PM Meles Zenawi’s responses to Ethiopia’s economic
malaise are getting funnier
04 February, 2011 | By Genet Mersha
--------------------------------------------------------------------------------------------
At a time when neighboring countries are tottering down the path of popular
revolt to overthrow entrenched dictators and possibly collapse of their regimes,
Meles has tightened political repressions in Ethiopia to protect himself from
their fate. In spite of those attempts, however, the deepening economic
problems are poking citizens with tensions and tremors of their own. These
are now being felt throughout the country, as public complaints even in the
government-controlled media are showing.
burglaries and highway robberies are becoming common occurrences some
distances from the capital city itself.
The making of the current frustrations in Ethiopian society have been brewing
over a long time. Their origins lay in the political crises that remain unresolved,
nor the regime would admit. Then there are the ubiquitous economic crises
that have been afflicting over 90 percent of the population. The only solution
the government favours now is complete shut off of public space, as a primary
step, politics by force and economics by decree, which have now become the
mode of Ethiopia’s governance. Therefore, such a situation has served better
corrupt party officials, business persons, the security, the military and those
wired with the leaders. In such an environment, ordinary citizens find it difficult
to eke out normal existence.
Whether information from countries now affected by popular revolt is
permitted, the situation in those countries may only encourage a sense of
solidarity with others. The little information Meles’s security apparatus could
not control has made it through to Ethiopians. Therefore, they have become
true partners in sharing the pains ofthe Egyptians, Tunisians, the Sudanese and
Yemenis… As they saying Ethiopia, a heart filled with its own pains has better
feel for others.
What is happening in Egypt, the reporting of which has been forbidden in the
mass media in Ethiopia in this age of the Internet, mobile phone, in addition to
foreign broadcasts may have only evoked great interest to the degree it has
terrified the Meles regime. This is because people understand that is the
reason why he chose to ‘shelter’ the people. This ‘let me get bye this’ situation
attitude has not only brought contempt for the regime, but also given them a
good sense of its shakiness. In the meantime, the situation in the country would
continue to worsen, not because of outside influences, but mainly on account
of the weight of the problems our people have been shouldering on a day-to-
day basis.
Soaring prices & inordinate solutions at work
At present, notwithstanding the under-reported level of inflation and the pain
this has caused for ordinary people for so long, especially after the
introduction of devaluation and price controls recently, have deeply worried
the government. It is trying to do everything within its powers, although even
the solutions they try are becoming more grievous than the pain of living on
little or nothing. An expert from the Ethiopian Commercial Bank recently
rightly observed, “The most recent devaluation tended to function opposite to
expectations and even caused grotesque developments in the economy. The
subsequent high and indiscriminate price rise of all goods encourages imports
more than exports, as domestic prices have become more rewarding than
export prices” (Addis Fortune, Commentary, 30 January 2011).
The economist Prime Minister Meles Zenawi seems now to be fully aware of
the damages he has caused the nation’s economy and the lives of its citizens.
A man of hubris, he cannot say he lacks the humility to say sorry for that.
However, when he appeared before parliament on 3 February, he used his
usual infinite wisdom and ability to foresee over a long span of time, and
pledged, among others, not to make any further devaluations for another five
years. There is nothing more disappointing than this silly trick of dictators to
summon evil at will and sputter ally when things go wrong at their lack of
ability to dismiss it at will. Therefore, they jabber false promises and hopes;
they know it is their way of admitting mistakes.
Of course, Ato Meles Zenawi’s ability to foresee things has been tested on
several occasions. Recall that when he invaded Somalia he said he would
make it a cakewalk into weeks. Ethiopia was stuck there for over two years—
for that matter making a very amenable situation in that country more
catastrophic for everyone now. If all claims to view things on a long-term
basis, such as Ato Meles Zenawi’s five-year horizon are indeed possible,
especially in economics either he or the IMF must have been able to foresee
the December 2010 inflation level at 14.5 percent coming.
That not being the case, only in mid-November the IMF Executive Board
gave clean bill of health and Mr. Naoyuki Shinohara, Deputy Managing
Director and Acting Chair of the Board,on 15 November stated:
That is not the end of it. Do you need more reminders? Who would forget that
broadband Internet coverage of the breadth and width of Ethiopia within five
years fiasco? Yes, important efforts were made and Cisco amassed tens of
billions of dollars building the school. net and the government. net linkages.
Thanks to the Chinese, the latter one has now become a dedicated instrument
of espionage on citizens and mind control, instead of national development.
I have good reminder, much like a ticker the time when Meles Zenawi made
that pledge to make Ethiopia the first country with broadband access within
five short years. At the time, he was busy paving the ground early on for his
election in 2005 that he took for granted. Ethiopians showed him that they are
not with him, his abrasiveness and his mishandling of the nation’s affairs like his
‘kitchendom’. I recall that pledge distinctly. My grandson was born at that
time. Soon he would turn ten. Surprise! Surprise! The latest research by an
Irish company about Ethiopia’s snail-paced move into the world of technology
states it all:
What is the conclusion? The report acknowledges that the French have taken
over the Ethiopian Telecommunications to turn things around. Therefore, even
in its most optimistic conclusion it hopes that the telecommunications sector
may witness some movement. Of course the report is initiated and is set to see
what it wants to see and therefore its hang-on is pure liberalization. For
Ethiopians, however, what matters are their real national development and a
sense of freedom from Meles’ Orwellian world. For whatever its worth, the
report skeptically states:
Good news folks! GTP would cost you only one trillion ETB
The other headline grabbing news is that the prime minister has kindly
identified funding sources for his Growth Transformation Plan (GTP), not that
he was willing to tell openly every piece of it. The total amount required is one
trillion ETB, about $60 billion, part of which is to be met from income from
power export to neighboring countries, more rental of farmlands, significant
amount of foreign aid and the rest from borrowing and foreign loans. What a
great picture for the future of deepening economic structural changes in the
country!
Ethiopia’s economic problems arise from: (i) centralization of decision-making
in one person, whose officials only frightfully echo every single word the prime
minister utters. Listen carefully when the foreign minister, the finance minister,
minister of agriculture, minister of trade, communication minister…speaks. The
echo is deafening. If this is the way a nation should be governed, what else
should one expect other than bad economy and terrible human conditions? (ii)
The other problem is the continuing replacement of few left over expertise by
new party cadres to make the political decision the boss would appreciate.
The first problem is that these people learn nothing, since they spend their
days in political plotting; (iii) bad policies and poor implementation are a major
problem, which we have seen time and again; (iv) poor domestic production
and supply capacities remain a fundamental problem; (v) corruption and lack
of accountability have become a way of life for the ruling party top down; (vi)
the country has comfortably become dependent on foreign aid that has stolen
its sense of independence and self-reliance. Even that, after the 2010 election
and the misuse of humanitarian aid for political purposes, the international
humanitarian community is having a second thought.
These are the major bottlenecks to the Ethiopian economy. Each of these has
contributed to the continuing domination in the economy of poor production
systems and non-existent and, if any, unreliable supply capacities.
Consequently, a structure of permanent disability has failed to meet domestic
demands for goods and export capacity to foreign markets. These translate
into foreign exchange shortage and poor macroeconomic environment that has
continuously distracted policy from improving production and real national
development.
On a side remark, let me ask you if you could give me one example where
Ethiopia’s exports have found a niche market for any of its unique and much
appreciated produces in terms of quality. Trust me, you would not find one,
save, the stealth EFFORT, the TPLF’s business empire, which has penetrated
the Chinese market—where now Ato Seyoum Mesfin, former foreign minister
and deputy chairman of the TPLF, would operate as the eyes and ears of the
regime as ambassador to that country. Many of the children of the ruling party
members (TPLF) are also being educated in China.
The policy problem of this regime is that it lacks macroeconomic policy
consistency. Because of that the task of policy has been reduced to fire
fighting permanently against inflation and the chronic shortages of goods and
services. Obviously, consistent long-term development has been pushed to the
second tier or to chance. If there are some lights flickering here and there, they
are not an outcome of two decades of work—but the efforts of a few
enterprises and the nascent private sector—outside the ethnic oligarchic
enterprises of the ruling party. That is why in Ethiopia today everything is
touch and go. The only exception to this is the political attempt at putting the
hyper make over of Addis Ababa as Meles’s fact on the ground to delude
citizens and willing accomplices to project that as national development.
The crises of the moment & Meles’ solutions
What gave spike to this present worry of the regime is the alliance of two evils :
devaluation and inflation. This is further made worse by price controls that
have been tried in many countries and have completely failed. It may some
how for a while impose controls over hoarders and price gougers. However,
overall it would only worsen the economic situation and weaken the economy.
The problem in Ethiopia has always been Meles' over-confidence that no one
could challenge him in his police state. He can do anything he likes with the
economy, the country' security,its long-term interests, the prospects of future
generations…
Even the pro-Meles EPRDF-ite Addis Fortune on 23 January tolerated the
publication on its magazine strong criticism of Meles’s policies. The
commentator wrote, “Little by little, certain goods and services in the market
for which people are willing to pay are disappearing. It will not be long before
parallel markets are created to cater to those who are willing to pay for what
they want. Alternatively, traders may find a way of circumventing the system.
Signs indicating this are also creeping.”
Interestingly, at about the same time in November 2010, China was also
considering price controls to dampen food inflation,according to the Financial
Times (China eyes price controls to fight inflation, 16 November 2010).
Since Beijing knew the negative consequences to the economy, a coupe of
cities used it to some products. China resorted to raising interest rate and is
still mulling in search of better ways of dealing with rising prices sourced in
inflation, other than price control.
In Ethiopia, salary increases have been made recently to offer civil servants
some minimal cushion. They range from 28 to 38 percent to 1,017,351 civil
servants (206,334 federal and 1,017,351 civil servants—source Capital).
These adjustments range from 1,000 ETB ($ 60) to high-level officials to ETB
144 ($ 9) to lower level workers.
Given the speed with which the price level changes, not to speak of the
availability of goods, the amount of the adjustments has understandably
courted more disappointments, according to Capital of 31 January. Since the
increases are too little to make a difference in this environment of rising prices,
it is reported that civil servants are openly critical. In the circumstances, more
noticeable is the big hole in the national budget equivalent to five billion ETB in
unbudgeted expenditures,to which the increase itself jacks up its own share to
the grinding inflation.
Speaking of inflation, from theory point of view,some in leadership seem
literate in economics. Unfortunately, the translation into practice of that literacy
has repeatedly belied that assumption and their pretenses. Of course, policy in
Ethiopia is hardly a reflection of national consensus, but diktat from Meles,
previously from Mengistu, which has gotten the country nowhere. In the past
two decades, Ethiopia has experienced several bouts of inflation, a
phenomenon directly associated with natural catastrophes, such as cyclical
droughts, resulting in GDP decline and shortages of food and other goods.
The country’s experience is that in a while they only turn into either disinflation
or deflation during crop seasons.
Now economic activity has increased and the level of imported inflation is
going up on annual basis, especially this time. The nature of recovery in global
economy is also making it a bit tricky. The policy that is the Meles regime has
begun to pursue is not only reminiscent of Britain in the course of WWII, but
has also been hardly capable of addressing the old and the changed
circumstances with appropriate policies. It is not enough to perorate about this
or that economic thought or this or that country’s experiences. Policy-makers
must see the pressing need to learn to apply the right policy measures
differently—this time around through genuine national consultations, instead of
the usual Stalinist top down approach.
Bear in mind, in the 1980s Argentina, Brazil and Israel learned to control their
huge inflations through approaches that were totally unorthodox—different
from what were applied in mainstream Western economic settings at the time.
It is in recognizing that the great economist the late Rudiger Dornbusch offered
his view of that with two short sentences as admonition: “The economists’
scissors normally has two blades, supply and demand. But in questions of
stabilization policy, that often is not the case.”The Ethiopian situation is far
different from that of those countries, but stabilization follows similar
principles, since the need for future growth has to be kept in mind.
Nevertheless, the message here is that the stakes are now too high and
recurrence of these problems has become habitual and different solution must
be sought. Consequently, Ato Meles must seize the opportunity to open the
door for open and transparent discussions, not only between the usual
suspects. But also this time in a nation-wide genuine participation, whereby the
people that bear the brunt of sufferings should express their problems and
make their recommendations, without fear of reprisals.
The prime minister holds scheduled meetings with businesses and is useful and
essential. However, even that seen by its record, at no time has it been about
addressing their actual problems of the gatherers. Therefore, as a part of his
government’s approach in the search for solutions, this time he must allow
people to express themselves. For once, he should stop pushing his solutions
down everybody’s throats. Discussion is not a skills talent to pick who knows
most and better, but to exchange views. This time, Ato Meles must listen to
what citizens could chip in the solutions they think would save the nation. He
should also recognize that, in addition to a number of policy-related
destabilizing factors, the world grains market and food production in general
has now come back with vehement problems of is own.
Food shortages and rising prices & the Meles regime response
Citing its barometer index, according to Reuters, on 3 February the FAO
reported “price changes for a variety of staples, averaged 231 points in
January -- the highest since records began in 1990…From its vantage point,
Oxfam attributed the problem to reduced production due to bad weather,
increased oil prices making fertilizer and transport more expensive, increased
demand for biofuels, export restrictions and financial speculation.” That much
for international analysts; no one sees the impact of poor and misguided
policies on peoples in different countries.
The Economic Times of India recently wrote, “In what could give a big boost
to India's efforts at food security, Ethiopia has offered 1.8 million hectares of
its farmland to Indian investors that equals nearly 40 percent of the total area
of the principal grain-growing state of Punjab.” The article was published in
connection with the visit of the controversially demagogic Minister of
Agriculture Tefera Derbew. The paper quotes the minister, who informs it:
nearly 50 percent of the cultivable land of Punjab, often called India's granary.
According to the paper, it accounts for 23 percent of its wheat and 10 percent
of paddy output.
It seems that the Meles regime is taking its revenge for its agricultural policy
failure by selling the country piece by piece. This has built frustrations of
peasant farmers and patriotic Ethiopians to rise. It knows that they do not
want to see their country sold piece by piece, for that matter to the lowest
bidder! What is worrisome is that the contracts are long-term, the shortest
being sixty years and the highest 99 years. Most of the deals the government
has made so far with farm-renters are encouraged to produce cash crops so
that it could pocket some foreign exchange, if not immediately, at least, after
several years.
What has so far been kept secret has now become official. Land renters are
promised and included in their contracts that they can export their produces to
their home countries or wherever. Therefore the domestic market has nothing
to look forward for from these deals. What state of mind tolerates this, now
resulting in the displacement of our farmers and the destruction of natural
forests, about which even the figurehead president has expressed repeated
concerns?
The May 5, 2010 issue of The Reporter carried a story that the residents of
Gambella had written to President Girma Wolde-Giorgis, asking his
intervention to stop the takeover of their lands and the clearing of forests by
farm companies. Incidentally, the land clearing company is state-owned and is
paid Birr 9,000($670) per hectare (Addis Fortune, August 29).
Their letter states in part, “In a manner we do not know, without anybody
telling us and consulting with us, our lands and forest resources have
been allocated to a foreign company…The forest is our life, we use it to
harvest honey, prepare our traditional medicines and build our
homes…” The affected people also indicate that they do not want “the
forests they have preserved this long to be destroyed in the name of
development” [writer’s translation from Amharic].
What is interesting about this particular complaint is the fact that there is clear
division between the people and the state administration. The local kebele
(neighbourhood association) leaders are on the same side with the people,
soliciting the president’s intervention. They have even been delegated to
represent the people on this matter. On the other side are the local
administration, the court and the federal ministry of agriculture; the latter saying
studies have confirmed that there would be no adverse effects resulting from
expansion of commercial farms on the leased farms and the clearing of natural
forests. As protest and complaints are often interpreted in political terms in
Ethiopia, The Reporter reports that the local administration was incensed and
reflected the view that this was the work of anti-development and anti-
democratic elements hiding within the people that are creating confusion.
Fortunately, the story does not end there. The president responded by writing
a letter to the local environment protection agency requesting it to take urgent
measures, taking into account thecomplaints by the residents of Goumare &
kabo districts, in Gambella region. The local environment protection office
wrote a letter to the minister of agriculture that the measures taken to give the
land to commercial farmers were wrong. The minister of agriculture has not
responded to the state president, because of which the president pursued the
matter further recently writing his second letter to the minister of agriculture
reminding him of the problem and inquiring if action was taken. The minister is
a political cadre propelled to power not because of his capacity, but because
of his service to the party as a political cadre.
This should serve as sufficient evidence that transactions in land are taking
place in ill-equipped countries such as Ethiopia that lack capacities to assess
the implications of ‘land grabs.’ This time, the state has sided the foreign farm
companies. Clearly, Ethiopia does not even have adequate capacity, let alone
to monitor its long-term consequences to millions of its citizens and the
country's future itself, but also even how much land is rented out at this stage.
The source of the problem is that the fact that every region is its own master
and can give land to whomever it wants, theoretically so long as it did not
exceed 5,000 hectares. The country does not also have centralized data
collecting system. Nor has it put in place appropriate laws and regulations to
ensure follow up their implementations. Moreover, the task of land
certification in Ethiopia has not been finalized. To date, only four regional
states—Amhara, Oromia, Southern Nations, Nationalities and Peoples
(SNNP) and Tigrai—have almost finalised issuance of land holding certificates
to peasant households, formally recognising the rights of holders of the
certificate.
At the same time, the other five regional states—Afar, Somali, Benishangul‐
Gumuz, Gambella and Harari—have not issued legislation how to ensure and
protect the rights of farmers and pastoralists, or implement land-leasing
arrangements. It is mostly in these regions that there has been serious
disenfranchisement of the farming population. A very useful paper presented
to the World Bank Conference on Land Policy and Administration in
Washington DC from April 26‐27, 2010, Imeru Tamrat states, “In the
absence of detailed land administration laws in the other five regional states, it
is not clear how the landholding rights given to peasants and pastoralists under
the Constitution is being implemented within these regional states” (Imeru
Tamrat, Governance of Large-scale Agricultural Investments in Africa:
the Case of Ethiopia, 2010).
The fact that this new enterprise has made African governments’ role as both
middlemen negotiating land deals and the ones clearing the lands and pushing
their people from their holdings no different from that of native slave traders
who hunted their own people and handed them to Arab slave traders that in
turn passed them for higher fees to European slave traders. It may sound too
strong a judgement. Anyone that has problem with this need only go and talk
to those uprooted from their ancestral lands and their belongings.
Finally, what should farm-renters produce? As far as Ethiopia, speaking
through its State Minister for Agriculture Abera Deressa,is concerned, they
should produce cash crops. On 26 October, in an interview with Bloomberg
he announced “We want to increase the amount of land to be leased…We
have abundant land available.” He urged those already invested and potential
investors to focus on production of “high value” crops; in that situation
Ethiopia could afford to import its foods using those earnings. Ato Abera
Deressa was confident when he said, “Then we can solve the food problem.”
Such is the state of affairs in the Federal Democratic Republic of Ethiopia
under the TPLF led EPRDF government.
malaise are getting funnier
04 February, 2011 | By Genet Mersha
--------------------------------------------------------------------------------------------
At a time when neighboring countries are tottering down the path of popular
revolt to overthrow entrenched dictators and possibly collapse of their regimes,
Meles has tightened political repressions in Ethiopia to protect himself from
their fate. In spite of those attempts, however, the deepening economic
problems are poking citizens with tensions and tremors of their own. These
are now being felt throughout the country, as public complaints even in the
government-controlled media are showing.
- Moreover, not that these would
amount to anything in a highly
militarized and ethnically
divided society, rumors and
some credible stories are
circulating about open clashes
between farmers and students
with security forces in some
parts of the country. As signs
burglaries and highway robberies are becoming common occurrences some
distances from the capital city itself.
The making of the current frustrations in Ethiopian society have been brewing
over a long time. Their origins lay in the political crises that remain unresolved,
nor the regime would admit. Then there are the ubiquitous economic crises
that have been afflicting over 90 percent of the population. The only solution
the government favours now is complete shut off of public space, as a primary
step, politics by force and economics by decree, which have now become the
mode of Ethiopia’s governance. Therefore, such a situation has served better
corrupt party officials, business persons, the security, the military and those
wired with the leaders. In such an environment, ordinary citizens find it difficult
to eke out normal existence.
Whether information from countries now affected by popular revolt is
permitted, the situation in those countries may only encourage a sense of
solidarity with others. The little information Meles’s security apparatus could
not control has made it through to Ethiopians. Therefore, they have become
true partners in sharing the pains ofthe Egyptians, Tunisians, the Sudanese and
Yemenis… As they saying Ethiopia, a heart filled with its own pains has better
feel for others.
What is happening in Egypt, the reporting of which has been forbidden in the
mass media in Ethiopia in this age of the Internet, mobile phone, in addition to
foreign broadcasts may have only evoked great interest to the degree it has
terrified the Meles regime. This is because people understand that is the
reason why he chose to ‘shelter’ the people. This ‘let me get bye this’ situation
attitude has not only brought contempt for the regime, but also given them a
good sense of its shakiness. In the meantime, the situation in the country would
continue to worsen, not because of outside influences, but mainly on account
of the weight of the problems our people have been shouldering on a day-to-
day basis.
Soaring prices & inordinate solutions at work
At present, notwithstanding the under-reported level of inflation and the pain
this has caused for ordinary people for so long, especially after the
introduction of devaluation and price controls recently, have deeply worried
the government. It is trying to do everything within its powers, although even
the solutions they try are becoming more grievous than the pain of living on
little or nothing. An expert from the Ethiopian Commercial Bank recently
rightly observed, “The most recent devaluation tended to function opposite to
expectations and even caused grotesque developments in the economy. The
subsequent high and indiscriminate price rise of all goods encourages imports
more than exports, as domestic prices have become more rewarding than
export prices” (Addis Fortune, Commentary, 30 January 2011).
The economist Prime Minister Meles Zenawi seems now to be fully aware of
the damages he has caused the nation’s economy and the lives of its citizens.
A man of hubris, he cannot say he lacks the humility to say sorry for that.
However, when he appeared before parliament on 3 February, he used his
usual infinite wisdom and ability to foresee over a long span of time, and
pledged, among others, not to make any further devaluations for another five
years. There is nothing more disappointing than this silly trick of dictators to
summon evil at will and sputter ally when things go wrong at their lack of
ability to dismiss it at will. Therefore, they jabber false promises and hopes;
they know it is their way of admitting mistakes.
Of course, Ato Meles Zenawi’s ability to foresee things has been tested on
several occasions. Recall that when he invaded Somalia he said he would
make it a cakewalk into weeks. Ethiopia was stuck there for over two years—
for that matter making a very amenable situation in that country more
catastrophic for everyone now. If all claims to view things on a long-term
basis, such as Ato Meles Zenawi’s five-year horizon are indeed possible,
especially in economics either he or the IMF must have been able to foresee
the December 2010 inflation level at 14.5 percent coming.
That not being the case, only in mid-November the IMF Executive Board
gave clean bill of health and Mr. Naoyuki Shinohara, Deputy Managing
Director and Acting Chair of the Board,on 15 November stated:
- The Federal Democratic Republic of Ethiopia has successfully
implemented policies to reduce inflation and rebuild external
reserves under the Exogenous Shocks Facility supported program.
Program performance has been satisfactory with all of the
quantitative performance targets met with margins and structural
benchmarks implemented. Inflation has continued to decline,
reflecting monetary restraint and aided by favorable weather
conditions. International reserves have risen to about 2.1 months
of imports coverage. The mild impact of the global recession on the
Ethiopian economy has allowed for better performance on the
external targets.
Press Release No. 10/432November 15, 2010
That is not the end of it. Do you need more reminders? Who would forget that
broadband Internet coverage of the breadth and width of Ethiopia within five
years fiasco? Yes, important efforts were made and Cisco amassed tens of
billions of dollars building the school. net and the government. net linkages.
Thanks to the Chinese, the latter one has now become a dedicated instrument
of espionage on citizens and mind control, instead of national development.
I have good reminder, much like a ticker the time when Meles Zenawi made
that pledge to make Ethiopia the first country with broadband access within
five short years. At the time, he was busy paving the ground early on for his
election in 2005 that he took for granted. Ethiopians showed him that they are
not with him, his abrasiveness and his mishandling of the nation’s affairs like his
‘kitchendom’. I recall that pledge distinctly. My grandson was born at that
time. Soon he would turn ten. Surprise! Surprise! The latest research by an
Irish company about Ethiopia’s snail-paced move into the world of technology
states it all:
- The population is approaching 90 million, but there are less than 1
million fixed lines in service, and a little more than 3.3 million mobile
subscribers. The number of Internet users is dismal below 500,000
at the end of 2009. Communications service provision is reserved
for the Ethiopian Telecommunications Corporation (ETC), one of the
few monopoly providers left on the African continent.
What is the conclusion? The report acknowledges that the French have taken
over the Ethiopian Telecommunications to turn things around. Therefore, even
in its most optimistic conclusion it hopes that the telecommunications sector
may witness some movement. Of course the report is initiated and is set to see
what it wants to see and therefore its hang-on is pure liberalization. For
Ethiopians, however, what matters are their real national development and a
sense of freedom from Meles’ Orwellian world. For whatever its worth, the
report skeptically states:
- By 2014 the number of fixed line subscribers in Ethiopia is expected
to increase to 4.4 million, representing an annual average growth
rate of 38% p.a. The number of mobile subscribers is expected to
grow at 43% per year over the period, reaching almost 20 million by
2014. Even at these high growth levels the overall tele density will
be less than 25% in 2014, indicating that the market will be
nowhere near saturation. The number of Internet users will jump to
12 million, but Internet subscribers will still be low at 1.4 million at
the end of 2014. Ethiopia presents an opportunity for investors to
reap vast returns as the liberalization agenda gets underway.
TMCnews.com, ICT Investment Opportunities in Ethiopia - 2010"
report
Good news folks! GTP would cost you only one trillion ETB
The other headline grabbing news is that the prime minister has kindly
identified funding sources for his Growth Transformation Plan (GTP), not that
he was willing to tell openly every piece of it. The total amount required is one
trillion ETB, about $60 billion, part of which is to be met from income from
power export to neighboring countries, more rental of farmlands, significant
amount of foreign aid and the rest from borrowing and foreign loans. What a
great picture for the future of deepening economic structural changes in the
country!
Ethiopia’s economic problems arise from: (i) centralization of decision-making
in one person, whose officials only frightfully echo every single word the prime
minister utters. Listen carefully when the foreign minister, the finance minister,
minister of agriculture, minister of trade, communication minister…speaks. The
echo is deafening. If this is the way a nation should be governed, what else
should one expect other than bad economy and terrible human conditions? (ii)
The other problem is the continuing replacement of few left over expertise by
new party cadres to make the political decision the boss would appreciate.
The first problem is that these people learn nothing, since they spend their
days in political plotting; (iii) bad policies and poor implementation are a major
problem, which we have seen time and again; (iv) poor domestic production
and supply capacities remain a fundamental problem; (v) corruption and lack
of accountability have become a way of life for the ruling party top down; (vi)
the country has comfortably become dependent on foreign aid that has stolen
its sense of independence and self-reliance. Even that, after the 2010 election
and the misuse of humanitarian aid for political purposes, the international
humanitarian community is having a second thought.
These are the major bottlenecks to the Ethiopian economy. Each of these has
contributed to the continuing domination in the economy of poor production
systems and non-existent and, if any, unreliable supply capacities.
Consequently, a structure of permanent disability has failed to meet domestic
demands for goods and export capacity to foreign markets. These translate
into foreign exchange shortage and poor macroeconomic environment that has
continuously distracted policy from improving production and real national
development.
On a side remark, let me ask you if you could give me one example where
Ethiopia’s exports have found a niche market for any of its unique and much
appreciated produces in terms of quality. Trust me, you would not find one,
save, the stealth EFFORT, the TPLF’s business empire, which has penetrated
the Chinese market—where now Ato Seyoum Mesfin, former foreign minister
and deputy chairman of the TPLF, would operate as the eyes and ears of the
regime as ambassador to that country. Many of the children of the ruling party
members (TPLF) are also being educated in China.
The policy problem of this regime is that it lacks macroeconomic policy
consistency. Because of that the task of policy has been reduced to fire
fighting permanently against inflation and the chronic shortages of goods and
services. Obviously, consistent long-term development has been pushed to the
second tier or to chance. If there are some lights flickering here and there, they
are not an outcome of two decades of work—but the efforts of a few
enterprises and the nascent private sector—outside the ethnic oligarchic
enterprises of the ruling party. That is why in Ethiopia today everything is
touch and go. The only exception to this is the political attempt at putting the
hyper make over of Addis Ababa as Meles’s fact on the ground to delude
citizens and willing accomplices to project that as national development.
The crises of the moment & Meles’ solutions
What gave spike to this present worry of the regime is the alliance of two evils :
devaluation and inflation. This is further made worse by price controls that
have been tried in many countries and have completely failed. It may some
how for a while impose controls over hoarders and price gougers. However,
overall it would only worsen the economic situation and weaken the economy.
The problem in Ethiopia has always been Meles' over-confidence that no one
could challenge him in his police state. He can do anything he likes with the
economy, the country' security,its long-term interests, the prospects of future
generations…
Even the pro-Meles EPRDF-ite Addis Fortune on 23 January tolerated the
publication on its magazine strong criticism of Meles’s policies. The
commentator wrote, “Little by little, certain goods and services in the market
for which people are willing to pay are disappearing. It will not be long before
parallel markets are created to cater to those who are willing to pay for what
they want. Alternatively, traders may find a way of circumventing the system.
Signs indicating this are also creeping.”
Interestingly, at about the same time in November 2010, China was also
considering price controls to dampen food inflation,according to the Financial
Times (China eyes price controls to fight inflation, 16 November 2010).
Since Beijing knew the negative consequences to the economy, a coupe of
cities used it to some products. China resorted to raising interest rate and is
still mulling in search of better ways of dealing with rising prices sourced in
inflation, other than price control.
In Ethiopia, salary increases have been made recently to offer civil servants
some minimal cushion. They range from 28 to 38 percent to 1,017,351 civil
servants (206,334 federal and 1,017,351 civil servants—source Capital).
These adjustments range from 1,000 ETB ($ 60) to high-level officials to ETB
144 ($ 9) to lower level workers.
Given the speed with which the price level changes, not to speak of the
availability of goods, the amount of the adjustments has understandably
courted more disappointments, according to Capital of 31 January. Since the
increases are too little to make a difference in this environment of rising prices,
it is reported that civil servants are openly critical. In the circumstances, more
noticeable is the big hole in the national budget equivalent to five billion ETB in
unbudgeted expenditures,to which the increase itself jacks up its own share to
the grinding inflation.
Speaking of inflation, from theory point of view,some in leadership seem
literate in economics. Unfortunately, the translation into practice of that literacy
has repeatedly belied that assumption and their pretenses. Of course, policy in
Ethiopia is hardly a reflection of national consensus, but diktat from Meles,
previously from Mengistu, which has gotten the country nowhere. In the past
two decades, Ethiopia has experienced several bouts of inflation, a
phenomenon directly associated with natural catastrophes, such as cyclical
droughts, resulting in GDP decline and shortages of food and other goods.
The country’s experience is that in a while they only turn into either disinflation
or deflation during crop seasons.
Now economic activity has increased and the level of imported inflation is
going up on annual basis, especially this time. The nature of recovery in global
economy is also making it a bit tricky. The policy that is the Meles regime has
begun to pursue is not only reminiscent of Britain in the course of WWII, but
has also been hardly capable of addressing the old and the changed
circumstances with appropriate policies. It is not enough to perorate about this
or that economic thought or this or that country’s experiences. Policy-makers
must see the pressing need to learn to apply the right policy measures
differently—this time around through genuine national consultations, instead of
the usual Stalinist top down approach.
Bear in mind, in the 1980s Argentina, Brazil and Israel learned to control their
huge inflations through approaches that were totally unorthodox—different
from what were applied in mainstream Western economic settings at the time.
It is in recognizing that the great economist the late Rudiger Dornbusch offered
his view of that with two short sentences as admonition: “The economists’
scissors normally has two blades, supply and demand. But in questions of
stabilization policy, that often is not the case.”The Ethiopian situation is far
different from that of those countries, but stabilization follows similar
principles, since the need for future growth has to be kept in mind.
Nevertheless, the message here is that the stakes are now too high and
recurrence of these problems has become habitual and different solution must
be sought. Consequently, Ato Meles must seize the opportunity to open the
door for open and transparent discussions, not only between the usual
suspects. But also this time in a nation-wide genuine participation, whereby the
people that bear the brunt of sufferings should express their problems and
make their recommendations, without fear of reprisals.
The prime minister holds scheduled meetings with businesses and is useful and
essential. However, even that seen by its record, at no time has it been about
addressing their actual problems of the gatherers. Therefore, as a part of his
government’s approach in the search for solutions, this time he must allow
people to express themselves. For once, he should stop pushing his solutions
down everybody’s throats. Discussion is not a skills talent to pick who knows
most and better, but to exchange views. This time, Ato Meles must listen to
what citizens could chip in the solutions they think would save the nation. He
should also recognize that, in addition to a number of policy-related
destabilizing factors, the world grains market and food production in general
has now come back with vehement problems of is own.
Food shortages and rising prices & the Meles regime response
Citing its barometer index, according to Reuters, on 3 February the FAO
reported “price changes for a variety of staples, averaged 231 points in
January -- the highest since records began in 1990…From its vantage point,
Oxfam attributed the problem to reduced production due to bad weather,
increased oil prices making fertilizer and transport more expensive, increased
demand for biofuels, export restrictions and financial speculation.” That much
for international analysts; no one sees the impact of poor and misguided
policies on peoples in different countries.
The Economic Times of India recently wrote, “In what could give a big boost
to India's efforts at food security, Ethiopia has offered 1.8 million hectares of
its farmland to Indian investors that equals nearly 40 percent of the total area
of the principal grain-growing state of Punjab.” The article was published in
connection with the visit of the controversially demagogic Minister of
Agriculture Tefera Derbew. The paper quotes the minister, who informs it:
- So far we have transferred 307,000 hectares of land to foreign and
domestic investors. Some 79 percent of this land has been
transferred to Indian companies. This land is made available on a
70-year lease. We are now proposing to transfer another 3.6
million hectares of land to investors from overseas. And I am
confident that more than half of the 3.6 million hectares land will go
to Indians. How much land will actually go to Indian investors
depends entirely on the interest of investors. If they come and take
all the land, then also we will be very happy. Indian investors are
very welcome in Ethiopia.
nearly 50 percent of the cultivable land of Punjab, often called India's granary.
According to the paper, it accounts for 23 percent of its wheat and 10 percent
of paddy output.
It seems that the Meles regime is taking its revenge for its agricultural policy
failure by selling the country piece by piece. This has built frustrations of
peasant farmers and patriotic Ethiopians to rise. It knows that they do not
want to see their country sold piece by piece, for that matter to the lowest
bidder! What is worrisome is that the contracts are long-term, the shortest
being sixty years and the highest 99 years. Most of the deals the government
has made so far with farm-renters are encouraged to produce cash crops so
that it could pocket some foreign exchange, if not immediately, at least, after
several years.
What has so far been kept secret has now become official. Land renters are
promised and included in their contracts that they can export their produces to
their home countries or wherever. Therefore the domestic market has nothing
to look forward for from these deals. What state of mind tolerates this, now
resulting in the displacement of our farmers and the destruction of natural
forests, about which even the figurehead president has expressed repeated
concerns?
The May 5, 2010 issue of The Reporter carried a story that the residents of
Gambella had written to President Girma Wolde-Giorgis, asking his
intervention to stop the takeover of their lands and the clearing of forests by
farm companies. Incidentally, the land clearing company is state-owned and is
paid Birr 9,000($670) per hectare (Addis Fortune, August 29).
Their letter states in part, “In a manner we do not know, without anybody
telling us and consulting with us, our lands and forest resources have
been allocated to a foreign company…The forest is our life, we use it to
harvest honey, prepare our traditional medicines and build our
homes…” The affected people also indicate that they do not want “the
forests they have preserved this long to be destroyed in the name of
development” [writer’s translation from Amharic].
What is interesting about this particular complaint is the fact that there is clear
division between the people and the state administration. The local kebele
(neighbourhood association) leaders are on the same side with the people,
soliciting the president’s intervention. They have even been delegated to
represent the people on this matter. On the other side are the local
administration, the court and the federal ministry of agriculture; the latter saying
studies have confirmed that there would be no adverse effects resulting from
expansion of commercial farms on the leased farms and the clearing of natural
forests. As protest and complaints are often interpreted in political terms in
Ethiopia, The Reporter reports that the local administration was incensed and
reflected the view that this was the work of anti-development and anti-
democratic elements hiding within the people that are creating confusion.
Fortunately, the story does not end there. The president responded by writing
a letter to the local environment protection agency requesting it to take urgent
measures, taking into account thecomplaints by the residents of Goumare &
kabo districts, in Gambella region. The local environment protection office
wrote a letter to the minister of agriculture that the measures taken to give the
land to commercial farmers were wrong. The minister of agriculture has not
responded to the state president, because of which the president pursued the
matter further recently writing his second letter to the minister of agriculture
reminding him of the problem and inquiring if action was taken. The minister is
a political cadre propelled to power not because of his capacity, but because
of his service to the party as a political cadre.
This should serve as sufficient evidence that transactions in land are taking
place in ill-equipped countries such as Ethiopia that lack capacities to assess
the implications of ‘land grabs.’ This time, the state has sided the foreign farm
companies. Clearly, Ethiopia does not even have adequate capacity, let alone
to monitor its long-term consequences to millions of its citizens and the
country's future itself, but also even how much land is rented out at this stage.
The source of the problem is that the fact that every region is its own master
and can give land to whomever it wants, theoretically so long as it did not
exceed 5,000 hectares. The country does not also have centralized data
collecting system. Nor has it put in place appropriate laws and regulations to
ensure follow up their implementations. Moreover, the task of land
certification in Ethiopia has not been finalized. To date, only four regional
states—Amhara, Oromia, Southern Nations, Nationalities and Peoples
(SNNP) and Tigrai—have almost finalised issuance of land holding certificates
to peasant households, formally recognising the rights of holders of the
certificate.
At the same time, the other five regional states—Afar, Somali, Benishangul‐
Gumuz, Gambella and Harari—have not issued legislation how to ensure and
protect the rights of farmers and pastoralists, or implement land-leasing
arrangements. It is mostly in these regions that there has been serious
disenfranchisement of the farming population. A very useful paper presented
to the World Bank Conference on Land Policy and Administration in
Washington DC from April 26‐27, 2010, Imeru Tamrat states, “In the
absence of detailed land administration laws in the other five regional states, it
is not clear how the landholding rights given to peasants and pastoralists under
the Constitution is being implemented within these regional states” (Imeru
Tamrat, Governance of Large-scale Agricultural Investments in Africa:
the Case of Ethiopia, 2010).
The fact that this new enterprise has made African governments’ role as both
middlemen negotiating land deals and the ones clearing the lands and pushing
their people from their holdings no different from that of native slave traders
who hunted their own people and handed them to Arab slave traders that in
turn passed them for higher fees to European slave traders. It may sound too
strong a judgement. Anyone that has problem with this need only go and talk
to those uprooted from their ancestral lands and their belongings.
Finally, what should farm-renters produce? As far as Ethiopia, speaking
through its State Minister for Agriculture Abera Deressa,is concerned, they
should produce cash crops. On 26 October, in an interview with Bloomberg
he announced “We want to increase the amount of land to be leased…We
have abundant land available.” He urged those already invested and potential
investors to focus on production of “high value” crops; in that situation
Ethiopia could afford to import its foods using those earnings. Ato Abera
Deressa was confident when he said, “Then we can solve the food problem.”
Such is the state of affairs in the Federal Democratic Republic of Ethiopia
under the TPLF led EPRDF government.
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