Introduction It Ethiopia, over the last twenty-eight years a pernicious economic process has been going on, with disastrous outcomes. The country’s population has more than doubled; potentially productive land and capital have fallen into the hands of an unproductive and predatory class of people, who have neither the talent nor the desire to kindle and ignite the engine of economic growth that has worked miracles in China, Singapore, South Korea, Japan, Malaysia and elsewhere.
By sheer dint of state capture, this parasitic and exploitative class of people has robbed the Ethiopian people of an estimated 1.5 trillion birr (i.e., about 50 billion USD), which, in the hands of a dynamic entrepreneurial c l a s s would, together with an estimated equal amount of foreign grants, loans and foreign direct investment (FDI), have propelled the Ethiopian economy well beyond the stage of economic take-off.
Add to this the domestic resources mobilized, a great deal of which, unfortunately, found its way into the 1.5 trillion loot, and the target of reaching a middle-income country status would have long been attained. The pillage has been a double whammy. On the one hand, a huge absolute amount of resources has been plundered; and, on the other hand, the reproductive power of that much capital has been crippled, thus amplifying the impoverishment of the Ethiopian people in the face of nearly three percent annual population growth (the official growth rate is about 2.7 percent).
The outstanding and visible consequence of such large-scale corruption are obvious: low production levels particularly for basic goods and services including food, clean water, shelter, basic healthcare; and unemployment, widespread poverty, land shortage and emigration. Unfortunately, land shortage has been a major cause of the constitutionally assisted widespread evictions and internal displacements in the country. On the other hand, prospects for rapid economic development remain bleak in the absence of any determined effort to restitute the stolen money and property to the Ethiopian people.
Passion for Value Creation
One major detrimental effect of the 27-year TPLF/EPRDF rule has been the loss on the part of the Ethiopian youth of their erstwhile passion for knowledge and productive skills which used to be nurtured particularly during the Haile Selassie era, and of the attendant selfactualization through value creation. In years gone by, high academic achievement, natural wisdom and, in later years, honest business success were held in high esteem and respect. During the imperial period, university and college graduates, especially from the then Alemaya Univesisty and Jimma College, successfully joined the budding business community inareas such as large-scale commercial farming and industrial enterprises.
In those days, making or doing something of value was a sterling passport to social prestige. High profile business persons such as Tedla Aebe, Mekonnen Negash, Mammo Kacha, Teferi Sharew, Bekele Molla, Hunegnaw Mera, Tedla Desta, etc. created real values in terms of goods and services, which materially benefitted the Ethiopian people and legally enriched the persons who provided them through hard work and enterprise.
Hence, then, the passion for value creation, the real source of economic progress, derived from the natural desire for self-actualization and, at a more primordial level, from the struggle for survival. Particularly over the last twentyeight years, the social value system in the country seems to have been turned upside down. It is no longer necessary to acquire knowledge and skills in order to achieve self-actualization.
Apparently, all one needs to command respect is to shoot ones way to power and use that power as a source of greater power, wealth and prestige and thereby attain self-actualization, albeit unreal in the usual scheme of things. As a result, real value creation, the fountainhead of economic and social progress and prosperity, goes down the drain. However, in the absence of passion for value creation, a society is forced to be trapped in the vicious circle of corruption, impoverishing those from whom resources are stolen until they have nothing left to be stolen, and then finally plunging the entire society into the progressive phases of moral crisis, decay and breakdown! Hence, we Ethiopians must leave no stone unturned to restore out traditional passion for value creation.
Land Use Plan
One of Ethiopia’s major institutional deficiencies is the absence of land reform and administration institution. In fact, such an institution should be established at a ministry level. Its major task should be to draw up a country-wide land use plan, both for rural and urban land. It requires identifying and zoning land areas suitable for commercial crop farming, forestry development, tree farms, livestock development, horticulture, and other agricultural development; and in urban and semiurban areas for agro-industries, other industries, residential and commercial buildings, schools, parks, etc.
All this is, of course, dependent on the availability of highly qualified town planners, engineers, architects and other professionals who might not at present be fully available from the local work-force, in which case it would be advisable to recruit experts from abroad. Another important area of land reform is its tenure pattern. At present, the country’s constitution has provedbeyond a shadow of doubt that it has been a detrimental stranglehold on a factor of production so essential in Ethiopia’s development context.
Hence, all four land tenure systems, namely, private, communal, government and leasehold should be legally allowed. Further, appropriate decisions regarding urban land occupied by extra houses nationalized by the Derg regime some forty-five years ago should also be made by the government. It is regrettable that the TPLF/EPRDF regime made land a foundation of its exploitative patronage system. This, now, has to be corrected as soon as possible if genuine economic development is to be launched in earnest.
The Need for the Creation of an Entrepreneurial Class
As may be ascertained from casual observation, entrepreneurial talent appears at least particularly to be a trait of natural endowment. Of course, education, training and practice do improve it significantly. In Ethiopia, there are thousands, if not millions, of people who are so naturally endowed and who have somewhat enhanced their entrepreneurial talent despite the low level of the quality of formal education and training in the country.
What the government of the day (more about this below) should do is create an enabling economic environment for such persons in terms of easy access to land, credit, skilled labor and specialized technical knowhow, including project study and analysis. Administrative facilitation is also an important service input into the resources package to be made available. However, at the end of the day, potential entrepreneurs should prove themselves to be genuine value creators, capable of making profits in a highly competitive domestic and global market.
Productive Bank Credit
Private domestic commercial banks largely advance loans and credit for relatively safe economic activities such as domestic trade, import/export trade, merchandize loans, pre-shipment loans, business loans, etc. and mainly generate revenue from foreign banking operations including remittance exchange. Although all these loan types are essential for the smooth functioning of the economy, their contribution to increasing productive capacity through expansion or new projects is rather limited. Hence, bank loans and credits to finance expansion and new projects should become an important feature of the loan portfolio of banks in Ethiopia.
To this end, the now seriously weakened Development Bank of Ethiopia should be restructured, strengthened and re-resourced while the former Construction and Business Bank, which was merged with the CBE a few years back, should be reestablished and strengthened as a wellfunctioning mortgage bank. At the same time, while collateral, own savings and general credit worthiness should continue to be important criteria for advancing bank credit, feasibility and profitability prospects for expansion and new projects should be appraised by bank project analysts with a view to advancing the required loan component of such productive projects.
Project Study and Analysis
Another major institutional deficiency in the Ethiopian economy is the absence of well-recognized project study, analysis and appraisal institutes or organizations. Under the Haile Selassie regime, the then existing Technical Agency was a highly respected project study and analysis institution. Under the Derg government, DEPSA served the same purpose with distinction. On the other hand, no such institution of the same reputation has existed under the TPLF/EPRDF regime, with dire consequences including serious doubts about feasibility, profitability, prioritization, timeliness and efficient use of scarce resources.
As a result, government development projects including the so-called mega projects have been a hotbed for rampant corruption. Hence, it is mandatory to establish at least one strong government project study, analysis and appraisal institution and to encourage the establishment of similar institutions in the private sector as well.
Developing the Foreign Exchange Earning and Saving Capacity of the Country
It is simply not possible to talk about developing Ethiopia’s economy without earning or saving foreign exchange. Hence a balanced export/ import-substitution strategy is essential. Natural endowment should generally be the basis for export and importsubstitution production. Agricultural and agro-industrial production should be emphasized, including crop production, livestock development, tree farming and wood products, agro-processing, honey, flowers, leather and leather products, cotton plantation and textiles, etc.
In the mining sector, potash and other minerals should be developed, paving the way for fertilizer and other agro-chemicals, including pesticides. With Ethiopia’s natural endowments, imports of sugar, wheat and edible (cooking) oil are just not acceptable and are a reflection of the lack of simple imagination on the part of successive governments.
On the other hand, considering Ethiopia’s long history and rich and diverse cultural heritage, the contribution tourism is currently making is at best minimal. A lot more foreign exchange should be earned from tourism and related activities. With regard to production technology, the idea should be to produce with the highly competitive global market in mind; hence, state-ofthe-art technologies should be employed as goods produced with what are termed appropriate technologies may never compete with imports even in the case of domestic consumers.
Development Planning and Macroeconomic Policy Formulation
It is not a bad idea to drawing a five-year development plan, but it should be realistic. Plan objectives, policies and strategies should be clearly elucidated. Targets should be set realistically. Resources should be more or less accurately estimated, both domestic and foreign resources. Implementation capacity in terms of both skilled manpower and institutional capabilities should be properly assessed.
A macroeconomic framework, preferably assisted by a macro-economic model of a fairly robust nature, should be a great help, but should never be looked upon as a magic wand or box. Particular emphasis should be placed on overall GDP growth, investment, employment generation , foreign exchange earnings and savings on a net basis, inflation, budget deficits, monetary policy, fiscal policy, trade deficits, etc. In general, a development plan that cannot be implemented at least seventy-five percent on time and on budget should be considered a failure.
The Need for a Technocratic Government A development vision such as envisaged above cannot be realized without a competent and technocratically oriented government. A governor of a central bank who cannot control inflation within the targeted margins should be relieved of his duties; a minister of finance who fails to balance his budget within the envisaged limits should similarly be nowhere near the government coffers; a planning commissioner who is unable to come up with a development plan that has some relation to common sense should first go to a school of pragmatism.
Ethiopia has no more time for on-thejob training in its ministerial positions. She has wasted forty-five years in such trial runs and has suffered immensely. During that same period China, Singapore and other countries have changed for the better beyond recognition while Ethiopia is teetering on the brink of hunger and starvation and worse still, on the brink of civil war! To reverse this dire situation we must first get our money back, some 30 billion dollars of it stashed away in offshore accounts alone, from the Mafia syndicate which masqueraded as an elected government of Ethiopia for the last but one twenty-eight years! So help us God! Amen!
The Ethiopian Herald Sunday Edition May 26/2019
BY TEKLEBIRHAN GEBREMICHAEL
