Abyssinia´s Realities, World Bank´s Illusions, and Mr. Ken Ohashi´s Grave Blindness
Dr. Muhammad Shamsaddin Megalommatis
September 02, 2008
The provocative lies presented in a sophisticated way by the incredible forger Mr. Ken Ohashi are due to an effort deployed in order to create among possible investors the illusion that the World Bank expects great possibilities of development in Abyssinia, which is a lie.
In this, second, part of his paper, the fraudulent Mr. Ohashi, who proved unable to see down-to-earth economic realities that prevail in the dysfunctional, archaic, and totalitarian relic of state ´Ethiopia´, suggests that under the present administration Abyssinia can reach 10% annual growth rate.
I believe it is a shame that Mr. Ohashi did not spend some time, before writing his trash, on a trip to various parts of Ogaden in order to better analyze the ways by which any development whatsoever could be possibly allowed in this huge province of Abyssinia by the thugs of his secret financer, the cruel dictator Zenawi.
It is a shame that the World Bank hires every incompetent pseudo-specialist who disregards reports, like the recently published HRW Report on Ogaden, which consist in key documents that are necessary for anyone willing to assess the prevailing social realities before embarking on macro-economic contemplations for a development that will never be achieved.
After Mr. Ohashi´s second part of report, I republish two pertinent reports prepared and published recently by the UN OCHA (Office for the Coordination of Humanitarian Affairs); they give an authoritative idea about the real situation that currently prevails in Abyssinia – in striking contradiction with Mr. Ohashi ridiculous gobbledygook.
I would suggest the World Bank authorities to offer the two reports as elementary bibliography to the irrelevant and ignorant Mr. Ohashi; it would certainly help save the reputation of the international body, if they removed Mr. Ohashi´s childish nonsense from their website.
Sustaining Growth: A Way Forward
By Ken Ohashi
World Bank´s Country Director for Ethiopia and Sudan
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/ETHIOPIAEXTN/0,,contentMDK:21879391~menuPK:295935~pagePK:2865066~piPK:2865079~theSitePK:295930,00.html
Setting aside the food crisis for a moment, Ethiopia´s two main economic challenges today are rampant inflation and rising trade deficits. They are interrelated. They reflect an economy that is trying to grow faster than the supply side could keep up. When domestic demand grows faster than domestic supply, an underlying inflationary tendency is created, and imports rise sharply to alleviate domestic shortages. Of course, the external shocks of high oil and other commodity prices and the failure of Belg rains earlier this year have exacerbated the problem.
Behind all this is the growth strategy of the Government of Ethiopia (GoE). It aims to create quickly a strong infrastructure base and certain key production capacity (e.g., in hydropower, cement, and export industries in general) so that in time, growth of imports will moderate and exports will begin to narrow the trade deficit. This is a risky approach, for it is an attempt to "over invest" in certain things in anticipation of a strong supply response. But, Ethiopian policymakers argue that a gradualist approach will not do in a country that has been mired in severe poverty for decades. The current food crisis, which was caused by a failure of rains that generally contribute no more than 10% of the annual food supply, is a stark reminder that Ethiopia needs fast and sustained growth to overcome such vulnerability. Having managed to get the unprecedented growth started—an impressive feat in itself—GoE leaders are keen to sustain this at all cost. Until a tipping point in external imbalance arrives, they hope that more aid and remittances may bridge the financing gap.
Is this a credible scenario? Should the donors step up aid efforts to help fill the temporary financing gap? I believe this strategy has certain coherence. But, the recent experience has also revealed an important weakness. Private investment, while very strong in select sectors, has not responded to the increasing opportunities on the scale needed to keep the supply side of the economy growing fast enough. Various analyses indicate that investors still find the ´business climate´ in Ethiopia not good enough for a major investment rush that could have avoided this supply problem. One should also not forget that after a 17-year Derg regime, Ethiopia´s private sector started from a very weak base in the early 1990s.
This does not mean the basic strategy is wrong. I think it can still be viable, and I hope it will prove successful. I believe, however, some mid-course corrections may be necessary. To give a more considered answer, we will have to examine carefully the possible export and import trajectories, underlying investment projections, etc. But, I have some tentative suggestions.
First, I do not think Ethiopia can count on increased aid and remittances alone to offset the rising trade deficits for the next several years. The gap is simply too large. An important part of the solution is likely to be found in increasing foreign direct investment (FDI), while moderating investment by the public sector. Both types of investments require imports, but FDI brings its own foreign financing. This switch will allow Ethiopia to maintain high levels of investment without causing foreign exchange problems. Of course, this assumes some public investment projects can be delayed without harming growth, or can even be replaced by private investment. Ethiopia may find such substitution opportunities in electricity generation, transportation, etc. If state-owned enterprises are involved in conventional manufacturing activities, they would offer obvious opportunities for FDI substitution.
Second, there is still much Ethiopia can do to encourage private sector investment broadly and increase the supply response to the growth in demand. Studies have identified several areas of action, including access to finance, access to land, etc. Measures that encourage FDI are usually also good for domestic investors (unless they are preferential measures). Since Ethiopia faces a shortage of foreign exchange, focusing on areas that can attract FDI may be timely. One idea I found interesting is the possibility of opening the domestic civil aviation sector to foreign/domestic joint ventures, and lifting the limit on the size of aircraft private companies can operate. This can bring not only foreign investment but also increase Ethiopia´s attractiveness to foreign tourists. Furthermore, it would increase the passenger traffic for Ethiopian Airlines from its international routes, a major foreign exchange earner for the country. Although I do not know all the complexities of this industry, this seems like an attractive proposition. I imagine there are many other such ideas. If foreign investors are required to enter Ethiopia through joint ventures, then it would also help promote domestic businesses.
Third, agricultural productivity remains too low. This is true despite the significant growth in output and some impressive success stories (e.g., roses). I had indicated in part one that an important foundation has been laid to accelerate productivity growth. There is now a need for a comprehensive program to make it happen on a large scale. Although there is an important role for public investments, e.g., in rural infrastructure and research and development, this needs to be complemented by a policy environment that leads to significantly higher levels of investments by entrepreneurial farmers and the agribusiness sector alike. One way to achieve this is through active promotion of public-private partnerships. For example, a strong cooperation between public agricultural research on the one side and private seed companies and farmers on the other can facilitate market access and availability of high-yielding varieties to farmers.
Fourth, it is essential to tackle inflation. High inflation tends to stifle savings and investment in productive assets, favoring holding of inflation-resistant assets (such as buildings, undeveloped land, or even teff). This does not help growth. Inflation in Ethiopia already points to some of these problems. East Asian countries that sustained rapid growth for many years all kept inflation in check and encouraged domestic savings and investment. I cannot think of any easy solution for Ethiopia´s inflation, for it seems to be now driven significantly by expectations. GoE has already done much to contain growth of money supply. Whether this, combined with good harvest this fall, will be enough to revere the inflationary expectations is yet to be seen. All I can suggest is GoE needs to remain vigilant and perhaps be prepared to take tougher actions as needed (possibly including further slowing of public investments).
These challenges are daunting. It is important, however, to remember that these policy problems arose from too much growth, not lack thereof. Many governments would gladly exchange their headaches of slow growth for GoE´s headaches. Although increased donor assistance is unlikely to be big enough to solve the problem of foreign exchange, I do believe that when combined with policy measures to increase supply responsiveness of the economy, additional aid could be very helpful in facilitating a smoother transition to a more sustainable growth path. Without such help, the acute foreign exchange shortage could force Ethiopian economy to slow down abruptly. That would be a huge setback for poverty reduction and a costly way to adjust to macro imbalances.
In part one of this piece, I had indicated that the potential growth rate of Ethiopia may have risen to around 7.5-8% in recent years. Ethiopia should not be satisfied with maintaining that trend line. With strong policy measures to increase supply responsiveness and manage inflation, I believe that rate has the potential to head toward 10%. Poverty reduction in Ethiopia needs that kind of growth. That would make Ethiopia´s growth strategy truly bold, and well worthy of strong donor support.
Ethiopia: Two months of rain but still not enough to eat
By UN OCHA (Office for the Coordination of Humanitarian Affairs)
http://www.irinnews.org/Report.aspx?ReportId=80071
Badessa, 29 August 2008 (IRIN) - In normal times, the weekly market in Badessa town, Damot Woyde district of Wolayita zone in Ethiopia´s Southern Region, fills with fresh food as farmers and traders bring in crops from the surrounding hills.
Over the last few months, the main food sold in the market has been ´kocho´, a strong-smelling, dough-like paste made from the processed roots and stems of enset, a member of the banana family of plants.
"Enset is the last food asset for most families in this region," Tadesse Boda, a local resident told IRIN in the market on 25 August. "Seeing it in the market in such quantities means there is no other food to eat."
Much of Wolayita suffered drought last year, followed by erratic rains that failed the ´belg´ harvest of maize, millet, wheat, haricot bean and teff crops at a time when food prices were rising sharply.
Many have now pinned their hopes on rains in the area for the last two months, which turned the gardens of young maize, beans and wheat into verdant fields.
"I expect to harvest food that can last me at least six months," Wegari Beyene, a mother-of-three explained as she waited to receive supplementary food for her youngest child at Badessa distribution centre. "I own a half hectare of land."
One-year-old Abel Beyene had been on treatment for serious malnutrition for six weeks. "Once the food gets finished, I will sell firewood or work for someone to feed the children."
Like Wegari, many people facing food shortages in the Southern Region have limited coping mechanisms, such as participation in the Productive Safety Nets Programme (see sidebar), and borrowing food or money. Others sell livestock cheaply, temporarily migrate to towns and cities, eat seed reserves, take children out of school or resort to cheap, basic diets.
"When you get people living on the edge, a shock like drought easily pushes them over," Louise Finan of the NGO Concern Worldwide in Ethiopia said. "Then it brings them into the cycle of not being able to pull themselves out of it."
Apart from the Southern Region, also called the SNNPR, several other areas of Ethiopia have equally suffered food shortages, say humanitarian workers. This is despite heavy rains in recent weeks.
The International Federation of the Red Cross (IFRC), for example, has revised its six-month emergency appeal to US$7.9 million to assist more than 76,000 people in Wolayita, while the Ethiopian Red Cross, which in May targeted 40,000 vulnerable people in Damot Pulasa, has added 36,000 more in neighbouring Damot Gale.
"Over the past two months the situation has worsened and living conditions have deteriorated. People have exhausted all their resources and are unable to feed themselves," Lorenzo Violante, IFRC's drought operations manager, said on 20 August.
Damot Gale and Damot Pulasa had more than 16,000 acutely malnourished children, of whom 1,614 were in intensive care in therapeutic centres.
According to the UN Office for the Coordination of Humanitarian Affairs (OCHA) in Ethiopia, food security and malnutrition continue to affect people living in most of Ethiopia´s drought affected regions.
The situation has, however, improved in some areas where the harvesting of green maize, teff and beans has started. Water is also more available in some areas due to recent main season 'kiremt' rainfall, OCHA said in a 25 August report.
Pockets of malnutrition
The government admits food is short, but insists the situation is not out of control. "We have pockets of severe malnutrition in some districts in the south and an emergency situation in the Somali region," Prime Minister Meles Zenawi told TIME magazine in an interview published on 18 August.
"It's not small to those who are suffering, but it is a manageable problem," he added. "Famine has wreaked havoc in Ethiopia for so long; it would be stupid not to be sensitive to the risk of such things occurring. But there has not been a famine on our watch - emergencies, but no famines."
The government, he added, was reforming agriculture to primarily focus on commercialisation of small-scale farms. There were also plans to improve seed varieties, irrigation and to increase private investment in large-scale operations.
But aid workers said the situation in many villages remained fluid. The large hunger gap this year, they pointed out, was largely a result of the 2007 failed rains. The worry now was whether the upcoming harvest starting in September would sufficiently meet existing needs.
The hunger season, which is the period between food running out and the next harvest, usually lasts six months. This year, it lasted longer. "We are seeing phase one; we are yet to see phase two," said one NGO head in the capital, Addis Ababa.
The situation has been compounded by shortfalls in UN World Food Programme (WFP) supplies. Despite a national caseload of at least 4.6 million people, WFP has experienced pipeline breaks for all relief commodities and has been forced to reduce rations.
Currently, WFP´s total national shortfall stands at 170,000 MT valued at US$138.8 million. Yet the needs remain. For example, a June assessment by the NGO Samaritan´s Purse in Kedida Gamella district, Kembata Timbaro zone of Southern Region, found 10.7 percent of sampled children malnourished.
The district had 111,150 people of whom 22,236 were children under five.
"It is normal to have small areas of malnutrition during the hunger season, when people wait for the harvest," Aaron White of Samaritan´s Purse told IRIN. "This year it is more widespread [mainly] because of failed rains."
Over four weeks, the survey found, enset had become the staple food for 38.4 percent of the households, up from 21.6 percent. Some 63.2 percent of households reported sourcing their food from the market, while five percent had eaten ´unusual´ food.
Five percent reported migrations to urban areas by family members and those eating one meal a day had increased. On the other hand, households eating three meals a day had decreased from 88.6 percent to 28.3 percent.
"Comparison between the sources of food in a normal year and the past four weeks, indicated a dramatic shift from own production to purchased food and other sources," the NGO said.
Sources pointed to high global food prices, but insisted these had affected the response not the problem. "The government delayed, then under-described the problem. Still, it does not compare with 1984," one said.
"The main problems are inadequate rains and too many people," an aid worker said. "The population has doubled in the last 22 years from 41 to almost 80 million; people´s coping mechanisms have been eroded and many have got used to handouts over the years."
There were also the questions of marketing and land ownership that needed to be addressed to encourage significant investment in farming. "As long as the people do not own the land, they will not invest in it," one source said.
Ethiopia: Urban poor finding it harder to get food
By UN OCHA (Office for the Coordination of Humanitarian Affairs)
http://www.irinnews.org/Report.aspx?ReportId=79980
Addis Ababa, 25 August 2008 (IRIN) - Fatuma Ali and Tieba Hussein left Hara village in Wollo, Amhara region of northeastern Ethiopia with some of their neighbours, believing that they could improve their livelihoods in the capital city, Addis Ababa.
"Our husbands decided to stay in the village with the children," Fatuma, a mother of three, told IRIN as her sister and mother of one looked on. "If rain comes, we will return to the village."
Like various villages across Ethiopia, Hara did not receive adequate precipitation in the short, or belg rainy season, which usually begins in February and ends in late April or early May.
As a result, local residents have had to endure serious food and water shortages. The situation was exacerbated by a poor harvest from the 2007 meher growing season.
Fatuma and Tieba worked hard to help their husbands try and get a good harvest. "After harvest, we sold the produce in the market and bought cattle," Tieba said.
Unfortunately, the short rains failed, killing the village pasture as well as their cattle.
Two weeks after arriving in the city, however, life for the two sisters proved just as tough as it was in Hara. "We came to Addis Ababa expecting to get [a better life]," Fatuma explained. "Sometimes the residents give us some food, but sometimes we sleep hungry."
Faced by increasing hardship, the two turned to begging. Moving from door-to-door, they often turn up at people's gates and ask for help. On a lucky day, they will barely get enough to eat.
High food inflation
Fatuma and Tieba are just two of the thousands of Ethiopians who have flocked to urban areas to escape food shortages in the rural areas. Instead, the influx, according to aid workers, has increased demand and pushed urban prices even higher.
In Somali region, for example, decreasing food availability and price increments in local markets have led to migration from Woredas along the Shabelle river banks to Gode town, according to the UN World Food Programme.
This, however, has increased the numbers of malnourished children in the town.
In Amhara, according to the zonal Food Security Disaster Prevention and Preparedness office, serious food shortages exist in some areas of the region. At least five people have died while 300 have been forced to migrate from the area, in recent months.
Addis Ababa has, however, borne the biggest influx. The number of city dwellers, according to local officials, has swelled significantly over the last few months. Most new arrivals, however, have been forced to eke a living on the margins due to high costs of living and food.
The Consumer Price Index published by Ethiopia's Central Statistics Agency, showed the country's food inflation rate stood at 43. 3 percent in July, compared to 17.9 percent at the same time a year ago; with significant variations between regions.
The index is based on regional indices and measures the average change in prices paid by consumers for a fixed market basket of goods and services. The agency attributed the sharp rise to changes in the prices of food components, such as cereals which rose by 171.9 percent.
Should there be a decrease in food production during the September harvest season, warn aid workers, the situation will get worse. Last year, Ethiopia produced 16.1 million metric tonnes of grain during the September to November harvest, against an expected 16.5 million tonnes.
Economists blame a combination of factors for the current situation, including increasing numbers of mouths to feed, Ethiopia's largely subsistence farming systems, the global food crisis and high oil prices. Aid workers said there were also the broader questions of land ownership and the need for modern farming methods.
"One reason for the urban food crisis is the huge gap between demand and supply," said a lecturer from Addis Ababa University, who requested anonymity. "The demand is increasing beyond expectation while the supply is less."
Ethiopia's population has doubled to nearly 80 million in 22 years. Officially, an estimated 4.6 million people across Ethiopia are in need of emergency food assistance, but aid workers say the number is expected to increase in light of recent assessments.
More food insecurity
The current high staple food prices, according to the Famine Early Warning System Network (Fews Net) have compounded already extreme levels of food insecurity.
"Increases in staple food prices are coming at a time of already high and extreme levels of food insecurity in [some] regions," Fews Net said on 12 August. "At the same time, livestock prices and labour rates have increased only minimally, further reducing the overall purchasing power of poor and very poor households."
Tewodros Makonnen, an economist from the Ethiopian Economist Association, said urban livelihoods had also been affected negatively by changes in prices of agricultural inputs on the international markets.
"When local production fails to feed the people, one looks at global markets," the university lecturer who requested anonymity, added. "But despite Ethiopia's move to import food from the international market, the prices are [still] not affordable to urban dwellers."
There was, however, differing opinion on this. "The global situation has affected the response, not the problem," said one aid worker. "The problem remains the increasing population and poor farming methods. There has to be emphasis on helping people to recover."
Some 16 percent of Ethiopia's population live in urban areas. According to the UN Population Fund, Ethiopia is one of the fastest urbanising nations in sub-Saharan Africa with 4.3 percent growth per year.
But much of the growth is a result of migration, rather than just natural population increase. By 2020, the level of urbanisation is expected to reach 25 percent, meaning one out of four Ethiopians will be an urban dweller.
Meanwhile the government and aid agencies are grappling with the situation. Apart from increasing imports, such as wheat for distribution to bakers, especially in Addis Ababa, various strategies have been designed to try and deal with the situation.
The Ethiopia Commodity Exchange, for example, which started operations in April, is being strengthened to provide a marketplace where buyers and sellers can come together to trade and be assured of quality, delivery and payment.
Improvements in farming systems are also on the table, along with microfinance schemes and cooperative unions. But while some of these strategies have helped raised farm incomes, they have increased the burden on urban dwellers.
"Previously farmers brought their products and sold to wholesalers without prefixed price," the university economist said. "Now, unless they get a buyer at their price, they wait for a good offer."
According to the International Food Policy Research Institute, Ethiopia's agricultural markets had, over the years, been plagued by high transaction costs and excessive risk. Only a third of output reached the market.
Even then, small-scale farmers, who produce 95 percent of output, came to market with little information and were often at the mercy of the local merchants. If farmers in a particular region were especially productive, the local market got glutted and prices would drop.
Note
Picture: Mr. Ohashi forgot to have a glimpse of the real Abyssinia, and expanded on an imaginative country which, as long as it continues existing, will be a Hell for its tyrannized inhabitants and the world´s epitome of underdevelopment, poverty, and starvation. The only healing possible for the execrable tyranny of Abyssinia is Final Dissolution.
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