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Participate! End Poverty

 

After a series of exchanges with some friends in the Diaspora who have yet to be convinced of the merit of purchasing EEPCo’s Millennium Bonds, some thoughts arose that warranted putting pen to paper.

For a professional who has spent a considerable number of years in the electricity industry in the United States (US), the news that the Ethiopian government has embarked on the construction of a major dam was overwhelming. Dubbed the Great Millennium Dam, it would have the capacity to improve the lives of the people.

The international development community has long been aware of the fact that energy is often the critical missing link in the effort to reduce poverty and bring about development in Africa.

Energy affects people’s ability to access clean water and increases agricultural productivity. It also helps to improve health and modernise education, aside from helping to address wide-ranging gender inequalities. However, it is alarming to note that millions of Ethiopians lack access to basic energy services, even in the 21st century.

It is time for Ethiopia to take bold and decisive steps to free its people from energy poverty and along the way create better economic opportunities for the present generation and for those to come. 

It is precisely for this reason that many Ethiopians who are engaged in the field of development received the news of the Millennium Dam on the Abay River, which would be generating 5, 250MW of power, with great enthusiasm.

Such types of projects do not come cheap. There is an enormous capital requirement associated with the construction and development of utilities on such a scale.

Traditionally, most developing countries, including Ethiopia, have relied on Western aid and loans to finance development projects. Yet, financing development through such mechanisms is proving difficult as they often come attached to conditions that many poor countries find too difficult to meet without undermining their own priorities.

Development experts advise developing countries to improve the human, organisational, and institutional capacities that would allow them to better mobilise domestic resources to tackle developmental challenges. Improving domestic resource mobilisation is important for poor countries like Ethiopia, for at least three reasons.

Potentially, it represents the largest source of income governments have direct control over and are able to use for the provision of public goods and services. Properly managed domestic resources can help strengthen fiscal institutions by providing stable and predictable revenues.

This minimises long-term aid dependency, which in turn creates space to put in place development strategies that reflect the recipient country’s own priorities.

Consistent with these objectives, the resources made available through the sale of Millennium Bonds would enable the country to exercise relative independence in making its decisions. By helping set its own priorities, this would provide the platform for public participation in the process.

Governments across the world issue bonds on a regular basis for a variety of economic purposes. For those familiar with American history, War Bonds were issued during WW II. The sale of these played a powerful role in galvanising the population toward the common aim of winning the war. Some historians even argue that War Bonds were issued primarily to remove liquidity from the market in order to help ease inflationary pressure.

High inflation had bedevilled the war economy resulting from full employment and rationing. Regardless, the bond was crucial in that it raised an enormous amount of money for the war effort. More than 85 million Americans, representing half the population at the time, purchased bonds, totalling 185.7 billion dollars.

Using various media outlets, the government made emotional appeals to entice citizens to participate. No doubt, the public responded positively. Despite the fact that the bonds carried rates of return which were far below the market value, people continued to buy them because it gave them a moral and financial stake in the war effort.

The people who purchased the bonds came from all walks of life with varying shades of political and ideological beliefs. The one thing that united them was their common desire to end the war with victory.

Ethiopia is also at war. The war is not with an external enemy, but against an enemy from within; energy poverty. Ethiopians everywhere should rally behind this particular project that would undoubtedly contribute towards setting the country on a firm path to progress and development.

The Millennium Bonds afford Ethiopians everywhere, but particularly those in the Diaspora, a unique opportunity to participate in the country’s effort to end poverty.

There might be some who may not respond to this appeal favourably and they should be assured that this is no ploy to play the politics that often accompany such initiatives. As long as there are people, there will always be political squabbles and contentions.

However, national progress should not be held hostage by one group or the other until they are fully happy and content with the existing political environment.

Infrastructure being built now will outlive everyone alive and perhaps their children and grandchildren. Building the Millennium Dam needs to be treated as a national cause that transcends the politics of the day.

To build public confidence, bond issuing agencies need to play their part by adopting good management practices anchored on principles of good governance. Bond holders also have the right and responsibility to demand accountability from issuing agencies and ensure that the funds collected are utilised efficiently and effectively.

BY KALEB B. DEMEKSA

Kaleb B. Demeksa is an economist with an international development agency. He can be reached at kalebd@hotmail.com.

 
 
 
 
 

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