Government media in Ethiopia vs Scholars view of development: A stand-off paradox

 

 

 

 

Government  media in Ethiopia vs Scholars view of development: A stand-off paradox

Ameyu Etana*

 

It has been more than a decade since DEVELOPMENT became a buzzword in Ethiopian Radio  and Television Agency

As ERTA is a pro-government media and are sponsored by the state, there is a strong probability to be under the guise of social responsibility theory when addressing issues. As it is common of using development journalism as an instrument in developmental states, likewise, the Ethiopian government is using media as a big power to making the public participating in development.  Television Agency (ERTA) and other media that are pro-government but run under the auspices of private media. Regrettably, probably, it is the most abused and corrupted word beyond what one could imagine. A name developmentalist came to develop a negative connotation for a journalist in Ethiopia. Quite number of academic researches has been done on the single nationwide media in Ethiopia, however; very little of them adduced and proved the professional nature of political power house of Ethiopian government, ERTA.

Ethiopia, a nation came to be a laboratory of political economy is a dish for choose and pick philosophy of politics. The political economy of Ethiopia is democratic developmental state. By their nature such states are repressive. And there has never been a country both democratic and developmental at a time except Ethiopia. Nevertheless, it seems, what we are seeing is not in accord with the political economy.

The Ethiopian government adopted United Nations General Assembly Resolution 41/128:1986. Alike, the right to development is one of the bill rights that had been included in the federal constitution of Ethiopia. Article 43 of FDRE constitution could depict this. To the contrary, mostly, what has been written and what has been practiced seems contradict each other.

As we know, what Ethiopian Television, Ethiopian Radio, Ethiopian Herald, Addis Zemen, Bariisaa, Ethiopian News Agency, Walta Information Center and other government driven media and/or news agency in Ethiopia and other whose names called under the guise of private but pro-government media view development as econometric (statistics use to view development e.g. economic development) view of development. As a result, any report that put Ethiopian development in number presumed to have high political benefit and get the major attention as it makes a headline. Infrastructure, number of investors, their capital, the KM of a road built, export and import quantities, number of graduates, number of higher institutions, and others are mostly at the desk of those media institution. Hence, what is seen is not the human side but the growth side as it uses to be.

Since the philosophy of state media in Ethiopia is development journalism, though wrongly interpreted, the issue of development vastly and exhaustively reported in a form of news, program, documentary, and other types of reports. However, most news are just a report as they lack interpretation while the journalist acts as a conduit than the one who produce it. I.e. Ethiopia is amongst the fastest growing economy in the world though third of its population lives in absolute poverty. In addition, there is been a big unequal economic distribution in the country and unemployment is getting higher albeit it is repeatedly told it is non-oil economy. If so, what is the benefit of jobless growth? Moreover, indigenous knowledge is ignored at the same time modern technology is also getting little attention by farmers, which is discrepancy right now in the country. As the journalism model, those media were supposed to critically examine and meticulously analyze issue that matters most to the people than merely reporting it.

The people of the country have long experienced the use of development for propaganda. Owing to this, it is difficult to identify the real concept of development in the mind of citizens. This resembles the sedative nature of the media in the country. Recently, journalists of Oromia Radio and Television Journalists (ORTO) did a deliberation on the controversial master plan of Addis Ababa, however, regrettably, they got an axe for the mere fact they did speak their mind. Hence, we can say that development is like politics in Ethiopia as it is untouched area to be opened for deliberation.

After all what is development? What scholars say about development? 

Several scholars held a debate for decades on what development is until they came to, probably; seems agree as it is all about human development. Lamentably, as Rita Abrahamsen puts it in her book called Disciplining Democracy: Development Discourse and Good Governance in Africa the issue of development became politicized, which is unfortunate as the world came to see help poor countries based on their political ideology they might have than favoring solely for being human.

The leading professor Amartya Sen in his book Development as Freedom which was published in 1999 argues development should be seen as a process of expanding the real freedoms that people enjoy. He contrasts the view of development with the widely prevalent concentration on the expansion of real income and on economic growth as the characteristics of successful development. Poverty, the flip side of development, means capability deprivation that inhibits citizen’s freedom to live, the reason they value most. As a result, development means an expansion of freedom.

For Amartya Sen Poverty is lack of choice, socioeconomic and political deprivation while development is a freedom or emancipation from poverty, empowerment of the people. Therefore, we simply understand us development is all about a people than merely numbers.

Similarly Michael Todaro in his book Economic Development argues that development must be seen as multidimensional process involving major changes in social structure, popular attitudes, and national institutions as well as the acceleration of economic growth, the reduction of inequality and the eradication of absolute poverty. And several scholars including Thomas Alan and others believed development is about empowering and emancipating people from the agony that make them suffer most than ignoring their existence.

Having looked at this, inopportunely we see the paradox in Ethiopia. In the name of development people has been ignored freedom; few are benefiting but millions are joining poverty if not struggling to survive. Rather than sensitizing them the media is pursuing sedative under the auspices of development as submissive people at large are being produced in the country seeing that the issue of development became not open for discussion and untouchable. Regrettably, in the name of investment and several projects, millions are being displaced from the land they presumes their only property they got from their forefathers but, are treated like ignorant who could serve nothing for the development. I.e. it is the residents of Addis Ababa that were deliberating over the contentious master plan for days on the lands of farmerssurrounding Addis Ababa. How could this be the right way? By no means it is democratic or developmental? It is highly nonsense and absurd but not surprise as it uses to be in the country.

If development is for the people why do ignore them or why to treating them as against development? By its nature development is not merely road or building, it is about mind development. If the big asset for human, which is mind is not well set, how to manage the entire infrastructure? It seems everything is messed up in Ethiopia. Due to this, the wider public is feeling ignorant to the plans and strategies the government drafts each time.

Consequently, here in Ethiopia, under the guise of development thousands get prisoned, displaced, ignored, dehumanized, unnerved, denied capability, bottled in poverty, whereas, few get rich, empowered, emancipate in such a way to fasten andwiden the gap of living standards of citizens, which is shockingly inhuman. Inconveniently, for the development gained it is not the people but a party or officials get recognition as personal cult is common so far.

The other vital issue we should pay attention to is making the people the participant when the plan is drafted which mean making the people the source of development. If doing so, those who decide by themselves become responsible for the accomplishment, which is a big benefit for the ruled and for the ruler. However, this was not happening rather the people are assumed as ignorant mass that could have no role prior to drafting of the plan but after. http://mohiboni.blogspot.co.uk/2014/08/government-herd-media-in-ethiopia-and.html

*Ameyu Etana is a journalist in Ethiopia and by now he is a graduate student at Addis Ababa University. Can be reached at: ameyuetana@gmail.com  You can follow and comment on his articles on mohiboni.blogspot.com and mohiboni.wordpress.com. All are encouraged to challenge. Any idea is welcomed as far as it has adduced. 

 

False accounting & the great ‘poverty reduction’ lie

Exposing the great ‘poverty reduction’ lie

Jason Hickel* @ Aljazeera Opinion

 

The UN claims that its Millennium Development Campaign has reduced poverty globally, an assertion that is far from true.

 

 

The received wisdom comes to us from all directions: Poverty rates are declining and extreme poverty will soon be eradicated. The World Bank, the governments of wealthy countries, and – most importantly – the United Nations Millennium Campaign all agree on this narrative. Relax, they tell us. The world is getting better, thanks to the spread of free market capitalism and western aid. Development is working, and soon, one day in the very near future, poverty will be no more.

It is a comforting story, but unfortunately it is just not true. Poverty is not disappearing as quickly as they say. In fact, according to some measures, poverty has been getting significantly worse. If we are to be serious about eradicating poverty, we need to cut through the sugarcoating and face up to some hard facts.

False accounting

The most powerful expression of the poverty reduction narrative comes from the UN’s Millennium Campaign. Building on the Millennium Declaration of 2000, the Campaign’s main goal has been to reduce global poverty by half by 2015 – an objective that it proudly claims to have achieved ahead of schedule. But if we look beyond the celebratory rhetoric, it becomes clear that this assertion is deeply misleading.

The world’s governments first pledged to end extreme poverty during the World Food Summit in Rome in 1996. They committed to reducing the number of undernourished people by half before 2015, which, given the population at the time, meant slashing the poverty headcount by 836 million. Many critics claimed that this goal was inadequate given that, with the right redistributive policies, extreme poverty could be ended much more quickly.

But instead of making the goals more robust, global leaders surreptitiously diluted it. Yale professor and development watchdog Thomas Pogge points out that when the Millennium Declaration was signed, the goal was rewritten as “Millennium Developmental Goal 1″ (MDG-1) and was altered to halve the proportion (as opposed to the absolute number) of the world’s people living on less than a dollar a day. By shifting the focus to income levels and switching from absolute numbers to proportional ones, the target became much easier to achieve. Given the rate of population growth, the new goal was effectively reduced by 167 million. And that was just the beginning.

After the UN General Assembly adopted MDG-1, the goal was diluted two more times. First, they changed it from halving the proportion of impoverished people in the world to halving the proportion of impoverished people in developing countries, thus taking advantage of an even faster-growing demographic denominator. Second, they moved the baseline of analysis from 2000 back to 1990, thus retroactively including all poverty reduction accomplished by China throughout the 1990s, due in no part whatsoever to the Millennium Campaign.

This statistical sleight-of-hand narrowed the target by a further 324 million. So what started as a goal to reduce the poverty headcount by 836 million has magically become only 345 million – less than half the original number. Having dramatically redefined the goal, the Millennium Campaign can claim that poverty has been halved when in fact it has not. The triumphalist narrative hailing the death of poverty rests on an illusion of deceitful accounting.

Poor numbers

But there’s more. Not only have the goalposts been moved, the definition of poverty itself has been massaged in a way that serves the poverty reduction narrative. What is considered the threshold for poverty – the “poverty line” – is normally calculated by each nation for itself, and is supposed to reflect what an average human adult needs to subsist. In 1990, Martin Ravallion, an Australian economist at the World Bank, noticed that the poverty lines of a group of the world’s poorest countries clustered around $1 per day. On Ravallion’s recommendation, the World Bank adopted this as the first-ever International Poverty Line (IPL).

But the IPL proved to be somewhat troublesome. Using this threshold, the World Bank announced in its 2000 annual report that “the absolute number of those living on $1 per day or less continues to increase. The worldwide total rose from 1.2 billion in 1987 to 1.5 billion today and, if recent trends persist, will reach 1.9 billion by 2015.” This was alarming news, especially because it suggested that the free-market reforms imposed by the World Bank and the IMF on Global South countries during the 1980s and 1990s in the name of “development” were actually making things worse.

This amounted to a PR nightmare for the World Bank. Not long after the report was released, however, their story changed dramatically and they announced the exact opposite news: While poverty had been increasing steadily for some two centuries, they said, the introduction of free-market policies had actually reduced the number of impoverished people by 400 million between 1981 and 2001.

This new story was possible because the Bank shifted the IPL from the original $1.02 (at 1985 PPP) to $1.08 (at 1993 PPP), which, given inflation, was lower in real terms. With this tiny change – a flick of an economist’s wrist – the world was magically getting better, and the Bank’s PR problem was instantly averted. This new IPL is the one that the Millennium Campaign chose to adopt.

The IPL was changed a second time in 2008, to $1.25 (at 2005 PPP). And once again the story improved overnight. The $1.08 IPL made it seem as though the poverty headcount had been reduced by 316 million people between 1990 and 2005. But the new IPL – even lower than the last, in real terms – inflated the number to 437 million, creating the illusion that an additional 121 million souls had been “saved” from the jaws of debilitating poverty. Not surprisingly, the Millennium Campaign adopted the new IPL, which allowed it to claim yet further chimerical gains.

A more honest view of poverty

We need to seriously rethink these poverty metrics. The dollar-a-day IPL is based on the national poverty lines of the 15 poorest countries, but these lines provide a poor foundation given that many are set by bureaucrats with very little data. More importantly, they tell us nothing about what poverty is like in wealthier countries. A 1990 survey in Sri Lanka found that 35 percent of the population fell under the national poverty line. But the World Bank, using the IPL, reported only 4 percent in the same year. In other words, the IPL makes poverty seem much less serious than it actually is.

The present IPL theoretically reflects what $1.25 could buy in the United States in 2005. But people who live in the US know it is impossible to survive on this amount. The prospect is laughable. In fact, the US government itself calculatedthat in 2005 the average person needed at least $4.50 per day simply to meet minimum nutritional requirements. The same story can be told in many other countries, where a dollar a day is inadequate for human existence. In India, for example, children living just above the IPL still have a 60 percent chance of being malnourished.

According to Peter Edwards of Newcastle University, if people are to achieve normal life expectancy, they need roughly double the current IPL, or a minimum of $2.50 per day. But adopting this higher standard would seriously undermine the poverty reduction narrative. An IPL of $2.50 shows a poverty headcount of around 3.1 billion, almost triple what the World Bank and the Millennium Campaign would have us believe. It also shows that poverty is getting worse, not better, with nearly 353 million more people impoverished today than in 1981. With China taken out of the equation, that number shoots up to 852 million.

Some economists go further and advocate for an IPL of $5 or even $10 – the upper boundary suggested by the World Bank. At this standard, we see that some 5.1 billion people – nearly 80 percent of the world’s population – are living in poverty today. And the number is rising.

These more accurate parameters suggest that the story of global poverty is much worse than the spin doctored versions we are accustomed to hearing. The $1.25 threshold is absurdly low, but it remains in favour because it is the only baseline that shows any progress in the fight against poverty, and therefore justifies the present economic order. Every other line tells the opposite story. In fact, even the $1.25 line shows that, without factoring China, the poverty headcount is worsening, with 108 million people added to the ranks of the poor since 1981. All of this calls the triumphalist narrative into question.

A call for change

This is a pressing concern; the UN is currently negotiating the new Sustainable Development Goals that will replace the Millennium Campaign in 2015, and they are set to use the same dishonest poverty metrics as before. They will leverage the “poverty reduction” story to argue for business as usual: stick with the status quo and things will keep getting better. We need to demand more. If the Sustainable Development Goals are to have any real value, they need to begin with a more honest poverty line – at least $2.50 per day – and instate rules to preclude the kind of deceit that the World Bank and the Millennium Campaign have practised to date.

Eradicating poverty in this more meaningful sense will require more than just using aid to tinker around the edges of the problem. It will require changing the rules of the global economy to make it fairer for the world’s majority. Rich country governments will resist such changes with all their might. But epic problems require courageous solutions, and, with 2015 fast approaching, the moment to act is now. Read more @original source http://www.aljazeera.com/indepth/opinion/2014/08/exposing-great-poverty-reductio-201481211590729809.html

*Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules. 

Oromia Against the Tyranny of Ethiopia: A Generation, Fearless of Death and Detention, Will Crumble Mountains

 

 

 

A Generation, Fearless of Death and Detention, Will Crumble Mountains

By Firehiwot Guluma Tezera*

There is an Ethiopian saying, “one would lose what one has in the hand while reaching for more from the upper shelf.” While this selfish individual tries to get hold of more, what one has already have will be scattered all over the place. Lately, in the Habesha camp, fear has spread, and uneasiness has increased likewise.

Soothing, warnings, rebuking, and many others had been tried. Unfortunately, they try to tell us that the source of their problem is the national struggle of the Oromo people. In reality, the aim and goal of the struggle of the Oromo people is to get rid of authoritarian rulers, and thus, to achieve the right to self-determination for the Oromo people – based on international regulations and laws. The importance of the struggle is not only for the Oromo people, but for all peoples of the empire who are suffering under the colonial rule. So, the Oromo people trust in the united struggle of the oppressed peoples. The Oromo national movement will wedge, and has been wedging, joint struggles with forces of similar aims. In other ways, the Oromo people demonstrate peace in their cultural and administrative structures, and support fair unity. Fair unity helps the weak and stands for the oppressed. A good demonstration is the exemplary unity of the different ethnic groups living in today’s Oromiyaa – despite the numerous attempts by anti-Oromo groups to create rifts between the Oromo people and the other ethnic groups.

As the Oromo people – in their social lives and national struggle – respect the rules of human rights, by any measure, they are not threats to neighboring and same-region peoples; the information, which has been disseminated by groups wanting to re-instate the old system and TPLF jointly and independently, has turned out to be fake and false time and again.

The truth has been illustrated at various times by different individuals. But as long as those Oromo-phobic individuals who could not understand it give in, we must show and teach them theoretically and by action how the Oromo struggle has matured. Accordingly, the Oromo struggle has come a long way and has reached a stage where it cannot be averted; even though they are not going to like it, I would like to demonstrate through credible facts:

• By the sacrifices paid by its dear children, the Oromo Nation has been able to show to the whole world its country’s boundaries and its true history. By blood and bones of her children, our country Oromiyaa will be respected till eternity. This is the reality.

• The language and culture of Oromo people has been developing on solid foundation. Today Afan oromo has its own alphabets. Millions study, teach and do research by it. Medias with International audience broadcast by it. It has become language of literature. As this indicates that the struggle is nearing the end, we must take note.

• The Oromo people’s struggle has arrived at the generation which does not fear death, and which is ready to sacrifice for its dignity and for the sovereignty of Oromiyaa. This confirms all. As this reality has already been seen on the ground, there is no need for further explanations.

• The international community has not only understood, but forced to look for solutions about the arbitrary killings of the Oromo people. This is the fruit of the relentless struggle. Even if you don’t like it, you know the exact gist.

• Today, we have arrived at a historical chapter where the Oromo people have demonstrated that they will not crack by propaganda of anti-Oromo elements, and that they have stood together in unison for a common goal. This cooperation among all segments of the Oromo people has started to shake your power base – giving you high blood pressure as demonstrated by the recent uprising.

• As the Oromo national struggle consists of all options, Oromiyaan mountains, valleys and forests are witnessing strong military preparations. Accordingly, in May 2014 the Oromo Liberation Army has attacked enemy soldiers, and more than 200 soldiers have been put out of action. It has also confiscated a number of military equipment.

Overall, the Oromo people have scored important victories, and are mobilizing their human and material resources to claim the rest of their rights. So, are you trying to stop this visionary generation by imprisonment? Or trying to fool them through rebuke and fake words? To tell you the truth, that era has passed. Let me help you realize the truth. You can’t stop them. This is because you can’t stop a generation with a cause. The better way is to drop the old eyeglasses, which has twisted the truth, and straighten your views and live together. May God help you.

* Firehiwot Guluma Tezera: keetimdhufeera@yahoo.com

Dictators lie about economic growth

BY HENRY FARRELL

(Washington Post, 26th June 2014), There’s a lot of recent scholarship suggesting that non-democratic regimes grow faster than democratic regimes. This has led some people not only to admire the Chinese model of growth focused authoritarianism, but to suggest that it may be a better economic model for developing countries than democracy. However, this research tends to assume that both democracies and non-democracies are telling the truth about their growth rates, when they report them to multilateral organizations such as the World Bank. Is this assumption safe? The answer is no, according to aforthcoming article (temporarily ungated) by Christopher S. P. Magee and John A. Doces in International Studies Quarterly.

The problem that Magee and Doces tackle is that it’s hard to figure out when regimes are being honest or dishonest about their rates of economic growth, since it’s the regimes themselves that are compiling the statistics. It’s hard to measure how honest or dishonest they are, if all you have to go on are their own numbers. This means that researchers need to find some kind of independent indicator of economic growth, which governments will either be less inclined or unable to manipulate. Magee and Doces argue that one such indicator is satellite images of nighttime lights. As the economy grows, you may expect to see more lights at night (e.g. as cities expand etc). And indeed, research suggests that there’s a very strong correlation between economic growth and nighttime lights, meaning that the latter is a good indicator of the former. Furthermore, it’s an indicator that is unlikely to be manipulated by governments.

Magee and Doces look at the relationship between reported growth and nights at light and find a very clear pattern. The graph below shows this relationship for different countries – autocracies are the big red dots. Most of the dots are above the regression line, which means that most autocracies report higher growth levels to the World Bank than you’d expect given the intensity of lights at night. This suggests that they’re exaggerating their growth numbers.

 

The two countries with the biggest difference between their reported growth and their actual growth (as best as you can tell from the intensity of nighttime lights) are China (although the discrepancy was considerably larger in the mid-1990s than now) and Myanmar. More broadly:

If democracies report their GDP growth rates truthfully, then dictatorships overstate their yearly growth rate by about 1.5 percentage points on average. If democracies also overstate their true growth rates, then dictatorships exaggerate their yearly growth statistics by about 1.5 percentage points more than do democracies.

The authors conclude:

the existing literature on economic growth overestimates the impact of dictatorships because it relies on statistics that are reported to international organizations, and as we show, dictatorships tend to exaggerate their growth. Accounting for the fact that authoritarian regimes overstate growth slightly diminishes the effect of these regimes on long-run economic growth. In light of this point, much of the evidence showing growth benefits associated with authoritarian regimes is less compelling and the case for democracy looks better than before. See more @ http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/06/26/dictators-lie-about-economic-growth?Post+generic=%3Ftid%3Dsm_twitter_washingtonpost

 

Related Article:

What if everything we know about poor countries’ economies is totally wrong?

Read @ http://www.vox.com/2014/7/10/5885145/what-if-everything-we-know-about-poor-countries-economies-is-totally?utm_medium=social&utm_source=facebook&utm_name=share-button&utm_campaign=vox&utm_content=article-share-top

 

 

(OPride) – Over the last decade, Ethiopia has been hailed as the fastest growing non-oil economies in Africa, maintaining a double-digit annual economic growth rate. The Ethiopian government says the country will join the middle-income bracketby 2025.

Despite this, however, as indicated by a recent Oxford University report, some 90 percent of Ethiopians still live in poverty, second only after Niger from 104 countries measured by the Oxford Multidimensional Poverty Index. The most recent data shows an estimated 71.1 percent of Ethiopia’s population lives in severe poverty.

This is baffling: how can such conflicting claims be made about the same country?  The main source of this inconsistent story is the existence of crony businesses and the government’s inflated growth figures. While several multinational corporations are now eyeing Ethiopia’s cheap labor market, two main crony conglomerates dominate the country’s economy.

Meet EFFORT, TPLF’s business empire

The seeds of Ethiopia’s economic mismanagement were sown at the very outset. We are familiar with rich people organizing themselves, entering politics and protecting their group interests. But something that defies our knowledge of interactions between politics and business happened in 1991 when the current regime took power.

Ethiopia’s ruling party, the EPRDF, came to power by ousting the communist regime in a dramatic coup. A handful of extremely poor people organized themselves exceptionally well that they quickly took control of the country’s entire political and military machinery.

In a way, this is analogous to a gang of thieves becoming brutally efficient at organizing themselves to the extent of forming a government. Once in power, the ruling Tigrean elites expropriated properties from other businesses, looted national assets and began creating wealth exclusively for themselves.

This plan first manifested itself in the form of party affiliated business conglomerate known as the Endowment Fund for Rehabilitation of Tigray (EFFORT). EFFORT has its origin in the relief and rehabilitation arm of the Tigrean People Liberation Front (TPLF) and the country’s infamous 1984 famine.

As reported by BBC’s Martin Plaut and others, the TPLF financed its guerilla warfare against the Dergue in part by converting aid money into weapons and cash. That was not all. On their way to Addis Ababa from their bases in Tigray, the TPLF confiscated any liquid or easily moveable assetsthey could lay their hands on. For instance, a substantial amount of cash was amassed by breaking into safe deposits of banks all over Ethiopia. Those funds were kept in EFFORT’s bank accounts. TPLF leaders vowed to use the loot to rehabilitate and reconstruct Tigray, which they insisted was disproportionately affected by the struggle to “free Ethiopia.”

Intoxicated by its military victory, the TPLF then turned to building a business empire. EFFORT epitomizes that unholy marriage between business and politics in a way not seen before in Ethiopian history. According to a research by Sarah Vaughan and Mesfin Gebremichael, EFFORT, which is led by senior TPLF officials, currently owns 16 companies across various sectors of the economy.

This figure grossly understates the number of EPRDF affiliated companies. For example, the above list does not include the real money-spinners that EFFORT owns: Wegagen Bank, Africa Insurance, Mega Publishing, Walta Information Center and the Fana Broadcasting Corporate. The number of companies under EFFORT is estimated to be more than 66 business entities. Suffice to say, EFFORT controls the commanding heights of the Ethiopian economy.

While it is no secret that EFFORT is owned by and run exclusively to benefit ethnic Tigrean elites, it is a misnomer to still retain the phrase “rehabilitation of Tigray.” Perhaps it should instead be renamed as the Endowment Fund for Rendering Tigrean Supremacy (EFFORTS).

MIDROC Ethiopia, EPRDF’s joker card

In Ethiopia’s weak domestic private environment, EFFORT is an exception to the rule. Similarly, while Ethiopia suffers from lack of foreign direct investment, MIDROC Ethiopia enjoys unparalleled access to Ethiopia’s key economic sectors. Owned by Ethiopian-born Saudi business tycoon, Sheik Mohammed Al Amoudi, MIDROC has been used by the EPRDF as a joker card in a mutually advantageous ways. The Sheik was given a privilege no less than the status of a domestic private investor but the EPRDF can also count it as a foreign investor. For instance, the United Nations Conference on Trade and Development reported that about 60 per cent of the overall FDI approved in Ethiopia was related to MIDROC.

MIDROC stands for Mohammed International DevelopmentResearch and Organization Companies. Despite reference to development and research in its name, however, there is no real relationship between what the crony business says and what it actually does. Ironically, as with EFFORT, MIDROC Ethiopia also owns 16 companies. But this too is a gross underestimation given the vast sphere of influence and wealth MIDROC commands in that country.

Like EFFORT, Al-Amoudi’s future was also sealed long before the TPLF took power. He literally entered Addis Ababa with the EPRDF army, fixing his eyes firmly on Oromia’s natural resources. Shortly after the TPLF took the capital, Al-Amoudi allegedly donated a huge sum of money to the Oromo People’s Democratic Organization.

Why the rush?

The calculative Sheik sensed an eminent threat to his business interests from the Oromo Liberation Front (OLF), a groups that was also a partner in the transitional government at the time. In return for its “donation,” MIDROC acquired massive lands in Oromia – gold mines, extensive state farms and other agricultural lands. In a recent article entitled, “The man who stole the Nile,” journalist Frederick Kaufman aptly described Al Amoudi’s role in the ongoing land grab in Ethiopia as follows:

In this precarious world-historic moment, food has become the most valuable asset of them all — and a billionaire from Ethiopia named Mohammed Hussein Al Amoudi is getting his hands on as much of it as possible, flying it over the heads of his starving countrymen, and selling the treasure to Saudi Arabia. Last year, Al Amoudi, whom most Ethiopians call the Sheikh, exported a million tons of rice, about seventy pounds for every Saudi citizen. The scene of the great grain robbery was Gambella, a bog the size of Belgium in Ethiopia’s southwest whose rivers feed the Nile.

It is little wonder then that Al-Amoudi said, “I lost my right hand,” when Ethiopia’s strongman of two decades Meles Zenawi died in 2012. If EFFORT is a curse to the Ethiopian economy, MIRDOC is EPRDF’s poisoned drink given to the Ethiopian people.

Mutual Distrust

The marriage between politics and business has had damaging effects on the country’s economy. One of its most far-reaching consequences is the total breakdown of trust between the EPRDF and the Ethiopian people. In economic policy, trust between private investors and the government is paramount. The deficit of trust is one of the hallmarks of Ethiopia’s much-touted development.

After all youth unemployment hovers around 50 percent. Every year, hundreds of young Ethiopians risk their lives trying to reach Europe or the Middle East, often walking across the Sahara desert or paying smugglers to cross the Red Sea or Indian Ocean aboard crowded boats. The desperation is a result of the lack of confidence in the government’s ability to provide them with the kind of future they were promised.

Ironically, aside from their crony businesses, the EPRDF does not have any confidence in Ethiopian entrepreneurs either. It is this mutual distrust that culminated in the prevalence of an extremely hostile environment for domestic private investment.

This is not a speculative claim but a well-documented fact. The World Bank’s annual survey, which measures the ease with which private investors can do business, ranks Ethiopia near the bottom. In the 2014 survey, Ethiopia came in 166th out of 189 countries in terms of difficulties in starting new business or trading across borders. Moreover, year on year comparison shows that the investment climate in Ethiopia is actually getting worse, sliding down the ranking both in the ease of doing business and trading across borders.

Farms but no firms

The TPLF cronies do not engage in competitive business according to market rules but act as predators bent on killing existing and emerging businesses owned by non-Tigrean nationals. However, the ruling party, which largely maintains its grip on power using bilateral and multilateral aid, is required to report its economic progress to donors (the regime does not care about accountability to the people). In this regard, the lack of foreign direct investment (FDI) has been a thorn in the throat of the EPRDF. Donors have repeatedly questioned and pressured the EPRDF to attract more FDI. The inflow of FDI is often seen as a good indicator of the confidence in countries stability and sound governance. Despite widespread belief in the West, the EPRDF regime cannot deliver on these two fronts.

To cover up these blind spots, the regime has persuaded a handful of foreigners to invest in Ethiopia, but until recently few investors considered any serious manufacturing venture in the country. Besides, considered “cash cows” for the government, banks, the Ethiopian Airlines, telecommunication and energy sectors remain under exclusive monopoly of the state. They provide almost free service to the crony businesses. Any firm looking to invest in manufacturing and financial sectors have to overcome insurmountable bureaucratic red tape and other barriers.

One sector that stands as exception to this rule is agriculture. Since the 2008 financial crisis and the rise in the global price of food, the regime opened the door widely for foreigners who wanted to acquire large-scale farms. These farms do not hurt their crony businesses but they do harm poor subsistence farmers. Vast tracts of lands have been sold to foreigners at ridiculously cheap prices, often displacing locals and their way of life.

Contrary to the government rhetoric, the motivation for opening up the agricultural sector has nothing to do with economic growth but everything to do with politics – to silence critics, particularly in the donor community who persistently question EPRDF’s credibility in attracting FDI. In essence, hundreds of thousands of poor farmers were evicted to make way for flower growers and shore up the government’s image abroad. This tactic seems to be working so far. Earlier this year, Ethiopia received its first credit rating from Moody’s Investors Service. In the last few years, in part due to rising labor costs in China and East Asia, several manufacturers have relocated to Ethiopia.

Addis’ construction boom as a smokescreen

Crony businesses and flower growers may have created some heat but certainly no light in Ethiopian economy. EFFORT and MIDROC were in action for much of the 1990s and early 2000s but GDP growth was not satisfactory during that time. In fact, since other private businesses were in dismal conditions (and hence domestic market size is very limited), even the crony businesses encountered challenges in getting new business deals.

The setbacks in political front during the 2005 election shifted EPRDF’s strategies to economic front to urgently register some noticeable growth.  This partly explains the motives behind the ongoing construction rush in and around Addis Ababa. In several rounds of interviews on ESAT TV, former Minister d’etat of Communications Affairs, Ermias Legesse, provided interesting accounts of cronyism surrounding Addis’ explosive growth and its tragic consequences for Oromo farmers.

It is important to understand the types of construction that is taking place around or near Addis. First, private property developments by crony estate agents mushroomed overnight. A lion’s share of land expropriated from Oromo farmers were allocated to these regime affiliates through dishonest bids. Luxury houses are built on such sites and sold at prices no average Ethiopian could afford, except maybe those in the diaspora. The latter group is being targeted lately due to shortages of hard currencies.

Second, EPRDF politicians and high ranking military officers own multi-storey office buildings, particularly aimed at renting to NGOs and residential villas for foreign diplomats who can afford to pay a few thousand dollars per month. It is a known fact that the monthly salary cap for Ethiopian civil servants is around 6000 birr (about $300). As such, that these individuals could invest in such expensive properties underscores the extent of the daylight robbery that is taking place in Ethiopia.

Third, the government was engaged in massive public housing construction but under extremely chaotic circumstances. The condominium rush in Addis is akin to the Dergue regime’s villagization schemes in rural Ethiopia. Families are uprooted from their homes without any due consideration for their social and economic well-being.

Most households that once occupied the demolished homes in Addis Ababa’s shantytowns made a living through informal home businesses such as brewing local drinks and preparing and selling food at prices affordable to the poor. It was clear that the condominiums were not suitable for them to continue doing such businesses. The construction of the public houses was financed by soft loans from various donor agencies to be sold to target households at affordable prices. However, the government often priced them at the going market rates for condos.

As a result, the poor households simply rented out the properties to those who could afford, while struggling to find affordable houses for themselves. Solving the public housing crisis was never the government’s intention in the first place, as they were only interested in creating business opportunities for their crony construction companies.

Fourth, roads and railway networks are by far the most important large-scale public sector construction projects taking place in Addis. There is no doubt that Addis Ababa’s crowded roads, equally shared by humans, animals and cars, need revamping. But, what is happening in the name of building roads and railways simply defies belief. First, the sheer scale and magnitude as well as the obsession with construction makes the whole undertaking look suspicious. Every time I travelled to Addis, I witness the same roads being constructed and then dug up to be reconstructed over and over again.

The ulterior motive behind these projects is nothing more than expanding TPLF’s business empire and benefit crony allies. Having exhausted opportunities within the existing perimeter of Addis, the so-called master plan had to be crafted to enlarge the size of “the construction site” by a factor of 20 to ensure that the cronies will stay in business in the foreseeable future.  In effect, the large-scale construction projects are being used to siphon off public funds. And there seems to be no priority or accountability in the whole process from the project inception, planning to implementation.

Lies and damn lies

The construction boom in Addis serves as a two edged sward. On the one hand, the funds generated from selling Oromo lands to private property developers adds to the ever-expanding business empire of Tigrean political and military elites. On the other hand, the appearances of several high-rise buildings and complex road networks give the impression that Ethiopia is witnessing an economic boom. The target audience for the latter scenario is foreign journalists and the diplomatic community in Addis Ababa, some of whom are so gullible that they fall in love with ERDF’s economic “miracle” from the first aerial view even before landing at the Bole airport.

The fact remains however: no such economic miracle is actually happening in Ethiopia. A pile of concrete slabs cannot transform the economy in any meaningful way. After all, buildings and roads are only intermediaries for doing other businesses. For instance, it is not enough to build highways and rural roads – a proportionate effort is required to enhance production of goods and services to move them on the newly built roads in such a way that the roads will get utilized and investments made on them get recovered. Otherwise, the roads and buildings can deteriorate without giving any service, and hence more public money would soon be required to maintain them. This is exactly what is happening in Ethiopia.

Meanwhile, the EPRDF has been engaged in a frantic effort to generate lies and damn lies to fill the gap between the rhetoric and the reality of Ethiopia’s economy. The government-controlled media has been used for extensive propaganda campaign to create a “positive image” in the eyes of ordinary citizens. They literally compel viewers or listeners to see or feel things that do not exist on the ground. The Ethiopian television zooms onto any spot of land with a colony of green grass or lush crop fields to “prove” the kinds of wonders the government is engineering.

Barring rain failures, much of Ethiopia’s lush-green countryside has a decent climate for agriculture. But the EPRDF regime tries to convince the public that anything positive that occurs in the Ethiopia is because of its economic policies. But, as evidenced in ongoing multifaceted grievances around the country, the government is fooling no one else but itself (and perhaps a few gullible individuals in the diplomatic community).

Its lies also come in the form of dubious economic statistics, which are generated in such a way that EPRDF could report double-digit economic growth year after year. The story of the double digit economic growth rate in Ethiopia has been such that a lie told hundreds of times, no matter how shambolic the numbers are, is becoming part of the western vernacular. Donors often point to the abundance of high-rise buildings and impressive road networks in Addis Ababa in regime’s defense.

In a brief conversation, it is not possible to take such casual observers through details of the kind I have attempted to narrate in the preceding paragraphs. And, unfortunately for millions of Ethiopia’s poor, in the short run the government’s lies and crony capitalism may continue to ravage the country’s economy until it begins to combust from within.

*The writer, J. Bonsa, is a researcher-based in Asia. Photo courtesy of Addis Food Not Bombs – Ethiopia.

http://www.opride.com/oromsis/news/3762-the-myth-of-ethiopia-s-crony-capitalism-and-economic-miracle