are to :

1. Revisit the trends in inflation over the last 15-20 years and identify the key sources in order to understand the key drivers of inflation in Ethiopia ;
2. Disaggregate the contribution of external factors (e.g. international food and oil prices), structural constraints (supply side impediments), policy variables (e.g. fiscal, monetary, and exchange rate policy), and expectations to inflationary pressures in Ethiopia ;
3. Identify the channels through which food and non-food inflation has evolved in the last 15-20 years and estimate the magnitudes of their impact on overall inflation ;
4. Review the experience of monetary policy compared to inflation targeting regimes in low-income countries to investigate the effectiveness of different regimes to shocks; and
5. Based on findings in bullet points (i) to (iii), propose policy recommendations to mitigate inflation in Ethiopia.

2. Scope of work and deliverables :

The primary deliverables to be undertaken by the consultant during the period November 2020 – March 2021 will include :

1. Inception Report capturing: (a) review of relevant literature and country experience with inflation, (b) the methodology to be used in responding to the study questions, data to be gathered, their periodicity and potential sources (c) and the proposed outline of the report ;
2. Draft and revised study reports incorporating stakeholder comments and suggestions ;
3. Presentation of draft study reports at the Macroeconomic Forum for review and inputs; and
4. A final study report underscoring key policy options, with the how and who to implement them.

2.1   Sources of inflationary pressures :

The assignment will present an empirical estimation of the sources of inflation, namely, external factors, policy variables and supply-side shocks and expectations using structural macro-econometrics models. Structural Vector Autoregression (SVAR) has been used extensively to study the sources of inflation (see Ha et al. 2019 for a comprehensive review of the literature). The focus will be a system estimation instead of a single equation estimation considering the variables (such as inflation, exchange rate, and so on) are endogenous. However, previous effort to do the same has not been successful due to data limitations (Durevall et al. 2013). Hypotheses of sources of inflationary pressures across different variables will also be tested.

2.2    Policy recommendations :

This section will tie together the research findings into a set of policy recommendations covering the sources of inflation targeted at responsible policymakers.

3.		Deliverables and Timelines
	Activity				Indicative Timeline
Deliverable 1 (D1):
•  Inception  report  capturing:  (a)  review  of  relevant  literature  and
	country experiences, (b) description of the methodology to be used				November 15, 2020
	in responding to the study questions, and why, (c) outline the sources
	of data, periodicity and how the data will be gathered, and (d) outline
	of the study report
	Deliverable 2 (D2):
	•  Draft study report underscoring the key findings in line with methods				January 2021
	applied
	•  Outline of implications for policy recommendations
Deliverable 3 (D3):
•  Presentation of the draft study reports at Macroeconomic Forum for					January 2021
	review and inputs
	Deliverable 4 (D4):
	•  Revised   draft   report   incorporating   the   comments   of   the
	Macroeconomic Forum and other reviewers.
	•  The   revised   draft   report   will   underscore   the   key   policy				February 2021
	recommendations, to be reviewed by the Ministry of Finance and the
	National Bank of Ethiopia for consistency with ongoing reforms, and
	within the Bank for their viability.
Deliverable 5 (D5):
•  Final report incorporating the comments of the Ministry of Finance
	and the National Bank of Ethiopia as well as the Bank’s internal				March 2021
	review.
•  The final report will underscore the key recommendations with how
	and who will implement them

4. Desired qualifications and competencies :

The national individual consultant should be able to demonstrate professional, operational and academic competence in the field of macroeconomics and economic policy, with specific experience working with governments in developing countries. Individual candidates should be able to demonstrate the following academic qualifications and professional experience, at a minimum:

Academic qualification: At least a master’s degree or its equivalent in development economics, economics, macroeconomic policy analysis, public sector economics, and related disciplines.

Experience :

• At least fifteen (15) years, of progressive responsibility in the field of economic policy analysis, working with governments, consultants and/or international organizations;
• Specific experience in relevant areas that include macroeconomics, inflation, exchange rate analyses;
• Experience of working with public sector, particularly in macroeconomic management and policy analysis, including in Ethiopia;
• Experience with preparing policy analysis and policy briefs, economic research and macroeconomic modelling; and
• Excellent communication abilities and ability to meet tight deadlines and under pressure.