NewsEast & Horn AfricaNo Change of lanes for Ethiopia

Sat,18Nov2017

Posted on Thursday, 30 May 2013 17:22

No Change of lanes for Ethiopia

By Parselelo Kantai in Addis Ababa

Addis Ababa: modern city and diplomatic hub for the region/Photo©Sven Torfinn/Panos-ReaWhile the ruling party maintains its grand plans to to transform the economy, critical voices are asking why agricultural production is not meeting targets and how the regime will hold itself accountable. Fulfilling late premier Meles's vision was never going to be easy.

 Seven months after the death of Ethiopia's Premier Meles Zenawi, the consensus of his ruling Ethiopian People's Revolutionary Democratic Front (EPRDF), emphatically delivered at its 10th congress in March, is that there will be no wavering from the late leader's vision.

Few who understand the inner workings of the party would be terribly surprised. After 21 years, Meles, the ruling coalition and the state became almost interchangeable. In death, his legacy has become the driving force for both party and state.

The anecdotal descriptions of the late prime minister say something about the role his party played in national life: workaholic, intellectually curious, charismatic, dictatorial and wary of dissent.

The 'developmental authoritarian' state was in many ways a reflection of this.

Publicly disavowing its Marxist roots in the post-Cold War era, the party nevertheless intervened in every facet of public life, has been wary of uncritically embracing market reforms under the 'Washington consensus' and sought to transform Ethiopia from a pre-capitalist agrarian economy into an industrial middle-income economy.

To do so, the government's Growth and Transformation Plan (2010-2015) emphasises accelerated industrialisation through the development of massive infrastructure projects, particularly in energy and transport, while exploiting Ethiopia's untapped resources – including phosphates, oil and gas.

At the same time, the liberalisation of Ethiopia's other key resource – more than 70m ha of largely unexploited land – has become a key strategy for speeding up agrarian reform.

Over the past decade, the government has leased 330,000ha, mostly in the lowlands of the south and west. Agrarian reform in historically neglected regions such as Gambella and Benishangul-Gumuz in the west and the Omo River Valley in the south has involved 'villagisation', in which more than one million rural people have been relocated to make way for large-scale rice, sugar and rubber plantations.

While there have been complaints that these foreign-owned plantations are growing cash crops for export, government officials are quick to point out that 80 percent of the large-scale projects have an element of local ownership and that Mohammed Al Amoudi's 10,000ha Saudi Star Agricultural Development rice project in Gambella will distribute 40 percent of its crop locally.

FEDERALISM

At the same time, government-backed agricultural schemes have allowed smallholder farmers to obtain plots and loans. The nature of land reform also fits into a wider political project that came with Ethiopia's 2005 constitution: federalism.

"Ethiopia is perhaps the only country in the region in which the periphery controls the centre," says Mehari Taddele Maru, a former director of the Institute of Security Studies' African Conflict Prevention Programme.

The observation is cryptic and can be interpreted as referring to the nominal ceding of power to the semi-autonomous regions under the constitution. While the ruling party wields unquestioned power over the multi-ethnic republic, the attempt to devolve power to regional governments has acted as something of a check on ruling-party excesses.

"The EPRDF's revolution is unique in Africa. We came to power with a transformation agenda to shift Ethiopia from a pre-capitalist society to a capitalist market-based society, but we are not there yet. With 80 percent of its population still in the peasantry, Ethiopia remains a peasant-based agricultural society. Our challenge is how to mobilise the targeted classes for which the EPRDF remains a caretaker – the peasantry, the petty bourgeoisie, the intelligentsia and the working class," says EPRDF veteran Sebhat Nega.

While official statistics continue to be impressive, showing double-digit growth over the past decade, there has been something of a slowdown over the past year. An Addis Ababa University economist who requested anonymity explains: "Meles Zenawi's vision has two elements. One is a repudiation of the Washington consensus. He was very explicit about this. In its place, he planned to inaugurate the developmentalist state, modelled on China and South Korea. The goal here was the eventual creation of a middle-income state. The question is whether it is working.

"Take a simple example: cereals production. The government targeted an increase of cereals production from 16 quintals (1.6tn) an acre to 32 quintals an acre between 2010 and the present. The targets have not been met at all. It may appear a small issue, but it raises several questions, the most important being how does [the government] hold itself internally accountable?"

Investment in infrastructure and social services has brought about material change. Primary school enrolment is close to 100 percent. There are 22 public universities, up from three a decade ago. There is a health centre within 20 minutes of every citizen, according to the government, and better roads have opened up the country.

However, the challenge of transformation remains. On the outskirts of Asosa in Benishangul-Gumuz, Melese Kaseya, 30, is a model farmer at an organic farming project established by non-governmental organisation Biovision.

The local woreda (Amharic for district) allocated him 5ha. Initially unschooled in modern farming methods, he barely scratched out a living, earning on average 2,000 birr ($110) annually.

Since he joined the Biovision scheme, Melese has seen his annual maize and cabbage output more than double to 40 quintals and 600 quintals respectively. As a result, he is now earning more than 30,000 birr annually.

He is well on his way to completing the construction of a stone house and also produces mangoes, bananas and other fruit. As a model farmer, he now trains 10 other farmers in his woreda.

As a case study, however, Melese's story is at odds with the national experience. Access to fertiliser and farm inputs continue to be low.

"The structure of the economy remains virtually unchanged since the era of the Derg. Agriculture still contributes 8-10% of gross domestic product. The same goes for manufacturing, at 10-13 percent.

Remember that the Tigrayan People's Liberation Front/EPRDF rebellion was triggered by ethnic domination. But today, what has really changed is nothing more than ethno-linguistic replacement.

In almost every sector, the top positions almost 90 percent of the time are held by Tigrayans," says the economist, referring to Meles's ethnic group.

"The ideology is very positive. It is pro-poor and transformational, there is no question about that. But the control of key sectors of national life by one ethnic group is leading to emerging governance issues," he concludes.

Hallelujah Lulie, a researcher with the Institute for Security Studies, observes: *"[Describing] Ethiopia as a country where the periphery controls the centre is generally understood as a reference to federalism." But, more pointedly, it is also a reference to Tigrayan minority domination.

BALANCING ACT

The Ethiopian state's political engineering skills have a very old history. It was therefore instructive that in seeking a successor Meles picked the southerner Hailemariam Desalegn, an indication that he may have understood that two decades of Tigrayan rule spelled trouble.

On the economic front, there are signs that the government is committed to bringing down inflation and dealing with perennial foreign exchange short- ages. As hard currency is used to finance large infrastructure projects there have been acute shortages.

Similarly, a policy of quantitative easing pushed inflation above 40 percent in 2011. Today, the government has turned to borrow- ing from domestic markets instead of printing money. This has lowered the official inflation rate to less than 10 percent.

Deputy prime minister Debretsion Gebremichael says that the government has addressed these concerns. "Projects such as the Grand Renais- sance Dam were always going to pose big challenges, especially to our foreign currency reserves," he told The Africa Report.

Strategies have been implemented to address this. One is trading our local resources; the other is export promotion; and the third is agriculture. We have to work hard for bigger returns. We also have to mobilise the diaspora."

Independent economist Bisrat Teshome says: "The growth figures may be exaggerated, but that should by no means suggest that there has not been growth. The government is clearly pursuing foreign direct investment (FDI) as a strategy to shore up its currency reserves, and it is working to a certain extent. Power, land and cheap labour are the ingredients to attract FDI. They are in abundant supply in Ethiopia."

Over the past decade, Chinese investment in Ethiopia has grown from zero to an average of $54m annually, says a World Bank report published earlier this year.

Plagued by a low-skilled labour base, onerous trade and import regulations, foreign exchange risks and insufficient local access to finance, Chinese and other investors recognise that these are teething problems.

World Bank country director Guang Chen observes: "Ethiopia is an attractive business destination for Chinese enterprises. Almost half of Chinese investors are in for the long run – 10 years and more – and plan to increase investment in Ethiopia over the coming years."

*Erratum: The Africa Report would like to clarify that the remark about Tigrayan minority domination attributed to Mr Lulie in the original article published in our June, 2013 edition was a typographical error. We sincerely apologise for any embarrassment the attribution has caused to Mr Lulie.



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