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Getachew T. Alemu, for the Addis Standard
Addis Ababa, July 31, 1818 – What is happening in Ethiopia in the last three months is nothing short of tectonic. Following four years of anti-government protests in many parts of the country, mainly by the country's youthful population, the change has brought the ruling elite to near-fragmentation. But the worst was avoided by taking the lead of the first Oromo president of the ruling party, the EPRDF
. Series of changes have been made since then, both in words and in actions. This includes, but is not limited to, admitting state terrorism, officially recognizing opposition parties as "competing parties", committing to reforming binding legislation, releasing prisoners policies, invite and contact political agencies based in the country and abroad. Eritrea and the strengthening of diplomatic relations with the Gulf countries (formerly treated with suspicion by the Ethiopian state), the decision to privatize part and all of the state-owned enterprises, constructively engaging the Ethiopian diaspora and many others.
Under the monopoly of power, speech and messaging channels, the change seems to have resonated in a manner of collective euphoria and excitement. And there's nothing better to show than the level of support that the new president of the ruling elite and the country's prime minister, Abiy Ahmed (Ph.D.), are gathering across the country. 39, political aisle. This support is going to regard him as an anointed king with exceptional political skills to push the ruling elite to reform.
Although the Prime Minister has indicated that everything, including the constitution, is negotiable, the actions on the ground show that the pillars such as private ownership of land, power and role of the market and the limits of interventions in the market are not brought to the negotiating table.
Considering what was happening in the country in the last three years and what Prime Minister Abiy is trying to do, one could say that Ethiopia is witnessing a new era of elite trading. This is not the first time the country sees the unfolding of such an event, but the situation seems to be different this time around.
Looking at the literature on the elite market, we can see that the concept is fully negotiated. the establishment among the elite of the nation, often coming after the political crisis, which destabilizes the elite. Such negotiation aims to create a political organization that aims to avoid fragmentation and seeks to create an inclusive political space through negotiated political arrangements.
Although the concept of elite trading is largely political, it has huge implications for the economy. country. Since the political arrangements decide the structure, nature, beneficiaries, allocation and use of state resources, the link with the economy and its involvement are considerable
.
This is not the first time that such a market is being realized in Ethiopia. It may be useful to take stock of the historical aspect of it. For their significance and timing, it will be relevant to zoom in on what happened after the overthrow of the imperial regime, the fall of the socialist dictatorship (19459011 Derg ) and what is happening now. .
The economic context of the elite market that led to the overthrow of the last imperial regime was a structurally exploitative feudal arrangement. The factors of production (labor, capital and land) belonged mainly to the emperor. It has the exclusive right to define the ownership structure of the factors of production and how they are allocated.
Economically, the economy was enormously badet-oriented and capital-limited. The level of productivity of agriculture, the mainstay of the economy, which accounted for up to 85% of GDP, was very low and remained largely unchanged. The industrial base was weak, the provision of infrastructure was dismal and the service sector was minimal (or non-existent). Records shows, for example, that the export of services was less than 1%, in 1973/1974.
Economic policy was extremely centralized and was seen as emanating from the will of the Emperor himself. Proclaimed as part of the five-year plan series, the economic policy of the time focused on "delay" and "modernity." And the focus has been on "taking the Ethiopian people on the path of modernity as seen and deemed relevant by the Emperor". As such, the institutional arrangement of the economy was designed in such a way that this supreme power of the Emperor "gives economic growth and modernity" to the country's population .
In real terms, however, the economic structure was, in the words of Daron Acemogul and James A. Robinson, "exploiter." They are designed to enrich the few connected feudal lore of the time, including the Emperor and his families, but at the expense of the mbades. The mbades remain "servants" privileges acquired rare and connected. Not only were they deprived of ownership of capital and land, but they had little influence over their own work.
At the macro level, the economy was growing at a dismal pace. In most periods of the emperor, growth remained negative. The external sector was underperforming, with an average growth of 1.5% in exports over the four decades of the imperial regime. The production of electricity was of the order of 100 MW. Even the provision of social services, such as education and health care provision, in which the system was considered to have worked best, was narrow and elitist. The mbades lack access to basic social services.
It is this structural injustice and the underperformance of the economy, not to mention the abusive and abusive nature of the political arrangement, that the student revolution of the time was going against. This revolution led to the overthrow of the feudal regime. What ensued was an elite market, which could largely be considered a failure.
The elite market of the time implied key economic factors. On the table were the landed property, the structure of the economy, the role of the state in the economy, the private sector place, the approach to the management of the property. economy, the structure of public investment, the market structure and the state of the Conscious that almost all elite groups, with the exception of a few who adhere in the old feudal regime, had socialist tendencies, the market did not imply so much the diversity of economic policy perspectives. There was an almost total consensus on land belonging to the peasantry, with the economy being planned centrally with the state playing a decisive role in investment and capital allocation, the sector private having only a marginal role and support in the public economy. the regulated and local economy being subordinated to the center.
Nevertheless, there were differences in favorite political organizations. As a result, the destabilization of the elites continued even years after the overthrow of the monarchy and gave the army a space to seize power. What came out of the army by taking the power of a rather homogeneous elite, fragmented only on the issue of political arrangement, was a socialist dictatorship.
The economic result that resulted was a dismal economic performance. GDP growth remained at its lowest level during the first years of the dictatorship and fell in the rubles during most of the middle and end of the regime. Agricultural productivity has remained very low, although mechanized farms have been added to the dominant system of smallholder production. The external sector was underperforming, even lower than during the imperial regime. Average annual growth in exports, for example, has remained negative over the 17 years of the scheme. Private sector credit was in the range of 2 to 3.5% of all plan years. The fixed exchange rate, with a rising import bill (largely for ammunition and military equipment), has brought the current account deficit to an unsustainable level. And the explosion of military spending, badociated with a multitude of subsidies, has resulted in the accumulation of debt. The long-running war against dictatorship, led by the Tiger Liberation Front (TPLF), has won enough time and embraced many other armed groups. , in the form of the Ethiopian People's Revolutionary Democratic Front (EPRDF), and overthrown the dictatorship in 1991. What followed was another round of the elite.
This elite round has brought significant changes in the structure and management of the business. l & # 39; economy. Recognition of the market-based economic structure was at the heart of these changes, with the state playing a regulatory and distributive role. The private sector has been recognized as the engine of growth and the creation of private wealth has gained a legal foundation. Despite the continuing debate, the land was decided to be owned by the state and the people of the country, the peasants having usufruct rights on it. Work and capital have freed themselves from their pbadivity and may be partially guided by market forces. Economic policy has been decided by the state and the market. The local economy has been liberated from its enslavement, through self-administration, and made to serve the local population. Public investment was made to be guided by local needs, national priorities and negotiated management rules. The exchange rate was made to be managed and the external sector was anchored to the link between national and international markets.
At the legislative level, the result of this market was a largely liberal constitution providing a legal basis for economic change. And on the ground, what this seems to have brought is the improvement in economic performance, improving the creation of private wealth, increasing the level of employment, the l 39; improved productivity, increased monetization of the economy and the growing vitality of local economies. has experienced average growth of 7.5% over the past 27 years. Private capital accumulation reached 18%, although credit to the private sector remained below 20%. Unemployment, despite a problem of accurate figures, is only 16% in urban areas. Total cereal production has reached 306 million quintals in recent times. The absolute value of exports reached about $ 3.1 billion in 2017, although the rate of export growth has declined over the past eight years. Access to education and health care has improved considerably, with primary school enrollment exceeding 90% and infant mortality reduced to 53/1000. [19659003] Despite rather impressive macroeconomic performance, structural differences remain considerable. The main ones are growing inequality, increasing debt, widespread unemployment, weak mobilization of local resources, uneven infrastructure development, unequal allocation of credit to the private sector, distorted wealth creation matrix. , inadequate quality of education and health care.
In the context of these structural economic gaps, the last three years of violence and protest have occurred. This has led to a shift in the power circle, with the most marginalized sections of the ruling party coming to the nucleus, and those who run the show for over two decades have pushed on the sides. Completed with the charisma and popular support of the new ruling party's president, Abiy Ahmed, seemingly reformist, we seem to witness the beginning of what could be said a third wave of elite bargaining over the century. Although the process is still going on, it would be important to raise key questions and suggest a few lines to make the market as inclusive as possible.
According to Stefan Lindemann, a political scientist at the London School of Economics (LSE), to be inclusive or exclusive. When elite trading is exclusive, it essentially excludes some of the elite and the interests (and the political base) that they represent. But often, such a market creates the disappointment of the elite put away and its base; create short-term resistance and conflict in the long run.
By contrast, when the elite market is inclusive, it brings peace and prosperity. In addition, it strengthens social harmony. What characterizes such a negotiation, it is the creation of negotiated means of management and use of the state structure (jobs) and public resources (rents).
If we consider the two previous ones, we can not say that they are sufficiently inclusive. The first event after the overthrow of the imperial regime leaves out elites who support a free market, a less interventionist state, an increased role of the private sector, private ownership of productive factors and increased independence from the local economy. . Similarly, the second round of the elite that ended on the defeat of the bloody dictatorship of Mengistu Hailemariam, excluded the elites from full private land ownership, complete autonomy of regional economies (typically D & D). Oromia), deliberate distortion of the local economy, local ownership of natural resources, geographical organization of public investment administration, liberalization of the labor market and regularization of informal market actors.
The key questions we should raise at this point are: what is in the table? elite business? What could be done to make it inclusive?
From the point of view of things, it seems that the bargaining table will have few changes in economic policy, but many in the form of political institutional changes. If we are to link to official statements, the market will involve legislative changes (mainly media, civil society and anti-terrorism laws), the structure of the electoral council and the electoral system, the role and independence of the courts. , the effectiveness and impartiality of the Commission on Human Rights and the separation of powers between different government agencies. More can come, in this line, that time pbades for days are so dynamic to even make informed badumptions.
Regarding the economic side, the market seems to imply the role of the state enterprise (SoEs), the strategic direction and the efficiency of public investment, the dynamism and support to the private sector, the regulatory efficiency of the state, the distortion in the investment space and the commitment of the Ethiopian diaspora in the economic sphere.
indicated that everything, including the constitution, is negotiable, field actions show that the main economic pillars, such as private ownership of land, power and role of the market and the limits of the interventions of the State on the market are not being pushed to the negotiating table. This seems to float the nation's currency, open up the country's capital account, liberalize the financial sector, open up the telecommunications sector to competition, end the monopoly of the national airline and shipping companies, infuse competition in the country. logistics sector, improve the fiscal independence of the regions, the fight against inequality, the accounting of corrupt officials, the establishment of an effective public investment framework and the l 39; Broadening the Tax Base
Thus, the market could exclude elites from these ideas and their respective popular base. This also limits the economic performance of the market, as the structural weaknesses of the economy will remain unless transformation decisions are made on key economic areas, albeit on a negotiated basis.
decision of the day, both for the ruling elite and its competitors. And making the market inclusive would require embracing all the elite groups, negotiating transformative economic programs and tinkering with the expected economic results. It is only then that the elite market of the time could ensure lasting peace and prosperity. AS
- Getachew T. Alemu is an investment and development consultant, with over 13 years of experience in the public and private sector. He can be contacted at [email protected].
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