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Editor's Note  
   
 

Ethiopia’s Apparent Fear to Move Forward
 

 

 

 

Someone is surely upset everyday when trying to make a call to someone known to be only a few blocks away because the automated voice says she is out of the calling zone. Another person sneaks into the backroom of an internet café to make an illegal international call as the official rates are grossly exaggerated.

In another part of town, an investor is seeking land from the local government office, but is frustrated as the bureaucrats delay carrying out their duties due to fear of a commission's wrath that sends waves of fear among many, if not extorting him or her for kickbacks.

There is a clumsy financial industry, which appears to be repulsive by the very idea of innovation and modernity that could give it efficiency and reliability in serving deserving customers.

Incongruously, the state continues to be the largest source of housing to millions of urban dwellers, unable to muster the courage to move out from the sector, contrary to its declared intentions earlier and the high expectations created thereof. There are alarming desires remerging within the establishment, following a bill tabled by the executive to Parliament that will empower a federal housing agency to play the role of a plaintiff and an arbitrator.

Everywhere and everyday citizens are forced to go to the government to procure goods and services that should be, as in many other more quickly developing countries, left to the private sector. These separate anecdotes connected show the saddening reluctance of the Revolutionary Democrats in power, who seem unwilling to recognise, or at least do anything to change, the gross inefficiencies stemming from the unenviable title as one of the most state-controlled economies in the world.

To get land for a house or to make investments, the government is the sole authority to seek assistance from. To access any modern form of communications, it is big brother's corporation that must be sought.

Of course, the current regime has not created this troubling system. It rather perpetuates a philosophy of centralised control, propagated for hundreds of years by an absolute monarchical system hastily interrupted by an authoritarian military regime suspicious of anything that smelled private. Unfortunately, citizens have become accustomed - possibly to the point of harmful complacency - to a state-dominated society.

The state in Ethiopia is almost everything in citizens' lives: a protector, guardian, provider, and as good as a parent. To get anything done in the economic realm, for instance, the central authority's tentacles have been sticking to the instruments that grant progress. But it has been this way for too long.

Currently, fault is rather found in the government's programmes for adhering to this unfortunate historical trend. The state is not even playing its justified role, as minimal but efficient regulator of the economy, to the extent it is evidenced in the World Bank's latest report on "Doing Business". Far from being included in the list of champions of reformers, where neighbouring Kenya and Egypt up in the north are stars, Ethiopia has slipped spots in the 175-country survey due to hindrances in conducting business caused by inefficient bureaucracy.

It is also puzzling how this government plans to navigate the intense process of joining the World Trade Organisation (WTO) as full member, with its gauche performance of changing its archaic state machinery. Many painful steps will need to be taken in order to accomplish this. These no doubt include opening up the telecom sector, currently monopolised by the state, and the heavily regulated finance industry to an international competition; it is a matter of time.

It is always difficult to let go of those privileges that have become custom. This seems especially true in the current regime's process of liberalising the economy that is supposedly underway. For all the rhetoric of privatisation and modernisation in the mid 1990s, the Revolutionary Democrats are quite hesitant to loosen its grips on the reigns of the economy.

As The Economist bluntly described it in its latest issue, flatteringly dedicating three pages to report on Ethiopia for the first time, the administration of Prime Minister Meles Zenawi is simply afraid to let it go. Sadly, it is this same Prime Minister that is proud of having control of the expensive land allocation regime, inefficient banks and pathetic communications infrastructure.

It is obvious why those who hold onto the state power would wish to be the guardian certain sectors they see reap huge revenues and maintain a patriarchal status. To be less cynical, there are potential arguments for involving in a fledgling economy attempting to take the giant leap into the often cruel globalising world.

Protecting infant industries from brutal foreign competition may eventually turn out efficient factories that will have achieved economies of scale. After passing the rough beginning stages where companies hover in the red, it is possible for the state to lift the guards and allow the free market forces to challenge the exposed institution.

However, as seems to be the existing case, what is meant to be an initial boost can turn into permanent security from confronting the necessary reforms to maintain competitiveness. Complacency often overtakes the companies that become attached to the privileges they enjoy.

Take the case of the over 100-year-old state monopoly in the telecom sector, the Ethiopian Telecommunications Corporation (ETC). Services provided by this giant are almost unarguably poor by any standard. Lack of voicemail, network coverage and modern services, not to mention the difficulties in the most basic provision of the capacity for even a five-minute call to remain connected without interruption, are symptoms of a deep-seated philosophical problem within the government.

It is painfully clear to subscribers with no alternative choice that ETC is immune from the modernising pressures that have brought efficient services all over the world. Subscribers are benefiting from the stiff competition capitalism has brought to this sector advancing by leaps and bounds every year.

Some of these markets, though, suffer from asymmetries of technological access. Here is where those more pragmatic members of the government not constrained by dangerous philosophical conservatism see a rationale to protect the telecom sector.

By directly controlling ETC the government can ensure, at least in theory, that cell phones and telephone lines are not only found in the big cities but may trickle into the countryside where they can bring dramatic improvements to quality of life. It is true many private firms may not see profitability in the thin rural markets and thus not enter on their own initiative.

However, direct control is not the only way to reach the goal. Indirect control through regulation in attaching ratio of distribution to licensing, taxation and incentive provisions can be used to induce these private entities to undertake the same operations the government is now attempting itself, if not far more better and diversified services.

It is clear that the consumer is the one that benefits from the choices afforded by competitive markets. The possibilities of switching service providers if displeased empowers people and keeps the companies on their toes as well as on the forefront of technological innovation.

While it may be easy to say that the government is simply gripping the economy too tightly to maintain authority, it could be that they have good intentions but are just misled in their theoretical leanings. Prime Minister Meles Zenawi's words last Saturday at the Export Day event in the Millennium Hall support such a theory.

Meles cited control of land and strict regulation of the financial sector if not outright ownership of banks as reasons why the investment atmosphere is more conducive to the growth of the flower sector here than in neighbouring countries.

While it is true that direct control of the inputs to horticulture production may be a temporary boost and advantage to those investors managing to be granted high level officials' ears, the ramifications of maintaining state control go much further and are, on the balance, negative. He simply admitted that these businesses under the state's domain are making decisions less on business sense and more on political pressure that suits the government's agenda. This has a much more implication far beyond development talks and affects the ideological market place were voters pick the party they want to be governed under. It has the potential in upsetting the electoral competition, where the group in power claims success simply because it has used state owned resources whether or not they make economic rational in the long term. 

For too much of Ethiopia's past, citizens have remained powerless to change a regime's policy direction with unelected leaders crowding the history books' pages. As the country's democracy evolves, at a debateable speed, hopefully more pressure for a liberalised statehood will challenge the governance philosophies of the Revolutionary Democrats that are in power today.

There is no doubt that the impetus for change is buried deep somewhere. The proposed liberalisation platform of certain opposition parties and discontent felt amongst a populace forced to try to pull themselves out of poverty through state-dominated channels will no doubt add up some day. Currently, however, the opposition appears in disarray and organised movements are lacking in the political landscape. For now, it will be wishful thinking to imagine a country where political and economic liberalism plays a bigger role in the Ethiopian society, which is rather inclined to social democracy. 

 

 
 
 
 
   
   
   
 
 
 

 

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