For centuries, Ethiopia had been ruled by monarchies, subjecting the people to harsh governance and hindering economic progress. The feudal economic system entrenched for millennia impeded development, leaving farmers trapped in subsistence living. Exploitation and oppression festered, creating a society yearning for change.
The popular revolution of 1974, which abolished the imperial system, initially brought hope for political and economic advancement. However, the Derg military rule derailed the progress, plunging the nation into chaos for 17 years. Although the downfall of the Derg regime in 1991 ignited hope, the subsequent EPRDF regime governed undemocratically, leading to public discontent and its eventual removal in 2018.
Yared Hailemeskel, an economist based in London, delved into various aspects of Ethiopia’s economy in a recent interview with local media. He highlighted the long-standing dominance of a monarchical system, where decision-making and enforcement rested in the hands of authoritarian rulers. This power dynamic, detached from public needs and aspirations, became deeply ingrained in Ethiopian politics.
Despite controversial policies under the EPRDF administration, some positive economic improvements were witnessed. Notably, from 1991 to 1995, the party initiated financial system liberalization and state asset privatization, reversing the previous socialist economic doctrines.
However, these policies lacked public consent, and limitations were evident. Ethiopia now faces challenges that overshadow its economic gains, raising concerns about the system’s sustainability.
The lack of political plurality and repression of opposition parties can be seen as obstacles contributing to the downfall of the EPRDF. Yared further emphasized that the adoption of an ethno-nationalistic governance model, influenced by socialist ideology imported from the Soviet Union, accelerated the regime’s collapse.
The inability of this ideology to engage in meaningful dialogue, question fundamental concerns, and address the needs of the Ethiopian people played a significant role in its demise.
Yared stressed that regardless of the philosophical framework a government adheres to; it should always evolve, meet the needs of the population, and be responsive to changing times.
During the early years of the EPRDF’s rule, its political ideology enjoyed widespread acceptance. However, as the political system lost integrity, the people yearned for change, leading to widespread dissatisfaction.
The ruling government’s policies and philosophies bore resemblances to both the monarchical era and the Derg dictatorship. These policies resisted considering diverse perspectives, concentrating political repression and economic control within the government and its affiliates.
The situation deteriorated after the announcement of the 2018 election results, where the EPRDF secured almost all parliamentary seats. Resentment emerged across the country, sparking massive demonstrations that eventually led to the downfall of the party.
Seizing this opportunity, an internal political transition took place, instilling newfound hope among the public. Ethiopia has undergone significant political reforms that expanded political freedoms but also brought long-suppressed ethnic tensions to the surface.
However, although notable political reforms occurred, significant economic reforms are yet to be fully implemented compared to the extensive legislative measures undertaken during the EPRDF’s tenure.
During the Derg regime, Ethiopians were prohibited from establishing banks or owning private organizations, and government-controlled public entities. Under the EPRDF, however, significant reforms abolished these restrictions, allowing Ethiopians to participate in the private banking sector and privatizing government-owned entities. However, the current government might approach the liberalization or privatization of the telecom service and financial sector differently.
Ethiopia’s socioeconomic challenges are deeply rooted, stemming from decades of authoritarian rule, historical ethnic divisions, land disputes, marginalization of remarkable sections of the community, and perceived inequalities. These factors have significantly contributed to the prevailing tensions in the country.
While the political transition initially attracted interest from investment groups and investors, bureaucratic barriers hindered their plans, leading to withdrawal of investments. This bureaucratic hurdle acts as a deterrent, impeding potential inflows of investments into the country.
Although the current government inherited political and economic challenges, it has made efforts to address past mistakes and achieve economic progress. However, the outbreak of war in the northern part of Ethiopia has posed a setback to the economic achievements witnessed.
Currently, the nation faces various economic challenges, including negative trade balance, foreign currency shortages, illegal trade, inflation, and corruption. Conflicts in various parts of the country further hamper trade and business activities.
The abduction of citizens during travel has caused fears among drivers and increased transaction costs for agricultural products. It also affects the value chains for supplying agricultural inputs to farmers.
A recent study revealed that the absence of peace and security in remote areas has created opportunities for illegal traders to smuggle cattle and agricultural products to neighboring countries, putting further pressure on the economy.
According to Yared, Ethiopia has the potential for economic growth by harnessing its abundant natural resources such as arable lands, a productive labor force, water, minerals, energy, and tourism. However, without political stability, achieving development goals is extremely challenging.
To overcome these challenges and achieve real economic progress, Ethiopia needs to prioritize several key areas. Firstly, there must be a genuine commitment to democratic governance, ensuring the protection of human rights, freedom of speech, and the rule of law. This will create conducive environment for political stability and attract both domestic and foreign investments.
Secondly, economic reforms should focus on creating a transparent and business-friendly environment. Streamlining bureaucratic processes, reducing corruption, and improving the ease of doing business will encourage investment and stimulate economic growth.
Thirdly, investing in infrastructure development is crucial. This includes improving transportation networks, expanding access to electricity, and enhancing digital connectivity. Infrastructure development will not only facilitate trade and commerce but also create employment opportunities and promote regional integration.
Fourthly, the agricultural sector, which employs a significant portion of the population, should be modernized and made more resilient. This can be achieved through investments in irrigation systems, agricultural research and development, and access to finance and markets for smallholder farmers.
Fifthly, there should be a focus on developing human capital through investments in education, healthcare, and skills training. A well-educated and healthy workforce is essential for driving innovation, productivity, and overall economic development.
Lastly, promoting regional integration and international cooperation can unlock new opportunities for trade, investment, and economic growth. Collaborating with neighboring countries and participating in regional economic communities can expand market access and attract foreign direct investment.
Ethiopia has immense potential for economic progress, but it requires a comprehensive and inclusive approach to address its historical challenges and current issues. By learning from past mistakes, fostering political stability, implementing economic reforms, and investing in key sectors, Ethiopia can pave the way for sustainable and inclusive development, he opined.
BY ABEBE WOLDEGIORGIS
THE ETHIOPIAN HERALD FRIDAY 29 MARCH 2024
