The sad state of Ethiopia and the need for a new generation of Leaders
Zekarias Ezra
April 08, 2008
I just returned from a visit to Ethiopia. It is not my first visit. Every time I visited I tried to assess the situation objectively by having discussing with different sections of the population and by going around and making a planned visit.
So, I don´t waste time sitting around in the high places of entertainment. I rode Taxis or walked just like the citizens who live there. I talked to the well educated and the rich and the less educated and the poor.
For whatever it is worth, here is my observation of Ethiopia.
Despite the 11.8% annual average GDP growth the Ethiopian government keeps announcing the Ethiopia I saw is suffering from escalation in food and energy prices resulting with double digit inflation. Every thing in Ethiopia has seen a hefty price hike. I mean every thing. A small single loaf of bread costs around 60 cents. No traditional Ethiopian meal, like Injera and Wat, is sold less than 13 birr in a neighborhood small restaurant. A piece of cake costs you over 7 birr. A cup of coffee costs you over 2 birr. All this is happening in the small coffee places. Housing shortage is beyond belief. A two small room house, a condo, is rented for 1500 birr per month. At times it is mind boggling. I have seen a house rented for $6000/month. No, it is not a typo. You heard me right. It is rented for $6000/month US Dollar.
Many rich folks and other well connected are rushing to build homes that would go for rent in the range I just mentioned above. I don´t have the statistics but these folks may constitute less than 1% of the population. I hear from people, who I know have insider knowledge, the business connection going on between the top officials of the government and the business people. You hear of Wegagn Bank making a 35 % ROE (Return on Equity) payment to its share holders. Other banks do similar payments. Only those same rich folks do own the shares. I question the health of an economy that produces such a skewed ROE.
Prime Minister Meles Zenawi has argued that the inflation is a short time phenomenon which will go away as the government is trying to increase people´s income by expanding the domestic production of basic goods and ensuring rapid economic growth. It is good if this was true. But, I have not seen a shred of evidence that this will happen in the near future or this will ever happen.
However, I fundamentally disagree with the Prime Minister´s assessment. Food shortage of such scale and magnitude cannot be dismissed or glossed over as a temporary phenomenon or a simple supply and demand dilemma. It is very obvious that a number of complex and interrelated forces are behind the development. (I plan to expound on this subject in a later article).
The government also claims that the low level of productivity of the agriculture sector is one of the reasons for the problem of inflation and price hikes. That might well be true. Yet, as a government that governed the country for the last 17 years one would expect this government would understand this and craft a policy to boost the productivity of agriculture. It never happened.
Every where you go in Addis you would see construction of high rise buildings and high end villas. You would see road construction. The same is true in Awassa and the other big cities. Of course, these activities in the sacle I have seen are a very recent phenomenon mainly after 2005.
All these growth, however, has not yet translated into meaningful social development and inclusion of vulnerable groups. Ethiopia is still suffering high incidence of poverty, high urban unemployment, and acute shortage of access to service and other constraints.
The Meles administration has many times declared, and I might add proudly, a war on poverty, but on the ground for real people it sure sounds a war on the poor. The gap between rich folks and the over 99% of the population is widening by the day. It is scary to contemplate what will happen if something is not done to correct this morally reprehensible situation.
My observation tells me that this government is just incapable of correcting the situation. There are many reasons why it is so. The main one in my opinion is that this government is rotten beyond hope.
Lord Acton is famous for his line that "power tends to corrupt, and absolute power corrupts absolutely." In the case of EPRDF it is the rampant corruption, the extraordinary arrogance and overreaching, and last but not least, the acute sloth or growing out of touch that would make it absolutely incapable of preventing the down fall of Ethiopia as a nation. Whether it was the Mengistu administration or the Meles administration, too much unchecked power is an inevitable problem.
In America I have seen as most of you would have seen forests being set to fire to begin the regeneration process. Like wise, political parties (administrations) need the dead wood cleared out and space made for new growth to emerge. It is imperative, therefore, for EPRDF to realize that to rise like a phoenix, it has to get down to ashes first.
So, I don´t waste time sitting around in the high places of entertainment. I rode Taxis or walked just like the citizens who live there. I talked to the well educated and the rich and the less educated and the poor.
For whatever it is worth, here is my observation of Ethiopia.
Despite the 11.8% annual average GDP growth the Ethiopian government keeps announcing the Ethiopia I saw is suffering from escalation in food and energy prices resulting with double digit inflation. Every thing in Ethiopia has seen a hefty price hike. I mean every thing. A small single loaf of bread costs around 60 cents. No traditional Ethiopian meal, like Injera and Wat, is sold less than 13 birr in a neighborhood small restaurant. A piece of cake costs you over 7 birr. A cup of coffee costs you over 2 birr. All this is happening in the small coffee places. Housing shortage is beyond belief. A two small room house, a condo, is rented for 1500 birr per month. At times it is mind boggling. I have seen a house rented for $6000/month. No, it is not a typo. You heard me right. It is rented for $6000/month US Dollar.
Many rich folks and other well connected are rushing to build homes that would go for rent in the range I just mentioned above. I don´t have the statistics but these folks may constitute less than 1% of the population. I hear from people, who I know have insider knowledge, the business connection going on between the top officials of the government and the business people. You hear of Wegagn Bank making a 35 % ROE (Return on Equity) payment to its share holders. Other banks do similar payments. Only those same rich folks do own the shares. I question the health of an economy that produces such a skewed ROE.
Prime Minister Meles Zenawi has argued that the inflation is a short time phenomenon which will go away as the government is trying to increase people´s income by expanding the domestic production of basic goods and ensuring rapid economic growth. It is good if this was true. But, I have not seen a shred of evidence that this will happen in the near future or this will ever happen.
However, I fundamentally disagree with the Prime Minister´s assessment. Food shortage of such scale and magnitude cannot be dismissed or glossed over as a temporary phenomenon or a simple supply and demand dilemma. It is very obvious that a number of complex and interrelated forces are behind the development. (I plan to expound on this subject in a later article).
The government also claims that the low level of productivity of the agriculture sector is one of the reasons for the problem of inflation and price hikes. That might well be true. Yet, as a government that governed the country for the last 17 years one would expect this government would understand this and craft a policy to boost the productivity of agriculture. It never happened.
Every where you go in Addis you would see construction of high rise buildings and high end villas. You would see road construction. The same is true in Awassa and the other big cities. Of course, these activities in the sacle I have seen are a very recent phenomenon mainly after 2005.
All these growth, however, has not yet translated into meaningful social development and inclusion of vulnerable groups. Ethiopia is still suffering high incidence of poverty, high urban unemployment, and acute shortage of access to service and other constraints.
The Meles administration has many times declared, and I might add proudly, a war on poverty, but on the ground for real people it sure sounds a war on the poor. The gap between rich folks and the over 99% of the population is widening by the day. It is scary to contemplate what will happen if something is not done to correct this morally reprehensible situation.
My observation tells me that this government is just incapable of correcting the situation. There are many reasons why it is so. The main one in my opinion is that this government is rotten beyond hope.
Lord Acton is famous for his line that "power tends to corrupt, and absolute power corrupts absolutely." In the case of EPRDF it is the rampant corruption, the extraordinary arrogance and overreaching, and last but not least, the acute sloth or growing out of touch that would make it absolutely incapable of preventing the down fall of Ethiopia as a nation. Whether it was the Mengistu administration or the Meles administration, too much unchecked power is an inevitable problem.
In America I have seen as most of you would have seen forests being set to fire to begin the regeneration process. Like wise, political parties (administrations) need the dead wood cleared out and space made for new growth to emerge. It is imperative, therefore, for EPRDF to realize that to rise like a phoenix, it has to get down to ashes first.
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