Why Ethiopians Must Unite, Part Four (b) of Five

Aklog Birara, PhD

“Ethiopia’s long-awaited democracy has stalled over the last half decade…Today; there are fewer constraints on the EPRDF’s power than at any time in its 20 year rule.”

Leonardo Arriola, Countries at the Cross-roads, 2011

The above sums up the status of political and economic power in today’s Ethiopia. For long, experts presented convincing evidence linking political, economic, and social capture through a web of state, party and endowment enterprises as well as favored individuals strengthened by administrative and official (state corruption) in one of the least developed and poorest countries on the planet. Those who are disempowered and disenfranchised need no additional proof than those provided by ordinary Ethiopians who live with the system each day and by global indices each year for more than a decade. They endure hunger, hyperinflation, low incomes, unemployment, the indignity of dependency on international emergency food aid, immigration out of the country for lack of opportunities at home and so on. Here are indices that the top leaders of the TPLF/EPRDF cannot deny. The 2011 UN Human Development Index places Ethiopia 174th out of 184 countries. The Legatum Prosperity 2011 Index places Ethiopia at the bottom of five poorest countries in the world. The 2011 Global Hunger Index with IFPRI identifies Ethiopia as one of five countries with extremely alarming hunger indices. The 2011 Foreign Policy of Failed States Index places Ethiopia 20th of 60 countries in terms of de-legitimacy of state, gross human and economic rights violations and the like. Transparency International confirms that Ethiopia as one of the most corrupt among the least developed and poorest countries in the world.

As I suggested in my book, Waves last year, Global Financial Integrity (GFI) in Washington disclosed massive illicit outflow of funds in excess of US$11 billion that the UNDP validated this year. Corruption and illicit outflow of monies from one of the poorest, hungriest and aid dependent countries on this planet could not have taken place without official collusion and knowledge. Corruption and illicit outflow penalize the current and future generations. Ethiopia cannot afford theft amidst hunger, destitution and technological backwardness. Imagine that these stolen monies could build factories that would produce fertilizer, for instance, to boost smallholder agricultural productivity; textile and other industries that would employ hundreds of thousands of Ethiopian youth and put the economy on a sustainable basis. Corruption and illicit outflow is loss of precious financial capital the country needs.

Ordinary Ethiopians know that this massive illicit outflow of precious resources is a consequence of poor, authoritarian and unrepresentative governance. The minority ethnic elite that rules Ethiopia has been relentless and un-bashful in using state power to amass and to transfer resources within the country and to channel monies out of the country. These elites cannot deny the fact that Ethiopia lost US$ 16 million worth of gold bullion. Persons stole it from the National Bank of Ethiopia (NBE) in 2008. Under a chapter entitled “Should the route to wealth creation and asset accumulation (at the national level) be state capture,” I documented the sudden formation of at least 58 Tigrean owned enterprises between the period 1991 and 1995. This was the height of TPLF initiated and sponsored privatization. Among the major beneficiaries it is appropriate to include TPLF endowment firms such as EFFORT, family owned enterprises such as Mesfin Engineering. These and numerous party owned, endowed and favored enterprises are now dominant players in national transport, cement, textile and pharmaceutical production, road and other public sector construction, export and domestic trade. Where did the initial capital come from? It cannot come from the sky.

Initial capital for these and similar enterprises that are now worth billions of Ethiopian Birr came from the proceeds of nationalized firms, the banking system, foreign aid and other transfers. The political culture of shifting national resources for private gain began in earnest during this formative period. Mega construction projects such as roads, schools, dams, telecommunications and other public projects served and still serve as conduits in amassing and shifting national resources for private gain. Among the inevitable consequences is uneven development and concentration of wealth and incomes into a few hands. I assert with full confidence that the primary sources of corruption, shift of monetary and other resources and illicit outflow are primarily administrative management and state (official) manipulation and control of the sources of wealth and asset creation. Merger of ethnicity, party and state reinforce resource capture, misallocation, diversion and capital flight.

Opponents of the governing party may think that the top leadership of the TPLF/EPRDF does not know the disastrous nature of its socioeconomic and political governance including corruption and illicit outflow of funds. Prime Minister Meles’s open dialogue with the business community last year says it all. Like the gold bullion stolen three years ago, 10,000 tons of coffee slated for export just disappeared without a trace under the watch of TPLF leadership. Galling is what the Prime Minister said to his audience. “We all have our hands in the disappearance of the coffee.” His regime failed to make anyone accountable for this multimillion US dollar theft. Why is that? Admission suggests that top party and government officials and allies benefit directly from this continued plunder of the national economy.

My sense is that the top leadership knows what it is doing and does it intentionally and strategically by focusing on a nation-wide network of beneficiaries, mostly ethnic elites at the top of the political and economic power pyramid. To make the system work effectively, the single minority ethnic party must provide financial and economic incentives in order to survive. Mobilization of millions, especially youth, and the spread of a network of spies across the country at all levels suggest a determination on the part of the governing elite to amass more and to prolong single party governance. This is the reason for expert assertions that in Ethiopia, political power is business; and the business of political power is to amass wealth and assets. One cannot sustain it without incentives. Granting jobs and other sources of income is part of the story. How else would one explain the phenomenon that policy and decision making, including resource allocation, is done by a small Tigrean elite at the center and the rest simply follow? How else would ethnic elites propagate the notion that ethnic-federalism has devolved policy and decision making to regions and localities when the center is the decisive force in the country? Who at the regional or local level has policy and decision making authority. Concrete evidence I would offer is the visible difference between the level of investment and growth of towns and cities in Tigray within a short time compared to towns and cities in other regions. Compare Harrar with Mekele and Jijiga with small towns in Tigray and assess. Another is the predominance of party owned, endowed and favored individuals all over the country. Ask yourself who really owns what and where and you will arrive at the same conclusion. Preponderance must be assessed in its totality.

It is not only the democratization process that “has stalled,” it is also the capacity of the national economy to produce and supply goods and services to the vast majority of the population. This condition emanates from closure of access to economic and social opportunities that would offer ordinary people to move from hunger, poverty and dependency to prosperity and the freedom this entails that have literally stopped. This is the essential message from the UN Human Development Index. Poverty and freedom have direct correlations. Without freedom, ordinary people cannot assert their rights. Discrimination and favoritism are taking huge tolls on the majority of people and regions. The fortunate thing is that the vast majority of the Ethiopian people are politically sophisticated enough to understand that these relationships between a system that differentiates and discriminates against them; and holds them back suggest the urgent need for a new, peaceful and democratic alternative that will empower them. Divided and weak, opposition groups cannot do much except shout. This is why the Ethiopian people are literally fed-up with opposition political and civic groups that make it a life time chore to quarrel among one another ad infinitum rather than respond to the need of the population by collaborating and by working together.

Only 21 percent of Ethiopia’s 90 million people have faith and confidence in the TPLF/EPRDF. What about the 80 percent? Who represents their urgent needs? If the 93 mostly ethnic-based political parties within and outside the country represented the hopes and aspirations of the Ethiopian people as a whole, things would have been different by now. I wonder if these ethnic-based political parties and their extended civic arms are, in content, any different from the ethnic-based TPLF and the largely ethic oriented umbrella organization that it dominates, the EPRDF? It is they who should answer the question; and it is time that well-meaning Ethiopians within and outside the country poses this question directly to them? It is for this reason that I suggest that civic movements in the Diaspora can no longer act as extensions of ethnic-based political parties. They need to distance themselves from ethnic-based political organization and behaviors that keep the Ethiopian people disempowered, marginalized, poor, dependent, disillusioned and increasingly dispossessed. Let us reflect on inequality and impact.

Anyone and everyone who has patience and determination to learn the reality on the ground within Ethiopia has ample opportunity to do so. The Ethiopian people see and witness the growing and alarming gap or chasm between the few rich and the vast majority poor whether it is Addis Ababa or Mekele. The physical manifestations are all over: condominiums, villas and palatial homes bestowed by the governing party. The difference in wealth and incomes concentration in a few individuals and families, and destitution among the vast majority in Mekele alone is telling about this growing gap. The same is true in other parts of the country.

Political power and the determination to maintain it by any means necessary is a function of this economic and natural resource capture within the 20 percent party membership and support base of the governing party. Within this cluster are huge differences in incomes, assets and power that will eventually surface and push those who are less well to do and vulnerable toward the 80 percent of the population that is not getting any benefit from the system. There is nothing permanent and durable about this discriminatory and exclusionary system that survives by ‘bribing’ innocent people, especially youth, and forcing them to be loyal in order to survive. The poor, youth and the small middle class are essentially stuck in a vicious cycle of coping with hyperinflation, hunger and unemployment because they do not have the political power to influence public policy and to claim resources and gain accesses to opportunities. Believe it or not, young women and men are postponing marriage because they cannot afford the marriage itself, and more important to have children. Family is the social foundation of Ethiopian society regardless of ethnic and religious affiliation. It is an Ethiopian and not an ethnic problem. These types of incidents suggest that ethnic-based political organization and leadership are, today, barriers to rapid, cohesive and national transformation to achieve peace, national reconciliation, justice, human and economic rights and democratic governance. These aspirations are indivisible.

The 93 largely ethnic based parties and the numerous civic groups that advocate democratic change have wasted and continue to waste their political and social capital without making any meaningful contribution in support of the Ethiopian people, especially activist youth within the country. It is they who demand a change in vision and political organization and leadership. My overall sense from the post 2005 general elections that the governing party refused to accept is this. Ethiopia’s’ diverse population accepts and shares the fundamental principle and value inherent in a common country—Ethiopia—and, demands fair, just and equitable access to opportunities to improve their own livelihoods and the status of their country. I accept this fundamental principle and believe that the Ethiopian people would share a common destiny.

The illusive search for unity

The failed state indicator that I identified earlier suggests enormous dangers for the independence, territorial integrity, stability, security unity within diversity, and prosperity of Ethiopia and its mosaic. No ethnic or religious group can insulate itself from this danger. My continued plea for unconditional unity is none other than the sheer survival of this country that offers enormous promise and possibilities for all Ethiopians. This survival cannot be guaranteed with 93 largely ethnic-based parties operating against one another, competing with one another and bowing to pressures from the governing party and persuaded by external forces that there is a short cut to justice, the rule of law and political pluralism. The foundation for durable peace, national reconciliation, security, stability prosperity is nothing less than the establishment and institutionalization of individual freedom, equality for all stakeholders, human and economic rights anchored in the rule of law. These noble objectives cannot be rooted without unity of purpose and action. Members and supporters of the governing party must feel secure that they have a future in a newly constituted democratic Ethiopia in which the supremacy, power and sovereignty of the electorate is respected. It is this foundation that will avert terrorism; and that will lead to prosperity for all Ethiopians.

The question that we each need to ask then is why opposition groups whether political or civic, whether within the country or abroad, failed over and over again to iron out minor differences and forge unity to advance the common interests of the Ethiopian people as a whole regardless of ethnic or religious affiliation? It is this void in political wisdom and courage that generates mistrust among the Ethiopian people. Critical in this void is lack of mutual trust and confidence among opponents of the regime and among one another and their inability to apply rigor, discipline and consistency in advancing and institutionalizing the interests of the Ethiopian people ahead of self and group interest. It is also their lack of genuine commitment in siding with the people who struggle within the country to unseat a repressive regime peacefully, systematically and in sustainable ways. Freedom, justice, human and economic rights, the rule of law and political pluralism cannot be advanced unless we deal squarely with the voids in trust, confidence, individual and organizational discipline and genuine commitment to what ultimately matter the most: the fate of Ethiopia and the interests of Ethiopia’s diverse population. Otherwise, we will sustain minority ethnic-based single party governance in perpetuity whether we admit it or not.

Back to material arguments that support the above thesis. Last week, I diagnosed Ethiopia’s political economy under the grip of minority-ethnic elite and showed the adverse, and in some areas, devastating impacts on the country’s future and on the wellbeing and incomes of its diverse population.

In this century more than in any other, transformation for the better requires that we equip ourselves with ample knowledge and credible data and information. The era of gossip filled (shimut) based and personalized accusations and mutual suspicions of one another will not work. Activists and ‘talking heads’ must grasp the compelling socioeconomic and political reasons of the whys any meaningful change to affect all of the Ethiopian people in real and positive ways; and the alternative the day after. This is why the social motives for change must be anchored in Ethiopia and solely with the Ethiopian people. The rest of us in the Diaspora can and should contribute consistently and in sustainable ways to advance the causes of political pluralism, freedom, the rule of law, justice and fairness and equitable access to opportunities. This can only be done if we believe in diversity and unity of one country and one society expressed as Ethiopia and Ethiopians. Understanding the adverse consequences of ethnic-based single party governance is therefore not enough. The alternative must be compelling.

One ought to ask the question of why political and civil opponents of the governing party within and outside the country continue to fail in establishing the requisite organizational and leadership response to the problem. I take opposition to the governing party as a given. This opposition and rejection of a system must not be perceived as identical to opposing persons or a specific nationality group.

However and irrespective of how often we convene and shout it is not a solution by and on itself. To call and urge opponents to unite while advancing hidden agendas is a recipe for disaster. For example, one does not typically see an appreciation of external forces that would love to see Ethiopia disintegrate into pieces. For this reason, I suggest that Ethiopia’s long-term interests and the real interests of the Ethiopian people should not, ever again, be subjected to negotiated settlements among political elites with aspirations to take political power at any cost, including the “Balkanization” of Ethiopia. The TPLF has done enough damage to the country and its people. One cannot afford to repeat the same mistake. Opponents have all the information they need to forge unity of purpose and action based on core principles presented earlier, and without preconditions today. The following analysis is intended to offer additional insight why unity now may have a chance in averting disaster later.

The 2011 UN Human Development Index tells us how severe and worrisome the society’s wellbeing and livelihood are; and the vulnerability this and future generations will face. The Legatum Prosperity Index shows that the TPLF/EPRDF led developmental state develops itself and its allies and rewards itself and its allies. It is not the same as Korea or Taiwan or Singapore of China or Vietnam. It suffocates the emergence of a dynamic and competitive domestic (national) entrepreneur class and private sector. The regulatory system is discriminatory, unfair and unjust. Its direct effect is that setting-up private enterprises, choice and mobility of labor and capital, fair and open competition, creativity and innovation are stifled. The economic consequence is low productivity, continued hyperinflation, unemployment, corruption and illicit outflow of resources including foreign exchange, and the erosion of values and morals that emphasize hard work, love of and dedication to country and unreserved service to Ethiopia’s diverse population. Ethnic-based political and socioeconomic organization and allocation of scarce resources reinforces this low productivity path. It reinforces market fragmentation. For this reason alone, it is inefficient and costly for the vast majority of the population. This is why the domestic market cannot expand and middle class is not growing. It is an economy for a few and by a few. It is a form of rent seeking crony capitalism camouflaged as a developmental state.

Take corruption as an example. Corruption, discrimination, favoritism and exclusion associated with administrative and state capture (power) allow manipulations and mismanagement of the entire economy. This has a crippling effect on employment, expanding income generating opportunities, self and societal confidence. Corruption is corrosive and a way of life. A determined and nationalist government would make it a priority to promulgate laws and regulations of zero tolerance at any and all levels. For this to happen, the top leadership and its close allies must be clean. This will be a tall order for the governing party which benefits hugely from state capture. Brazil is a good example of a country that suffered most from corruption, nepotism and discriminatory policies for decades. It is not entirely clean yet. But, there are changes similar to Rwanda which has a zero tolerance policy.

As a developmental state with market orientation, Brazil has managed to transform its society for the better. It is home to the largest population of African origin in the world. Its political leadership is nationalist enough and wise enough to recognize that discrimination and exclusion is costly to the entire society and to businesses. It initiated social (education and health) and economic programs (investments and employment in excluded areas) and created the foundation for social mobility. In the process, it began reducing poverty. More important, the poor and lower classes moved to middle class status in millions: 32 million of them over less than a decade. In 2003, Brazil’s middle class was 45 percent of the population, mostly of European origin. Today, it is more diverse and constitutes 66 percent of the population. Experts agree that it will rise to at least 70 percent by early 2012. The same phenomenon occurred in Malaysia, one of the most diverse countries in the world. Mobility raises domestic demand for locally produced goods and services. Concentration of wealth and assets, discrimination and exclusion do not. This is why I would argue that the current system is punitive. This is why it must change radically.

This leads me to assess the distinctions and linkages between growth and development.

Growth and development

Members of the Diaspora, who travel to and from Ethiopia, and especially those with physical assets such as villas, convey the impression that the country is growing at a rapid pace. The 2011 UN Human Development Index confirms what the Economist said in the summer of 2010 when it reported that “Ethiopia (better yet, Ethiopians) are not better off today than they were a quarter of a century ago.” These temporary visitors fail to see growth from the human side. That is to say, they take visible ‘physical glitz’ in the form of villas, apartments, skyscrapers, eating and dancing places, traffic jams and roads as primary indicators of development and change. As the cases mentioned illustrate, the single most important measurement of positive transformation associated with growth is substantial improvements in the lives of the vast majority of the population. Incomes must rise and benefit as many people as possible. As incomes rise, people buy more; and contribute to the larger economy. The argument of the developmental state that the pie should expand first before it spreads to a larger group of people is self-serving. The pie is being gorged by a small and largely minority ethnic elite at a level that is scandalous and immoral. Top officials of the governing party propagate the notion of trickledown economics in the US which resulted in the concentration of incomes and wealth in the one percent of the population. It is this concentration that triggered the anti-Wall Street movement and youth –led revolts that may reshape economic and social thinking across the globe.

In sum, improvements in the standards of living and wellbeing of ordinary Ethiopians measure whether or not massive investments and deficit financing lifted them from poverty and dependency to self-sufficiency and sustainability. It is this lift that gives ordinary people a sense of pride and self-confidence in them, in their government and its leaders and in state institutions. One measurement is food. Agriculture is fundamental to poverty reduction, sustainable and equitable transformation. People must eat before anything else. The glitz story of growth that shows that eating places in Addis Ababa and other urban areas buzz with activities masks the disconnect in growth between government assertions that there is no famine but only ‘hunger’ and its failure to meet the basic needs of the vast majority of the population. On the other side of this story of two societies is conspicuous consumption by those who can afford to enter eating places in the first place: the governing elite, foreigners and visitors from the Diaspora. The poor, the unemployed, those with low wages and the middle class can only gaze at glitz. One single enjera with wott costs 25 Birr. Believe it or not, the poor and youth buy what Ethiopians call a single gursha for one Birr or more. It is that bad. The Diaspora cannot afford to measure wellbeing and livelihood using its higher incomes and its acquired standards.

Government officials claim that agriculture has actually been growing at rates higher than population growth. Is this credible? It is not. Stephen Dercon, Ruth Vargas and Andrew Zeitin of the World Bank wrote a provocative research paper entitled “In Search of a Strategy: rethinking agriculture-led growth in Ethiopia.” They concluded that the 20 year old TPLF/EPRDF Agriculture Development-Led Industrialization (ADLI) has practically failed; and dispute official claims that agriculture has been growing at a rapid pace. In particular, they point out that cereal production has not kept-up with demand. “Some economists note that the country’s reported increases in cereal production during the past decade are not plausible unless Ethiopia has seen the fastest “green revolution” in history.” This is sheer fantasy as is the government’s contention of life transforming overall growth for the vast majority of the population. In fact, it is this failure and the political need to do something dramatic that forced the governing party to introduce what I call “water and arable land colonization by invitation.”

Ethiopia’s agriculture faces crisis in part because of state (increasingly single party) ownership of lands and other natural resources; and in part because of primitive farming and other land resource management practices. It is not my intent in this short paper to diagnose the policy and structural causes for low productivity, hunger and poverty. What I like to do here is show the systemic reasons as well as linkages to explain “why Ethiopia is still poor.” The country suffers from poor, discriminatory, exclusionary and non-participatory governance in all sectors of the economy.

In summary, the Ethiopian economy suffers from at least seven major hurdles:

a) Hyperinflation that is making poor people even poorer and is driving the middle class into poverty.

b) Legendry hunger, malnourishment and ill-health in urban and rural areas that prompted the 2010 Hunger Index group to conclude that “Ethiopia is one of the hungriest nations in the world” and compelled the UNDP 2011 Human Development Index to report that “Ethiopia’s HDI is 0.363 which gives the country a rank of 174th out of 187 countries with comparable data,” far below the African average.

I suggest again that access to adequate food is a fundamental human right. The first priority of the Ethiopian government is to satisfy the food and other basic needs of the population. Before they did anything else, successful economies transformed the policies and structures of their economies and overcame famine, hunger and malnourishment and averted the deaths of millions of their citizens. Transformation of the agriculture sector by boosting the capabilities of smallholders and others and by promoting Ethiopian owned commercial agriculture is the foundation for sustainable and equitable growth and development. Heavy and sustained investment in the sector, including investments in industries to produce fertilizer and other inputs is thus critical for Ethiopian society. The billions stolen from the poor should have been channeled to raise these capabilities. Who is accountable for this failure? It is the governing party.

c) High unemployment among youth estimated at between 30 to 40 percent. Millions of youth waste their productive lives without meaningful or no employment. The economic, social and psychological costs of this persistent problem are incalculable. This is why only 21 percent of the population is satisfied with the Ethiopian government’s capacity and commitment in addressing the formidable problems they face each day.

d) Glaring income inequality, with a concentration of wealth and income in a few hands. Today, only a handful of party-owned and endowed enterprises such as EFFORT and MIDROC, and a few privileged individuals with political connections command incomes and wealth beyond description. This is among the reasons why only four out of 10 Ethiopians are satisfied with their lives. The glitz economy has not benefitted them.

e) Pervasive corruption that infects the entire society and corrodes traditional national values such as honesty and integrity. Today, Ethiopian society suffers from widespread administrative (permits, licenses, credits, lands) and state capture corruption (abuse of aid resources, land leases, banking and financial instruments, flooding the economy with cheap money, large scale procurements and contracts). The regulatory framework favors state; party owned and endowed enterprises and foreign investors. It crowds out the domestic private sector. The cost of doing business is among the highest in the world. Freedom House and the Wall Street Journal identify the Ethiopian economy as one of the “un-freest.” This happens in a country where there is no rule of law.

f) Illicit outflow of foreign exchange is estimated at US$8.345 billion by UNDP and US$11 billion by Global Financial Integrity. Corruption and illicit outflow of massive amounts of monies from one of the two poorest countries in Africa contributes to persistent poverty. It is discriminatory, repressive, exclusionary and single party governance, systems and linkages that created and sustained corruption and illicit outflow of billions from one of the poorest countries in the world. The system condones and or ignores practices that make high officials in the government and outside; their families and friends super rich.

g) Single party, endowment and foreign dominance of the pillars of the economy are among the greatest risks facing Ethiopian society. This averts, and in fact suffocates opportunities for aspiring national entrepreneurs. It is among the reasons why the domestic market is constricted despite a large potential consumer and productive base. “In addition to its complete dominance of local and national government institutions, a number of large businesses are linked to the ruling party either directly or through family members.” Politics and economics are intertwined and operate in tandem. Human Rights Watch noted that “Party affiliated non-governmental organizations such as the Relief Society of Tigray (REST) are major channels of developing funding,” capturing national resources and investing them in favored firms, persons and regions. A leading expert on Ethiopian political economy, Terrence Lyons, suggests that “Membership in the party is essential for obtaining a civil service job and development assistance and key agricultural inputs are denied to members of the opposition.” In short, both the public and private sectors suffer from ethnic-based single party discrimination and exclusion; and from the preponderance of party owned, endowed and favored enterprises and persons, including foreign firms and individuals. This suggests that convergence of multiple economic, social and political crises is inevitable. Experts and institutions such as the World Bank and the IMF now suggest that “Beyond the question of rates of growth in the past (that are often doctored), the TPLF/EPRDF will face increased political tensions if economic stagnation or high levels of inflation (now among the world’s worst), constrict the regime’s resource base.” Hyperinflation in 2011 has been particularly severe for the urban poor and the middle class, youth and the unemployed; retirees and low wage civil servants.

Command of the pillars of the economy by party owned, endowed and favored enterprises and individuals have direct impact on the hurdles described above. In short, these critical hurdles represent the heart or center of what is wrong with the Ethiopian economy; and illustrate the lead reasons why Ethiopia is still poor.

I believe that opponents cherish the prospect of contributing to the Ethiopian people so that they do not have to live with the indignities of hunger, poverty and international emergency food aid forever. If that is the case, they have another social and human reason as Ethiopians for pursuing unity over unhealthy rivalry among themselves.

Article five of this series will give prominence to one of the largest natural resource transfers in history: “The Great Land Giveaway” or what is commonly known as land grab. I will highlight the major implications for the country, and especially for Ethiopia’s youthful population, and for the rural poor.

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