BY BACHA ZEWDIE
Following the start of political reform in the country two years ago, the conspiracies of the now fugitive criminal group, the Tigrean People Liberation Front (TPLF) clique, have begun to come to light. Besides the criminal group’s recent treacherous act against the North Command of the Ethiopian Defense Forces which clearly showed its true identity, various reports are now coming out revealing the fact that the group had put the country’s economy at great risk.
Using its political dominance, the TPLF clique owned and controlled large businesses. The unfair business practices which favored the clique’s businesses and its affiliates by helping them evade taxes to strengthen their economic muscle illegally. The private sector has also been the victim of state-sponsored criminal activity.
Currently, 34 large businesses that are said to have direct links to the greedy criminal group have been banned during law enforcement. The impact of these institutions on the country’s economy and their negative impact on the business community are well known. Economists approached by the Ethiopian Press Agency in this regard shared their opinions about what should be the fate of these businesses and ownership of businesses by political parties.
Dr. Teshome Adugna, Assistant professor of Economics told The Ethiopian Herald that it doesn’t matter if political parties own and run businesses as long as they are abiding by the rule of the market.
“The problem in our case is there is no boundary between political power and business ownership. Parties that own businesses abuse their economic power to manipulate the politics vice versa. Besides, since they were favored by the government contrary to market principles, they outshone their competitors in a short period of time” he remarked.
Regarding the banned institutions owned or affiliated with TPLF, he said as the clique is now illegal; there are various options to manage their future ownership.
One of the options is to transfer their ownership to the regional state after making sure that they are governed by market principles. Some are also said to be owned by shareholders, if so and if they are free from government debt, they can be privatized if their shareholders are willing to so. If they are indebted, they can be handled as per the legal procedure.
According to Teshome, the nature of the companies can decide their fate. “If they are community-oriented, it is better to let them continue that way. If they are market-oriented, it is better to let them continue that way. Some might also be put under state control based on their purpose and nature.”
Apart from this, the extent to which they had been engaged in illicit activities matters to decide their fate. If they are relatively safe to continue in the market, it is would be enough to make some readjustment. This is the best remedy considering the fact that the country’s private sector is at its infancy and there is a need to encourage its development.
“Letting them continue operating in the market by unravelling and clearing their illegal activities will enable them to become more innovative and utilize their experience in stabilizing the market,” he said.
Above all, strong institutions are essential to regulate market actors whether they are public or private. In this regard, the Minister of Trade and Industry among other concerned organs need to exert its influence in properly regulating the companies and making sure that market principles are respected.
Assistant Professor of Economics at Kotebe Metropolitan University, Muhidin Mohamed Hussein, on his part, said that there must be healthy trade competition to boost the economy. It is appropriate for the government to take control of institutions that are said to be critical to the macroeconomic stability and overall security of the country. Other than that, the door should be open for competition and the playing field has to be levelled.
“In this case, a company can compete and come out victorious all by its own. This way, the company maximizes its gains and at the same time, the interests of the people will be respected.”
However, the largest businesses in the country have been under the control of the TPLF clique and this has resulted in unfair and unhealthy business practices and competition in the country. This, in turn, hindered the development of the private sector and its contribution to the economy.
According to the Assistant Professor, these huge business institutions are linked to politics and as a result, have not been properly audited nor paid taxes. The export-import business procedure was non-competitive as it was considered a government responsibility. He also pointed out that this has not only affected the economy but also weakened other private businesses, forcing them to leave the market as they were no more able to compete.
As the 34 businesses that are now banned by the government are affiliated to the clique that dominated the political life of the country for 27 years, their income and wealth, as well as where their resources and profit go have not been audited.
The government-run business and the private sector could not compete in equal terms. As a result, the presence of such a situation has paralyzed trade competition and significantly distorted the country’s trade balance.
The Assistant Professor said: “The negative impact of the now-banned institutions on the economy is significant due to the fact that they had been very active in the export and import business.”
He further added the businesses amassed wealth in an unfair and unhealthy way which gave the clique the advantage of having unnecessary economic dominance.
In fact, as to him, there is a strong belief that the party that controls the economy will have a huge opportunity to exert a huge influence on political matters.
True, the companies played their own role in exacerbating the crisis in the country. But the main focus now should be given to creating a competitive market that adds value to the economy. “For this to happen, there shouldn’t be any party-owned or affiliated business in the country as they would obstruct competitiveness in the market.”
Assistant Professor Muhdin pointed out that any modern economic thinking allows the government to have a role in the market to a limited extent. In Ethiopia, it is expected for the government to have a role as the country is in the take-off stage of economic development. “However, the government needs to intervene in selected sectors without harming the growth of the private sector.”
Parties should only generate ideas, he said adding a party can only generate money from the general public and its supporters. If this is not the case and the parties are in business, there will not be a healthy competition, both in politics and economy.
Economist Addisu Etifu for his part asserted the clique’s business caused more damage to the economy than their contribution. “They were instruments put in place to exploit the country’s limited resources and facilitate capital flight.”
The economist also said not only were the businesses operating illegally but also their start-ups were also gained or raised illegally.
“It is the private sector that can serve as an engine of growth and make the country better. The private sector is the one that meets the demands of the society and the market. Thus, any business activity at the expense of the private sector will have a detrimental effort on the economy. Giving much space for the private sector in the economy will have a significant positive impact on job creation, income generation and hence improving the standard of living for citizens,” he stressed.
