WOULD MELES ZENAWI TRULY DEPART,
AS HE HAS PROMISED, OR WOULD HE BECOME
THE GREY EMINENCE OF ETHIOPIAN POLITICS?
By Genet Mersha | July 24, 2009
“Africa doesn't need strongmen, it needs strong institutions”
--President Barack Obama
Part IV
This fourth and final instalment under this title has two things in mind. In that
sense, this article could be considered a two-part piece. First, is the conclusion
whether Prime Minister Meles Zenawi would quit, as he has promised, and the
likely direction he would tilt. The overall idea of the second part is to show in what
shape he leaves the country, especially the economy. He has endeavoured to make
it the main source of his legitimacy that public opinion has denied him.
The way I look at that is the whole purpose of Ato Meles’s engagement with the
nation on this matter, I should say with the foreign press, has been to win public
acceptance of him and his leadership the foreign media providing testimonials. If
the story appeared first or mostly only in the national media, which are under his
control, it would have lost its credibility. In that case, the media would be seen as
doing their job they are ordered to do. I must say, whatever his true intentions, he
has now made me believe that it is time for him to go. I am not saying this is what
Ato Meles wants, or intends to do.
On the other hand, many things are within the realm of the possible. In the event
that, the prime minister holds onto his vow to leave office, I urge him to
disconnect himself totally from his partisan politics. I would like him to act and
behave as an ex-Ethiopian leader, willing and ready to provide counsel, only upon
request. In that situation, I would be more than delighted to accept the errors of
my judgment about his motive and would accord him the respect he deserves. In
so doing, he would actually give a much better look to his credentials as a leader,
where so far their dominant feature has been his coldness, a person who is
incapable of feeling the pains of others and skilful in maximizing his advantages.
Therefore, if he gets across this time, he may find a place in history for setting a
unique precedent in our country in parting voluntarily. It may be small in the
scheme of things, but important, though in need of a great deal of tidying up.
I should mention at this point, it is extremely disappointing that the discussion in
the last few months about the prime minister leaving office had degenerated into a
position of for and against one person, instead of the country’s conditions, its
interests and its future. It is my fear that, because of this partisan warfare, people
on both sides of the debate risked missing the bigger picture, especially its
constantly swelling problems and its future direction. In my opinion, that is a
waste of good energy. In addition, inadvertent though, it has been harmful to the
realization of the dreams of our people, a reflection of the depth of our poisoned
political well from which we all drink.
It is immaterial whether Ato Meles continues as prime minister or becomes the
Grey Eminence of Ethiopian politics or leaves it altogether. Many of our pains may
not heal; many things cannot be undone. For far too long, our eyes have seen and
our minds have been alive especially to human cruelties, the destruction of
innocent lives and the disadvantages into which our country has been put.
Therefore, the issue at hand must be to see how we can all pull together. I would
stress, for instance, the immediacy of continued attention and resources to fighting
poverty that has been making a steady rise, even at this very moment.
I would put equal emphasis on the twin problems of ethnicization of the country
and the need to rein government at all times, including governance by a faction of
people bound by some less honourable bond. Not only it excludes others, but it
also denies the country of superb human capacities that could serve its interests
best with all sincerity. That is why we need at all times to make government,
whatever its ethnic, regional or political stripes, to the people. Only then would it
become accountable for its actions and inactions.
My intention in this article is to sketch the current state of the nation, with especial
attention on the key consequential actions and policies of Ato Meles’s government,
both positive and negative. The greater part of the article focuses on the economy,
present achievements, problems and future prospects. The message it brings out is
the Ethiopian economy, which is based on subsistence agriculture and is aiming at
agriculture-led industrialization is in very serious difficulties. The country remains
as vulnerable as ever to drought and famine. In its present pace of land expansion,
the continued dependence our survival on such production is a risky proposition.
The 2010 election drawing closer, even the 2009/10 national budget has put
agriculture in the third place in terms of priority claims on resources. Not much
cause for hurting, but road construction is given its place. On top of that, foreign
land-renters seem to hold spell on the government. Who knows, it may settle for
that, instead of helping continually poor peasant farmers to move beyond
subsistence and develop their capacities to produce their own food. It would have
been a great force for economic expansion. Too late, to envision that now under
the TPLF; partisan political interests have hijacked government’s political, financial
and moral stamina. In this connection, I must say, whatever the true intentions of
the prime minister, he has now made me believe that it is time for him to go. I am
not saying this is what he wants, or intends to do.
The main culprit denying the country agricultural transformation during the past
two decades is lack of productivity growth. As result, agriculture to date has been
the black hole to our scarce resources and investments, which TPLF says has put
in the course of eighteen years. As a result, the economic achievements of the
regime to date are grossly misrepresented. The successes in higher agricultural
production are a function of favourable weather and expansion of farmlands,
which would be discussed in detail later. In reality, however, economic expansion
has been minimal, if at all it has not stalled.
In that sense, the country is at a serious juncture in every sense, political and
economic specially. To demonstrate the seriousness of the problems surrounding
agricultural productivity, and the failure of Ato Meles’s regime, this article has
included various data, tables and explanations. Indeed that is the main reason why
this article has become so lengthy. I apologize for that.
Ato Meles trips on the economy
Undoubtedly, there has been momentum for economic growth during Prime
Minister Meles Zenawi’s stewardship of the nation. The favourable global
economic environment of the past decade-and-a-half has immensely contributed to
the great achievements in many developing countries, for many of them since the
mind-1990s. Although a latecomer to economic growth and national development,
Ethiopia also has had a bite of it. However, its belated efforts have short-circuited,
because of misguided economic policies and the political environment, which
could hindered essential reforms to address the structural weaknesses of the
economy as a whole, especially agriculture. At the onset of the world financial and
economic turmoil, the Ethiopian economy has already been running out of steam.
Nonetheless, in spite of that the country has witnessed appreciable strides in
infrastructural development into which massive investments have been thrown
(whatever domestic resources available, limited overseas aid and foreign loans).
Reaping their fruits has yet to take place. There is no doubt that they hold great
promises for the future in increasing chances of the country’s speedy
development, if only the political and security situations permit.
These infrastructural development projects—roads, the many dams under
construction, schools, colleges and universities, water and sanitation programmes,
the promising prospects in health services, etc—are contributing to broadening the
base of economic growth. Markets get closer to the people because road networks
are expanding. The presence of electricity all over will provide both light and
energy; it also improves possibilities for schools and, thus, betterment of education
and innovations. Healthy children grow up to be healthy and productive adults.
That is the womb of reliable human capital whose experience could be tapped for
much longer time and much higher goals, if only the powers make it possible
politically. Thanks to China’s enormously deep reserves and strategic interests in
Africa, the likelihood of such grants and loans does not seem to be in any
immediate risk to complete the many projects underway, despite the not too
promising global financial and economic environment.
Policy side of the economic problems
Much as GDP growths speak a positive language, the dark side of that is the
regime’s economic policies have undercut its depth and reach. In so doing, it has
posed serious problems at different times and with different consequences. Some
of them have had long-term consequences and, we still live through them. The
transformation of the country into a landlocked nation is another economic and
developmental setback for the economy.
The sum of these and suppressed human aspirations have set numerous obstacles
for sustained economic growth. First, the economic policies seem to be guided by
impulse and the extremes of unrealistic ambitions that have caused serious
macroeconomic problems. Induced by political goals and motives, the former less
thought out and the latter out of opportunistic interests, the now and this moment
often get precedence. This has affected economic goals, the actions of which out
to be guided by serious deliberations, bearing in mind outlines of the five-year plan
in place (Plan for Accelerated and Sustained Development to End Poverty 2005/06-
2009/10, PASDEP). Such an approach would have enabled the possibility of
weighing carefully immediate needs against future risks to the country.
Second, there is lack of transparency and the tendency on grabbing power. Siege
mentality has prevailed in government circles. Government operational capacity is
devoted to the defence of power in the hands of the regime and its existence,
instead of the nation’s. As a result, secrecy is the guiding principle of the regime,
because of which institutions have remained weak and their work uncoordinated.
This has compelled government official always to seek scapegoats, for most often
they are beset by problems and difficulties, they are not free or capable of
addressing them in that setting.
The double-digit inflation that has been ravaging the country for three years in a
row now cannot be considered an example of carefully thought out policy
measures. Indeed, it is a very serious problem, against which government on
several occasions acted out of desperation and not well-founded ambition. Before
all these came to pass, international advices were given, experiences have been
shared, but to no avail. Government mostly attributes all its problems now to high
prices of imports of especially oil, oil related products and foods. Of course, the
recession has now become a good excuse. Such cover-ups and constant denials
only detract the country’s ability to address the root causes of its problems.
Thus, inflation has terribly flogged our economy in more ways than one. During
the last few years, the economy has lost steam, as its internal capacities weakened
day bay day. The decline has hit hard public enterprises and small-scale
mushrooming businesses. The purchasing powers of families have been destroyed.
Individuals in their millions are constantly falling into the cracks of poverty both in
urban and rural areas. This situation has imposed on the National Bank of Ethiopia
(NBE) a series of forced devaluations of the birr for a few years now. Because of
this, the birr has already lost its exchange rate value by 25.7 percent from its
weighted average of 9.244 per dollar only in 2007/08. On 13 July 2009, it was
devalued to birr 12.4478 per dollar. While these measures indicate the enormous
difficulties in which the economy has been, the horrible side of devaluation is
usually its end is never in sight, especially when the balance of payments is in
severe crisis and inflation is as enormously high as it is at present.
During this season of relatively better weather and promising agricultural
production, the countrywide food inflation rate stands at 44.2 percent by the end
of June 2009 and non-food inflation is 23.7 percent, according to the Central
Statistical Agency (CSA). For instance, in spite of the confident assertions of the
prime minister at an April 15 press conference, saying inflation would go down to
single digit within two or three months, the present high of 36.4 percent is still too
high to plummet down. It is also less likely to do so even three more months from
now, given the fast pace of oil prices that are now hovering on past the $70
threshold per barrel. IMF is also in no better position in terms of its forecast. At
the beginning of the year, it had claimed, “The latest data are consistent with staff’
s projection that 12-month inflation will fall to below 20 percent by mid-2009”
(January 2009, Country Report 09/34). During this recession, economics has been
the most humiliated science. None of its forecasts held anywhere. For now, its
lack vigilance in spotting problems ahead of time has made disappoint of both the
rich and the poor a common denominator.
The data used here in this article are sourced from the CSA, NBE and the Ministry
of Finance and Economic Development (MOFAED), the Ministry of Health (MOH)
and international organizations. In so doing, I have taken full account of IMF’s
recommendations to the government, “Data shortcomings continue to affect
analysis of economic developments. The shortcomings were most prominent in
national accounts (where statistical discrepancy was 10 percent of GDP in
2005/06), balance of payments (where errors and omissions were equivalent to 32
percent of exports in 2005/06), and fiscal accounts (where unidentified financing
reached 1.6 percent of GDP in 2005/06)… In this regard, addressing the high
turnover of relevant staff, defining priorities, and improving inter-agency
coordination are key elements for ensuring the sustainability of statistical reform”
(July 2007 Country Report 247). While I fully share the Fund’s concerns,
nonetheless, I have compared with relevant experiences in other countries to make
balanced and better judgement in this article.
Political side of the problems
We live at a time and environment when the economy has weakened and politics
hardened. The government is winding down its five-year long preparation for the
2010 election. Ethiopia is at the crossroads now. There is a lot of anger below the
surface in Ethiopian society. Because of this and intent on consolidating his
powers, Ato Meles knows it, he has taken too many risks. He has gambled on
popular fears and patience and his own credibility. Consequently, there has been a
prevalent sense of injustice, brutality and cruelty by those in power, be it at the
centre or the regional level and in the lower structures. Both in connection with
this and Ato Meles’s presumed intentions of departure, such concerns surface
easily in discussions amongst Ethiopians and foreign friends and colleagues. Where
is Ethiopia headed?
solidarity, arising from the dominance of ethnicity over Ethiopianness, even turmoil
in the churches and mosques.
For instance, in a country known as an island of religious tolerance, the many
repeated occurrences of religious conflicts, including the one in mid-July in
Dessie, 250 km from the capital, where religious conflict claimed three lives and
injured six others, strengthens those concerns. Bear in mind, this occurred in
Dessie, Wollo, where the extent of religious tolerance is such that it is a region
known for its very high rate of inter-faith marriages. It is even common that a
single individual holds first name Christian and second name Moslem or vice versa.
In a small healthy place, steeped in history and culture, incidents such as that
reflect our country’s vulnerabilities. In the meantime, the tendency still is to
promote institutionalized domination of a single minority group over the other
ethnic and language groups in the country. The government denies it has any such
agenda. However, the reality of the power structures and EFFORT’s control of
the economy is staring at all citizens with its worst manifestations.
Clearly, Ato Meles has understood what he and his party are facing. It is not that
the opposition is strong and ready to snatch the meat out of the lion’s teeth, but
use of force and power in general has it limits. Society may wish to shake of its
burden because of the number of factors triggering its actions. In early May, the
prime minister summoned courage and implicitly spoke of his concerns to Africa
Confidential about the worrisome link between the country’s economic
performance and the possibilities of a peaceful election. That open concern or
admission of serious challenge is the first of its kind I know from this regime.
When I read what is happening within the opposition party UDJ lately, I fear that
the opposition, both at home and abroad, is in serious trouble, more to itself this
time than to its opponent—the government. More time is spent on condemnation
of government and mutual recriminations. For instance, have they ever asked what
would be the role in the event the prime minister relinquishes and TPLF anoints
whomever it chooses? Would they cooperate with the successor(s)? Or they reject
any such decision outright? After all, would Meles’s successor be any different?
Would the opposition be content in continuing the politics of condemnation in its
current shape and form, while waiting what Mr. Obama can do to firm up the
roots of democracy in Ethiopia? There is need to face reality and rethink a
different approach.
Would Ato Meles’s successor be any more willing or freer to develop a meaningful
agenda to create a better environment for genuine multiparty opposition groups to
engage in political work and competition within legally defined parameters but that,
as now, does not deny citizens their rights and freedoms to participate in a political
activity of their choice? Would he allow citizens to decide whomever they wish to
appoint as their prime minister, with all the powers, as defined by the constitution
in force? It is time, to think harder, in a sober way to regain credibility, attract, and
unite domestic and foreign supporters and force power to respond by allowing
public space and empowering the people to assert their rights.
By its very nature, backbench politics is specialized in critiquing or judging the
actions of government, especially when both sides are genuine representatives of
the people. The likelihood is greater there where the honest clashes of ideas gives
birth to better ideas and enable its victory. The forums also become the best
preparatory schools for leadership, although individuals cannot escape the
corrupting influences of hunger for power and falling into the trap of becoming
faultfinders, usually propping up their positions with the facts they manufacture.
On the contrary, especially in countries such as ours, where citizens/the opposition
are not free to evolve their positions, nor speak their minds and consciences, the
result is that opposition politics becomes a pool of negative emotions and
government power an instrument of repression. In those circumstances, society is
cursed needlessly to remain in the trenches and the strongmen in palaces, if not for
half a century, at least, a quarter century. There are better choices when there is
some honesty, tolerance and goodwill. Our country can do better, if we all put our
hearts and minds into this matter.
On the part of the government, time is long past to recognize and learn not to
repeat the mistakes of the Emperor since the late 1950s and the Deruge throughout
its life. Military means cannot solve all political problems. EPLF and TPLF were
not crushed. TPLF still has not eliminated the OLF or the ONLF, despite massive
and on-going military operations. As I mentioned in an earlier paper, if any thing it
had done, it has deprived the leadership any goodwill and the country its scarce
resources on armaments. So far, military means may have enabled the country to
contain the worst. It is hard to imagine it can bring it lasting peace for the future.
Too many limited efforts and resources have been deployed to explore and exploit
the country’s natural resources, especially oil and natural gas and build
hydroelectric dams. Even more are the reasons why Ethiopia needs to find without
any delay peaceful solutions to its political and security problems. Only then can it
use rationally and peacefully the benefits accruing from these projects. Even
without such complicated problems, for developing countries oil, natural gas and
precious minerals are the mother of all curses. We need not wait for that day of
curse.
Therefore, it is in the best interests of our country to engage in search of peaceful
solutions for all outstanding political problems, including with armed groups so
long as they are willing to disarm and accept Ethiopia’s unity and territorial
integrity. The rest should be subject to political discussions and accommodations.
The government is insisting that everyone that wants to engage in peaceful
struggle first accept the constitution. As anyone can see it from experience, it has
become harder even for local opposition groups throughout these years to operate
freely, because the government does not respect its own constitution.
Consequently, the fact that not all efforts have succeeded on the peace front does
not necessarily indicate the burden is only on the side of those that are still
fighting. Government’s lack of seriousness on this matter has led to a firm
conclusion that the multiplicity of its conditions and disruptive activities are a
reflection of its desire to entrench itself in power permanently.
Ethiopian society fenced with repressive laws
Might I confess at this point that, it has always struck me as out of the ordinary
that the prime minister should devote ‘his’ current five-year term to be fully
engaged in the adoption of repressive laws and regulations. On the face of it, it is
part of his preparations for the 2010 election, although it could still be instrumental
toward any long-term agenda of ethnic domination. This in view, it seems to me,
that Ato Meles’s past decisions relating to the country’s territorial integrity, the
tragic aftermath of the 2005 election and present decisions regarding the tightening
of repression and the downturn in the economy have already conspired to make
the decision for the prime minister.
This may make it necessary and easier for him to be ‘persuaded’ to stay in
power. That seems the reason why the proposal to quit has come in the first place.
It would enable him to justify his continued stay in power, which by the end of
2014/15 would lengthen his tenure to a quarter century. The sole purposes of the
recent barrage of legislations that came out from the TPLF/EPRDF parliament
speak for themselves. They aim at silencing dissent and restricting individual and
organizational political initiatives. Why should a departing prime minister bother to
take trouble and more blemishes to himself by choosing to leave behind an unkind
legacy for history?
The anti-terrorism law
Opposition members of parliament who voted against it say, “The law itself
terrorizes citizens.” Deputy Secretary of State Jacob Lew has expressed the
displeasure of the United States government, when he recently visited Addis
Ababa. Human Rights Watch is of the view, “The law could turn political speech
and peaceful protest into terrorist acts.” In brief, this legislation gives the regime
the right to detain and torture citizens at will. That is not to say such practices are
not common occurrences already in Ethiopia. This time, however, the law has
made the task of government in spreading fear much easier.
Abuse and misuse of the media & unhelpful efforts at mind control
A legislation that has empowered the TPLF regime over society is the frightening
press law. Its unique quality is it has two blades like scissors. One side of it
sharpens the pro-government private media to cut to pieces and discredit the
already weak opposition and the diaspora, mostly with defamation and planted
stories. The other side has been busier cutting too many independent-minded
journalists; private media people with integrity, publishers included. Many such
journalists have been rotting in prison; some have already perished; many have
become refugees in different countries.
In addition, government security personnel continue to behave like thugs in the
street physically attacking journalists. In early July an editor of Addis Neger, an
Amahric language weekly, was assaulted in the street. Such phenomenon is
occurring repeatedly without government lifting a finger to find out who is doing it
and why. In the light of this, it is imperative that the international community
focuses its attention in countries that cannot protect journalists from
‘unknown/known’ assailants. There is something troubling when something like
this happens in a country where government claims to be legally constituted, but is
unable or unwilling to respect the rule of law. One Anna Politkovskaya, a cruelly
murdered Russian journalist, is one too many for the entire world. From the news
sources, we understand that she had terribly rocked the boats of the powers who
felt threatened by her reportage on Chechnya.
Similarly, at the heart of the problem in Ethiopia is the interest of the ruling party in
tightly controlling society by controlling the media—both government and private.
As The Reporter, a popular Amharic weekly put it in its editorial a few weeks ago,
in its present form or substance, the current press law does not have even remote
resemblance to the relevant provisions of the country’s constitution. On the
English language Addis Fortune of 12 July, one observer aptly stated, “A free
press is one of the best ways to provide information to the public and comment on
pertinent social issues. However, this vital institution is hindered by complex legal
obstacles. Encouraged by draconian press laws that cripple intelligent and vibrant
journalism, more often than not the judiciary upholds verdicts boiled down from
the heat of the political temperature, pleasing the whims of the executive branch.
This is one of the many sad realities that large numbers of the truly independent
media community in the country acknowledge.”
The use of the flag
As recently as early July, the parliament adopted the national flag law. Certainly,
keeping standard national flag is common practice for all countries. The
government says that is exactly the purpose of its new legislation. Nonetheless,
individuals with attachments to the plain tri-colour, the law seems to suggest, they
should make frequent visits to the museum. If confidence in our government has
been what our experience has taught us, we would have been less inclined to think
in terms of conspiracy theories. It is granted that conspiracy theory takes more
than it does give; still experience is a better witness than good faith in such matters.
In fact, both the purpose of adoption of the law and the timing is not a matter of
coincidence, it seems. Who would forget one of Ato Meles’s first few press
conferences in 1991 where he turned society against himself and the TPLF by
disparagingly dismissing the Ethiopian national flag as “a piece of cloth”? That
remained stuck in the minds of citizens that he is disrespectful of the many that
have fallen for it. Prime Minister Meles’s concern may not be merely to define by
law the national colour and the symbols on it. He may be worried about the people
coming out en masse during the 2010 election flying the original Ethiopian flag as a
sign of protest against him and his party. Therefore, he is determined to ensure
that nothing should be left to chance, nor should any crafty attempts or the
symbolism of open political opposition by the public against him go unhindered.
The anti-civil society law
Much has been said about this law. I know that more will be said with great stress
and effects. The legislation aims at denying or restricting the activities of non-
governmental organizations with interest and specialization in human rights,
democracy-related work and humanitarian issues. The interesting aspect of
this legislation is its denial of the country’s reality. That is to say, Ethiopia has been
constantly exposed to the humiliations of all of the three—either in the form of
lack of respect for human rights or denial of democratic rights. Ethiopia has had
enough of humanitarian crises, in one sense, to paraphrase Prof. Amartya Sen, as
a sign of power’s indifference to terrible human conditions, which makes it a
symptom of the crisis of democracy.
Through this law, the government has incurred a double jeopardy, in a country
constantly exposed to cyclical droughts and famines. Humanitarian work has
proved a saviour more than the government is on many occasions. If the
government is concerned about the credentials of the organizations, the honourable
way out would have been to strengthen its vetting system. Instead, it chose to
impose blanket limitations on NGO activities in those fields.
It cannot be helped it is widely felt that the intention of the law is to show
government does not want local or foreign organizations involving in the task of
creating political awareness and rights consciousness amongst the population. See
the statistics of how many individuals working for the Ethiopian human rights
council or other civil society organizations are picked up from time to time under
every pretext all these years and sent to prison. Here it comes again, on 21 July
government has revoked the licenses of 42 NGOs, accusing of them involvement
in activities that are "out of their mandate” in the southern part of the country. We
all understand that, by definition "out of their mandate” is interpreted as meaning
involvement in human rights and democracy related activities, unless it comes and
convinces us that they are Martian spies.
Would President Obama’s diplomacy take its cues from his speech and
help honour his commitments to Africa?
President Obama pledged from Accra that his administration and the West are
ready to help African countries in critical areas in improving their lives. It is
understood that he is reflecting part of the consensus among the G-8 members in
Rome recently. His administration’s mission, he said, would no longer be mere
doling out of aid. The United States, in a sense also with the rest of the western
world, he underlined would seek serious partnership. Here is how he put it,
“The true sign of success is whether we [the West] are a source of aid that helps
people scrape by—it is whether we are partners in building capacity for this
transformational change. This mutual responsibility must be the foundation of our
partnership...First, we must support strong and sustainable democratic
governments.”
The president had the right message; he delivered it in a serious tone and balanced
manner, from which everyone got promises on something, especially on
‘democracy, opportunity, health, and the peaceful resolution of conflict.’ My
sense is that the masses of the people are overjoyed genuinely and expectations are
heightened. The fear is some tyrants would also step up to claim credit. The
illusion is that they have called their system democratic so far, even when they
have kept thousands of political prisoners and muzzled the media. They may point
to the progresses that are made in the economic field, thanks to the global
commodity markets and cheap finance of the past fifteen years. However, they
cannot come up with clear evidence that widespread fear that has been imposed on
society is a sign of peace or stability. Nor could they show how suppressed
human aspirations cannot clog better economic growth possibilities and enhanced
opportunities for the future, while it has happened in Ethiopia.
Just because of that, I regret the president did not have the time and opportunity to
discuss with civil society organizations from troubled countries in a secure way. It
sounds luxurious, does it not? No need to include the Ghanaians in this—God bless
their soul, they have seen the light. Those from other countries such as Ethiopia
and some others would have exactly told the president the importance of the four
points he outlined in his speech before even they heard him. Perhaps some might
have wanted more emphasis on the rule of law as a basis to govern future African
American relations.
In this connection I must say, if the US president were to see the success of his
policies in Africa, it is time that he should be aware of the worries of Africans with
regard to US policies in Africa as well. Salim Lone, a respected Kenyan media
personality and former United Nations official, has captured the essence of those
concerns. They appeared in his 10 July article on the Guardian under the title
What Obama can do for Africa, an excerpt of which reads:
One thing he [President Obama] would consistently hear from our civil society
leaders would be that good governance – democracy, inclusion, respect for human
rights and the rule of law – is non-negotiable. He would also hear that some of the
significant gains made in expanding freedoms in multi-party Africa are being
rolled back. This is not surprising, as the strategy of the US war on terror reverted
to the cold war model of supporting dictatorial allies, which in east Africa
included the Ethiopian and Ugandan leaderships.
That article is deserving of the president’s attention and time. Mr. Lone has put on
paper the stark truth. His assertion has spoken to my heart, my intellect and my
folks’ experiences.
CLOGGED ECONOMIC GROWTH THREATENS FUTURE
POSSIBILITES
The international community has been praising the level of gross domestic product
(GDP) growth Ethiopia has registered in the past few years. There is no doubt
that, especially for a country that is producing neither much-sought-after minerals
nor oil, specialized services or industrial outputs, by any measure its high GDP
growth represents great achievements, unparalleled in the country’s past.
The question is how one can reconcile the uninterrupted six years of GDP growth
(Table 1) with the worsening economic situation in which our country finds itself
today. At this moment, the ability of the Ethiopian government to make the
economy work is severely constrained. Official explanations admit to that, but
with their own spin, without looking inwards and only by attributing blame to the
global recession or the cyclical drought. This paper looks at Ethiopia’s economic
problems differently.
Table 1
Source: MOFAED *The 2008/2009 is Ethiopia’s original estimate and lately revised
data. **IMF projection ***IMF revised estimate
In the light of these figures, therefore, it may sound strange to say that the
Ethiopian economy weakened long before the onset of the global financial and
economic meltdown. This paper insists that indeed is the case. For the greater
part, all that the current global financial and economic crises have done is
exacerbating the economy’s structural and policy problems. One thing this tells is
that no adequate policy measures have gone into improving and vitalizing the weak
domestic production structures and the sagging export capacities.
Otherwise, the negative consequences of the huge appetite for higher expenditures
that the country has displayed since 2005 could have been accommodated partly
were they supported by domestic production, increased volumes in exports and
higher revenues from exports. In brief, the structural constraints on the supply
side of the economy are still intact. Even in normal years, the trend has been
export revenues falling behind private transfers and overseas aid, excluding
humanitarian assistance.
Good weather years and bumper crops, higher commodity prices have made
government feel good and encouraged it to spend public money without restraint.
Demand shot up. Imports quadrupled. What the government has sacrificed is
macroeconomic sanity, to borrow Prof. Susan Collins’ phrase (Lessons from
Korean Economic Growth). What sane macroeconomic policy does, among
others, is ensuring GDP growth, price stability, employment growth, expansion of
the economy and opportunities for all citizens. It would also seek ways of enabling
members of society attain fair income distribution, while investing in the future.
In Ethiopia’s situation, this unrestrained use of public resources has bred double-
digit inflation that has hurt the country for three years running. Therefore, what
started the country on this road is its weak production capacity, dependence on
rain-fed agriculture, the rising revenue from agriculture and the other sectors
combined giving rise to unsustainable demand for imports of goods. This has
conspired with imported inflation to exacerbate the economy problems. In a short
few years, despite rising exports, the levy in the country’s usually weak foreign
reserve situation gave in.
The government suddenly woke up, as if hit by lightening. Out of desperation, it
began to use illegal means, as is the case with coffee exporters and the
mistreatments seen in the recent vigorous tax revenue collection efforts. Coffee
exports had declined in 2004/05. Government did not attack exporters then,
because it was not as desperate in its foreign exchange needs. Why does
government have to wait for difficult circumstances to be its guide to take policy
measure that, as a government, it ought to do as a habit? The truth is that these
very problems have been there in the economy in the making for a long time. What
the recession found is an economy badly flogged and on its way to the intensive
care unit. The result is that Ethiopia finds itself now in the worst macroeconomic
dislocations, the correction of which, in this fragile political and economic
environment, invites harder times and many difficulties for the country.
Illustrative examples
In the past few years, we recall how many times the country has fallen short of its
export targets, long before the latest market squeeze and the recession began. For
a number of years, NBE has reported the shortfall on the production side in its
quarterly and annual bulletins. Similarly, for instance, MOFAED in its 2004/05
Macroeconomic Developments in Ethiopia report indicated: “coffee, pulses, and
fruits and vegetables have showed decreased performance of 8.3, 9.2, and 8.2
percent, respectively, compared with the preceding fiscal year [2003/04] whereas
oilseeds, meat and meat products and live animals have witnessed increased
performance.” These decline in volume of exports are nothing new. Their pain
was no felt that much earlier, because transfer from the diaspora was much
higher, as was foreign aid and credits. This time, the economy is almost shutting
down the tap.
In the same manner, at a time when the prices of oilseeds were picking up in
2007/08, production fell down by 35.3 percent. However, because of improved
prices Ethiopia earned $218.8 million, compared to $187.4 million in another failed
year of 2005/06. These vicissitudes in production are a typical feature of the
Ethiopian production structure. The only product that lately enjoyed better support
is the horticultural industry. In its case, it has become a real casualty of the global
recession. The main reason for that is it is new and handled in a modern way; it
had a good start; production increased astronomically in successive years, despite
difficulties domestically relating to transports, freight costs and later capital for
expansion.
The situation in 2009 is, therefore, a combination of weaknesses and
inconsistencies on the production and export sides on one hand and market
contraction at a later stage on the other, at a time when the country. Clearly, from
2005-2008 Ethiopia had not reaped the benefits of higher prices for exports
because of the problems already discussed. The result is the economy was denied
a leg up in terms of foreign exchange earnings and import items essential for
development, the consequence of which has stalled economic expansion, which
Table 2 shows clearly. At this very moment, double-digit economic growth has
become a meaningless slogan for many families and businesses.
This is not to deny or belittle the country’s achievements to date, but to register
the fact that, instead of increases in assets, inflation has effectively destroyed a
number of them, in the form of businesses, as can be seen from the growing
number of companies going bankrupt and seized by banks. In the same manner,
poverty is on the rise, as is hunger and homelessness, threatening severely millions
of citizens. The number of those begging in the streets is rising. In his right mind,
no one could attach any link between that and the country’s high GDP growth
figures. In spite of the many efforts the country has made, these are only the outer
manifestations of worsening poverty in the country.
Consequences of the failure on a mini-scale
By the end of May 2009, Trade and Industry Minister Girma Biru reported to
parliament that Ethiopia would face a shortfall of close to a billion dollars in 2009,
out of its targeted $2.5 billion in export revenues. This represents a loss of revenue
of about 42.0 percent. At the same time, international transfers, both private and
public, have significantly declined, at a time when there still are immense needs in
the country for items such as fuel, food imports, materials and chemicals for
industries, agriculture (fertilizers), and other payments including debt service. The
Djibouti port, Ethiopia’s only gateway for its commerce with the rest of the world,
requires close to a billion dollars in annual fees.
During the fiscal year just out, Ethiopia’s outstanding external debt was $2.8
billion. The breakdown is $1.5 billion for multilateral organizations, $953 million
for bilateral sources, $276 million for commercial banks. The quarterly debt
servicing is $339.4 million, after debt relief, out of which the principal was $158.5
million, interest $173 million and commission $7.9 million, according to the
MOFAED. After May 2008, Ethiopia was almost staring on the face of default,
possibly the danger of bankruptcy, from a close range. Government bills have to
be paid in foreign currencies. Otherwise, the country would not be able to import
anything or honour its international contractual obligations, including the servicing
of short and long-term debts the country has accumulated. At the beginning of
January, the country had an international reserve of $906 million, or six weeks
equivalent of its requirements, according to IMF financial indicators. Immediately,
the country started rationing of foreign currency to prioritize imports, which hit
businesses of all categories hard.
Like any developing country, Ethiopia has always been short of foreign exchange
for various reasons. In some good years, the reserves had built better to meet four
to five import months of requirements, though not in a long, long time now. In the
years since GDP growth jumped, the reserve on average was sufficient only for
three import months maximum. However, since 2005/06 it has been going down
year after year. For instance, in 2007/08 it reached the critical 1.2 months,
although projection has put the 2008/09 figure at 1.8 months, which seems to be
less likely to be revised after the recession had deepened in many of the European
countries, Ethiopia’s primary export destinations. One way this could be avoided
artificially by sitting on its receipts of international currencies, as was the case
when reserves jumped to six months level early on. This means to starve oneself
to death to be slim.
In Ethiopia’s recent history, a similar distress occurred toward the last years of the
Mengistu regime, where GDP growth in such scale was ever unthinkable, although
Ethiopia’s records in honouring its obligation have always been respectable. Those
familiar with activities of the NBE during the Dergue time say that a loan of 10
million dollars came from Algeria, after a national delegation was sent to solicit
comradely help. In addition, Italy made available a letter of credit worth $25 million
dollars for purchase of goods and services. That lifeline bailed out socialist
Ethiopia from total collapse. This time, the situation has a serious twist. As the
cliché has it, things would only get worse before they get better, because the
problem has its origin in policy and are structural in nature, all at the same time at
the unkindest of times.
In spring 2008, the IMF had looked into Ethiopia’s debt sustainability. At the time,
the country’s debts were estimated to claim 5.0 percent of GDP or over 50.0
percent of export revenues. The Fund’s signal of discomfort was evident, when
export revenues continued to fail to achieve target, although debt has been rising
ever since. In the Fund’s revised figures, public debt stands at 35.9 percent of
GDP in 2007/08. The 2009/10 debt level is forecasted to be 31.7 percent, of
which the breakdown is 14.1 percent domestic and 17.6 percent external. The
interesting thing here is how the data for both debts reversed for 2009/10, though
both rising. Earlier external debt was 14.5 percent and domestic debt 17.0 percent.
Recall at this point the fast-tracked release of $50 million dollars to ameliorate the
foreign exchange crunch. It came with IMF warning that, “…the balance of
payments situation is likely to remain difficult in the coming year.” In 2007/08, it
was negative balance of $174 million. The outstanding domestic debt by December
for the period was birr 53.1 billion.
Officials go foreign exchange fishing
To avoid a nasty situation, government started rationing foreign exchange, which
put NBE in the eye of the storm, with the campaign against it by businesses
growing louder, including by commercial banks. Meanwhile, officials have been on
wings since January 2009, canvassing sources of more loans, grants and aid
amongst EU and OECD countries, China, India, some Middle East countries and
Turkey at a bilateral level and from multilateral financial institutions.
Already in January, the EU granted 322 million dollars to boost development
projects. In mid-May, the country signed $400 million credit from the Chinese.
Again, at almost the same time, the World Bank (IDA) approved $540 million for
the protection of basic services (PBS). Moreover, $845 million has been on the
pipeline ($475 million through the World Bank, $30 million for agriculture, $200
million to improve the education sector, $245 million for the roads sector) and
another $400 million from the IMF, as a part of the G-20 rescue plan. In addition,
$380 million has been provided on a bilateral basis from BADEA, Finland, Italy,
and Japan for different projects. Lately, the African Development Bank also has
released $326.5 million to finance the road link between Addis Ababa and
Mombassa. On 21st July, Kuwait has become the latest addition on the list of
donors, providing $65 million for expansion of electricity in Tigray. The list
continues. Nonetheless, this does not mean that Ethiopia is out of the woods.
What led the country into a tight foreign exchange corner?
The immediate answer would be what this paper already mentioned earlier i.e.,
decline in production, inadequate export capacity leading to foreign exchange
shortage and the recession finally squeezing Ethiopia out of the market. The
question is why does this happen? Where did Ethiopia go wrong?
What Table 1, above, does not show is a full picture of the performance of the
different sectors of the economy. Such is the nature of overall GDP figures. A
better picture emerges only when one is able to see the inter-relations between the
different sectors, meaning, agriculture, industry and services. This enables one to
follow economic activities in general, including the possibility of getting a sense of
where the problem lies. That in mind, Table 2 is inserted here to show the scale of
the industrial and services sectors relative to agriculture.
Table 2
Source: Ministry of Finance and Economic Development (Ethiopia)
The industrial sector
In nearly twenty years of TPLF rule, the shares of industry and services in GDP
have not bitten anything out of agriculture’s dominance. In a period of twelve
years, i.e., from 1997/98 to 2008/09, industry grew by a negligible 0.7 percent, as
shown in table 2, above. In fact, since 2005, there has been a trend decline from
the high of 14.0 percent down to where it is now. Included in the industrial sector
are mining and quarrying, manufacturing, electricity and power and construction.
Manufacturing is more important because of its broad based reach and facilitation
of the transformation of the structure of agriculture itself when its expansion is
supported by deliberate policy measures. The available evidence indicates that, it is
hardly given sufficient policy attention and the necessary technical support.
Overall, industrial plants have been operating for several years, even before the
current power outages for most of the time, at an average of 55.7 percent
capacity, according to MOFAED’s Manufacturing Industries Businesses Survey.
The problems have been known for some time, because these surveys have been
carried out for a number of years now.
More importantly, though the manufacturing sector comprises 910 enterprises in
the country, 94.7 percent of their income in 2007/08 came from servicing the local
market. Their products include such items as fabricated metals, basic iron, steel,
foods, paper and paper products. They figure poorly in export capacity, with 5.3
percent of their income in 2007/08 coming from export revenues of leather and
leather products (MOFAED Macroeconomic development for 2007/08).
The services sector
Over the twelve-year period, the services sector has registered an average growth
of 4.1 percent, as can be captured from Table 2. Its components include
distribution of goods and services, banking and insurance, real estate and
ownership, education, health, private households with employed persons (domestic
labour), and public administration and defence. On average, the performance of
several sub-sectors has shown improvement from time to time, though the jump
not that great. This article would single out the health sector and education
because of their importance, in the light of the great achievements and the number
of problems encountered.
In Ethiopia, both the industrial and services sectors complain about everything.
Chief among these are lack of capital, foreign exchange, lack of raw materials or
quality problems, lack of markets, electricity and water supply, and a number of
other aggregated basic developmental problems, including policy and institutional,
although direct reference to policy for obvious reasons is glossed over. Not that
the past years were easier for the industrial and services sector, especially 2009
has gotten more difficult because of the monetary policy decisions the government
has taken that has made access to capital increasingly difficult.
Whereas agriculture is the source of employment for the bulk of the population in
almost all developing countries, as time passes, the lack of productivity constantly
generates unemployed and underemployed people in the rural areas. The success
of any policy, therefore, among other things, is measured in its strengthening of
the manufacturing sector as source of employment for the surplus labour.
Historically, studies have shown that such success comes through the
manufacturing sector. In learning from the experiences of South Korea and
Taiwan, which used the manufacturing sector as a stepping-stone to
industrialization, Ethiopia could have done itself a great deal of favour.
The needs of the industrial and services sector
Studies show that one of the most critical factors for both industrial development
and the expansion of the services sector is the transformation of agriculture and
increases in productivity growth. In a simple term, it means increases in volume of
crops per hectare. That opens up possibilities for farmers to make savings, use
their resources to initiate locally essential processing. That could grow in time into
manufacturing leading to industrialization and the expansion of markets.
That helps to raise the share of the industrial and services sectors over time in
gross domestic production. What is needed in Ethiopia now is for the government
to change its political game, if it is interested in a better future for Ethiopia. It
needs to get out of its trenches and begin to seek serious collaboration with all
educated Ethiopians, foreign experts and institutions to improve agricultural
productivity. That is the only path for the improvement of agricultural growth,
expansion of industry and the services sector. That is when the country’s success
in eradicating poverty would be marked and celebrated. That leads to fostering a
middle class that further hastens economic growth and meaningful national
development. Moreover, that middle class would contribute to reigning
government and its authoritarianism.
To underscore the importance of this, I would refer to a paper by Prof. Inchul
Kim of South Korea, who has brilliantly outlined the Korean experience along its
relatively shorter distance of a few decades to impressive national development. He
writes that for South Korea one of the important measures was to ensure the
success of its plans by setting up specialist groups, especially in the fields of
economics, sociology, demography and statistics. Some of the individuals in these
groups were recruited from internationally renowned universities and
organizations. They worked on fixed-term appointments and left when they
accomplished the missions they are called for (Korea’s Growth Planning and
Statistical Credibility, School of Economics Sung Kyun Kwan University).
Instead, what has become important for government is first to send TPLF agents
to spy and find out the profile of the individual professional whether she/he is open
to accepting the politics and policies of the government. This has not gotten the
country far, nor would it get it anywhere in twenty years!
Agriculture-led industrialization flops
As shown in Table 2, the bulk of Ethiopia’s growth comes from agriculture. Farm
work in Ethiopia is largely dominated by smallholder producers, currently
estimated at 13.3 million households, according to CSA’s 2008 Abstract. Unless
Ethiopia succeeds in transforming its agricultural production, no matter what GDP
figures show, the country would not easily move out of poverty. In terms of
policy, government shows good understanding of the problem. However, its
inconsistencies and implementation methods are far apart from its objectives.
Admittedly, even with everything in place—policy, institutional, financial, technical
and technological, etc—agricultural transformation and its growth constitute an
incredibly difficult challenge. Why did the Soviet Union, a superpower, fell behind
in agricultural production, despite massive number of tractors, combine
harvesters, fertilizers and soviet communal labour? It used to import wheat from
the US and Argentina, even during the Cold War. In spite of enormous efforts in
these two decades, the government in Ethiopia has failed to see signs of
improvements in agricultural productivity.
Therefore, when one sees the attitude of the government, the impression one gets
is that government is content with the growth of agricultural production from
expansion of farmlands. It is extremely troubling. In fact, in 2007/08, agricultural
land expanded by 1.03 million hectares, compared to the 495,203 hectares in
2006/07. These figures do no include commercial farms. The question is whatever
happened to improvements in agricultural technology? The three tables below are
provided to enable the reader to answer the question by himself/herself, comparing
the data for three fiscal years.
The question of land tenure system has bee discussed extensively. There have
been opinions of experts on both sides of the divide. In the Ethiopian reality, the
peasant framers are more controlled than workers in urban areas or other
members of the society are. The TPLF has had a number of control measures
over the peasantry through control of rural farmers’ organizations, out of which it
intends to evolve an agrarian party, as the prime minister implied in his 2006
writing entitled Africa: Dead Ends and New Beginnings. The sanctions to disloyal
peasants are very stiff; they constantly live under the threat of losing their holdings
or imprisonment, if they did not show their loyalty in every way possible. For the
government, peasants are its secure political base, with over four million peasant
members in the ruling party.
For reasons that have not convinced experts or those who doubt the political
motives of the regime, the TPLF is stuck with keeping land under government
control. We have not seen this helping agricultural productivity growth or
enhancing agricultural production.
Prof. Dessalegn Rahmato, a a respected Ethiopian scholar and expert on land
tenure advocates the middle of the way in terms of addressing this problem. His
view is land should not be privatized at all, which I share, nor should it be owned
by the state. Here is his idea, excerpted from his 13 August 2003 interview with
IRIN,
The fact remains that Ethiopian agricultural practices are not employing adequate
modern technologies, especially of improved seeds, which from 2005-2008 period
have shown decline, even from the negligible at 5.32 percent that it was in
2005/06. Similarly, irrigation use is extremely low, so far not exceeding 1.2
percent. In brief, government claims that agricultural productivity has been realized
is not borne out even by its own data, as shown by Tables 3, 4 and 5.
Table 3
Table 4
Table 5
Source: Central Statistical Agency (Ethiopia) *The writer’s compilation of crops
leaves out vegetables, permanent crops, root crops. The total crop area data
differs from the other tables.
Farm size, family size & rural poverty
Tables 6, 7 and 8 provide useful information on the state and number of
landholders, areas under crop by year and the volume of production. Important
information they provide is about the state of asset ownership in rural Ethiopia.
Table 6
Table 7
Table 8
Source: Extracted form Ethiopian Statistical Abstract 2008 (Tables D.8; D.9; D.10)
In 2007/08, 83.2 percent of farmers (11.03 million) owned from 0.1 to 2.0
hectares. Three-and-a-half million farmers owned between 1.0 and 2.0 hectares.
The number of those owning from 5.0 hectares and above is 16.8 percent, while
only 1.3 percent owned from 5.0 hectares and above. However, one expression of
poverty is the size of land held by a household relative to family size. For instance,
26.5 percent of landholders have six to nine family members and are in the group
of those that own between 1.01 and 2.0 hectares. In the previous year, this group
constituted 27.5 percent of landholders. The most significant increase in family
size is observed in those in the group holding 0.1 to 0.5 hectares (CSA Abstract
2008, Tables D.15 and D.16).
Why am I raising this? We need to retrace the steps of trailblazers like South Korea
to see the importance of what a sense of ownership and security could to the
farmers and the country. Writing about South Korea, Prof Irma Adelman of
Berkley and a major economic adviser to the government of South Korea in its
Second Five Year Plan, says,
“On the plus side, the country was one of the most ethnically homogeneous in the
world. Values were communitarian and egalitarian, and accorded educated
individuals the highest social status The distribution of assets was extremely even,
due to two waves of land reform in which holdings exceeding 3 acres (!) were
redistributed to previous tenant- farmers, and due also to the destruction of other
capital assets caused by the wars. And the distribution of income was very even–
one of the most even in the world. The level of social capital was extremely high”
Bank reserves rising, private lacking access to capital, 2010 budget comes
with big holes
The just approved 2010 national budget shows a great dilemma of the government
because of the choices it has to make. A national budget is one of the best
indicators of a government’s objectives and the directions of change it favours in
the country. The shift in this budget has pushed agriculture, for instance, from
number one position since 2001 to number three. This is partly a reflection of
government’s intention, perhaps frustration as well, in agricultural productivity,
much as it is its desire to deploy resources where maximum and visible impact is
attainable within a short time. Nevertheless, the difference between agriculture and
defence is only 3.3 percentage points.
The total budget has increased by 18.9 percent. Estimated total federal government
revenue is birr, 39.5 billion. Priority areas of the budget have been defined under
nine categories, with higher levels of appropriations allocated, according to
government priorities allowing them to claim resources accordingly, as shown in
Table 9. The level of the approved budget is birr 64.5 billion. Of this, birr 14.5
billion is for recurrent expenditures, i.e., general administration and all support
services relating to economic activities. Birr 29.1 billion is for capital expenditures,
which in a nutshell is capital outlays for special programmes mostly in the priority
sectors. Birr 20.9 billion is for the regional states.
The budget was already approved with birr 10.4 billion hole in it. The government’
s intention is to finance this through domestic borrowing of birr 6.4 billion, project-
financing credits of birr 3.9 billion and through debt relief of birr 118.8 million. Is
the government’s position tenable? We would explore that in a moment. We t need
first to see where the money comes from to finance all the above-mentioned
activities? Table 10 provides the answers for that.
Table 9
Data: Source: MOFAED2002 Budget, Economic And Revenue Analysis volume I (Amharic)
Table 10
Data: Source: MOFAED2002 Budget, Economic And Revenue Analysis volume I (Amharic)
If past budget performances of the government are of any value or relevance to
this, actual shortfalls in the past have often been much higher than the government
admits. In other words, shortfalls are underestimated. As far as this budget is
concerned, it would not be any different from the past, with a few exceptions.
First, due to the weaknesses in the economy it is less likely to collect as much
revenue in taxes. However, since the government has deployed rigorous efforts
this time in tax collection, it is very likely it may be closer to its goals. In terms of
experience, in 2007/08 its domestic revenue target was short by birr 5.0 billion or
14.7 percent. Foreign aid and credit anticipated in the budget in 2007/08 fell short
by birr 5.7 billion or 20.0 percent.
What is interesting here is that the government’s budget utilization rate is estimated
at 88.0 percent. A the same time, the office of the auditor general has continued
complaints about over-expenditure problems, under expenditures of allocated share
of budgets and problems of untraceable resources, which on repeated occasions
the prime minister has snapped and dismissed the reports the work of ‘junior
accountants.’ What would one expect if the head of government shows direct and
indirect and sympathy to violations of financial accountability regulations.
In the current budget, there seem to be a couple of points of serious concern.
First, the level of inflation in the country remains very high. As mentioned above,
inflation is the worst enemy that wantonly destroys assets of the both the poor and
the rich alike. Government has hinted confidence in controlling it. In the name of
fighting inflation, the government has tightened money supply. Not only banks are
restricted by the rising bank reserve level from 15 percent at the beginning of the
year to 25 percent, but also the ‘gentleman’s agreement’ the NBE reached with
individual banks to be restrictive with bank credits. The economy being mostly in
government hands with its several public enterprises, it is clear that they would
always be the first to get access to capital. However, this tightening of access to
small businesses would force many into closing shops. Such measures have also
opened up possibilities for corruption and nepotism. Those with good political
connections are getting a backdoor access to capital.
On the other hand, the rising level of bank reserves means, there is ample money
sitting in the banks idle, which this government resents. If it were not for IMF
surveillance, chances are that the lapse could have been greater toward
overspending. It is still a great danger. The view of the Ethiopian government on
this matter, according to the IMF is, “They [authorities] see excess reserves of
commercial banks as “savings” which can, and should, be mobilized in support of
public infrastructure development.” This view is also consistent with Ato Meles’s
personal conviction, as indicated in, ‘African Development: Dead Woods and New
Beginnings’, wherein he makes similar claim. That has only led the country into
one of the highest inflation levels in recent experience, excluding Zimbabwe.
The invisible infrastructures, education & the health sectors in the
scheme of things
At some point in the beginning, this paper promised that there would be some
thoughts on the education and the health sectors. If there should be any significant
regret for Ethiopia, it is the fact that how many first-rate medical professionals and
engineers the country has lost over the last few decades. Therefore, like a newly
emerging country, today the health sector is being restarted from the scratch, with
hundreds of locally trained physicians, medical officers and technicians now
beginning to fill the gaps.
While not something to be content with, given the enormous needs, the number of
hospitals in the country has increased from 138 in 2005/06 to 149 in 2007/08,
according to the Ministry of Health. The paucity is already clear there that one
hospital is servicing an estimated 5.6 million people. At the same time, the number
of health centres with beds has grown from 1,206 to 1,517. For reasons not clear,
at least, to me the number of beds during this time has dropped by 9.4 percent.
The data from both CSA and MOH indicate that the state of health of the nation is
moving in a slow but hopeful direction. For instance, in 2007/8 fiscal year 8.6
million children were given vaccinations for tuberculosis, measles, polio and D.P.T
doses—diphtheria, pertussis and tetanus. During the number of children born in
medical facilities reached close to six hundred thousand, whereas the number of
maternal and babies death is terribly, terribly under reported.
From family planning services, 13 million women have received birth control
treatment, while about thirty thousand men have opted sterilization, the number of
men who used condom during the period is less than a million, as could be seen
from data on condom distribution.
The efforts undertaken in capacity building in the health sector are shown in Table
11, below. The point here is not the importance of how many medical personnel
are trained, but whether the country is capable of retaining them. If the
government could provide them with retaining opportunities, ensure their sense of
security, job satisfaction and professional independence, current efforts may give
chance to a good start in the health sector. It should be emphasized that, however,
there is great need to ensuring overall conditions; remunerations and that they get
professional satisfaction to stay and serve the people. This includes improvements
in the rule of law that at this very moment is closer to non-existence.
Table 11
Source: Ministry of Health
*Includes all types of nurses **Addis Ababa data not included
In terms of diseases, malaria is the number one killer in Ethiopia. The Ministry of
Health acknowledges an estimated 68% of the population are at risk of contracting
malaria. The number of bed nets distributed during 2007/08 is 9.2 million, and the
affected localities are 6,446. Transmission of the disease is seasonal and
predominantly unstable, with frequent and often large-scale epidemics. At 56.7
percent rate, it has become the leading cause of hospital and health centre
morbidity during this period. Acute upper respiratory infection (4.8%), other
infectious and parasitic diseases (2.7%), all other respiratory diseases (2.1%), etc
follow far behind malaria. The prevalence of such diseases in the country has
attracted generous aid from all sources, which now is challenging the country’s
absorptive capacity.
As can be seen from Table 9, on priorities scale in the 2010 national budget, health
is down at number five. It is understood that the reason for this is the health sector
is the top most heavily financed sector in Ethiopia with overseas aid. The Ministry
of Health may not be ready to admit it, but with increased aid has come the
problem of accountability. There are allegations that there is no way of knowing
who is doing what, where, when, why and with whom (the famous five Ws).
Indeed serious efforts must be exerted to ensure that such capacity develops,
before funding sources dry or migrate somewhere where they think there is better
absorptive capacity and performance. International funding sources in the health
field have already adopted the partnerships funding modality known as the Global
Health Partnerships (GHPs).
Included in this group are the Global Alliance for Vaccines and Immunizations
(GAVI), the Global Fund to Fight AIDS, Malaria and Tuberculosis (GFATM) and
the Global Alliance for Improved Nutrition (GAIN), etc. They are multiplying at a
pace faster than the reproduction of rabbits. This is the result of a trend that many
wealthy donors are showing willingness to share their wealth, such the Melinda
and Bill Gates Foundation (MBGF) and many others. This has caught the attention
of the pharmaceutical industry and money-makers have jumped in the play in the
form of voluntary organizations. That is one reason why the country needs to
develop capacity to monitor where aid money is going and what it is doing.
Ethiopia has already become one of the largest recipients of aid in the health
sector, which accounts for its success for instance in child immunization, HIV
campaigns and fighting malaria.
Getnet Alemu, an Ethiopian development specialist has serious concerns however.
In a similar tone, he warns of the danger of aid ineffectiveness and lack of
absorption capacity, and accountability problems in Ethiopia, mainly because of
lack of harmonization and coordination with the multitude of such organizations.
His research attests that dealing with the GHPs that WHO estimates to be between
75 and 100 globally, has not been very easy for developing countries. So far,
Ethiopia has remained grateful, taking as much aid as possible, without the trouble
of asking or answering the questions raised by the five Ws, mentioned above.
Getnet says GHPs “establish their own management and reporting structures and
create parallel systems”, as has already been seen focusing mainly on HIV/aids,
malaria and TB (A Case Study on Aid Effectiveness in Ethiopia: Analysis of the
Health Sector Aid Architecture April 2009, Brooking Institute).
Education and its institutions
Schools are expanding. Primary education (grade 1-8) enrolment has grown from
8.6 million in 2002/03 to 14.7 million in 2008. Number of students in senior
secondary schools has grown to 1.6 million in 2008, from 626,714 in 2002/03.
The total number of teachers in both government and private schools in 2001/02
was 140,973, while the total number of students was 16.2 million. In 2007/08, the
number of teachers has jumped to 291,676.
The problem comes here. In public schools, the average number of students per
teacher in classroom is 59.8 in 2000/01 and has only dropped to 58.1 in eight
years, that is, 2007/08. In private schools, in 2000/01 the ratio was one teacher for
42 students, while since 2007/08 this has been reduced to 29.0. The high student
teacher ratio and classroom sizes are among the main issues that are affecting the
quality of education in the country. Excessive focus on expansion of buildings may
cost the country too much in the long run, if those that were sent to school do not
acquire the necessary skills.
Table 12 gives a good comparison of the situation in the school system and the
higher institutions, both public and private, by gender and across four fiscal years.
Table 12
Source: CSA 2008 Abstract *Does not include extension and postgraduate students
Since 2006/07, the country has been boasting of 55 universities and colleges. In
other words, if we exclude the colleges and universities that existed before the
TPLF, the rate of progress in building such higher institutions is 2.7 percent
universities and colleges on a yearly basis. The worry is whether government is
giving adequate attention to the quality of education at all, or is in some kind of
competition where what matters is the number of buildings. As it stands, most of
the schools and colleges have neither equipment nor the books or teachers.
Mere focus on numbers may only prove wasteful in the end. Relations between
government and teachers have not been healthy either, because of the continued
political tensions. University campuses have become battlefields for inter-ethnic
conflicts. Therefore, in the education sector the government needs to re-examine
its policies in a comprehensive manner, as schools are always the first point of
politicization, where students begin to respond to the already existing polarization
society-wide.
Is Ethiopia getting adequate foreign aid?
There is no way of measuring this, especially since aid is considered free money
and the needs of a developing country such as Ethiopia are enormous. However, in
comparison to the past, the international community has been considerate for the
poor in Ethiopia through the years for three important reasons. Firstly, the West is
pleased with the TPLF for overthrowing the military junta, a regime they have
wished to neither provide aid nor leave it alone. Secondly, they recognize the
political and strategic importance of Ethiopia with a strong state tradition in Africa
and its potentials for the future, given the size of its population and with
appropriate policy and institutional reforms.
Thirdly, the coincidence of the emergence of China on one hand and the spread of
Islamic fundamentalism has compelled the West to give Ethiopia higher
importance, as does China. In addition, China sees Ethiopia as its gateway to
Africa. Initially the policy of the West in Africa had aimed at maximizing its
economic interests by containing Chinese expansion in the region. Now, China’s
advances in Africa have turned the policy of the West into competition with China,
which has immensely benefited Ethiopia. China is providing money and expertise
without debilitating conditions. Therefore, Meles has taken advantage of both
worlds.
Politically, he has systematically used China as a bargaining position with the West.
From time to time, he has taken a tougher stance, which has irked many of them.
Having secured the trust of the Chinese, especially in respect of African politics,
he has made sure that they would take care of funding his pet projects,
infrastructural development. Even before the ink from the last agreement between
Ethiopia and China has dried from last May, the two countries signed a new
agreement on 15 July worth 1.9 billion euros, according to Reuter, to build two
hydroelectric dams with a capacity of more than 2,000 megawatts.
In a way, choice has also given the prime minister the capability to be assertive
politically. One could see from this, the West’s continues demarche about human
rights violations and derailment of democracy in Ethiopia, while the Ethiopian
government showing no movement beyond strongly worded denials and nothing
ever happening on the ground. At times, Meles is expelling from the country at a
moment’s notice and a flash of emotions Western experts, without fear of
reprisals. The West does not even strongly respond about the imprisonment of
their citizens in Ethiopia or those expelled. Thus, under Chinese pressure, it also
keeps on pumping resources, despite the fact that the country has shown its
independence and strong programme ownership, which is barely popular deep in
the heart of any donor. Lately, many have begun to take it with a perspective of
history that Ethiopia has never had a colonial past. This thing has its pluses and its
negative sides unless such actions at the top are translated into institutional
behaviour, which requires ensuring the independence of the civil service that today
is a mere party tool, instead of promoter of the national interests.
To respond to the question as to Ethiopia’s share in the OECD aid universe.
Ethiopia was at the top of the list of OECD supported countries in Africa in 2008.
It received country programmable aid (CAP) amounting $2.502 billion, followed
by Tanzania’s $2.191 billion. This amount does not include aid from non-OECD
countries such China, India and Middle Eastern countries and international
organizations. For 2009, Ethiopia has been overtaken by Tanzania, which receives
$2.238 billion in OECD aid, while Ethiopia’s would go down by 12.5 percent to
$2.188 billion.
In principle, in 2010 and 2011 the OECD estimated figure would go down overall.
However, the amount of receivable aid puts Ethiopia back at the top of the list
again. At the same time, Ethiopia is also the fourth largest receiver of budget
support out of the total twelve countries in the world (Benin, Burkina Faso,
Ethiopia, Ghana, Madagascar, Mozambique, Senegal, Tanzania, Uganda, Viet Nam
and Zambia (Source: 2009 DAC Report on Aid Predictability: Survey on Donors’
Forward Spending Plans 2009 – 2011).
Note in this connection, as a basis for its grant of aid, the OECD aid criteria
classify recipient countries into the categories of either fragile or conflict-affected
state, or both. Ethiopia belongs to both categories along with other 13 fragile and
conflict-affected countries. Such classification entitles the affected countries to an
additional $2.0 billion to be shared among them to help them with crises they
cannot handle on their domestic resources.
In general, as far as Ethiopia is concerned, aid level should not be used as an
excuse for anything, although no aid amount can be sufficient given the low level
of the country’s development. The more a country becomes dependent on aid, the
higher is its addiction blurring the distinction between the enormities of the
country’s needs on one hand, and the limits of donors’ generosities on the other,
without even thinking what could be mobilized from domestic sources as a starting
point. It is in the country’s interest to work to weaning itself from aid dependence.
Where are we in the recession?
The simple answer is recovery is still far off. In the US, the billions of stimulus
funds, although not much of it yet spent, have not delivered the much-anticipated
outcome, i.e., faster recovery. Credit has started moving, but commercial
investment is in a halt. Federal Reserve chairman Ben Bernanke is concerned with
a newer problem. His fear is that the state of commercial property may recreate
what the housing bubble has done to the financial sector and the main economy.
He told the US Senate on 22 July, “As the recession’s gotten worse in the last six
months or so, we’re seeing increased vacancy, declining rents, falling prices --
and so, more pressure on commercial real estate,” The previous day he had said,
“We are somewhat concerned about that sector and are paying very close attention
to it. We’re taking the steps that we can through the banking system and through
the securitization markets to try to address it.” This does not seem to promise the
end of the recession is anywhere on the horizon, even during the first two quarters
of 2010.
At the same time, oil and dollar are increasing uncertainties, the dollar increasingly
slipping and the price of oil rising. By the third week of July, oil prices have
breached the $70 per barrier threshold, compared to $31 in December. The
expectation is that it may still rise further before it declines again. In the meantime,
countries such as Ethiopia would have to absorb the additional costs, although they
continue to be beleaguered by the foreign exchange crunch. As mentioned earlier,
this reality would put to doubt the expectation of inflation moving to single digit in
Ethiopia.
In May, there was a lot of talk about green shoots in the United States, which
caught up like wildfire because of expectations. Stocks inched up; however, the
volatility in the stock markets and commodities remain, although we witness
current steady rise in stocks since the second week of July. The more the dollar
gets weaker, the more speculators shift between stocks and commodities, until the
equities market firms up. This would worsen the uncertainties of commodity
exporters ins Ethiopia and other developing countries.
So far, therefore, the anticipated recovery sings not holding up economies are still
struggling. With regard to oil prices, in either situation Ethiopia is still at a
disadvantage. When fuel prices goes down, there would be saving. At the same
time, the country cannot get higher export revenues, as it is a sign of markets
contracting. When prices go up, the country looses money and things become
more expensive. The country earns more revenues, but inflation, both domestic
and imported, pose serious challenges.
If it is any comfort, however, it should be mentioned that a respected Canadian
academician has come with a new foresight. In an interesting conversation
between Prof. Philip Verleger and Bloomberg’s Tom Keene ‘On the Economy’
segment, the professor believes that the price of oil would fall to $20 by the end of
this year. His arguments are based on two key points. The main one is economic
activity has decelerated and demand is low. The other point is the fact that Europe
and the US have had enormously high strategic reserves. As a result, the futures
market would not take too much risk. His view quoted by another reporter for the
same media is, “Prices would be much lower today, but for the very large
incentive to build inventories. You need forward buyers, which we had when
people were fearing inflation, but as concerns turn toward deflation.”
Depressed foreign markets
Europe is Ethiopia’s largest export destination. However, in spite of talk about
‘green shoots’ in the United States, on the commodity markets front, there are
new evidences in Europe beclouding that optimism. The European Commission
issued a new data in May, which indicates that the European economy (16 euro
countries) is expected to head into deep recession already this year with 4.4
percent contraction. Ethiopia’s major export countries, such as Germany is
suffering 5.4 percent contraction and public debt rising. The Italian economy is
expected to contract by 4.4 percent, Netherlands 3.5 percent, etc. In 2010,
growth in Europe is not likely to exceed 0.1 percent, according to the Commission.
Unemployment in Europe is expected to reach 11.0 percent, an indication that
income and purchasing power (aggregate demand) would remain depressed,
contracting further the markets for Ethiopian exports. The economic situation in
the UK is not any different; already 4.9 percent contraction of GDP is reported on
annualized basis. The Swiss economy is in the same boat with 2.9 percent
contraction forecasted. In Japan, GDP has shrunk at an annual 15.2 percent rate,
they say, it is steepest drop since 1955. In the US, unemployment at 9.4 percent in
June is at a twenty-six year high, though some declines were observed in
government data for the month of June.
Summing up
In the person of Prime Minister Meles Zenawi, the government of Ethiopia pledged
in September 2007 at the launching of the country’s second millennium to
transform Ethiopia in twenty years into a middle-income country. Heart warming
as that is, there is the inevitable reality of dissonance between politics and
economics on one side and the weaknesses of the economy’s structures on the
other, the correction of which, as discussed earlier, does not seem to have been
given adequate attention this long. These would make it difficult to achieve that
objective.
NOTE TO THE PRIME MINISTER ON HOUSEKEEPING
MATTERS
Prime Minister Meles, you may wish to take a few more measures for legacy’s
sake, before you leave, if you leave. The change I have in mind is perhaps easier
for a powerful person such as your good self, as an outgoing prime minister. That
is to initiate, before you leave, if you leave, or support any efforts to limit the
terms office of your successor prime minister to a maximum of two terms. I
understand you may be advised that it is too late in the day for you to do that.
They may tell you it is discourteous of you at the last minute to do that to your
successor. You must recall in 1995 that you insisted on limiting the terms of office
of the president that you knew you would vacate. At the same time, you refused to
accept term limits for the chief executive of the government that became your
destination.
By the way, if you do what I am kindly asking you now, you would spare the
country of entrenchment by your successor in power for much longer than is
necessary, as you did. Lately, there is even the danger of a new disease called
constitutional revision, prevalent now in some African and Latin American
countries. Your friend President Musevini has done it to Ugandans. The idea is to
enable greedy men of power to stay in office indefinitely. Early on Jean-Bedel
Bokassa did it. It was not enough for him. At last, he crowned himself an emperor
and died in power. There was not anything imperial about him or his death.
Nonetheless, he died a common man’s death, that we all share. His must have
been surreal to Central Africans, the man the world held in contempt for his vanity
and terribly flawed personality.
I see! Might I be wrong in asking you this favour? How do I know that you
yourself would not have revised the provisions of the constitution? Fortunately,
you would not be accused of that, because we never had one. Anyways, I still
urge you to put a safety valve into what you may propose before you leave, if you
leave, and in case you are willing to do it and succeed doing it. Please make it
nearly impossible to change its provisions of the revised constitution. The rest may
be tidied up after your departure.
Finally, I must say, after all, it has never been right you have been in power for
eighteen years; certainly, without our consent. It is not right at all that the nation
should be a passive observer in matters of such gravity, leaving the whole thing to
the benevolence of a single individual, the chief executive, until he expires or is
physically exhausted, as you are claiming now. It is not right! It is not fair, at all!
AS HE HAS PROMISED, OR WOULD HE BECOME
THE GREY EMINENCE OF ETHIOPIAN POLITICS?
By Genet Mersha | July 24, 2009
“Africa doesn't need strongmen, it needs strong institutions”
--President Barack Obama
Part IV
This fourth and final instalment under this title has two things in mind. In that
sense, this article could be considered a two-part piece. First, is the conclusion
whether Prime Minister Meles Zenawi would quit, as he has promised, and the
likely direction he would tilt. The overall idea of the second part is to show in what
shape he leaves the country, especially the economy. He has endeavoured to make
it the main source of his legitimacy that public opinion has denied him.
- In the previous three parts of the article, we
examined several interpretations that emerged
from the varied explanations the prime minister
gave from time to time about his presumed
departure. It aroused doubts about the sincerity
of his intentions. This writer is in no doubt Ato
Meles has played his declaration with refined
skills especially in the last one year in his
desperate search for public recognition of how
important and indispensable he is. Why would
he do that, if he were leaving? Is it an appeal to
history, which often finds it difficult to change
what has automatically entered into its records,
especially the state of life in a nation the and
texture of a regime?
The way I look at that is the whole purpose of Ato Meles’s engagement with the
nation on this matter, I should say with the foreign press, has been to win public
acceptance of him and his leadership the foreign media providing testimonials. If
the story appeared first or mostly only in the national media, which are under his
control, it would have lost its credibility. In that case, the media would be seen as
doing their job they are ordered to do. I must say, whatever his true intentions, he
has now made me believe that it is time for him to go. I am not saying this is what
Ato Meles wants, or intends to do.
On the other hand, many things are within the realm of the possible. In the event
that, the prime minister holds onto his vow to leave office, I urge him to
disconnect himself totally from his partisan politics. I would like him to act and
behave as an ex-Ethiopian leader, willing and ready to provide counsel, only upon
request. In that situation, I would be more than delighted to accept the errors of
my judgment about his motive and would accord him the respect he deserves. In
so doing, he would actually give a much better look to his credentials as a leader,
where so far their dominant feature has been his coldness, a person who is
incapable of feeling the pains of others and skilful in maximizing his advantages.
Therefore, if he gets across this time, he may find a place in history for setting a
unique precedent in our country in parting voluntarily. It may be small in the
scheme of things, but important, though in need of a great deal of tidying up.
I should mention at this point, it is extremely disappointing that the discussion in
the last few months about the prime minister leaving office had degenerated into a
position of for and against one person, instead of the country’s conditions, its
interests and its future. It is my fear that, because of this partisan warfare, people
on both sides of the debate risked missing the bigger picture, especially its
constantly swelling problems and its future direction. In my opinion, that is a
waste of good energy. In addition, inadvertent though, it has been harmful to the
realization of the dreams of our people, a reflection of the depth of our poisoned
political well from which we all drink.
It is immaterial whether Ato Meles continues as prime minister or becomes the
Grey Eminence of Ethiopian politics or leaves it altogether. Many of our pains may
not heal; many things cannot be undone. For far too long, our eyes have seen and
our minds have been alive especially to human cruelties, the destruction of
innocent lives and the disadvantages into which our country has been put.
Therefore, the issue at hand must be to see how we can all pull together. I would
stress, for instance, the immediacy of continued attention and resources to fighting
poverty that has been making a steady rise, even at this very moment.
I would put equal emphasis on the twin problems of ethnicization of the country
and the need to rein government at all times, including governance by a faction of
people bound by some less honourable bond. Not only it excludes others, but it
also denies the country of superb human capacities that could serve its interests
best with all sincerity. That is why we need at all times to make government,
whatever its ethnic, regional or political stripes, to the people. Only then would it
become accountable for its actions and inactions.
My intention in this article is to sketch the current state of the nation, with especial
attention on the key consequential actions and policies of Ato Meles’s government,
both positive and negative. The greater part of the article focuses on the economy,
present achievements, problems and future prospects. The message it brings out is
the Ethiopian economy, which is based on subsistence agriculture and is aiming at
agriculture-led industrialization is in very serious difficulties. The country remains
as vulnerable as ever to drought and famine. In its present pace of land expansion,
the continued dependence our survival on such production is a risky proposition.
The 2010 election drawing closer, even the 2009/10 national budget has put
agriculture in the third place in terms of priority claims on resources. Not much
cause for hurting, but road construction is given its place. On top of that, foreign
land-renters seem to hold spell on the government. Who knows, it may settle for
that, instead of helping continually poor peasant farmers to move beyond
subsistence and develop their capacities to produce their own food. It would have
been a great force for economic expansion. Too late, to envision that now under
the TPLF; partisan political interests have hijacked government’s political, financial
and moral stamina. In this connection, I must say, whatever the true intentions of
the prime minister, he has now made me believe that it is time for him to go. I am
not saying this is what he wants, or intends to do.
The main culprit denying the country agricultural transformation during the past
two decades is lack of productivity growth. As result, agriculture to date has been
the black hole to our scarce resources and investments, which TPLF says has put
in the course of eighteen years. As a result, the economic achievements of the
regime to date are grossly misrepresented. The successes in higher agricultural
production are a function of favourable weather and expansion of farmlands,
which would be discussed in detail later. In reality, however, economic expansion
has been minimal, if at all it has not stalled.
In that sense, the country is at a serious juncture in every sense, political and
economic specially. To demonstrate the seriousness of the problems surrounding
agricultural productivity, and the failure of Ato Meles’s regime, this article has
included various data, tables and explanations. Indeed that is the main reason why
this article has become so lengthy. I apologize for that.
Ato Meles trips on the economy
Undoubtedly, there has been momentum for economic growth during Prime
Minister Meles Zenawi’s stewardship of the nation. The favourable global
economic environment of the past decade-and-a-half has immensely contributed to
the great achievements in many developing countries, for many of them since the
mind-1990s. Although a latecomer to economic growth and national development,
Ethiopia also has had a bite of it. However, its belated efforts have short-circuited,
because of misguided economic policies and the political environment, which
could hindered essential reforms to address the structural weaknesses of the
economy as a whole, especially agriculture. At the onset of the world financial and
economic turmoil, the Ethiopian economy has already been running out of steam.
Nonetheless, in spite of that the country has witnessed appreciable strides in
infrastructural development into which massive investments have been thrown
(whatever domestic resources available, limited overseas aid and foreign loans).
Reaping their fruits has yet to take place. There is no doubt that they hold great
promises for the future in increasing chances of the country’s speedy
development, if only the political and security situations permit.
These infrastructural development projects—roads, the many dams under
construction, schools, colleges and universities, water and sanitation programmes,
the promising prospects in health services, etc—are contributing to broadening the
base of economic growth. Markets get closer to the people because road networks
are expanding. The presence of electricity all over will provide both light and
energy; it also improves possibilities for schools and, thus, betterment of education
and innovations. Healthy children grow up to be healthy and productive adults.
That is the womb of reliable human capital whose experience could be tapped for
much longer time and much higher goals, if only the powers make it possible
politically. Thanks to China’s enormously deep reserves and strategic interests in
Africa, the likelihood of such grants and loans does not seem to be in any
immediate risk to complete the many projects underway, despite the not too
promising global financial and economic environment.
Policy side of the economic problems
Much as GDP growths speak a positive language, the dark side of that is the
regime’s economic policies have undercut its depth and reach. In so doing, it has
posed serious problems at different times and with different consequences. Some
of them have had long-term consequences and, we still live through them. The
transformation of the country into a landlocked nation is another economic and
developmental setback for the economy.
The sum of these and suppressed human aspirations have set numerous obstacles
for sustained economic growth. First, the economic policies seem to be guided by
impulse and the extremes of unrealistic ambitions that have caused serious
macroeconomic problems. Induced by political goals and motives, the former less
thought out and the latter out of opportunistic interests, the now and this moment
often get precedence. This has affected economic goals, the actions of which out
to be guided by serious deliberations, bearing in mind outlines of the five-year plan
in place (Plan for Accelerated and Sustained Development to End Poverty 2005/06-
2009/10, PASDEP). Such an approach would have enabled the possibility of
weighing carefully immediate needs against future risks to the country.
Second, there is lack of transparency and the tendency on grabbing power. Siege
mentality has prevailed in government circles. Government operational capacity is
devoted to the defence of power in the hands of the regime and its existence,
instead of the nation’s. As a result, secrecy is the guiding principle of the regime,
because of which institutions have remained weak and their work uncoordinated.
This has compelled government official always to seek scapegoats, for most often
they are beset by problems and difficulties, they are not free or capable of
addressing them in that setting.
The double-digit inflation that has been ravaging the country for three years in a
row now cannot be considered an example of carefully thought out policy
measures. Indeed, it is a very serious problem, against which government on
several occasions acted out of desperation and not well-founded ambition. Before
all these came to pass, international advices were given, experiences have been
shared, but to no avail. Government mostly attributes all its problems now to high
prices of imports of especially oil, oil related products and foods. Of course, the
recession has now become a good excuse. Such cover-ups and constant denials
only detract the country’s ability to address the root causes of its problems.
Thus, inflation has terribly flogged our economy in more ways than one. During
the last few years, the economy has lost steam, as its internal capacities weakened
day bay day. The decline has hit hard public enterprises and small-scale
mushrooming businesses. The purchasing powers of families have been destroyed.
Individuals in their millions are constantly falling into the cracks of poverty both in
urban and rural areas. This situation has imposed on the National Bank of Ethiopia
(NBE) a series of forced devaluations of the birr for a few years now. Because of
this, the birr has already lost its exchange rate value by 25.7 percent from its
weighted average of 9.244 per dollar only in 2007/08. On 13 July 2009, it was
devalued to birr 12.4478 per dollar. While these measures indicate the enormous
difficulties in which the economy has been, the horrible side of devaluation is
usually its end is never in sight, especially when the balance of payments is in
severe crisis and inflation is as enormously high as it is at present.
During this season of relatively better weather and promising agricultural
production, the countrywide food inflation rate stands at 44.2 percent by the end
of June 2009 and non-food inflation is 23.7 percent, according to the Central
Statistical Agency (CSA). For instance, in spite of the confident assertions of the
prime minister at an April 15 press conference, saying inflation would go down to
single digit within two or three months, the present high of 36.4 percent is still too
high to plummet down. It is also less likely to do so even three more months from
now, given the fast pace of oil prices that are now hovering on past the $70
threshold per barrel. IMF is also in no better position in terms of its forecast. At
the beginning of the year, it had claimed, “The latest data are consistent with staff’
s projection that 12-month inflation will fall to below 20 percent by mid-2009”
(January 2009, Country Report 09/34). During this recession, economics has been
the most humiliated science. None of its forecasts held anywhere. For now, its
lack vigilance in spotting problems ahead of time has made disappoint of both the
rich and the poor a common denominator.
The data used here in this article are sourced from the CSA, NBE and the Ministry
of Finance and Economic Development (MOFAED), the Ministry of Health (MOH)
and international organizations. In so doing, I have taken full account of IMF’s
recommendations to the government, “Data shortcomings continue to affect
analysis of economic developments. The shortcomings were most prominent in
national accounts (where statistical discrepancy was 10 percent of GDP in
2005/06), balance of payments (where errors and omissions were equivalent to 32
percent of exports in 2005/06), and fiscal accounts (where unidentified financing
reached 1.6 percent of GDP in 2005/06)… In this regard, addressing the high
turnover of relevant staff, defining priorities, and improving inter-agency
coordination are key elements for ensuring the sustainability of statistical reform”
(July 2007 Country Report 247). While I fully share the Fund’s concerns,
nonetheless, I have compared with relevant experiences in other countries to make
balanced and better judgement in this article.
Political side of the problems
We live at a time and environment when the economy has weakened and politics
hardened. The government is winding down its five-year long preparation for the
2010 election. Ethiopia is at the crossroads now. There is a lot of anger below the
surface in Ethiopian society. Because of this and intent on consolidating his
powers, Ato Meles knows it, he has taken too many risks. He has gambled on
popular fears and patience and his own credibility. Consequently, there has been a
prevalent sense of injustice, brutality and cruelty by those in power, be it at the
centre or the regional level and in the lower structures. Both in connection with
this and Ato Meles’s presumed intentions of departure, such concerns surface
easily in discussions amongst Ethiopians and foreign friends and colleagues. Where
is Ethiopia headed?
- In essence, this means,
fear and insecurity are
more real now than in the
few months following the
tragedy of 2005. Civil
liberties and democratic
rights of citizens are
getting further limited by
the day. Therefore, the
defence of this very
system Ato Meles has put
in place has increased
repression, nepotism,
corruption and worsened
urban and rural poverty.
solidarity, arising from the dominance of ethnicity over Ethiopianness, even turmoil
in the churches and mosques.
For instance, in a country known as an island of religious tolerance, the many
repeated occurrences of religious conflicts, including the one in mid-July in
Dessie, 250 km from the capital, where religious conflict claimed three lives and
injured six others, strengthens those concerns. Bear in mind, this occurred in
Dessie, Wollo, where the extent of religious tolerance is such that it is a region
known for its very high rate of inter-faith marriages. It is even common that a
single individual holds first name Christian and second name Moslem or vice versa.
In a small healthy place, steeped in history and culture, incidents such as that
reflect our country’s vulnerabilities. In the meantime, the tendency still is to
promote institutionalized domination of a single minority group over the other
ethnic and language groups in the country. The government denies it has any such
agenda. However, the reality of the power structures and EFFORT’s control of
the economy is staring at all citizens with its worst manifestations.
Clearly, Ato Meles has understood what he and his party are facing. It is not that
the opposition is strong and ready to snatch the meat out of the lion’s teeth, but
use of force and power in general has it limits. Society may wish to shake of its
burden because of the number of factors triggering its actions. In early May, the
prime minister summoned courage and implicitly spoke of his concerns to Africa
Confidential about the worrisome link between the country’s economic
performance and the possibilities of a peaceful election. That open concern or
admission of serious challenge is the first of its kind I know from this regime.
When I read what is happening within the opposition party UDJ lately, I fear that
the opposition, both at home and abroad, is in serious trouble, more to itself this
time than to its opponent—the government. More time is spent on condemnation
of government and mutual recriminations. For instance, have they ever asked what
would be the role in the event the prime minister relinquishes and TPLF anoints
whomever it chooses? Would they cooperate with the successor(s)? Or they reject
any such decision outright? After all, would Meles’s successor be any different?
Would the opposition be content in continuing the politics of condemnation in its
current shape and form, while waiting what Mr. Obama can do to firm up the
roots of democracy in Ethiopia? There is need to face reality and rethink a
different approach.
Would Ato Meles’s successor be any more willing or freer to develop a meaningful
agenda to create a better environment for genuine multiparty opposition groups to
engage in political work and competition within legally defined parameters but that,
as now, does not deny citizens their rights and freedoms to participate in a political
activity of their choice? Would he allow citizens to decide whomever they wish to
appoint as their prime minister, with all the powers, as defined by the constitution
in force? It is time, to think harder, in a sober way to regain credibility, attract, and
unite domestic and foreign supporters and force power to respond by allowing
public space and empowering the people to assert their rights.
By its very nature, backbench politics is specialized in critiquing or judging the
actions of government, especially when both sides are genuine representatives of
the people. The likelihood is greater there where the honest clashes of ideas gives
birth to better ideas and enable its victory. The forums also become the best
preparatory schools for leadership, although individuals cannot escape the
corrupting influences of hunger for power and falling into the trap of becoming
faultfinders, usually propping up their positions with the facts they manufacture.
On the contrary, especially in countries such as ours, where citizens/the opposition
are not free to evolve their positions, nor speak their minds and consciences, the
result is that opposition politics becomes a pool of negative emotions and
government power an instrument of repression. In those circumstances, society is
cursed needlessly to remain in the trenches and the strongmen in palaces, if not for
half a century, at least, a quarter century. There are better choices when there is
some honesty, tolerance and goodwill. Our country can do better, if we all put our
hearts and minds into this matter.
On the part of the government, time is long past to recognize and learn not to
repeat the mistakes of the Emperor since the late 1950s and the Deruge throughout
its life. Military means cannot solve all political problems. EPLF and TPLF were
not crushed. TPLF still has not eliminated the OLF or the ONLF, despite massive
and on-going military operations. As I mentioned in an earlier paper, if any thing it
had done, it has deprived the leadership any goodwill and the country its scarce
resources on armaments. So far, military means may have enabled the country to
contain the worst. It is hard to imagine it can bring it lasting peace for the future.
Too many limited efforts and resources have been deployed to explore and exploit
the country’s natural resources, especially oil and natural gas and build
hydroelectric dams. Even more are the reasons why Ethiopia needs to find without
any delay peaceful solutions to its political and security problems. Only then can it
use rationally and peacefully the benefits accruing from these projects. Even
without such complicated problems, for developing countries oil, natural gas and
precious minerals are the mother of all curses. We need not wait for that day of
curse.
Therefore, it is in the best interests of our country to engage in search of peaceful
solutions for all outstanding political problems, including with armed groups so
long as they are willing to disarm and accept Ethiopia’s unity and territorial
integrity. The rest should be subject to political discussions and accommodations.
The government is insisting that everyone that wants to engage in peaceful
struggle first accept the constitution. As anyone can see it from experience, it has
become harder even for local opposition groups throughout these years to operate
freely, because the government does not respect its own constitution.
Consequently, the fact that not all efforts have succeeded on the peace front does
not necessarily indicate the burden is only on the side of those that are still
fighting. Government’s lack of seriousness on this matter has led to a firm
conclusion that the multiplicity of its conditions and disruptive activities are a
reflection of its desire to entrench itself in power permanently.
Ethiopian society fenced with repressive laws
Might I confess at this point that, it has always struck me as out of the ordinary
that the prime minister should devote ‘his’ current five-year term to be fully
engaged in the adoption of repressive laws and regulations. On the face of it, it is
part of his preparations for the 2010 election, although it could still be instrumental
toward any long-term agenda of ethnic domination. This in view, it seems to me,
that Ato Meles’s past decisions relating to the country’s territorial integrity, the
tragic aftermath of the 2005 election and present decisions regarding the tightening
of repression and the downturn in the economy have already conspired to make
the decision for the prime minister.
This may make it necessary and easier for him to be ‘persuaded’ to stay in
power. That seems the reason why the proposal to quit has come in the first place.
It would enable him to justify his continued stay in power, which by the end of
2014/15 would lengthen his tenure to a quarter century. The sole purposes of the
recent barrage of legislations that came out from the TPLF/EPRDF parliament
speak for themselves. They aim at silencing dissent and restricting individual and
organizational political initiatives. Why should a departing prime minister bother to
take trouble and more blemishes to himself by choosing to leave behind an unkind
legacy for history?
The anti-terrorism law
Opposition members of parliament who voted against it say, “The law itself
terrorizes citizens.” Deputy Secretary of State Jacob Lew has expressed the
displeasure of the United States government, when he recently visited Addis
Ababa. Human Rights Watch is of the view, “The law could turn political speech
and peaceful protest into terrorist acts.” In brief, this legislation gives the regime
the right to detain and torture citizens at will. That is not to say such practices are
not common occurrences already in Ethiopia. This time, however, the law has
made the task of government in spreading fear much easier.
Abuse and misuse of the media & unhelpful efforts at mind control
A legislation that has empowered the TPLF regime over society is the frightening
press law. Its unique quality is it has two blades like scissors. One side of it
sharpens the pro-government private media to cut to pieces and discredit the
already weak opposition and the diaspora, mostly with defamation and planted
stories. The other side has been busier cutting too many independent-minded
journalists; private media people with integrity, publishers included. Many such
journalists have been rotting in prison; some have already perished; many have
become refugees in different countries.
In addition, government security personnel continue to behave like thugs in the
street physically attacking journalists. In early July an editor of Addis Neger, an
Amahric language weekly, was assaulted in the street. Such phenomenon is
occurring repeatedly without government lifting a finger to find out who is doing it
and why. In the light of this, it is imperative that the international community
focuses its attention in countries that cannot protect journalists from
‘unknown/known’ assailants. There is something troubling when something like
this happens in a country where government claims to be legally constituted, but is
unable or unwilling to respect the rule of law. One Anna Politkovskaya, a cruelly
murdered Russian journalist, is one too many for the entire world. From the news
sources, we understand that she had terribly rocked the boats of the powers who
felt threatened by her reportage on Chechnya.
Similarly, at the heart of the problem in Ethiopia is the interest of the ruling party in
tightly controlling society by controlling the media—both government and private.
As The Reporter, a popular Amharic weekly put it in its editorial a few weeks ago,
in its present form or substance, the current press law does not have even remote
resemblance to the relevant provisions of the country’s constitution. On the
English language Addis Fortune of 12 July, one observer aptly stated, “A free
press is one of the best ways to provide information to the public and comment on
pertinent social issues. However, this vital institution is hindered by complex legal
obstacles. Encouraged by draconian press laws that cripple intelligent and vibrant
journalism, more often than not the judiciary upholds verdicts boiled down from
the heat of the political temperature, pleasing the whims of the executive branch.
This is one of the many sad realities that large numbers of the truly independent
media community in the country acknowledge.”
The use of the flag
As recently as early July, the parliament adopted the national flag law. Certainly,
keeping standard national flag is common practice for all countries. The
government says that is exactly the purpose of its new legislation. Nonetheless,
individuals with attachments to the plain tri-colour, the law seems to suggest, they
should make frequent visits to the museum. If confidence in our government has
been what our experience has taught us, we would have been less inclined to think
in terms of conspiracy theories. It is granted that conspiracy theory takes more
than it does give; still experience is a better witness than good faith in such matters.
In fact, both the purpose of adoption of the law and the timing is not a matter of
coincidence, it seems. Who would forget one of Ato Meles’s first few press
conferences in 1991 where he turned society against himself and the TPLF by
disparagingly dismissing the Ethiopian national flag as “a piece of cloth”? That
remained stuck in the minds of citizens that he is disrespectful of the many that
have fallen for it. Prime Minister Meles’s concern may not be merely to define by
law the national colour and the symbols on it. He may be worried about the people
coming out en masse during the 2010 election flying the original Ethiopian flag as a
sign of protest against him and his party. Therefore, he is determined to ensure
that nothing should be left to chance, nor should any crafty attempts or the
symbolism of open political opposition by the public against him go unhindered.
The anti-civil society law
Much has been said about this law. I know that more will be said with great stress
and effects. The legislation aims at denying or restricting the activities of non-
governmental organizations with interest and specialization in human rights,
democracy-related work and humanitarian issues. The interesting aspect of
this legislation is its denial of the country’s reality. That is to say, Ethiopia has been
constantly exposed to the humiliations of all of the three—either in the form of
lack of respect for human rights or denial of democratic rights. Ethiopia has had
enough of humanitarian crises, in one sense, to paraphrase Prof. Amartya Sen, as
a sign of power’s indifference to terrible human conditions, which makes it a
symptom of the crisis of democracy.
Through this law, the government has incurred a double jeopardy, in a country
constantly exposed to cyclical droughts and famines. Humanitarian work has
proved a saviour more than the government is on many occasions. If the
government is concerned about the credentials of the organizations, the honourable
way out would have been to strengthen its vetting system. Instead, it chose to
impose blanket limitations on NGO activities in those fields.
It cannot be helped it is widely felt that the intention of the law is to show
government does not want local or foreign organizations involving in the task of
creating political awareness and rights consciousness amongst the population. See
the statistics of how many individuals working for the Ethiopian human rights
council or other civil society organizations are picked up from time to time under
every pretext all these years and sent to prison. Here it comes again, on 21 July
government has revoked the licenses of 42 NGOs, accusing of them involvement
in activities that are "out of their mandate” in the southern part of the country. We
all understand that, by definition "out of their mandate” is interpreted as meaning
involvement in human rights and democracy related activities, unless it comes and
convinces us that they are Martian spies.
Would President Obama’s diplomacy take its cues from his speech and
help honour his commitments to Africa?
President Obama pledged from Accra that his administration and the West are
ready to help African countries in critical areas in improving their lives. It is
understood that he is reflecting part of the consensus among the G-8 members in
Rome recently. His administration’s mission, he said, would no longer be mere
doling out of aid. The United States, in a sense also with the rest of the western
world, he underlined would seek serious partnership. Here is how he put it,
“The true sign of success is whether we [the West] are a source of aid that helps
people scrape by—it is whether we are partners in building capacity for this
transformational change. This mutual responsibility must be the foundation of our
partnership...First, we must support strong and sustainable democratic
governments.”
The president had the right message; he delivered it in a serious tone and balanced
manner, from which everyone got promises on something, especially on
‘democracy, opportunity, health, and the peaceful resolution of conflict.’ My
sense is that the masses of the people are overjoyed genuinely and expectations are
heightened. The fear is some tyrants would also step up to claim credit. The
illusion is that they have called their system democratic so far, even when they
have kept thousands of political prisoners and muzzled the media. They may point
to the progresses that are made in the economic field, thanks to the global
commodity markets and cheap finance of the past fifteen years. However, they
cannot come up with clear evidence that widespread fear that has been imposed on
society is a sign of peace or stability. Nor could they show how suppressed
human aspirations cannot clog better economic growth possibilities and enhanced
opportunities for the future, while it has happened in Ethiopia.
Just because of that, I regret the president did not have the time and opportunity to
discuss with civil society organizations from troubled countries in a secure way. It
sounds luxurious, does it not? No need to include the Ghanaians in this—God bless
their soul, they have seen the light. Those from other countries such as Ethiopia
and some others would have exactly told the president the importance of the four
points he outlined in his speech before even they heard him. Perhaps some might
have wanted more emphasis on the rule of law as a basis to govern future African
American relations.
In this connection I must say, if the US president were to see the success of his
policies in Africa, it is time that he should be aware of the worries of Africans with
regard to US policies in Africa as well. Salim Lone, a respected Kenyan media
personality and former United Nations official, has captured the essence of those
concerns. They appeared in his 10 July article on the Guardian under the title
What Obama can do for Africa, an excerpt of which reads:
One thing he [President Obama] would consistently hear from our civil society
leaders would be that good governance – democracy, inclusion, respect for human
rights and the rule of law – is non-negotiable. He would also hear that some of the
significant gains made in expanding freedoms in multi-party Africa are being
rolled back. This is not surprising, as the strategy of the US war on terror reverted
to the cold war model of supporting dictatorial allies, which in east Africa
included the Ethiopian and Ugandan leaderships.
That article is deserving of the president’s attention and time. Mr. Lone has put on
paper the stark truth. His assertion has spoken to my heart, my intellect and my
folks’ experiences.
CLOGGED ECONOMIC GROWTH THREATENS FUTURE
POSSIBILITES
The international community has been praising the level of gross domestic product
(GDP) growth Ethiopia has registered in the past few years. There is no doubt
that, especially for a country that is producing neither much-sought-after minerals
nor oil, specialized services or industrial outputs, by any measure its high GDP
growth represents great achievements, unparalleled in the country’s past.
The question is how one can reconcile the uninterrupted six years of GDP growth
(Table 1) with the worsening economic situation in which our country finds itself
today. At this moment, the ability of the Ethiopian government to make the
economy work is severely constrained. Official explanations admit to that, but
with their own spin, without looking inwards and only by attributing blame to the
global recession or the cyclical drought. This paper looks at Ethiopia’s economic
problems differently.
Table 1
Source: MOFAED *The 2008/2009 is Ethiopia’s original estimate and lately revised
data. **IMF projection ***IMF revised estimate
In the light of these figures, therefore, it may sound strange to say that the
Ethiopian economy weakened long before the onset of the global financial and
economic meltdown. This paper insists that indeed is the case. For the greater
part, all that the current global financial and economic crises have done is
exacerbating the economy’s structural and policy problems. One thing this tells is
that no adequate policy measures have gone into improving and vitalizing the weak
domestic production structures and the sagging export capacities.
Otherwise, the negative consequences of the huge appetite for higher expenditures
that the country has displayed since 2005 could have been accommodated partly
were they supported by domestic production, increased volumes in exports and
higher revenues from exports. In brief, the structural constraints on the supply
side of the economy are still intact. Even in normal years, the trend has been
export revenues falling behind private transfers and overseas aid, excluding
humanitarian assistance.
Good weather years and bumper crops, higher commodity prices have made
government feel good and encouraged it to spend public money without restraint.
Demand shot up. Imports quadrupled. What the government has sacrificed is
macroeconomic sanity, to borrow Prof. Susan Collins’ phrase (Lessons from
Korean Economic Growth). What sane macroeconomic policy does, among
others, is ensuring GDP growth, price stability, employment growth, expansion of
the economy and opportunities for all citizens. It would also seek ways of enabling
members of society attain fair income distribution, while investing in the future.
In Ethiopia’s situation, this unrestrained use of public resources has bred double-
digit inflation that has hurt the country for three years running. Therefore, what
started the country on this road is its weak production capacity, dependence on
rain-fed agriculture, the rising revenue from agriculture and the other sectors
combined giving rise to unsustainable demand for imports of goods. This has
conspired with imported inflation to exacerbate the economy problems. In a short
few years, despite rising exports, the levy in the country’s usually weak foreign
reserve situation gave in.
The government suddenly woke up, as if hit by lightening. Out of desperation, it
began to use illegal means, as is the case with coffee exporters and the
mistreatments seen in the recent vigorous tax revenue collection efforts. Coffee
exports had declined in 2004/05. Government did not attack exporters then,
because it was not as desperate in its foreign exchange needs. Why does
government have to wait for difficult circumstances to be its guide to take policy
measure that, as a government, it ought to do as a habit? The truth is that these
very problems have been there in the economy in the making for a long time. What
the recession found is an economy badly flogged and on its way to the intensive
care unit. The result is that Ethiopia finds itself now in the worst macroeconomic
dislocations, the correction of which, in this fragile political and economic
environment, invites harder times and many difficulties for the country.
Illustrative examples
In the past few years, we recall how many times the country has fallen short of its
export targets, long before the latest market squeeze and the recession began. For
a number of years, NBE has reported the shortfall on the production side in its
quarterly and annual bulletins. Similarly, for instance, MOFAED in its 2004/05
Macroeconomic Developments in Ethiopia report indicated: “coffee, pulses, and
fruits and vegetables have showed decreased performance of 8.3, 9.2, and 8.2
percent, respectively, compared with the preceding fiscal year [2003/04] whereas
oilseeds, meat and meat products and live animals have witnessed increased
performance.” These decline in volume of exports are nothing new. Their pain
was no felt that much earlier, because transfer from the diaspora was much
higher, as was foreign aid and credits. This time, the economy is almost shutting
down the tap.
In the same manner, at a time when the prices of oilseeds were picking up in
2007/08, production fell down by 35.3 percent. However, because of improved
prices Ethiopia earned $218.8 million, compared to $187.4 million in another failed
year of 2005/06. These vicissitudes in production are a typical feature of the
Ethiopian production structure. The only product that lately enjoyed better support
is the horticultural industry. In its case, it has become a real casualty of the global
recession. The main reason for that is it is new and handled in a modern way; it
had a good start; production increased astronomically in successive years, despite
difficulties domestically relating to transports, freight costs and later capital for
expansion.
The situation in 2009 is, therefore, a combination of weaknesses and
inconsistencies on the production and export sides on one hand and market
contraction at a later stage on the other, at a time when the country. Clearly, from
2005-2008 Ethiopia had not reaped the benefits of higher prices for exports
because of the problems already discussed. The result is the economy was denied
a leg up in terms of foreign exchange earnings and import items essential for
development, the consequence of which has stalled economic expansion, which
Table 2 shows clearly. At this very moment, double-digit economic growth has
become a meaningless slogan for many families and businesses.
This is not to deny or belittle the country’s achievements to date, but to register
the fact that, instead of increases in assets, inflation has effectively destroyed a
number of them, in the form of businesses, as can be seen from the growing
number of companies going bankrupt and seized by banks. In the same manner,
poverty is on the rise, as is hunger and homelessness, threatening severely millions
of citizens. The number of those begging in the streets is rising. In his right mind,
no one could attach any link between that and the country’s high GDP growth
figures. In spite of the many efforts the country has made, these are only the outer
manifestations of worsening poverty in the country.
Consequences of the failure on a mini-scale
By the end of May 2009, Trade and Industry Minister Girma Biru reported to
parliament that Ethiopia would face a shortfall of close to a billion dollars in 2009,
out of its targeted $2.5 billion in export revenues. This represents a loss of revenue
of about 42.0 percent. At the same time, international transfers, both private and
public, have significantly declined, at a time when there still are immense needs in
the country for items such as fuel, food imports, materials and chemicals for
industries, agriculture (fertilizers), and other payments including debt service. The
Djibouti port, Ethiopia’s only gateway for its commerce with the rest of the world,
requires close to a billion dollars in annual fees.
During the fiscal year just out, Ethiopia’s outstanding external debt was $2.8
billion. The breakdown is $1.5 billion for multilateral organizations, $953 million
for bilateral sources, $276 million for commercial banks. The quarterly debt
servicing is $339.4 million, after debt relief, out of which the principal was $158.5
million, interest $173 million and commission $7.9 million, according to the
MOFAED. After May 2008, Ethiopia was almost staring on the face of default,
possibly the danger of bankruptcy, from a close range. Government bills have to
be paid in foreign currencies. Otherwise, the country would not be able to import
anything or honour its international contractual obligations, including the servicing
of short and long-term debts the country has accumulated. At the beginning of
January, the country had an international reserve of $906 million, or six weeks
equivalent of its requirements, according to IMF financial indicators. Immediately,
the country started rationing of foreign currency to prioritize imports, which hit
businesses of all categories hard.
Like any developing country, Ethiopia has always been short of foreign exchange
for various reasons. In some good years, the reserves had built better to meet four
to five import months of requirements, though not in a long, long time now. In the
years since GDP growth jumped, the reserve on average was sufficient only for
three import months maximum. However, since 2005/06 it has been going down
year after year. For instance, in 2007/08 it reached the critical 1.2 months,
although projection has put the 2008/09 figure at 1.8 months, which seems to be
less likely to be revised after the recession had deepened in many of the European
countries, Ethiopia’s primary export destinations. One way this could be avoided
artificially by sitting on its receipts of international currencies, as was the case
when reserves jumped to six months level early on. This means to starve oneself
to death to be slim.
In Ethiopia’s recent history, a similar distress occurred toward the last years of the
Mengistu regime, where GDP growth in such scale was ever unthinkable, although
Ethiopia’s records in honouring its obligation have always been respectable. Those
familiar with activities of the NBE during the Dergue time say that a loan of 10
million dollars came from Algeria, after a national delegation was sent to solicit
comradely help. In addition, Italy made available a letter of credit worth $25 million
dollars for purchase of goods and services. That lifeline bailed out socialist
Ethiopia from total collapse. This time, the situation has a serious twist. As the
cliché has it, things would only get worse before they get better, because the
problem has its origin in policy and are structural in nature, all at the same time at
the unkindest of times.
In spring 2008, the IMF had looked into Ethiopia’s debt sustainability. At the time,
the country’s debts were estimated to claim 5.0 percent of GDP or over 50.0
percent of export revenues. The Fund’s signal of discomfort was evident, when
export revenues continued to fail to achieve target, although debt has been rising
ever since. In the Fund’s revised figures, public debt stands at 35.9 percent of
GDP in 2007/08. The 2009/10 debt level is forecasted to be 31.7 percent, of
which the breakdown is 14.1 percent domestic and 17.6 percent external. The
interesting thing here is how the data for both debts reversed for 2009/10, though
both rising. Earlier external debt was 14.5 percent and domestic debt 17.0 percent.
Recall at this point the fast-tracked release of $50 million dollars to ameliorate the
foreign exchange crunch. It came with IMF warning that, “…the balance of
payments situation is likely to remain difficult in the coming year.” In 2007/08, it
was negative balance of $174 million. The outstanding domestic debt by December
for the period was birr 53.1 billion.
Officials go foreign exchange fishing
To avoid a nasty situation, government started rationing foreign exchange, which
put NBE in the eye of the storm, with the campaign against it by businesses
growing louder, including by commercial banks. Meanwhile, officials have been on
wings since January 2009, canvassing sources of more loans, grants and aid
amongst EU and OECD countries, China, India, some Middle East countries and
Turkey at a bilateral level and from multilateral financial institutions.
Already in January, the EU granted 322 million dollars to boost development
projects. In mid-May, the country signed $400 million credit from the Chinese.
Again, at almost the same time, the World Bank (IDA) approved $540 million for
the protection of basic services (PBS). Moreover, $845 million has been on the
pipeline ($475 million through the World Bank, $30 million for agriculture, $200
million to improve the education sector, $245 million for the roads sector) and
another $400 million from the IMF, as a part of the G-20 rescue plan. In addition,
$380 million has been provided on a bilateral basis from BADEA, Finland, Italy,
and Japan for different projects. Lately, the African Development Bank also has
released $326.5 million to finance the road link between Addis Ababa and
Mombassa. On 21st July, Kuwait has become the latest addition on the list of
donors, providing $65 million for expansion of electricity in Tigray. The list
continues. Nonetheless, this does not mean that Ethiopia is out of the woods.
What led the country into a tight foreign exchange corner?
The immediate answer would be what this paper already mentioned earlier i.e.,
decline in production, inadequate export capacity leading to foreign exchange
shortage and the recession finally squeezing Ethiopia out of the market. The
question is why does this happen? Where did Ethiopia go wrong?
What Table 1, above, does not show is a full picture of the performance of the
different sectors of the economy. Such is the nature of overall GDP figures. A
better picture emerges only when one is able to see the inter-relations between the
different sectors, meaning, agriculture, industry and services. This enables one to
follow economic activities in general, including the possibility of getting a sense of
where the problem lies. That in mind, Table 2 is inserted here to show the scale of
the industrial and services sectors relative to agriculture.
Table 2
Source: Ministry of Finance and Economic Development (Ethiopia)
- * GDP total may exceed 100.0% by 1.0 or less than 1.0 percent due to financial
intermediation services FISIM. Defined officially, it is “a productive activity in which an
institutional unit incurs liabilities on its own account for the purpose of acquiring
financial assets by engaging in financial transactions on the market”, attributable to bank
services.
The industrial sector
In nearly twenty years of TPLF rule, the shares of industry and services in GDP
have not bitten anything out of agriculture’s dominance. In a period of twelve
years, i.e., from 1997/98 to 2008/09, industry grew by a negligible 0.7 percent, as
shown in table 2, above. In fact, since 2005, there has been a trend decline from
the high of 14.0 percent down to where it is now. Included in the industrial sector
are mining and quarrying, manufacturing, electricity and power and construction.
Manufacturing is more important because of its broad based reach and facilitation
of the transformation of the structure of agriculture itself when its expansion is
supported by deliberate policy measures. The available evidence indicates that, it is
hardly given sufficient policy attention and the necessary technical support.
Overall, industrial plants have been operating for several years, even before the
current power outages for most of the time, at an average of 55.7 percent
capacity, according to MOFAED’s Manufacturing Industries Businesses Survey.
The problems have been known for some time, because these surveys have been
carried out for a number of years now.
More importantly, though the manufacturing sector comprises 910 enterprises in
the country, 94.7 percent of their income in 2007/08 came from servicing the local
market. Their products include such items as fabricated metals, basic iron, steel,
foods, paper and paper products. They figure poorly in export capacity, with 5.3
percent of their income in 2007/08 coming from export revenues of leather and
leather products (MOFAED Macroeconomic development for 2007/08).
The services sector
Over the twelve-year period, the services sector has registered an average growth
of 4.1 percent, as can be captured from Table 2. Its components include
distribution of goods and services, banking and insurance, real estate and
ownership, education, health, private households with employed persons (domestic
labour), and public administration and defence. On average, the performance of
several sub-sectors has shown improvement from time to time, though the jump
not that great. This article would single out the health sector and education
because of their importance, in the light of the great achievements and the number
of problems encountered.
In Ethiopia, both the industrial and services sectors complain about everything.
Chief among these are lack of capital, foreign exchange, lack of raw materials or
quality problems, lack of markets, electricity and water supply, and a number of
other aggregated basic developmental problems, including policy and institutional,
although direct reference to policy for obvious reasons is glossed over. Not that
the past years were easier for the industrial and services sector, especially 2009
has gotten more difficult because of the monetary policy decisions the government
has taken that has made access to capital increasingly difficult.
Whereas agriculture is the source of employment for the bulk of the population in
almost all developing countries, as time passes, the lack of productivity constantly
generates unemployed and underemployed people in the rural areas. The success
of any policy, therefore, among other things, is measured in its strengthening of
the manufacturing sector as source of employment for the surplus labour.
Historically, studies have shown that such success comes through the
manufacturing sector. In learning from the experiences of South Korea and
Taiwan, which used the manufacturing sector as a stepping-stone to
industrialization, Ethiopia could have done itself a great deal of favour.
The needs of the industrial and services sector
Studies show that one of the most critical factors for both industrial development
and the expansion of the services sector is the transformation of agriculture and
increases in productivity growth. In a simple term, it means increases in volume of
crops per hectare. That opens up possibilities for farmers to make savings, use
their resources to initiate locally essential processing. That could grow in time into
manufacturing leading to industrialization and the expansion of markets.
That helps to raise the share of the industrial and services sectors over time in
gross domestic production. What is needed in Ethiopia now is for the government
to change its political game, if it is interested in a better future for Ethiopia. It
needs to get out of its trenches and begin to seek serious collaboration with all
educated Ethiopians, foreign experts and institutions to improve agricultural
productivity. That is the only path for the improvement of agricultural growth,
expansion of industry and the services sector. That is when the country’s success
in eradicating poverty would be marked and celebrated. That leads to fostering a
middle class that further hastens economic growth and meaningful national
development. Moreover, that middle class would contribute to reigning
government and its authoritarianism.
To underscore the importance of this, I would refer to a paper by Prof. Inchul
Kim of South Korea, who has brilliantly outlined the Korean experience along its
relatively shorter distance of a few decades to impressive national development. He
writes that for South Korea one of the important measures was to ensure the
success of its plans by setting up specialist groups, especially in the fields of
economics, sociology, demography and statistics. Some of the individuals in these
groups were recruited from internationally renowned universities and
organizations. They worked on fixed-term appointments and left when they
accomplished the missions they are called for (Korea’s Growth Planning and
Statistical Credibility, School of Economics Sung Kyun Kwan University).
Instead, what has become important for government is first to send TPLF agents
to spy and find out the profile of the individual professional whether she/he is open
to accepting the politics and policies of the government. This has not gotten the
country far, nor would it get it anywhere in twenty years!
Agriculture-led industrialization flops
As shown in Table 2, the bulk of Ethiopia’s growth comes from agriculture. Farm
work in Ethiopia is largely dominated by smallholder producers, currently
estimated at 13.3 million households, according to CSA’s 2008 Abstract. Unless
Ethiopia succeeds in transforming its agricultural production, no matter what GDP
figures show, the country would not easily move out of poverty. In terms of
policy, government shows good understanding of the problem. However, its
inconsistencies and implementation methods are far apart from its objectives.
Admittedly, even with everything in place—policy, institutional, financial, technical
and technological, etc—agricultural transformation and its growth constitute an
incredibly difficult challenge. Why did the Soviet Union, a superpower, fell behind
in agricultural production, despite massive number of tractors, combine
harvesters, fertilizers and soviet communal labour? It used to import wheat from
the US and Argentina, even during the Cold War. In spite of enormous efforts in
these two decades, the government in Ethiopia has failed to see signs of
improvements in agricultural productivity.
Therefore, when one sees the attitude of the government, the impression one gets
is that government is content with the growth of agricultural production from
expansion of farmlands. It is extremely troubling. In fact, in 2007/08, agricultural
land expanded by 1.03 million hectares, compared to the 495,203 hectares in
2006/07. These figures do no include commercial farms. The question is whatever
happened to improvements in agricultural technology? The three tables below are
provided to enable the reader to answer the question by himself/herself, comparing
the data for three fiscal years.
The question of land tenure system has bee discussed extensively. There have
been opinions of experts on both sides of the divide. In the Ethiopian reality, the
peasant framers are more controlled than workers in urban areas or other
members of the society are. The TPLF has had a number of control measures
over the peasantry through control of rural farmers’ organizations, out of which it
intends to evolve an agrarian party, as the prime minister implied in his 2006
writing entitled Africa: Dead Ends and New Beginnings. The sanctions to disloyal
peasants are very stiff; they constantly live under the threat of losing their holdings
or imprisonment, if they did not show their loyalty in every way possible. For the
government, peasants are its secure political base, with over four million peasant
members in the ruling party.
For reasons that have not convinced experts or those who doubt the political
motives of the regime, the TPLF is stuck with keeping land under government
control. We have not seen this helping agricultural productivity growth or
enhancing agricultural production.
Prof. Dessalegn Rahmato, a a respected Ethiopian scholar and expert on land
tenure advocates the middle of the way in terms of addressing this problem. His
view is land should not be privatized at all, which I share, nor should it be owned
by the state. Here is his idea, excerpted from his 13 August 2003 interview with
IRIN,
- “Q: Is land tenure the most pressing issue in Ethiopia?
A. Yes because this country, being a very poor country, the main resource
we have is land and unless we can use it efficiently and care for it, which
only security of tenure can bring about, you are going to face crisis after
crisis in the coming years.
Q: Do you think privatisation is the answer?
A: I have not fully supported privatisation. I see dangers in it. I think there
are arrangements that should be explored that could improve security. I
have argued in favour of a system I call associated ownership, which is a
combination of freehold and community responsibility. It is freehold in the
sense that the individual user has the right to dispose of the land if he or
she wishes to do so. Full rights over the land. But the community should
also have some say so that if interests that may be hostile to the interests of
the community, want to take it over, the community should have a say. The
first choice of sale should be given to the community so that the land is
kept within the community.”
The fact remains that Ethiopian agricultural practices are not employing adequate
modern technologies, especially of improved seeds, which from 2005-2008 period
have shown decline, even from the negligible at 5.32 percent that it was in
2005/06. Similarly, irrigation use is extremely low, so far not exceeding 1.2
percent. In brief, government claims that agricultural productivity has been realized
is not borne out even by its own data, as shown by Tables 3, 4 and 5.
Table 3
Table 4
Table 5
Source: Central Statistical Agency (Ethiopia) *The writer’s compilation of crops
leaves out vegetables, permanent crops, root crops. The total crop area data
differs from the other tables.
Farm size, family size & rural poverty
Tables 6, 7 and 8 provide useful information on the state and number of
landholders, areas under crop by year and the volume of production. Important
information they provide is about the state of asset ownership in rural Ethiopia.
Table 6
Table 7
Table 8
Source: Extracted form Ethiopian Statistical Abstract 2008 (Tables D.8; D.9; D.10)
In 2007/08, 83.2 percent of farmers (11.03 million) owned from 0.1 to 2.0
hectares. Three-and-a-half million farmers owned between 1.0 and 2.0 hectares.
The number of those owning from 5.0 hectares and above is 16.8 percent, while
only 1.3 percent owned from 5.0 hectares and above. However, one expression of
poverty is the size of land held by a household relative to family size. For instance,
26.5 percent of landholders have six to nine family members and are in the group
of those that own between 1.01 and 2.0 hectares. In the previous year, this group
constituted 27.5 percent of landholders. The most significant increase in family
size is observed in those in the group holding 0.1 to 0.5 hectares (CSA Abstract
2008, Tables D.15 and D.16).
Why am I raising this? We need to retrace the steps of trailblazers like South Korea
to see the importance of what a sense of ownership and security could to the
farmers and the country. Writing about South Korea, Prof Irma Adelman of
Berkley and a major economic adviser to the government of South Korea in its
Second Five Year Plan, says,
“On the plus side, the country was one of the most ethnically homogeneous in the
world. Values were communitarian and egalitarian, and accorded educated
individuals the highest social status The distribution of assets was extremely even,
due to two waves of land reform in which holdings exceeding 3 acres (!) were
redistributed to previous tenant- farmers, and due also to the destruction of other
capital assets caused by the wars. And the distribution of income was very even–
one of the most even in the world. The level of social capital was extremely high”
Bank reserves rising, private lacking access to capital, 2010 budget comes
with big holes
The just approved 2010 national budget shows a great dilemma of the government
because of the choices it has to make. A national budget is one of the best
indicators of a government’s objectives and the directions of change it favours in
the country. The shift in this budget has pushed agriculture, for instance, from
number one position since 2001 to number three. This is partly a reflection of
government’s intention, perhaps frustration as well, in agricultural productivity,
much as it is its desire to deploy resources where maximum and visible impact is
attainable within a short time. Nevertheless, the difference between agriculture and
defence is only 3.3 percentage points.
The total budget has increased by 18.9 percent. Estimated total federal government
revenue is birr, 39.5 billion. Priority areas of the budget have been defined under
nine categories, with higher levels of appropriations allocated, according to
government priorities allowing them to claim resources accordingly, as shown in
Table 9. The level of the approved budget is birr 64.5 billion. Of this, birr 14.5
billion is for recurrent expenditures, i.e., general administration and all support
services relating to economic activities. Birr 29.1 billion is for capital expenditures,
which in a nutshell is capital outlays for special programmes mostly in the priority
sectors. Birr 20.9 billion is for the regional states.
The budget was already approved with birr 10.4 billion hole in it. The government’
s intention is to finance this through domestic borrowing of birr 6.4 billion, project-
financing credits of birr 3.9 billion and through debt relief of birr 118.8 million. Is
the government’s position tenable? We would explore that in a moment. We t need
first to see where the money comes from to finance all the above-mentioned
activities? Table 10 provides the answers for that.
Table 9
Data: Source: MOFAED2002 Budget, Economic And Revenue Analysis volume I (Amharic)
Table 10
Data: Source: MOFAED2002 Budget, Economic And Revenue Analysis volume I (Amharic)
If past budget performances of the government are of any value or relevance to
this, actual shortfalls in the past have often been much higher than the government
admits. In other words, shortfalls are underestimated. As far as this budget is
concerned, it would not be any different from the past, with a few exceptions.
First, due to the weaknesses in the economy it is less likely to collect as much
revenue in taxes. However, since the government has deployed rigorous efforts
this time in tax collection, it is very likely it may be closer to its goals. In terms of
experience, in 2007/08 its domestic revenue target was short by birr 5.0 billion or
14.7 percent. Foreign aid and credit anticipated in the budget in 2007/08 fell short
by birr 5.7 billion or 20.0 percent.
What is interesting here is that the government’s budget utilization rate is estimated
at 88.0 percent. A the same time, the office of the auditor general has continued
complaints about over-expenditure problems, under expenditures of allocated share
of budgets and problems of untraceable resources, which on repeated occasions
the prime minister has snapped and dismissed the reports the work of ‘junior
accountants.’ What would one expect if the head of government shows direct and
indirect and sympathy to violations of financial accountability regulations.
In the current budget, there seem to be a couple of points of serious concern.
First, the level of inflation in the country remains very high. As mentioned above,
inflation is the worst enemy that wantonly destroys assets of the both the poor and
the rich alike. Government has hinted confidence in controlling it. In the name of
fighting inflation, the government has tightened money supply. Not only banks are
restricted by the rising bank reserve level from 15 percent at the beginning of the
year to 25 percent, but also the ‘gentleman’s agreement’ the NBE reached with
individual banks to be restrictive with bank credits. The economy being mostly in
government hands with its several public enterprises, it is clear that they would
always be the first to get access to capital. However, this tightening of access to
small businesses would force many into closing shops. Such measures have also
opened up possibilities for corruption and nepotism. Those with good political
connections are getting a backdoor access to capital.
On the other hand, the rising level of bank reserves means, there is ample money
sitting in the banks idle, which this government resents. If it were not for IMF
surveillance, chances are that the lapse could have been greater toward
overspending. It is still a great danger. The view of the Ethiopian government on
this matter, according to the IMF is, “They [authorities] see excess reserves of
commercial banks as “savings” which can, and should, be mobilized in support of
public infrastructure development.” This view is also consistent with Ato Meles’s
personal conviction, as indicated in, ‘African Development: Dead Woods and New
Beginnings’, wherein he makes similar claim. That has only led the country into
one of the highest inflation levels in recent experience, excluding Zimbabwe.
The invisible infrastructures, education & the health sectors in the
scheme of things
At some point in the beginning, this paper promised that there would be some
thoughts on the education and the health sectors. If there should be any significant
regret for Ethiopia, it is the fact that how many first-rate medical professionals and
engineers the country has lost over the last few decades. Therefore, like a newly
emerging country, today the health sector is being restarted from the scratch, with
hundreds of locally trained physicians, medical officers and technicians now
beginning to fill the gaps.
While not something to be content with, given the enormous needs, the number of
hospitals in the country has increased from 138 in 2005/06 to 149 in 2007/08,
according to the Ministry of Health. The paucity is already clear there that one
hospital is servicing an estimated 5.6 million people. At the same time, the number
of health centres with beds has grown from 1,206 to 1,517. For reasons not clear,
at least, to me the number of beds during this time has dropped by 9.4 percent.
The data from both CSA and MOH indicate that the state of health of the nation is
moving in a slow but hopeful direction. For instance, in 2007/8 fiscal year 8.6
million children were given vaccinations for tuberculosis, measles, polio and D.P.T
doses—diphtheria, pertussis and tetanus. During the number of children born in
medical facilities reached close to six hundred thousand, whereas the number of
maternal and babies death is terribly, terribly under reported.
From family planning services, 13 million women have received birth control
treatment, while about thirty thousand men have opted sterilization, the number of
men who used condom during the period is less than a million, as could be seen
from data on condom distribution.
The efforts undertaken in capacity building in the health sector are shown in Table
11, below. The point here is not the importance of how many medical personnel
are trained, but whether the country is capable of retaining them. If the
government could provide them with retaining opportunities, ensure their sense of
security, job satisfaction and professional independence, current efforts may give
chance to a good start in the health sector. It should be emphasized that, however,
there is great need to ensuring overall conditions; remunerations and that they get
professional satisfaction to stay and serve the people. This includes improvements
in the rule of law that at this very moment is closer to non-existence.
Table 11
Source: Ministry of Health
*Includes all types of nurses **Addis Ababa data not included
In terms of diseases, malaria is the number one killer in Ethiopia. The Ministry of
Health acknowledges an estimated 68% of the population are at risk of contracting
malaria. The number of bed nets distributed during 2007/08 is 9.2 million, and the
affected localities are 6,446. Transmission of the disease is seasonal and
predominantly unstable, with frequent and often large-scale epidemics. At 56.7
percent rate, it has become the leading cause of hospital and health centre
morbidity during this period. Acute upper respiratory infection (4.8%), other
infectious and parasitic diseases (2.7%), all other respiratory diseases (2.1%), etc
follow far behind malaria. The prevalence of such diseases in the country has
attracted generous aid from all sources, which now is challenging the country’s
absorptive capacity.
As can be seen from Table 9, on priorities scale in the 2010 national budget, health
is down at number five. It is understood that the reason for this is the health sector
is the top most heavily financed sector in Ethiopia with overseas aid. The Ministry
of Health may not be ready to admit it, but with increased aid has come the
problem of accountability. There are allegations that there is no way of knowing
who is doing what, where, when, why and with whom (the famous five Ws).
Indeed serious efforts must be exerted to ensure that such capacity develops,
before funding sources dry or migrate somewhere where they think there is better
absorptive capacity and performance. International funding sources in the health
field have already adopted the partnerships funding modality known as the Global
Health Partnerships (GHPs).
Included in this group are the Global Alliance for Vaccines and Immunizations
(GAVI), the Global Fund to Fight AIDS, Malaria and Tuberculosis (GFATM) and
the Global Alliance for Improved Nutrition (GAIN), etc. They are multiplying at a
pace faster than the reproduction of rabbits. This is the result of a trend that many
wealthy donors are showing willingness to share their wealth, such the Melinda
and Bill Gates Foundation (MBGF) and many others. This has caught the attention
of the pharmaceutical industry and money-makers have jumped in the play in the
form of voluntary organizations. That is one reason why the country needs to
develop capacity to monitor where aid money is going and what it is doing.
Ethiopia has already become one of the largest recipients of aid in the health
sector, which accounts for its success for instance in child immunization, HIV
campaigns and fighting malaria.
Getnet Alemu, an Ethiopian development specialist has serious concerns however.
In a similar tone, he warns of the danger of aid ineffectiveness and lack of
absorption capacity, and accountability problems in Ethiopia, mainly because of
lack of harmonization and coordination with the multitude of such organizations.
His research attests that dealing with the GHPs that WHO estimates to be between
75 and 100 globally, has not been very easy for developing countries. So far,
Ethiopia has remained grateful, taking as much aid as possible, without the trouble
of asking or answering the questions raised by the five Ws, mentioned above.
Getnet says GHPs “establish their own management and reporting structures and
create parallel systems”, as has already been seen focusing mainly on HIV/aids,
malaria and TB (A Case Study on Aid Effectiveness in Ethiopia: Analysis of the
Health Sector Aid Architecture April 2009, Brooking Institute).
Education and its institutions
Schools are expanding. Primary education (grade 1-8) enrolment has grown from
8.6 million in 2002/03 to 14.7 million in 2008. Number of students in senior
secondary schools has grown to 1.6 million in 2008, from 626,714 in 2002/03.
The total number of teachers in both government and private schools in 2001/02
was 140,973, while the total number of students was 16.2 million. In 2007/08, the
number of teachers has jumped to 291,676.
The problem comes here. In public schools, the average number of students per
teacher in classroom is 59.8 in 2000/01 and has only dropped to 58.1 in eight
years, that is, 2007/08. In private schools, in 2000/01 the ratio was one teacher for
42 students, while since 2007/08 this has been reduced to 29.0. The high student
teacher ratio and classroom sizes are among the main issues that are affecting the
quality of education in the country. Excessive focus on expansion of buildings may
cost the country too much in the long run, if those that were sent to school do not
acquire the necessary skills.
Table 12 gives a good comparison of the situation in the school system and the
higher institutions, both public and private, by gender and across four fiscal years.
Table 12
Source: CSA 2008 Abstract *Does not include extension and postgraduate students
Since 2006/07, the country has been boasting of 55 universities and colleges. In
other words, if we exclude the colleges and universities that existed before the
TPLF, the rate of progress in building such higher institutions is 2.7 percent
universities and colleges on a yearly basis. The worry is whether government is
giving adequate attention to the quality of education at all, or is in some kind of
competition where what matters is the number of buildings. As it stands, most of
the schools and colleges have neither equipment nor the books or teachers.
Mere focus on numbers may only prove wasteful in the end. Relations between
government and teachers have not been healthy either, because of the continued
political tensions. University campuses have become battlefields for inter-ethnic
conflicts. Therefore, in the education sector the government needs to re-examine
its policies in a comprehensive manner, as schools are always the first point of
politicization, where students begin to respond to the already existing polarization
society-wide.
Is Ethiopia getting adequate foreign aid?
There is no way of measuring this, especially since aid is considered free money
and the needs of a developing country such as Ethiopia are enormous. However, in
comparison to the past, the international community has been considerate for the
poor in Ethiopia through the years for three important reasons. Firstly, the West is
pleased with the TPLF for overthrowing the military junta, a regime they have
wished to neither provide aid nor leave it alone. Secondly, they recognize the
political and strategic importance of Ethiopia with a strong state tradition in Africa
and its potentials for the future, given the size of its population and with
appropriate policy and institutional reforms.
Thirdly, the coincidence of the emergence of China on one hand and the spread of
Islamic fundamentalism has compelled the West to give Ethiopia higher
importance, as does China. In addition, China sees Ethiopia as its gateway to
Africa. Initially the policy of the West in Africa had aimed at maximizing its
economic interests by containing Chinese expansion in the region. Now, China’s
advances in Africa have turned the policy of the West into competition with China,
which has immensely benefited Ethiopia. China is providing money and expertise
without debilitating conditions. Therefore, Meles has taken advantage of both
worlds.
Politically, he has systematically used China as a bargaining position with the West.
From time to time, he has taken a tougher stance, which has irked many of them.
Having secured the trust of the Chinese, especially in respect of African politics,
he has made sure that they would take care of funding his pet projects,
infrastructural development. Even before the ink from the last agreement between
Ethiopia and China has dried from last May, the two countries signed a new
agreement on 15 July worth 1.9 billion euros, according to Reuter, to build two
hydroelectric dams with a capacity of more than 2,000 megawatts.
In a way, choice has also given the prime minister the capability to be assertive
politically. One could see from this, the West’s continues demarche about human
rights violations and derailment of democracy in Ethiopia, while the Ethiopian
government showing no movement beyond strongly worded denials and nothing
ever happening on the ground. At times, Meles is expelling from the country at a
moment’s notice and a flash of emotions Western experts, without fear of
reprisals. The West does not even strongly respond about the imprisonment of
their citizens in Ethiopia or those expelled. Thus, under Chinese pressure, it also
keeps on pumping resources, despite the fact that the country has shown its
independence and strong programme ownership, which is barely popular deep in
the heart of any donor. Lately, many have begun to take it with a perspective of
history that Ethiopia has never had a colonial past. This thing has its pluses and its
negative sides unless such actions at the top are translated into institutional
behaviour, which requires ensuring the independence of the civil service that today
is a mere party tool, instead of promoter of the national interests.
To respond to the question as to Ethiopia’s share in the OECD aid universe.
Ethiopia was at the top of the list of OECD supported countries in Africa in 2008.
It received country programmable aid (CAP) amounting $2.502 billion, followed
by Tanzania’s $2.191 billion. This amount does not include aid from non-OECD
countries such China, India and Middle Eastern countries and international
organizations. For 2009, Ethiopia has been overtaken by Tanzania, which receives
$2.238 billion in OECD aid, while Ethiopia’s would go down by 12.5 percent to
$2.188 billion.
In principle, in 2010 and 2011 the OECD estimated figure would go down overall.
However, the amount of receivable aid puts Ethiopia back at the top of the list
again. At the same time, Ethiopia is also the fourth largest receiver of budget
support out of the total twelve countries in the world (Benin, Burkina Faso,
Ethiopia, Ghana, Madagascar, Mozambique, Senegal, Tanzania, Uganda, Viet Nam
and Zambia (Source: 2009 DAC Report on Aid Predictability: Survey on Donors’
Forward Spending Plans 2009 – 2011).
Note in this connection, as a basis for its grant of aid, the OECD aid criteria
classify recipient countries into the categories of either fragile or conflict-affected
state, or both. Ethiopia belongs to both categories along with other 13 fragile and
conflict-affected countries. Such classification entitles the affected countries to an
additional $2.0 billion to be shared among them to help them with crises they
cannot handle on their domestic resources.
In general, as far as Ethiopia is concerned, aid level should not be used as an
excuse for anything, although no aid amount can be sufficient given the low level
of the country’s development. The more a country becomes dependent on aid, the
higher is its addiction blurring the distinction between the enormities of the
country’s needs on one hand, and the limits of donors’ generosities on the other,
without even thinking what could be mobilized from domestic sources as a starting
point. It is in the country’s interest to work to weaning itself from aid dependence.
Where are we in the recession?
The simple answer is recovery is still far off. In the US, the billions of stimulus
funds, although not much of it yet spent, have not delivered the much-anticipated
outcome, i.e., faster recovery. Credit has started moving, but commercial
investment is in a halt. Federal Reserve chairman Ben Bernanke is concerned with
a newer problem. His fear is that the state of commercial property may recreate
what the housing bubble has done to the financial sector and the main economy.
He told the US Senate on 22 July, “As the recession’s gotten worse in the last six
months or so, we’re seeing increased vacancy, declining rents, falling prices --
and so, more pressure on commercial real estate,” The previous day he had said,
“We are somewhat concerned about that sector and are paying very close attention
to it. We’re taking the steps that we can through the banking system and through
the securitization markets to try to address it.” This does not seem to promise the
end of the recession is anywhere on the horizon, even during the first two quarters
of 2010.
At the same time, oil and dollar are increasing uncertainties, the dollar increasingly
slipping and the price of oil rising. By the third week of July, oil prices have
breached the $70 per barrier threshold, compared to $31 in December. The
expectation is that it may still rise further before it declines again. In the meantime,
countries such as Ethiopia would have to absorb the additional costs, although they
continue to be beleaguered by the foreign exchange crunch. As mentioned earlier,
this reality would put to doubt the expectation of inflation moving to single digit in
Ethiopia.
In May, there was a lot of talk about green shoots in the United States, which
caught up like wildfire because of expectations. Stocks inched up; however, the
volatility in the stock markets and commodities remain, although we witness
current steady rise in stocks since the second week of July. The more the dollar
gets weaker, the more speculators shift between stocks and commodities, until the
equities market firms up. This would worsen the uncertainties of commodity
exporters ins Ethiopia and other developing countries.
So far, therefore, the anticipated recovery sings not holding up economies are still
struggling. With regard to oil prices, in either situation Ethiopia is still at a
disadvantage. When fuel prices goes down, there would be saving. At the same
time, the country cannot get higher export revenues, as it is a sign of markets
contracting. When prices go up, the country looses money and things become
more expensive. The country earns more revenues, but inflation, both domestic
and imported, pose serious challenges.
If it is any comfort, however, it should be mentioned that a respected Canadian
academician has come with a new foresight. In an interesting conversation
between Prof. Philip Verleger and Bloomberg’s Tom Keene ‘On the Economy’
segment, the professor believes that the price of oil would fall to $20 by the end of
this year. His arguments are based on two key points. The main one is economic
activity has decelerated and demand is low. The other point is the fact that Europe
and the US have had enormously high strategic reserves. As a result, the futures
market would not take too much risk. His view quoted by another reporter for the
same media is, “Prices would be much lower today, but for the very large
incentive to build inventories. You need forward buyers, which we had when
people were fearing inflation, but as concerns turn toward deflation.”
Depressed foreign markets
Europe is Ethiopia’s largest export destination. However, in spite of talk about
‘green shoots’ in the United States, on the commodity markets front, there are
new evidences in Europe beclouding that optimism. The European Commission
issued a new data in May, which indicates that the European economy (16 euro
countries) is expected to head into deep recession already this year with 4.4
percent contraction. Ethiopia’s major export countries, such as Germany is
suffering 5.4 percent contraction and public debt rising. The Italian economy is
expected to contract by 4.4 percent, Netherlands 3.5 percent, etc. In 2010,
growth in Europe is not likely to exceed 0.1 percent, according to the Commission.
Unemployment in Europe is expected to reach 11.0 percent, an indication that
income and purchasing power (aggregate demand) would remain depressed,
contracting further the markets for Ethiopian exports. The economic situation in
the UK is not any different; already 4.9 percent contraction of GDP is reported on
annualized basis. The Swiss economy is in the same boat with 2.9 percent
contraction forecasted. In Japan, GDP has shrunk at an annual 15.2 percent rate,
they say, it is steepest drop since 1955. In the US, unemployment at 9.4 percent in
June is at a twenty-six year high, though some declines were observed in
government data for the month of June.
Summing up
In the person of Prime Minister Meles Zenawi, the government of Ethiopia pledged
in September 2007 at the launching of the country’s second millennium to
transform Ethiopia in twenty years into a middle-income country. Heart warming
as that is, there is the inevitable reality of dissonance between politics and
economics on one side and the weaknesses of the economy’s structures on the
other, the correction of which, as discussed earlier, does not seem to have been
given adequate attention this long. These would make it difficult to achieve that
objective.
- (a) At present, Ethiopia is confronted with enormous problems. This is
because there are certain things Ethiopia lacks, which other countries that
have broken the cycle of underdevelopment had. Government policy has
been and still is oblivious of those factors. For instance, of the long list of
adverse factors to national development includes, where natural human
homogeneity is lacking, national consensus should have been pursued with
vigour and in every way possible. Without a people united for a common
goal and on a voluntary basis, especially national development, there seems
to be less incentive for citizens stressed by poverty to build social capital.
The government has not only been reluctant in facilitating this, but in its
emphasis on ethnicity has also weakened whatever mutual solidarity and
concern there may have existed. Today, Ethiopia is more divided than it
should be. This is a wrong direction, and unhelpful for the country to
realize its objectives.
What we have in place now in essence is a system that eventually
creates inequalities amongst the people, denies the country peace and
security, and genuine equality. It needs rebuilding on the basis of
democratic principles and respect for fundamental human rights. History
provides ample examples of the immense possibilities for success when
different people and interests groups work together as coalition and build a
better and stronger society. The common denominator they agree upon
becomes the point of coordination of their efforts to engage in freeing
society from subordination to narrower interests and wants. What we see
today is solitary tap-dancing that has already gone against our individual and
group awareness of ourselves and the tide of ideas of our time.
(b) Peace and political stability borne of the rule of law are the most
important preconditions for national development. The reality in Ethiopia is
that the government is heavy-handed and always right. To get its way, it
relies on the use of or threat of use of force, incarceration, blackmail and
disappearances, instead of persuasion and consensus building. However,
the peace the nation needs should be differentiated from the quiet that fear
and repression impose on citizens.
(c) In any policy environment, mistakes can happen. The wisdom is not to
gloss them over or deny, but to correct them and be forthright about them.
Since 2005, Ethiopia has been living in an inflationary nightmare, an
outcome of mistaken policy judgement that has become devastating.
Consequently, that has busted the country’s balance of payments, heavily
devalued its currency and upset price parity between locally produced and
imported goods. This is not to deny the existence foreign factors
responsible for that; nonetheless, the main responsibility lies with the policy
actions of our government. If our media were free, our experts could write,
citizens could speak freely and help problems corrected without creating
too many damages.
In this connection, I might add here one quotation from Prof. Inchul
Kim of South Korea who, in his Growth Planning and Statistical
Credibility article, shares with us a relevant experience.
“In a democratic society, the role of the mass media is unquestionable.
It closely watches the behavior of government officials and political
leaders. If the national goals and policies set by the government are biased
towards a small number of interest groups, the mass media points out the
problem and tries to correct them. The national goals should reflect the
preferences of the majority of the population. In reality, however, that is
not always the case. Even if national goals truly reflect the preferences of
the majority voters, the government agents may not want to pursue them.
They tend to seek their own interest, and this is referred to as the principal-
agent problem. When the preliminary development plans are made, the
journalists and critics check the feasibility of the plans and try to point out
the adverse effects of the policies.”
(d) In his eighteen years in power, as a powerful chief executive at the head
of the government of Ethiopia, one cannot help noticing that Prime Minister
Meles Zenawi’s democratic credentials have been badly anaemic. It is an
incontrovertible fact, after all, that he has quashed those early promises and
hopes of millions of Ethiopians for freedom and democracy. There is no
doubt that the prime minister has laboured as hard as one could for
economic growth. However, his efforts have constantly been hijacked by
the search for legitimacy for both himself and his party, which only his
politics and ideology have denied him during these difficult years.
Is there any doubt that the country has become constantly incapable of
supporting itself in food production? Government even resorted to denying
the existence of hunger not to spoil its image. Our climate is changing,
hunger and famine are having shorter frequencies and cycles. With lots of
unemployment, no income for the many, or slowly dwindling incomes for
the few and sky-high prices of goods and services for all, I am not even
sure which way our country is headed. As far as I am concerned perhaps it
is time that Ato Meles takes his expressed interest to pass on the baton too
seriously.
NOTE TO THE PRIME MINISTER ON HOUSEKEEPING
MATTERS
Prime Minister Meles, you may wish to take a few more measures for legacy’s
sake, before you leave, if you leave. The change I have in mind is perhaps easier
for a powerful person such as your good self, as an outgoing prime minister. That
is to initiate, before you leave, if you leave, or support any efforts to limit the
terms office of your successor prime minister to a maximum of two terms. I
understand you may be advised that it is too late in the day for you to do that.
They may tell you it is discourteous of you at the last minute to do that to your
successor. You must recall in 1995 that you insisted on limiting the terms of office
of the president that you knew you would vacate. At the same time, you refused to
accept term limits for the chief executive of the government that became your
destination.
By the way, if you do what I am kindly asking you now, you would spare the
country of entrenchment by your successor in power for much longer than is
necessary, as you did. Lately, there is even the danger of a new disease called
constitutional revision, prevalent now in some African and Latin American
countries. Your friend President Musevini has done it to Ugandans. The idea is to
enable greedy men of power to stay in office indefinitely. Early on Jean-Bedel
Bokassa did it. It was not enough for him. At last, he crowned himself an emperor
and died in power. There was not anything imperial about him or his death.
Nonetheless, he died a common man’s death, that we all share. His must have
been surreal to Central Africans, the man the world held in contempt for his vanity
and terribly flawed personality.
I see! Might I be wrong in asking you this favour? How do I know that you
yourself would not have revised the provisions of the constitution? Fortunately,
you would not be accused of that, because we never had one. Anyways, I still
urge you to put a safety valve into what you may propose before you leave, if you
leave, and in case you are willing to do it and succeed doing it. Please make it
nearly impossible to change its provisions of the revised constitution. The rest may
be tidied up after your departure.
Finally, I must say, after all, it has never been right you have been in power for
eighteen years; certainly, without our consent. It is not right at all that the nation
should be a passive observer in matters of such gravity, leaving the whole thing to
the benevolence of a single individual, the chief executive, until he expires or is
physically exhausted, as you are claiming now. It is not right! It is not fair, at all!
| All rights reserved. |
| Ethio Quest News Together We Can Make It! |
 | |  | |  | |  | |  | |  | |  |
| Ethiopia's History of National Resistance for African Unity & Dignity PART - ONE PART - TWO PART - THREE |
| Ethio Quest News: For latest Ethiopian News, views, Reviews and More |
| Ethiopian Perspective Articles by Category Ethiopian Diversity Ethiopian Economy Ethiopian Politics Ethiopian Women |
| Previous Articles by Genet Mersha |
|
| PERCENTAGE OF GDP GROWTH 2000 - 2010 (in percentages) |
|
| GDP BY INDUSTRIAL CLASSIFICATION (AT CONSTANT BASIC PRICES) (in percentages) |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | Use of improved seed, irrigation, pesticide and fertilizers in 2005/06 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | Use of improved seed, irrigation, pesticide and fertilizers in 2006/07 |
| | Use of improved seed, irrigation, pesticide and fertilizers in 2007/08 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| 2005/06 agricultural landholding & main season production (hectare) |
| 2006/07 agricultural landholding & main season production (hectare) |
| 2007/08 agricultural landholding & main season production (hectare) |
|
|
|
| Sources of funding of the 2010 budget (in millions of birr) |
| Total domestic resources, foreign aid and loans | 54,144.9 |
|
| | NUMBER OF HEALTH PERSONNEL TRAINED IN ETHIOPIA |
|
| Number of students by sex in government & non-government schools* |
