Country FilesEast & HornCountry Profile 2014: ETHIOPIA

Mon,15Oct2018

Posted on Thursday, 06 February 2014 13:02

Country Profile 2014: ETHIOPIA

A few small signs of change

Prime Minister Hailemariam Desalegn has survived his first year in office following his appointment in September 2012 up on the death of long-time ruler Meles Zenawi. This is no small feat for a southerner and a Protestant in a country in which politics has traditionally been dominated by northern Orthodox Christians. It has been hard to perceive areas of difference between Hailemariam and the blueprint laid down by Meles, especially as his government has chosen to stay strongly committed to his predecessors’ comprehensive five- year Growth and Transformation Plan (GTP).

 

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> TOP ETHIOPIAN COMPAGNIES

> TOP ETHOPIAN BANKS

theafricareport-ethiopia-72dpiA few small signs of change

Arrests of prominent figures on charges of corruption could herald tougher action

The first major investment in geothermal energy production is getting underway

Prime Minister Hailemariam Desalegn has survived his first year in office following his appointment in September 2012 up on the death of long-time ruler Meles Zenawi. This is no small feat for a southerner and a Protestant in a country in which politics has traditionally been dominated by northern Orthodox Christians. It has been hard to perceive areas of difference between Hailemariam and the blueprint laid down by Meles, especially as his government has chosen to stay strongly committed to his predecessors’ comprehensive five- year Growth and Transformation Plan (GTP).

Hailemariam does, however, seem to have confounded-in part at least–those who claimed that he was just a ‘stopgap’ until the 2015 elections. He is increasingly thought to be in the driving seat, even if he is not fully in control. There are also small signs that Hailemariam is attempting to chart his own course, which could be an indication of bolder changes to come.

BALANCING POWER

The new prime minister’s first significant deviation from the Meles roadmap was the appointment of two additional deputy prime ministers (bringing the total to three) during a cabinet reshuffle in late 2012. The move was seen as a shrewd attempt to balance power among the four ethnic-based parties that make up the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF )coalition: the Oromo Peoples’ Democratic Organisation, the Amhara National Democratic Movement, the Tigrayan Peoples’ Liberation Front and Hailemariam’s Southern Ethiopian People’s Democratic Front. Analysts agree that Meles would never have made such a move, if only because his authority was such that he would not have needed to.

The arrest in May of Melaku Fenta, director general of the Ethiopian Revenues and Customs Authority, his deputy and 30 other suspects, on charges including tax evasion and the receipt of bribes, marked the start of a government anti-corruption drive. At the time, it was dismissed by some commentators as more of a public relations exercise than a real crackdown on graft. However in the following months the campaign gathered momentum with a series of further arrests, including that of Woldeselassie Woldemichael, director of the domestic intelligence department of the National Intelligence and Security Service, at the end of August. Continued action is expected in 2014.

Hailemariam has been credited with widening the debate within parliament, allowing it to slowly begin to perform its function as a check on the executive. He has set a positive example, answering questions without too much rhetoric, explaining government activities and permitting ministers to be grilled by MPs.

BLUE PARTY

It also seemed as if the government was opening up the political space for the opposition. In June the Semayawi Party (Blue Party) staged a demonstration in Addis Ababa that attracted 2,000-7,000 protestors – the largest in the country since the disputed 2005 elections – and sparked rallies in a number of other cities. However, subsequent attempts by the Semayawi Party and other opposition groups to organise protests in the capital have been blocked (see box).

Economic growth continues apace. Government figures put GDP growth at 9.7% in the 2012-13 fiscal year. Expansion in the service sector has remained steady at 10% while growth in agriculture and industry was up from 4.9% to 7.1% and 13.4% to 18.5% respectively. For the first time, services have taken over from agriculture as the largest contributor to GDP. The IMF disputes these figures, putting 2012-13 GDP growth at 7% and forecasting the same for 2013-14.

Exports were down by 2% from $3.15bn to $3.08bn in the 12 months to July 2013, due in part to a slump in coffee prices – despite an increase in volume of 18%, earnings from arabica coffee fell to $746.4m compared to $832.9m in 2011-12.Gold revenues declined by 4% and tantalum by 69% while other minerals increased almost 48%, bringing in $12.4m. Conversely, shipments of leather goods rose by 10% and textiles by 16%.

The government says foreign direct investment (FDI) doubled to $2bn in the financial year 2012-13, with growing interest from Europe and the US. In September, Reykjavik Geothermal announced a plan to spend around $4bn to develop geothermal generating capacity of up to 1,000MW over the next 10 years. Drilling on test wells is expected to begin at the start of 2014. Chinese car manufacturer Lifan Group announced plans to move a new assembly plant to Ethiopia, while Swedish fashion retailer Hennes & Mauritz (H&M) expressed an interest in moving some production to the country.

On the demand side, the key driver remains government spending on large infrastructural projects – hydropower facilities, telecoms, and road and rail networks – that formpart of the highly ambitious GTP. Concerns still exist that the high level of public spending – the third highest in the world -are crowding out the private sector and contributing to macroeconomic difficulties including foreign exchange shortages, increasing external debt, bank illiquidity and inflation (which the IMF predicts could fall to single digits next year from a 2008 high of 44.4%).

theafricareport-ethiopia-72dpi-2BUILDING TO CONTINUE

The IMF has urged the government to reconsider the scale of its infrastructure investment and to modify a directive exacting a 27% levy on commercial bank loans for the purchase of government bonds to fund development projects. On one such project, relations with Egypt reached a nadir in May following the diversion of the Blue Nile as part of the construction of the $4.3bn Grand Ethiopian Renaissance Dam, which Cairo says threatens its historic claim on the waters of the world’s longest river. Former President Mohamed Morsi responded that “all options are available to us”, while the Ethiopian prime minister vowed that building would continue. A report from an international panel of experts has yet to be released but is said to raise concerns that there are flaws in the dam’s design.

Hailemariam continued to play the role of mediator in the Horn of Africa, facilitating talks between Sudan and South Sudan as well as helping to broker a deal providing Jubaland, a strip of land in southern Somalia bordering both Ethiopia and Kenya, with a degree of autonomy. Following the Westgate siege in Kenya in September, Hailemariam vowed to keep Ethiopian troops in Somalia until Al-Shabaabis defeated. While an Islamic attack on the country would prove a much tougher proposition than the one on its southern neighbour, the government has not ruled out the possibility.

Despite Hailemariam’s proposal to go to Asmara, the Eritrean capital, for talks with President Isaias Afewerke, the relationship between the two countries remains frosty. Analysts agree that the Ethiopian prime minister’s gesture didn’t represent much of an advance on Meles’ offer to meet Isaias any time, anywhere.

The chairman ship of the African Union Assembly during its golden jubilee year fell to Addis Ababa, which was the venue for the inaugural meeting of the Organisation of African Unity, the AU’s predecessor. It was clear that when the decision was taken in 2011 the AU anticipated that Meles would assume the mantle, and while Hailemariam has perhaps not made his mark in the same way Meles would have, he has nonetheless acquitted himself well. Certainly he has been a marked improvement on the three previous holders of that office: Yayi Boni of Benin, Equatorial Guinea’s Teodoro Obiang and Libya’s Muammar Gaddafi.

BLUES STEP UP CALLS FOR ‘FREEDOM AND JUSTICE’

SEVERAL THOUSAND PROTESTORS took to the streets of Addis Ababa on 1 June in Ethiopia’s largest demonstration since the disputed 2005 elections, when a government crackdown led to the death of almost 200 people. Supporters of the opposition Semayawi Party (Blue Party) shouted slogans calling for freedom and justice. The party also demanded the release of journalists and political prisoners, government action to reduce unemployment, the end of state interference in religious affairs, a crackdown on corruption and compensation for communities displaced by government development projects. Its leaders vowed to hold a second rally three months after the first, but the attempt was foiled when the party’s offices were raided on the eve of the planned protest. The government denied the allegations.

The city administration finally granted permission for a second demonstration on 22 September, at a sports stadium on the outskirts of town. However party members – their numbers greatly reduced – were determined to march to the more central Meskel Square and were stopped less than 100 metres outside their headquarters. While the party does not yet have a detailed political manifesto, its leader, Yilkal Getnet, has proposed a new national constitution.

TOP ETHIPIAN COMPAGNIE

Rank 2012Rank 2011CompanySectorCountryTurnover (Thds $)Turnover changeNet profits
108143ETHIOPIAN AIRLINESAIR TRANSPORTETHIOPIA1,419,44941.87%70,638
 

TOP ETHOPIAN BANKS

Rank 2012Rank 2011Bank nameCountryTotal assetsNet interest incomeLoansDeposits
5046COMMERCIAL BANK OF ETHIOPIA*ETHIOPIA4,416,728223,1301,333,8253,305,217
150146DASHEN BANKETHIOPIA840,44614,983349,362678,858
166160DEVELOPMENT BANK OF ETHIOPIA*ETHIOPIA674,6154,626522,84133,034
187171AWASH INTERNATIONAL BANK*ETHIOPIA536,86819,984178,344363,303
 


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