Ethiopia has to loosen its grip on the economy

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The Financial Times

The authoritarian development model is running up against limits

As Ethiopian runner Feyisa Lilesa crossed the finishing line in his silver medal Olympic marathon run at Rio, he crossed his arms in protest against his government back home. It was a gesture of defiance that could, for transgressing Olympic rules, have cost him his medal and will cause him to live in exile. But it drew global attention to the brutal manner in which the government in Addis Ababa is handling the greatest challenge to the state since the end of the civil war in 1991.
Over the past nine months, hundreds have been killed and thousands incarcerated in a crackdown on protesters from the Oromo, the country’s largest ethnic group. Feyisa, like many of Ethiopia’s revered long-distance runners, is Oromo. The unrest among his people, which has spread to other groups, is symptomatic of a wider collision as the government seeks to transform a predominantly agrarian society through industrialisation, commercial farming and urbanisation.

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Ethiopia has spurred some of the fastest economic growth in Africa while eschewing liberal market orthodoxy and giving the state a central role in development. It is an experiment keenly watched by other African governments more constrained by democratic process.
The protests suggest that this authoritarian development model is running up against its limits. They were originally sparked by federal government plans to extend administration of the overcrowded capital Addis Ababa into the surrounding region of Oromia. Those plans have since been shelved.

But what started as parochial opposition to corrupt land deals has conflated with broader grievances about political repression and the perceived dominance in federal institutions of the Tigray ethnic group. Tigrayans, who spearheaded the overthrow of the government in 1991, make up about 6 per cent of the population.

In theory Ethiopia has the wherewithal to deal with such tension. In practice there is a fundamental contradiction in the way it is governed: between the federal nature of the state as enshrined in the constitution and the reality of centralised, authoritarian power. The de facto one-party state may retain sufficient strength to maintain hegemony for now. But in reverting to such crude tactics to suppress dissent, the government has raised the risk that what started as peaceful protest will evolve into armed revolt.
It is a scenario familiar to many African states. What sets Ethiopia apart is the effectiveness with which the government has approached development. Allies in the US and Europe have come to rely on the country’s comparative stability in a strategically important region threatened by Islamist extremists. International donors have turned a blind eye to the excesses of the regime — as they do in Rwanda, which shares a similar profile — and helped bankroll the state in part because they have received value for their money.

This is short-sighted. To sustain investment in infrastructure, and accelerate export-led industrial and agricultural growth, the country will require greater amounts of foreign capital. That capital will shy away from a further breakdown in law and order.
The government could start by respecting the spirit of the constitution and ushering in more decentralised rule. It needs to loosen in parallel its grip on political and economic freedom if there is to be a chance of providing opportunities for the 100,000 students graduating every year. It will be a delicate process given how tightly controlled the country has been and how charged the climate is as a result. But it is a necessary one. Ethiopian exceptionalism has run its course.

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3 Responses to Ethiopia has to loosen its grip on the economy

  1. In Ethiopia representatives of various insurance companies are expressing serious concerns over the recent uprisings and protests demands questioning if the insurance companies will be able to stay in business at all if the protestors demands do not get real solutions quickly.
    The United Insurance Company SC, better known as UNIC-ETHIOPIA shareholders said “even though in the past the country has made remarkable progress to build corporate governance practices among companies, enhancing the nation’s financial system, currently the ability to keep insuring their customers safety is being challenged due to the recent protests in many parts of Ethiopia.
    Promoting effective corporate governance in the financial sector contributes immensely to the soundness of the financial system, disclosed The United Insurance Company SC, better known as UNIC-ETHIOPIA.

    The International Finance Corporation (IFC) also indicated that corporate governance will create more sustainable business environment and foster economic development in Ethiopia.

    IFC and United Insurance jointly organized a workshop on corporate governance in Addis Ababa today.

    The workshop helps discuss flaws in corporate governance and share good practices that advance the country’s financial system.

    The role played by the financial system is essential to realize the country’s mega development plans as such a system helps mobilize and pool savings, among others.

    The United Insurance Company SC, better known as UNIC-ETHIOPIA shareholders called on actors in the industry to contribute to strengthening of good corporate governance so as to add value to shareholders wealth, improve competitiveness and ensure safety and soundness.

    According to IFC Country Manager for Ethiopia Adamou Labara, corporate governance is becoming an essential concept to boost investors’ confidence as well as their business environment.

    IFC has been implementing corporate governance with many African countries to end extreme poverty and promoting shared prosperity in the continent.

    August 29, 2016 at 5:43 pm

  2. It surprises any Ethiopian how the western evaluate the existing problem of the country.The western people are gullible and do scanty look on the basic issue why people are dissatisfied with the so called ‘Ethiopian Government’.
    In the first place the country is being governed by few tigrean thugs.They do not deserve to be called “Ethiopian Government”.
    The few in power loot the country as foreign colonizers.They take the country as”spoil of war” grab every resource,consume whatever in it and shift valuable resources,if it can be moved,to their final destined land of origin,i.e,tigray.
    For the last 25 years they have it more than enough TO MAKE PERFECT CURCLE.They own the businesses,government offices,the military,the security etc.
    They can easly cheat the west as Ethiopian Government,while in actual fact they take seige of the country,act irresponsibly,creat bogus conflict among different ethnic groups so that they can play divide and rule policy of colonizers.
    There is no government,at least in contemporary history,that insight one people to raise against the other under its domain.There is no country where merit to public office is the very fact of being born to only one ethnic group,there is no country that whole military generals exclusively belong to one ethnic group,there is no government inside government.litrally we Ethiopians are held by mafia and fascists.
    The so called speaker of government tell the media that the principal failure of government is due to that “enough propoganda has not been done to make cleavage between the two major ethnic groups,i.e.oromos and amharas”.
    Do you know that there are clandestine military and acadamic universities in tigray,which the federal government have knowledge of?do you know tplf endowment enterprises; (who grab war spoils from Ethiopia as exclusive property of tigrai);are the major businesses in Ethiopia?
    Time will tell all the attrocities this mafia group has done.but here the west is trying to tell us about ‘strong,unified government of Ethiopia’ having no regard to realities.

    August 29, 2016 at 6:10 pm

  3. The western governments have been protecting TPLF for the past 25 years. They support it because of TPLFs’ willingness to send Ethiopian army to hot spots in Africa and elsewhere on the cheap. That is why when TPLF claimed 100 % an election victory— Leaders like Obama, without flinching, have declared yea – TPLF is democratically elected. No country should get a blank check to kill more than 1000 people of its citizens. TPLF created an ethnic enclaves and called it federation, but in reality it is Bantuization of Ethiopia for the benefits of a minority government (5% the population to be exact). The west should weak up and stop supporting this minority government.

    August 30, 2016 at 9:15 pm

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