Africa: Illicit Financial Flows Drain US$55.6bn Annually from the Continent

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Illicit Financial Flows Drain US$55.6bn Annually from African Continent

Only Ethiopia has lost $11.7 billion to illicit fund outflows in the last decade.  

A climate of corruption, Ethiopian edition

corruption-in-africaWorking Group Must Address Trade Misinvoicing and Role of U.S. Business and Government in Facilitating Illicit Finance to Be Truly Effective, Warns GFI

Illicit Financial Flows Drain US$55.6bn Annually from African Continent, Sapping GDP, Undermining Development, and Fueling Crime, Corruption, and Tax Evasion

August 7, 2014, WASHINGTON, DC (GFI) – Global Financial Integrity (GFI) welcomed the announcement from the White House and African leaders today regarding the establishment of a bilateral U.S.-Africa Partnership to Combat Illicit Finance, but the Washington-DC based research and advocacy organization cautioned that any effective partnership must be sure to address deficiencies in both the U.S. and in Africa that facilitate the hemorrhage of illicit capital from Africa.

“We welcome the move by President Obama and certain African leaders to form this partnership on curbing illicit financial flows from African economies,” said GFI President Raymond Baker, who also serves on the UN High Level Panel on Illicit Financial Flows from Africa. “Illicit financial flows are by far the most damaging economic problem facing Africa. By announcing the creation of the U.S.-Africa Partnership to Combat Illicit Finance, President Obama and African leaders have taken the first step towards tackling the most pernicious global development challenge of our time.”

GFI research estimates that illicit financial outflows cost African (both North and Sub-Saharan African) economies US$55.6 billion per year from 2002-2011 (the most recent decade for which comprehensive data is available), fueling crime, corruption, and tax evasion. Indeed, GFI’s latest global analysis found that these illicit outflows sapped 5.7 percent of GDP from Sub-Saharan Africa over the last decade, more than any other region in the developing world. Perhaps most alarmingly, outflows from Sub-Saharan Africa were found to be growing at an average inflation-adjusted rate of more than 20 percent per year, underscoring the urgency with which policymakers should address illicit financial flows.

The problem with illicit outflows from Africa is so severe that a May 2013 joint report from GFI and the African Development Bank found that, after adjusting all recorded flows of money to and from the continent (e.g. debt, investment, exports, imports, foreign aid, remittances, etc.) for illicit financial outflows, between 1980 and 2009, Africa was a net creditor to the rest of the world by up to US$1.4 trillion.

Trade Misinvoicing at the Heart of Illicit Outflows

According to GFI’s research, most of the illicit outflows from Africa—US$35.4 billion of the US$55.6 billion leaving the continent each year—occur through the fraudulent over- and under-invoicing of trade transactions, a trade-based money laundering technique known as “trade misinvoicing.” As GFI noted in a May 2014 study, trade misinvoicing is undermining billions of dollars of investment and domestic resource mobilization in at least a number of African countries. The organization emphasized the importance of ensuring that the new U.S.-Africa partnership prioritizes the curtailment of trade misinvoicing.

“The misinvoicing of ordinary trade transactions is the most widely used method for transferring dirty money across international borders, and it accounts for the vast majority of illicit financial flows from Africa,” said Heather Lowe, GFI’s legal counsel and director of government affairs. “While it is easy to place the blame for this on corrupt officials or transnational crime networks, the truth of the matter is that the bulk of these fraudulent trade transactions are conducted by normal companies, many of them major U.S. and European companies.”

Ms. Lowe continued: “Just yesterday, President Obama announced the Doing Business in Africa Campaign, a U.S. government initiative focused on boosting trade between U.S. and African companies, without a signal mention of the elephant in the room: trade misinvoicing. Increasing trade is important to boosting economic growth across Africa, but only if the trade is done honestly and at fair market values. The single most important step that wealthy nations like the U.S. can take to help African economies curtail illicit flows is to trade legitimately and honestly with Africa. While this topic was not addressed at the U.S.-Africa Business Forum yesterday, it must be on the table as the U.S.-Africa Partnership to Combat Illicit Finance commences its work.”

U.S. Must Clean Up Its Own Backyard

GFI further emphasized the need to address the role of the U.S. financial system as a major facilitator of such outflows.
“For every country losing money illicitly, there is another country absorbing it. Illicit financial outflows are facilitated by financial opacity in tax havens and in major economies like the United States,” said GFI Policy Counsel Joshua Simmons. “Indeed, the United States is the second easiest country in the world—after Kenya—for a criminal, kleptocrat, or terrorist to incorporate an anonymous company to launder their ill-gotten-gains with impunity.

“While governance remains an issue for many African countries, structural deficiencies in the U.S. financial system are just as responsible for driving the outflow of illicit capital. This initiative cannot place the onus entirely on the shoulders of African governments. The burden for curtailing these illicit flows must be shared equally by policymakers in the U.S. and in Africa for this partnership to be effective,” added Mr. Simmons.

http://ayyaantuu.com/africa/illicit-financial-flows-drain-us55-6bn-annually-from-african-continent/

http://globalvoicesonline.org/2012/01/25/ethiopia-reflecting-on-corruption-in-ethiopia/

Aid to Africa:A smokescreen to hide the “sustained looting” of the continent

OThe Guardian home

Although sub-Saharan Africa receives $134bn each year in loans, foreign investment and development aid, $192bn leaves the region, leaving a $58bn shortfall. See @ http://www.theguardian.com/global-development/2014/jul/15/aid-africa-west-looting-continent?CMP=fb_ot

 

 

Mark Anderson writes for the Guardian:

Western countries are using aid to Africa as a smokescreen to hide the “sustained looting” of the continent as it loses nearly $60bn a year through tax evasion, climate change mitigation, and the flight of profits earned by foreign multinational companies, a group of NGOs has claimed.

Although sub-Saharan Africa receives $134bn each year in loans, foreign investment and development aid, research released on Tuesday by a group of UK and Africa-based NGOs suggests that $192bn leaves the region, leaving a $58bn shortfall.

It says aid sent in the form of loans serves only to contribute to the continent’s debt crisis, and recommends that donors should use transparent contracts to ensure development assistance grants can be properly scrutinised by the recipient country’s parliament.

“The common understanding is that the UK ‘helps’ Africa through aid, but in reality this serves as a smokescreen for the billions taken out,” said Martin Drewry, director of Health Poverty Action, one of the NGOs behind the report. “Let’s use more accurate language. It’s sustained looting – the opposite of generous giving – and we should recognise that the City of London is at the heart of the global financial system that facilitates this.”

Research by Global Financial Integrity shows Africa’s illicit outflows were nearly 50% higher than the average for the global south from 2002-11.The UK-based NGO ActionAid issued a report last year (pdf) that claimed half of large corporate investment in the global south transited through a tax haven.

Supporting regulatory reforms would empower African governments “to control the operations of investing foreign companies”, the report says, adding: “Countries must support efforts under way in the United Nations to draw up a binding international agreement on transnational corporations to protect human rights.”

But NGOs must also change, according to Drewry: “We need to move beyond our focus on aid levels and communicate the bigger truth – exposing the real relationship between rich and poor, and holding leaders to account.”

The report was authored by 13 UK and Africa-based NGOs, including:Health Poverty ActionJubilee Debt CampaignWorld Development MovementAfrican Forum and Network on Debt and Development,Friends of the Earth AfricaTax Justice NetworkPeople’s Health Movement Kenya, Zimbabwe and UKWar on WantCommunity Working Group on Health ZimbabweMedactHealthworkers4AllFriends of the Earth South AfricaJA!Justiça Ambiental/Friends of the Earth Mozambique.

Sarah-Jayne Clifton, director of Jubilee Debt Campaign, said: “Tackling inequality between Africa and the rest of the world means tackling the root causes of its debt dependency, its loss of government revenue by tax dodging, and the other ways the continent is being plundered. Here in the UK we can start with our role as a major global financial centre and network of tax havens, complicit in siphoning money out of Africa.”

A UK government spokesman said: “The UK put tax and transparency at the heart of our G8 presidency last year and we are actively working with the Organisation for Economic Co-operation and Development to ensure companies are paying the tax they should and helping developing countries collect the tax they are owed.” Read  @http://www.theguardian.com/global-development/2014/jul/15/aid-africa-west-looting-continent?CMP=fb_ot

http://www.gfintegrity.org/report/2013-global-report-illicit-financial-flows-from-developing-countries-2002-2011/

Dictators lie about economic growth

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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.

Growth and reported growth

 

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

 

 

Why has Africa’s growth failed to translate into adequate job creation?

 

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Why has Africa’s growth failed to translate into adequate job creation? Key insights from Unctad’s Economic Development in Africa report 2014*

Africa has a huge problem with unemployment, particularly youth unemployment. It has experienced a high rate of population growth, which has the potential to be a demographic dividend but only if there is sufficient investment in jobs, skills and education.

Essentially, the continent hasn’t produced enough investment and growth in the domestic economy. Public sector investment has been low, and foreign direct investment has largely been channelled into the sectors where the big returns are – oil, gas and minerals.

The difficulty is that these sectors are not very good at generating economic benefits outside a very small enclave. They are not labour intensive so they don’t create large numbers of jobs and benefit the wider economy. Investment needs to support sectors such as agriculture, manufacturing and industry that have the potential for higher growth and job creation. This type of employment creation will be key to the future of the continent’s growth.

What lies behind this failed investment strategy?

Partly it is the advice many African countries have had from Bretton Woods Institutions [World Bank and International Monetary Fund]. It is also partly a risk-averse strategy so they don’t find themselves in a terrible situation should another global financial crisis arise. But it is also fundamentally about a lack of political focus on building capacity, diversifying economies and recognising the need to create more employment.

What does the report have to say about the sectors where employment has declined, and risen?

Broadly speaking, because in Africa we’ve seen both population growth and a failure to upgrade traditional sectors like agriculture there’s been a high degree of rural-urban migration. Lots of people are moving from subsistence agriculture into urban activities which are largely informal and survivalist. This tends to be low-paid, vulnerable employment. This type of work makes up about 80% of total employment in many African countries.

The report highlights the unusually high level of employment and growth in the services sector in Africa, relative to its stage of development. However for this sector to see long-term growth and adequate job creation, there needs to be big leaps in investment in basic infrastructure. There are opportunities in agriculture too. While in the long run many people will still move from rural to urban areas, if we invest and raise productivity we can raise the incomes for those in the sector.

Are there any misunderstandings about the relationship between growth, investment and employment in Africa?

Often this relationship is understood as being a virtuous circle. We argue that growth in Africa has failed to translate into broader development gains such as employment.

What is key to this nexus is the role of the state. Governments have to be more aware that different types of economic activity involve different types of employment intensity. While the services sector is producing more job opportunities than the extractive sectors there still needs to be more investment directed towards industries such as manufacturing and agriculture. Africa has a relatively weak private sector so the state needs to have a much more prominent role in mobilising investment into job-rich sectors.
*By Junior Davies, an economist at the division on Africa, least developed countries and special programmes of Unctad
@http://4globaldevelopment.wordpress.com/2014/07/07/booming-economies-are-not-boosting-employment-in-africa-why-global-development-professionals-network-the-guardian/
Read more@
http://www.theguardian.com/global-development-professionals-network/2014/jul/03/unctad-report-africa-economics-employment?CMP=twt_gu

http://4globaldevelopment.wordpress.com/2014/07/07/booming-economies-are-not-boosting-employment-in-africa-why-global-development-professionals-network-the-guardian/

Theorizing Development

Theorizing Development

From historical perspectives, the urgency underlying the contemporary development quest of developing economies has been recognised for the last seven decades. Of course, this should not be considered as that there were no problems of development prior to 1940’s.  However, paralleling the increasing for economic self-determination and development of developing economies, there has been a tremendous growth in intellectual activity concerning the development problems.

The past 70 years have also witnessed a gluttony  of models, theories, and empirical investigations of the development problem and the possibilities offered for transforming Asia, African, Latin American, and Caribbean nations. This body of knowledge as come to be known in academics and policy circles as development economics.

In these perspectives development is discerned in the context of   sustained rise of an entire society and social system towards a better and ‘humane life’. What constitutes a better and humane life is an inquiry as old as humankind. Nevertheless, it must be regularly and systematically revised and answered over again in the unsteady milieu of the human society. Economists have agreed on at least on three universal or core values as a discernible and practical guidelines for understanding the gist of development (see Todaro,1994; Goulet, 1971; Soedjatmoko, 1985; Owens, 1987).  These core- values include:

Sustenance:

 the ability to meet basic needs: food, shelter, health and protection. A basic function of all economic activity, thus, is to provide a means of overcoming the helplessness and misery emerging from a lack of food, shelter, health and protection. The necessary conditions are improving the quality of life, rising per head income, the elimination of absolute poverty, greater employment opportunity and lessening income inequalities;

self-esteem:

which includes possessing education, technology, authenticity, identity, dignity, recognition, honour, a sense of worth and self respect, of not being used as a tool by others for their own exigency;

Freedom from servitude:

 to be able to choose. Human freedom includes emancipation from alienating material conditions of life and from social servitude to other people, nature, ignorance, misery, institutions, and dogmatic beliefs. Freedom includes an extended range of choices for societies and their members and together with a minimization of external restraints in the satiation of some social goals. Human freedom embraces personal security, the rule of law, and freedom of leisure, expression, political participation and equality of opportunity.

Sustained and accelerated increase and change in quantity and quantity of material goods and services (both in absolute and per capita), increase in productive capacity and structural transformation of production system (e.g. from agriculture to industry then to services and presently to knowledge based (new) economy), etc. hereinafter economic growth is a necessary if not a sufficient condition for development.

As elaborated in Hirischman (1981) and Lal (1983), this corpus of thought and knowledge denotes economics with a particular perspective of developing nations and the development process. It has come to shape the beliefs about the economic development of developing countries and policies and strategies that should be followed in this process. While development economics goes beyond the mere application of traditional economic principles to the study of developing economies, it remains an intellectual offspring and sub discipline of the mainstream economics discipline. The growth in economic knowledge and the corresponding intellectual maturation of development thought and policy debate has led to the appearance of various perspectives of thought on the theory and reality of development and underdevelopment within the same discipline of development economics. The two  main paradigms are neo-classicals (orthodox), and Political economy (neo-Marxists). There are also eclectics.

Copyright ©  The Oromianeconomist 2014 and Oromia Quarterly 1997-201 4. All rights reserved. Disclaimer.

Perverted Development: What role for Institutions

 

Development: What role for Institutions

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
Keynes, John Maynard

 

 

 

Introduction

The force of human reductionism that had assaulted on Oromia’s history, civilisation, politics and economy for many centuries in the last three Christian millenniums and particularly of the last two centuries has continued in the new millennium to enfeeble the endeavours of its people towards progress and development.

Oromia is not the poorest of the nations of the world in resources but it is one of the most underdeveloped, characterised by thwarted advancement, declined progress and cataclysm.

In Oromia today immense agricultural potential, mineral wealth and human capital coexist with some of the lowest standards of living in the world. Part of the problem lies in the nature of the economic change the Abyssinian colonialism fostered in Oromia. The Oromo economy has been distorted to serve the Abyss interest and needs.

Oromos are the most brutalised and humiliated in modern history. The genocidal treatments, which Oromos have received from Abyssinians, have been as gruesome as anything experienced by Jews, Native American and native Australians and the Armenians received from the Nazi, Europeans, white Americans, and the Ottoman Turkey respectively. Oromos have also been humiliated in history in ways that range from the level of slavery, segregation and treated as second-class citizens in part of their own country to the present day in spite of being numerically the majority and geographically the largest territory.

In the early 1990s the old Amhara settler colonialism (Nafxanyaa system) was substituted by Tigrean ‘federal colonialism’ (neo- nafxanyaa system) the facet of exploitation seemed to take on new dimensions. In fact, the pattern of colonisation and domination has remained the same since it instated century ago with the Berlin Conference of 1884-1885, which had approved the scramble for Africa among European colonial powers. It was a time when the cruel Abyssinian Empire was given an ordinance of Christianising and ‘civilizing’ the Oromos; though it is a historic derision how a backward and barbaric empire was to ‘civilize’ the society of prime civilisation, high culture and social structure, the ‘natives’, whose development levels and potentials were diverse and by far advanced.

The very idea of Christianising and civilizing was an external imposition often upheld by external protagonists. In the pre 1974 Ethiopia, this took the form of substantial military and economic aid from the US America and Europe. During the Cold War era, the mission of oppression of the Oromos maintained and supported by fresh military and economic aid from the then Soviet Union scheme of spreading its sphere of dominion and its ideology to Africa. In the contemporary ‘new world disorder’, the support has got new momentum in which the old Christian missionaries are replaced by an army of western neo-classical economists who peddle a ‘free market’ ideology, which they hope, will take care of the imprisoned market agents, in this case the Oromos.

According to the new Gospel, the Tigrean colonizers are given the mandate and the necessary financial backing to pursue ‘economic liberalization’ while keeping strict control that Oromia remains the Abyssinian colony. The liberalization agenda has served as a precursor of the making of Tigrean version of crony capitalism or more appropriately advanced feudalism in the age of economic globalisation. It is alien to Adam Smith’s invisible hand, social justice and the free-market ideals of relying on legal contracts, property rights, impartial regulations and transparency. It is no wonder that the political and economic prescriptions that the Ethiopian colonial rules implemented and or pretend to implement are in line with the advice of the International Monetary Fund and the World Bank and The US administration’s The Horn of Africa Initiative all of which have exacerbated the problem of the Oromo nation. It has also betrayed the ideals of free market, social justice, self-determination and human rights.

The sorrowing fact is that shared interest and solidarity between the West and the Abyssinian colonizers are impoverishing the people. Pretentious and ill-conceived measures are being taken in the name of free market and above all development. Currently, there are a number of regime-sponsored ‘associations’ of this or that ‘Region/State’s Development’ anti-terrorism, poverty alleviation, renewal process, revolutionary democracy, etc. Given this, the people’s last resort is to defend their own interests is the exit option or to retreat from the colonizers. What has become more apparent than ever is the need to rely on the Oromo initiatives to solve the problems of the Oromo. The Oromo poor need to defend themselves from the bogus free market invaders and their phoney local allies. This is necessary, since, in the absence of property rights, social justice, and individual and social freedom and democracy, no free market economic gimmickry is able to reserve the tragedy of the oppressed. It is within this context, that we discuss, how the Ethiopian colonial rules, in collaboration once with international socialism and now with the global capitalism has impoverished and underdeveloped one particular community in Africa, the Oromo nation.

Sclerotic to development: The Abyssinian Colonial Occupation and Its Alliances

Economists are inspired to point out the weight of political factors, captured by the term ‘governance’ and its role in economic development. Concerns about political factors in economic development is revitalized because of the dearth of economic development reform and structural adjustment programs to yield definite success and prosperity, particularly, in Africa. The main problem pointed out is ‘poor governance’ (World Bank, 1989; Moore, 1992). There are three different aspects to the notion of governance that can be identified as:

The form of political regime (independent, colonial government, multi-party democracy, authoritarian, etc.),

The process by which authorities exercised in the management of the country’s economic and social resource; and’

The willingness, the competence and the capacity of the government to design, formulate, and implement genuine development policies, and, in general to discharge development and government functions.

As there is no antithesis concerning the conviction that ‘good’ governance is an important and desirable ingredient of development, scholars are cautious not to attach specific regime type and political reforms to good governance. Broadly, however, good governance is legitimated by developmentalist ideology while poor governance is characterized by ‘state elite enrichment ‘ (Jackson and Rosberg, 1984), the ‘rent seeking society’ (Krueger, 1974) or ‘politics of the belly’ (Bayart, 1993;Tolesa, 1995) such as Ethiopia, Nigeria and Zaire). The latter in fact are characterized by sclerotic behaviours and are obstacles to development.

The Oromia’s underdevelopment (negative development) and its associated problems are never going to be understandable to us, much less contain it, as long as we persist to ponder it as a mere as an economic enigma. What is before us momentarily is in essence an enigma of political colonialism whose economic after-effects are severe.

Not only the problem is basically political and colonial in character. It arose largely from Abyssinian imperial conquest and its associated colonial disposition, which is characterized by reliance on sheer force, state terror, genocide, plunder, authoritarianism and violence.

The story goes back to the days of the Abyssinians crossed the Red Sea and seized the territory and resources of the Cushites ( Bibilical Ethiopia, the present Horn of Africa and Oromia) making concerted aggression on the latter’s history and culture in the name of settlement and civilizing the ‘non-believers.’

As it is discussed above and elsewhere, in the first millennium BC the Abyssinian group crossed the Red Sea from South Arabia (source: the debtras’ records and memories of Abyssinian high school history text book) to the present North East Africa to conquer and resettle the land occupied by endogenous Oromo and the other Cushitic people. Recent research recognises that the Semitic culture of the Abyssinian empire’s northern highlands was built on the Cushitic base for which not genuine credit has been given, and the Axum obelisks which were attributed to the (Sabeans Abyssinians) do not have corresponding existence on the Arabian peninsula while they are abundant in the Nile valley stretching from Egypt to ancient Kush in today’s Sudan. This most probably indicates that the earlier phase of Axum civilization was predating the Sabean infiltration/invasion.

Cleansing as a policy was initiated to conquer the Cushite territories. The territory they conquered was divided among numerous Abyss chiefdoms that were as often at war with each other as with Oromo and the entire Cushite. The population of conquered territories were considered as dangerous thus; Abyssinian cleansing, up rooting, forced labour and killings of the vanquished were conducted as the means of crushing resistance, securing the conquered territories and even to expand their occupation further. Though the Abyssinian gained some territories and resettled in the northern highlands of the Oromo and other Cushitic regions among others Afar, Agau, etc., their expansion was checked for a long time in history by wars of resistance and liberation they encountered by the endogenous people. These wars of resistance led to a decisive victory for Oromo, Afar and Somali nations particularly from 12th to the second half of 19th century. As a result of such a defeat Abyssinians started to wage particularly anti-Oromo propaganda battles to alert themselves and attract foreign support against the Oromo. The derogative name ‘Galla’ and the ‘16 century Oromo migration’ were all the Abyssinian fabrications and to serve the war against Oromo. In fact, the Oromo oral history shows that the 16th century was a massive Abyssinian further southward migration and intensive campaign to entirely control Oromia and other territories. For the Oromo this period was characterized by political and military dynamism and at the same time it was a period of victory, massive dislocations, rehabilitation and displaced communities returning home.

According to M. Bulcha (see Oromo Commentary), it was only during the second part of the 19th century that the Abyssinians ultimately succeeded to make significant in roads into the Oromo territory. Tewodros (also known in different names Hailu, Kassa, Dejazmach, Ras, etc., as other Abyssinian shiftas and present Woynes, is on record for his brutish hostility towards the Oromo nation. He was not the first or the last of his kind. They were many before and after him, for concrete evidence even today, this time and this second. All of them have been gangsters of very abnormal characters and Abyssinian detested figures. The Abyssinians remembered Tewodros and his type not only as the romanticized hero figures but also portrayed them as a modernises. Tewodros the lunatic and bandit declared and conducted a war of extermination against the Oromo. In order to help them to bargain for the western support, he and all his type including Yohannes, Menelik, Haile Sellasie, Mengistu and currently Meles declared anti-Islam and anti-Muslim nations. They mobilized all their resources and the entire Abyssinia (Amhara &Tigre) against the Oromo to achieve their goal. Tewodros made every effort to obtain the European military support claiming his fictions of Christian identity and ideology (the then dominant political ideology though he had not any biblical ethics and values, not at all). Tewodros is a symbol and an element of Abyssinian barbarism that was conducted at particular historical stage (1850-1868). Such barbarism has been conducted since the Axumite period (3000 years) but has never achieved its ultimate goal of elimination of the entire endogenous people of the North-East Africa. But it eliminated millions of and it thwarted the civilisations of Cushite people. They have used all the devastating means the: Christian civilizing ideology, European army, settler colonialism, Soviet Socialism, Stalin collectivisation, Mengistu’s villegisation, and America’s structural adjustment, terrorism, etc. They have always tried to change names after names for the same ugly & old expansionism, feudalism and empire (the legendary land of Sheba, Ethiopia, Ethiopia first, socialist Ethiopia, republic, mother land, federal etc.). The very name Ethiopia is Hellenistic Greece. It was the name used in the ancient Greece occupation (before Romans) of North Africa people and southward expansion. This name was colonialism from the beginning and it has been, it is and it will be. It is not African in origin as the people who invented it. This name was adopted and maintained to conquer the entire Cush and then the entire Africa in the shadow of christianisation. It is a sinister name that has no boundary and ethnic identity. It is not only the conquered people of North-East Africa but also all Africanists that must understand, including its sinister philosophy. It was designed and adopted to deconstruct an endogenous African identity.

One implication of the doctrine of Abyssinian ‘civilizing mission’ was that the Oromos needed to be ruled by Abyssinians and could not responsibly be granted civil liberties. Authoritarian as it has always been, the Abyssinian colonial rule in Oromia whether under Menelik II, Haile Selassie, Mengistu and currently under Meles has been characterized by the ‘politics of the belly.’ The underlying ethos remains self-aggrandizement and those elites are alien to growth whereas corruption, brutality, inefficiency and grotesque incompetence have tainted their politics. Time and again, they siphoned off Oromia’s wealth and indulged in conspicuous consumption and stashing millions of dollars in remote secret accounts in Europe, America and Asia. Scholars understand that development is about the future. However, the Abyssinian elites are living for the present. They came for quick self enrichment. The Oromos have no opportunity to invest in their country. They disowned everything.

While the Abyssinian colonial settlers in Oromia do no want and support policies that promote development, they find military and other forms of support abroad to stay in power. In more than one time, this force of underdevelopment has been strongly reinforced by external forces (Holcomb and Ibssa, 1990). Despite generous foreign assistance, this hardly commanded legitimacy to mobilize the colonized masses behind their rule. To the contrary, people who have waged legitimate struggle to reclaim their freedom, cultures and history has fiercely resisted their rule.

As it has been discussed elsewhere, Oromos have their own political power, which was fully operational before they were colonized and occupied by Abyssinians put under the strict control of Ethiopian empire state. Their political system is based on the Gadaa (Gada) system. The Gadaa system has been the foundation of Oromo civilization, culture and worldview (Jalata, 1996). The Gadaa political practices manifested the idea of real representative democracy with checks and balance, the rule of law, social justice, egalitarianism, local and regional autonomy, the peaceful transfer of democratic power, etc. (Jalata, 1966). The Gadaa political system also facilitated property rights, stability, and the expansion of free trade, commerce, improved farm techniques and permanent settlements, gradual diversification of division of labour. The Gada state was non-taxing state. Military was not the focal point, only defensive which is democratic. It was the opposite of expansionist, imperial, genocide or conquering state, e.g. Roman, Sparta, Abyssinian and Serbia, etc.

One of the distinctive virtues of Gadaa state was the weight of civilian power as compared to military power, military aristocracy was practically absent and in normal times, the army executed only an inconspicuous, if not nonexistent, political function. The military aristocracy was not the focal point of society. War had rather a defensive mission.

Nonetheless, particularly since the last decades of the nineteenth century, the Abyssinian colonial rule and its state disallowed the Gadaa political system and expropriated the Oromo basic means of subsistence, such as land cattle while it established an Ethiopian system of rule over Oromia. The Oromo commerce and industrious activities were not only discouraged but also ridiculed and obtained the lowest social status. Productive relations were imposed through the process of commodity production and extraction between those who control or own the means of production, the state, and those who do not. Those who control the means of coercion had the opportunity to reorganize productive relations through dispossession of the colonized Oromos in order to expedite more product extraction.

The process of dispossession is multi-faceted and far-reaching. As the result of it, the Oromos have been denied power and access to education, cultural, economic and political fields while at the extremes, the Abyssinian colonialism has been practiced through violence, mass killings, mutilations, cultural destruction, enslavement and property confiscation.

Apart from the splendid crop farm and animal husbandry, in his 1896-1898 travels in Oromia Bulatovich (2000, pp 60-61) described the Oromian industrial and commercial economy as the most vibrant with conducive endogenous institution as follows:

“Artisans such as blacksmiths and weavers are found among the [Oromo]. Blacksmiths forge knives and spears from iron, which is mined in the country. Weavers weave rough shammas from local cotton. The loom is set up very simple. … There is also the production of earthenware from unbaked clay. Craftsmen who make excellent morocco; harness makers who make the most intricate riding gear’ artisan who make shields; weavers of straw hats (all [Oromo] know how to weave parasols and baskets), aromers who make steel sabers; weavers who weave delicate shammas, etc.

Bulatovich Observed that commerce in Oromo was both barter and monetary based. The monetary unit was the Austrian taller and salt. The former was rather little in quantity and was concentrated in the hands of merchants. He witnessed that Oromos have great love for commerce and exchange economy. According to Bulatovich (2000, pp, 61-63):

“In each little area there is at least one market place, where they gather once a week, and there is hardly an area which is relatively larger and populated which does not have marketplace strewn throughout. Usually the marketplace is a clearing near a big road in the centre of [Oromo] settlements…. Rarely does any [Oromo] man or women skip market day. They come, even with empty arms or with a handful of barely or peas, with a few coffee beans or little bundles of cotton, in order to chat, to hear news, to visit with neighbours and to smoke a pipe in their company. But besides, this petty bargaining, the main commerce of the country is in the hands of the [Oromo], and they retain it despite the rivalry of the Abyssinians. Almost all the merchants are Mohammedan. They export coffee, gold, musk, ivory, and leather; and they import salt, paper materials, and small manufactured articles. They are very enterprising and have commercial relations with the Sudan, Kaffa, and the Negro tribes.”

The Oromos have also valued both the collective and personal independence and freedom very much. Their peaceful and independent way of life was broken and their freedom lost with the coming of the utterly vicious and sever authority and hard school of surrender and obedience of the Abyssinian conquerors. As Bulatovich (2000, p.65) further described:

“The main character of trait of the [Oromo] is love of complete independence and freedom. Having settled on any piece of land, having built him a hut, the [Oromo] does not want to acknowledge the authority of anyone, except his personal will. Their former government system was the embodiment of this basic trait of their character- a great number of small independent states with figurehead kings or with a republican form of government. Side with such independence, the [Oromo] has preserved a great respect for the head of the family, for the elders of the tribe, and for customs, but only insofar as it does not restrain him too much.”

Jalata (1993) sees the Ethiopian colonial domination as the negation of the historical process of structural and technological transformation. This is the case where the Abyssinian colonial class occupies an intermediate status in the global political economy serving its own interest and that of imperialists. The Oromos have been targeted to provide raw materials for local and foreign markets. Inside the empire, wherever they go, the Abyssinian colonial settlers built garrison towns as their political centres for practicing colonial domination through the monopoly of the means of compulsion and wealth extraction.

The Abyssinian colonial system was more cognated to a tributary system whereby the rulers extract tribute and labour from colonized lands. The Abyssinian peasants supported their households, the state and the church from what they produced. After its colonial expansion, Abyssinians maintained their tributary nature and established colonial political economy in Oromia and in the Southern nations. Although the colonial state intensified land expropriation and produce extraction from colonized peoples, capitalist productive relations did not emerge. Gradually with the further integration of the Ethiopian empire into the capitalist world economy, semi-capitalist farms seemed to emerge by extracting their fruits mainly through tenancy, sharecropping and the use of forced-labour systems.

The colonial exploitation has been maintained under Mengistu’s so-called socialist collectivisation/ villegisation campaigns and in the current Meles’ regime under the mask of structural adjustment and ‘free’ market economic system.

It should also mentioned that in addition to authoritarian and coercive rule, the Ethiopian colonialism depended on an Oromo collaborationist agents that were essential to enforce Ethiopian colonialism. This second rate clique is merely an expandable appendage which devotes most of its energy to the scramble for the spoils of slavery, picking up the leftover in economic and political advantages. The main task of this class is to ensure the continuous supply of products and labour for the settlers. Of course this class was not always loyal to the Ethiopian colonial state (Jalata, 1993). Broadly speaking, the state itself is a battlefield for two exclusive claims to rule and political competition among the Ethiopian colonizers, the Amharas and Tigreans. In effect, this makes the Abyssinian colonizer politics effectively a zero-sum game and the very practice of politics become a negation of politics, i.e. politics are practiced with the inert ending of politics.

The Abyssinian rulers, who have inherited power used to believe that their interests were well served by depoliticising, muting and suppressing the Oromos and the Southern peoples’ quest for national-self determination under the guise of maintaining the unity of the Ethiopian empire. So they convinced themselves and tried to convince others that there were no serious socio-political differences and no basis for political opposition. Apoliticism has been elevated to the level of ideology while the political structures become ever more monolithic and authoritarian.

The political structures and political ideologies, which have been used to effect depoliticization and suppression, are all too familiar. The process entailed political repression, which the Oromos endured and suffered for more than a century. The implication of depoliticization is to deny the existence of differences, to disallow their legitimate expression and, therefore, to deny collective negotiation. Whatever the degree of repression, the process did not remove the differences. The ensuing popular frustration and resistance has led to even more repression. That is how political repression has become the most characteristic feature of the colonial political life and domination as its salient political relationship. All this means that political power becomes particularly important; so the struggle for it gets singularly intense.

In Abyssinian Colonial regime and psyche Seize power is supernatural and a magical axiom and power itself does not mean influence on policies but it means license over their colonial subjects. People have been so frightened and constricted by fear and indoctrination. Besides, they have been overwhelmed by deceptive rhetoric, crude, systematic misinformation, and hypocrisy, which made it virtually impossible to see through the situation and to form an intelligent judgement. The Abyssinian rulers including Tewodros, Menelik, Yohannes, Hailessilassie, Mengistu and Meles in resemble wanted an absolute power both on earth and heaven. All mobilised Abyssinian myth to enhance their cults. Loyalty and submission to them was being shrouded in an illusive appeal to be a good citizen. We heard and observed, childhoods dominated by a miasma of poverty, misery, starvation, with no shoes, slavery, slave soldier, premature and painful deaths. The power of the Abyssinian colonial empire has been not only absolute but also arbitrary, extraordinarily statist and hostile. It tightly controls every aspects of its subject’s economy. In the state where politics is driven by the calculus of power, everyone in arena only focused in the accumulation of power. Politics has been reduced to a singular issue of domination. It has never afloat restraint and dispensation. There have been regime changes within the empire but the new has accustomed to reproduce and reinforce the past. None of the the Ethiopian rulers including the present regime fundamentally had any firm interest in transformation , and all of them were only too alert that they could afford to broaden the social base of the state power. Power has been maintained by politicising and manipulating the Abyssinian myth and chauvinistic nationalism and depoliticisation of the occupied. In doing so, they engaged in weakening. They produced not only fanatical divisions within their own echelon but antagonism and exclusivity in society and . the solidarity of the oppressed at any price. It is so clear that such political condition has been profoundly hostile to development. The struggle for power within itself and to sustain the occupation of the oppressed majority has been so engrossing that everything else, including development must be sacrificed

The oppressed are exposed to all kinds of onslaught by state that is hardly subject to any constitutional or institutional fetters. The colonial power barred Oromos from engaging in their own industrial enterprises, export trade, domestic commercial venture, modern and relatively productive farm, private, free media, education and philanthropy etc. Unlike the Hobbes’s state, it is so backward, uncivil sing, further underdeveloping and essentially a military institution that imposes subordination and maintains colonial condition. In this context, it is more colonial and barbaric by the standard of other colonial experiences observed elsewhere in the Americas, Asia and other parts of Africa.

There are two major aspects in which this situation has severely thwarted Oromia’s development. The first enigma lies in the incompatibility between the pursuit of development and the crusade for survival, reproduction of the existing forms of social control and domination. The deleterious after-effect of this animosity is that it leads to misuse of human resources, inefficiency and corruption. Unquestionably, appointments into the positions of power, even when they are positions, which demand specialized knowledge, tend to be made by political criteria, particularly by regarding these appointments as part of survival strategy. Each time such appointment is being made, the friction between political survivals, economic efficiency and development crops up. The ruination to efficiency and development derives not only from the performance criteria and likely incompetence of the persons so assigned but also from the general demoralization of the technically qualified and competent people purveying under them who are often repressed and frustrated by their subjection to the surveillance and regulations of people who are powerful but inapt. Here lies the role of Ethiopian ministers and parastatals: incompetent personnel used to obstruct productive use of resources. Wasted are also competent people. They lose at both ends. In the midst of waste, the Oromos have been denied basic civil and political rights and the right to development. Alien leaders who channel the meagre resources into unproductive uses imposed the related economic problem, the very rights over which the people are fiercely struggling.

Development projects were initiated for wrong reasons; they may, on account of political considerations, be located in places where they are least beneficial both economically and socially. One could site familiar cases where important contracts and licenses have been given to politically significant people. Higher positions are created and new rule and regulations are established just to benefit people whose political support is considered important. Oromia pays for all these disservice. The Ethio-crats are overpaid and creating demoralizing disparities between reward and effort. That is how; the persistence of Ethiopian imperial and colonial domination is imperilling to the integral tenets of development.

Abyssinian academics and international development agencies offer many factors for the apparent failures and crises of development industry in the Abyssinian empire: lack of capital, lack of technology, entreprenuerial skills, corruption, poor planning and management, socialist system, lack of infrustracture, falling commodity prices, cyclical drought, unfavourable international terms of trade, low level of saving and investment. These factors and the long lists of related factor are undeniably crucial factors in development. However, we have to address the misleading assumption that has commonly been taken that there has been development failures and crises. The Oromia experience exhibits the terrible realites that development has never been on the agenda. The business of the politics of occupation has prevented the pursuit of development and the emergence of relevant and effective development paragims and programs.

The burning question is, can the people of Oromia try to trade, farm, imitate and innovate then develop their economy in this state of siege? The question is vital and congruous; but the answer is doubtful, as it is impractical. Development strategies as such are comprehensive programs of social transformation. They call for a great deal of ingenious management, confidence in the leadership and commitment. They require clarity of purpose for a society at large; they need social consensus especially on the legitimacy of the leadership. Yet these are not common features of an institution, which does not represent the society. Besides, development is about change and that change may not work to the survival of the colonial rulers. In this sense it runs against the instincts of the rulers whose preoccupation is to survive and maintain its dominant position. One of the most amazing things about development discourse in Ethiopian empire is how readily it is assumed that the rulers are interested in development particularly when they profess commitment to development and negotiate with international aid organizations for economic assistance. People making this assumption forget the primacy of maintaining colonial power and its conflict with other social and economic goals.

Why the Ethiopian rulers embark on a course of societal transformation just because it is good for the nations under its empire like Oromos if it is bad for their own survival?

The ideology of development has been adopted to grapping resources from external aid agencies. In the name of development people are forced to obedience and conformity. Billions of dollars was looted by tolitarian regime and its cliques. Structural adjustment, privatisation, liberalisation, investment, rural development, fertiliser for farmers and democratisation have been the slogans of Mele’s regime for the last 20 years. There have not been: appropriate political structure and practices, administrative system, institutional framework to conduct development in Abyssinian empire. There have been also failures by international development agencies that have taken the responsibilities of financing development and transferring resources ignoring the specificity and historicity of the Abyssinian empire. This has also exhibited the mounting anarchy of development studies and development practices that has been based on modernising paragim.

The Abysinian rulers and their elites, especially the Amharas regard the ideal characters of themselves as the end of evolution. The application of this evolutionary schema meant advancement is a matter of assimilating to Abysinian culture. Abyysinians have established the negative view of the Cushite people, institutions and their culture. The colonial regime discourages any belief in the integrity and validity of the Oromo society and have offered the notion that Oromos can find validity only in their total transformation, that is, in their total self-alienation. On practical level , the result has been frustrating.They have assaulted on Oromo governance (Gadaa), Oromo culture, Oromo religion (Waqeffannaa) and Oromo names.They have changed Oromo names to Amharic (e.g. Finfinnee changed to Addis Ababa). They assaulted on the use of Oromo language. They evicted Oromos from cities and towns. They instituted the negative image of the Cushite and the superiority of the Abyssinians. How people in such state of mind, behaviour and attitude pursue development? According to Claude Ake “Development requires changes on a revolutionary scale; it is in every sense a heroic enterprise calling for consummate confidence. It is not for people who do not know who they are and where they are coming from , for such people are unlikely to know where they are going,”(Ake, 1996, p. 16).

When we think of development, it is about society at large and the paradox is that it is often the leader who is not in a position to think of the objective interests of the society. For thinking in this way entails profound democratic commitment, which cannot usually be expected of such leaders. By virtue of their position, colonial rulers suffer the disadvantage of confusing what maintains the existing social order, which they dominate, and they are tendentiously suspicious of change; it is all the more so when it comes to fundamental changes.

Finally, we need to remember some of the implications of development with respect to alien colonial rulers. As it has already been mentioned, they have been more interested in taking advantage of the social order inherited from their predecessors rather than in transforming it. To all appearances, they are colonial rulers. Oromos have been oppressed and humiliated for over a century. The political history of the last hundred years of colonial rule of Oromia has vividly indicted that the Oromos lacked freedom; it means that they did not have control over the products of their labour, it means that their natural resources and environment were tarnished by others; and eventually it means that they witnessed chronic poverty, destitution, killing forces, the forces of abuse & alienation, human misery and less and less of humane life.

In these circumstances, it is not surprising that where development is pursued in Oromia, if at all, it is full of ambiguities and contradictions and it is just a mere posture. Even taking these postures on the face value, in so far as we are critical of development strategies in Oromia, our criticism runs in the direction of their sloppy conception and hence their failure to come to grips with sclerotic of imperial domination. If we raise the question of the contradiction between political survival and social transformation, we commence to behold that it is doubtful and equivocal where development is, or it has ever been, on the colonizers’ list for Oromia.

The other aspect of economic consequences of colonial domination has been militarism, which is but the outcome of over-valuing of political power. Associated with it is the intense struggle to obtain and keep it. Therefore, the politics of the empire is sustained by warfare and force than by consent. In this atmosphere, force is mobilized and deployed: the winners are anxious to take absolute power into their hands while the losers forgo not only power but also lose liberty and even life. As politics relies solely on force, the vocabulary and organization advocates coercion. For that matter, the Ethiopian empire is a political formation of armies in action and this is in itself a serious development problem. In an institution in which the political formations are organized as warring armies, differences are too wide and far, the scope for co-operation too limited; there is too much distrust; and life is too raw to nature commerce and industry in subject nations like Oromia. Currently, the militarism of life in general and politics in particular has reached its logical culmination in Ethiopian military rule and its negative consequences have wider regional implications. This too hinders the course of development not only in Oromia but also in entire North East Africa.

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