Alemu Sime (PhD), head of Oromo Democratic Party secretariat, told Fana Broadcasting Agency, regarding the Oromia Regional State’s insistence on addressing conflicts through discussion instead of the use of force.
Month: December 2018
Stock Markets Require Robust Institutions for Dev’t
When farmers raising sheep in the countryside plan to sell their livestock at a nearby town, they know exactly where, in or around the town, they will be selling the cattle. They will also be able to check the prevailing prices set by supply and demand at the markets before setting the price.
The market enables them to study the prices of each animal on a like-for-like basis to determine the value of their livestock. If they would prefer to sell the cattle to middlemen, it would not be difficult to find and deal with them.
However, there are no markets for people owning equities of large share companies such as financial institutions in Ethiopia when they are planning to sell their shares. People might end up informally talking to friends and acquaintances for assistance in selling the shares. Estimating the going prices of these financial assets will be another difficult task, which is imposed by a lack of markets.
One of the primary purposes of individuals and institutions buying shares of companies is to benefit from expected returns in the form of dividends arising from annual profits. The other major goal is to gain on the increase in the price of shares. As companies grow continuously as a result of local and global economic acceleration, share prices are generally on an increasing trend. This trend has resulted in a buying frenzy for share of companies.
Individuals and institutions buy shares of companies using their savings and investment capital with the expectation that, in the longer term, the increase in the price of shares beats inflation and savings’ deposits. However, this expected gain cannot easily materialise without organised market platforms known as stock markets.
Such markets formalise and facilitate the buying and selling of financial instruments including shares and bonds of companies. One major advantage of stock markets is in creating liquidity for holders of shares of companies listed in these exchanges.
As farmers could easily refer to local livestock markets to know the prevailing prices applicable to their cattle, stock markets are reliable indicators of the market prices for shares. Companies listed in stock exchanges can easily know their market value, known as market capitalisation, by simply multiplying the number of shares outstanding by the market price of the shares.
Regional business magazines periodically compare total values of companies in the African continent based on market capitalisation. We have our share of larg Ethiopian enterprises that can compete well with their counterparts in the region. However, they are usually left out of the lists due to a lack of stock markets to use as a reference to value their shares and to arrive at their market values.
As a result, our companies appear only when the magazines compare the enterprises using asset values, which can be misleading to the reader as the asset values can be based on historical book values.
A company churning out high-valued intellectual products using the brains of its professionals may have no significant asset book values, while the market valuation of its business could be in the billions of dollars. Currently, technology companies like Google and Amazon have beaten the traditionally resource-based companies, which dominated the race in earlier decades, on market value.
The resource-based company Exxon was the largest company in the world in 2008. In just ten years Apple, Google, Microsoft, Amazon and Facebook surpassed it in valuation. This valuation is only possible in reference to their respective stock markets.
Stock markets have become vital platforms in market-led economies in reliably informing the performance of companies and industries in particular and the economy in general and are often referred to as barometers of the economy. The existence of these platforms also facilitates the investment process in an economy by providing ease of raising capital when companies need additional resources and offer liquidity when shareholders need cash.
However, as stock markets are part of the larger financial markets, a proper understanding of these facilities calls for an understanding of financial markets, which consists of primary and secondary markets. Primary markets facilitate new issuance of financial instruments including equity and debt, in the form of shares and bonds, respectively, while secondary markets trade those financial instruments already issued by primary markets.
In our local context, share companies have been issuing shares to the public mainly to raise paid-up capital. In doing as such, the companies prepare business plans and prospectuses to be issued to the broader public as part of their marketing activities to raise funds.
The process is usually carried out by the issuing companies themselves or through consultants, sales and marketing individuals or institutions. Except for financial institutions, which are tightly controlled by the National Bank of Ethiopia (NBE), this process of raising funds from the wider public has been very lightly regulated.
The practice of light regulation in the public share offering process might have been an opportunity for a few companies, which were carefully and successfully managed from inception to growth and profitability. On the other hand, we have witnessed various startups that failed to see the light of day despite significant public capital contribution.
The main objective for the requirement of tighter control from regulatory authorities during the first public offering of shares – Initial Public Offering (IPO) – is to protect the public from misrepresentation by issuing companies in terms of reliability of the financial instruments they are offering. The offering companies will have to undergo a process of transparency regarding the company they are promoting to the regulatory bodies for rigorous validation.
After the process of validation, those companies with approval to issue their shares to the public for the raising of funds usually make their offer to institutional investors and financial brokers rather than to individual investors. This further protects unsophisticated investors – those who are not expected to be professional investors with significant net worths.
Moreover, it will ease the process of fundraising as a few institutional investors will have the capacity to buy a considerable number of newly issued shares of a company. These institutional investors start trading the shares on stock exchanges afterwards.
Relevant institutions like investment banks and stockbrokers play a critical role in the process of raising funds in primary and secondary markets. Unlike commercial banks, investment banks do not make money through savings mobilisation for consumer lending at interest.
They serve as intermediaries between companies issuing financial instruments to raise funds and the investors who acquire the shares in exchange for their funds. Investment banks assist the issuing companies in preparation of the various documents required to be filed at the regulatory bodies and serve as consultants in the valuation of the companies’ shares and in contacting potential institutional investors to buy the shares.
In many cases, investment banks guarantee a fixed price for the newly issued shares by buying all of the shares in a process known as firm commitment underwriting. These institutions make money by acquiring the shares at discounts for an offer to institutional investors at slightly higher price points.
While these institutions facilitate the process of raising capital, they also provide another mechanism of protecting the public by serving as insulators between companies issuing new shares and individual retail investors.
There are a few business consulting firms and law offices in Ethiopia currently assisting investors in verifying the financial and legal standing of companies targeted by the investors. These professional firms are already providing financial and legal due diligence and business valuation services of investee companies on behalf of the investors.
The firms also assist their clients in preparation of documents required for the investment process. When these firms work for the investee, they prepare information memoranda summarising the operations and resources of the companies for presentation to potential investors. They also accompany their clients in the presentation and marketing process. This is similar to what investment bankers call a “roadshow.”
As these activities are among the significant functions of investment banks, these firms can be assisted to provide full-fledged investment banking services. Our preparation for stock markets should therefore carefully consider paving the way for the development of the relevant institutions to be part of the financial markets.
Through the Political Turmoil, Let’s Not Forget the Economy
It would be an understatement to say that Ethiopia’s economic and political situation has gotten worse over the years. But the latter has been far worse than the former. There is tension between the federal and regional governments. The rhetoric coming from most sides of the political rhetoric is ugly and sickening.
Most worryingly, the government is losing its grip over the legitimate exercise of force in the country, and innocent civilians are getting attacked in broad daylight owing to their ethnic persuasion.
Such sociopolitical tensions can persuade us into believing that the macroeconomic problems facing the nation should be put on the back burner. Double-digit inflation, low export performance, debt stress and the absence of a strong private sector do not seem that urgent given that citizens are beginning to feel less safe in their own country.
Indeed, the seriousness of the political malice this nation is facing makes it very hard for the incumbent to spend time on matters that are not directly related to averting the worst case scenario the combination of an uninformed public, a non-assertive security apparatus and egotistical political leaders can bring.
But there is no escaping the fact that all political problems, either partly or wholly, have their roots in economic shortcomings. It can be said that to all the political problems that face the country citizens should contribute their part to orient the country along a more stable path. The economic problems though can only be addressed by a government willing to learn from its past and reform accordingly.
This is because it is the EPRDF’s policies that have led to this sorry macroeconomic state. There may be a high gross domestic product growth rate, but there is enough worrying undulation in the macroeconomic fundamentals to show that the economy is unhealthy and requires stimulation in the form of progressive economic reforms.
The fundamental problems have been poor fiscal and monetary policies. High government spending and deficit financing over the years ensured that inflation picked up, the real rate of the Birr depreciated and investors lost confidence in the currency. This fueled the appetite of the black market, which then dilapidated the government’s foreign currency reserves.
Lax checks and balances between the different bodies of governments also made the possible positive impacts that could have been gained from government spending impossible to be fully realised. It left us with the waste of government resources, delays of projects and poor products.
This all severely impacted the private sector. It was crowded out by public enterprises in credit and foreign currency allocation, but that these ventures were never as profitable as they were promised meant businesses will continue to subsist in an environment that is inimical.
Fortunately, there are already some initiatives underway to improve the business environment with the view that a robust private sector will go a long way to helping the nation generate foreign currency, create employment opportunities and improve tax revenue.
This should be commended full-heartedly and the government edged on to push forward with reforms indispensable to a healthy economy. It should be able to liberalise industries closed to the private sector, take measures to improve the professionalism of the bureaucracy and invest to ensure linkages between industries.
The government at this time should also improve its regulatory capacity. It should be able to come up with new policies that are able to dissuade efforts to move capital away from the country while incentivising its entry into the country.
This could be by opening up the capital account, which will boost investor confidence about the state of the economy, and by printing new 50 Br and 100 Br notes to nip illegal stashing of wealth in the bud.
Prime Minister Abiy Ahmed (PhD) and his administration may be tasked with the mountainous task of keeping this country stable and peaceful, but it should not be forgotten that the economic paralysis is also worrying. It is not just a case of having to lubricate the economy for better performance but correcting the unhealthy distribution of wealth.
Transport Authority Needs to Step Up its Game
Faced with a continued breakdown in the rule of law, it is easy to miss the stagnant state of economic fundamentals and service administration across the country. With seemingly endless existential threats facing the country, the bureaucracy and local authorities tasked with improving services and creating an enabling environment are getting a pass despite lack of flexibility and myopia.
For Addis Abeba, the threats are the rising cost of rent, homelessness and water shortages. There are also the city’s high unemployment rate that hovers around 20pc; a projected annual population boom of almost four percent; and one of the highest rates of income disparity in Ethiopia, where the 2011 Gini index puts the city at 0.61, nearly double the national ratio.
Despite investments made by the city administration, the persisting problem of public transportation is worrying. In the capital, 15pc of residents use private vehicles, just over half walk and a third are dependent on public transportation. The public transportation system, however, is characterised by its inefficiencies and inadequacies. Unfortunately, the prospects are that the situation will only get worse in the years to come given the compounding challenges the city confronts.
Addis Abeba’s population, estimated at 3.8 million currently, is expected to grow to at least five million within 12 years. The discouragingly high tariffs imposed on car imports will only ensure that the burden will likely fall on public transportation to carry the slack. As the city sprawl continues outwards from downtown, dependency on public transportation and private vehicles will only increase.
The consequences of a reduced modality of goods and people on the economy are self-evident. Its most negative influence will be on productivity, indispensable to any city with a service-based economy. A reliable and smooth transportation system is one of the foundations of a strong and competitive private sector. It is also the necessary means by which Addis Abeba can address the challenges it faces as a result of its population explosion.
Lack of a smooth and effective public transport system also serves as the push-factor for residents to acquire vehicles, adding to the already congested city traffic and at the expense of environmental pollution.
The City Administration does have policies in place to address the transportation problems. It includes increasing the number of paved roads in the city, installing traffic lights, robustly enforcing traffic rules and encouraging the use of buses for public transportation. The city is even awarding youth associations land to administer as parking lots with the aim of easing congestion, one of the chief hazards of a smooth public transport system.
In effect, it is expanding a program that is already in place but with the strategy of utilising it on a larger scale and stricter implementation. It is similar to the shortcomings of the policy making and regulatory schemes employed by the federal government, in that it falls short in flexibility.
Like much of the public sector, the city Transport Authority is working with little data, refuses to see the underlying structural problem and barely makes use of new technology. Most importantly, it treats private sector initiatives as threats to its regulatory capacity and as dangers to the common good.
What the public transport system requires is a more liberal approach. This does not mean a free-for-all system where government surrenders the provision of crucial services. Transportation, like education and health care, needs to be provided by the government to cater to a segment of the population that cannot be served by private players. But the private sector needs to be given enough room to play its part, while government works to fill the gaps.
The Transport Authority can begin by allowing minibus taxis complete freedom to choose their own routes and their operations. The obvious counter-argument to this is that certain difficult routes will be neglected and underserved, as market forces channel crucial services away from certain segments of the population.
The authorities can counteract this situation by implementing smart regulations. This will entail the introduction of variables such as levels of congestion, road conditions, availability of passengers in return trips and time of the day in the setting of tariffs.
Such dynamic pricing for transport tariffs will be able to provide private players the incentive not to abandon difficult routes and for new entrants to join. The government can fill in the gaps, where the inevitable high tariffs will be too expensive for certain segments of the public.
Another dynamic and innovative approach worth looking into is Pool Technology by Uber Technologies, a ridesharing company based in the United States.
Currently being employed in Cairo, Egypt, it allows minibus drivers to connect with multiple passengers. Its implementation in Ethiopia can go a long way in more efficiently connecting the public with the transportation provider.
Capability will remain the major roadblock that keeps the authorities from liberalising transportation and utilising new technology.
It would require the Transport Authority to graduate in its role from merely policing to smartly managing. Updating the blanket distance-based tariff system to dynamic pricing and encouraging taxi hailing firms to broaden their services for wider use requires a great deal of data, processing power and the use of algorithms to map out road and congestion conditions and the availability of commuters.
In effect, it would require the Transport Authority to step up its game.
The Fate of an Impoverished Horn
The Horn’s politics is fast becoming one of the most closely watched and discussed topics, giving rise to an international rivalry dubbed the “Scramble for the Horn.” The phrase is fitting given that the nations who are showing interest in the region, building military bases and pouring billions of dollars into investments, are the likes of China, the United States and Middle Eastern powers.
The countries that form the region are Ethiopia, Somalia, Djibouti and Eritrea. The biggest economic power among them is Ethiopia, with an annual gross domestic product of over 80 billion dollars, the approximate net worth of the American business magnate Warren Buffet. As far as wealth is concerned in geopolitical decision making, the entire Horn is made up of economically disenfranchised nations at the mercy of global big players.
This is reminiscent of Africa’s fate over the past centuries. Ethiopia, for all its pride in never being colonised, has never been as sovereign as many of its citizens like to boast. Crucially, the Dergue era, as is the case in many different countries, could be explained as merely another extension of the Cold War. It is hard to imagine that the communist military junta would have lasted 17 years without the support of the now defunct Soviet Union.
In the same token, the post-Dergue era has seen the nation quietly, but surely, lapse into Chinese economic dependency, giving way to large trade imbalances. Most worryingly, the accumulation of Chinese debt accounts for more than half of the 24 billion dollars of Ethiopia’s external indebtedness in 2016. It is not at all comforting that China has been willing to make up for unsettled debt with national assets.
Of course, there is something to be said for different administrations and regimes that attempted to shield the nation from the machinations of outside influence. Despite its economic dependency, Ethiopia seems to front a neutral posture internationally, except when it comes to Eritrea and Somalia.
This has had its benefits, and it has not been without a great deal of effort. This nation preferred to hold its own peace during periods of geopolitical tensions and conflicts, including the Israel-Palestine conflict and the United States-China rivalry. Of course, the latter hardly makes the country unique.
Ethiopia played along on issues that garnered international consensus. The nation fully supports the United States’ war on terror, participates in UN peacekeeping missions and is an early and enthusiastic supporter of green energy.
For a developing nation, Ethiopia has done a surprisingly impressive job of maintaining a level of policy sovereignty for a long time. Since the 1990s, it may have been easier to do since there has been nothing that resembles the Cold War. Nations that did not venture too far afield of United States policies have been, relatively speaking, left to their own devices.
Ethiopia does not support terrorism nor has any intention of developing nuclear weapons.
Why should the United States care?
It care now, though. Within this generation, China will surpass the United State as the largest economy in the world. And the United States will not take it lying down. China does not espouse the same capitalist – at least in rhetoric, if not in practice – and democratic values as the US. Between the two, strategic and economic conflicts, if not a military one, will be wedged.
Unfortunately, it would be the likes of Ethiopia that suffer most as it could be used as a proxy. This scenario ought to be well understood as the government enters into trade and grant agreements between the two powerhouses. A delicate balance will need to be maintained, and this needs to be done by removing all perceptions that Ethiopia has it in for one of them.
The nation should also advocate economic and political integration within Africa – the only way developing countries can ever fend off Western or Eastern superpower influences.
And this should not just be a foreign policy dictated by an administration but one that parliament has a say in. The stakes are higher than at any time since the Cold War – the wealthiest and most powerful nation in the world has encountered a protagonist worthy of a match. What follows will not be pretty, and there needs to be consensus on how Ethiopia can counter it.
Inept Officialdom Lulls ‘Free-for-all’ Law and Order
In the foothills of Gulele, the ancient forested mountain that towers over the northern parts of Addis Abeba, a new settlement has sprouted that is aptly named Addis Gebeya, or new market. It is a cavernous community of tangled homes, corrugated metal roofs, intertwined electrical wires and narrow unpaved lanes like everywhere else in this enigmatic capital – this seat of emperors, dictators and, arguably, pseudo-republicans.
In one neighbourhood, where a single narrow road leads to a collection of cluttered concrete block and mud-walled homes, a contractor is working on a new building. For a few days, there have been some activities inside the fenced-off construction site where workers have been clearing and grabbing and piling refuse out along the sides of the tiny road, slowly obstructing the path but not entirely closing it.
On a recent morning, however, two or three truckloads of crushed rock, cement bags, lumber and rebar is dumped right in the middle of the street, completely blocking any ingress or egress along the lane. Neighbours struggle to pass, gingerly stepping through a knot of metal and debris, while some young men flatten the mounds of gravel and debris to create a semblance of a track to let people pass by.
No one lodges any complaints to the wereda authorities, who are officiating in a dilapidated office just a few houses down from the construction site; nor do the officials come out of their darkened offices to investigate the hazards and troubles posed to the community by the dumping and closure of the only access road in the neighbourhood.
A policeman, assigned to the wereda, lolls idly on the side of the road, engrossed in fiddling with his Smartphone, cleaning his teeth with a twig and hanging out with acquaintances that stop by to chat. He pays scant attention to the hubbub the road closure has created just a few metres from where he stands.
Matters deteriorated a few days later when a septic-tank truck arrives to service a home past the blocked roadway and could not navigate itself in or out of the trap. A lengthy argument ensues between the truck driver, the builder and the man who has ordered the cleaning service.
The passersby, whose inconveniences and trouble have found no registry in officialdom, pause briefly to hear the arguments and move on.
When they come across the indolent policeman standing a few metres away, they seem to momentarily pause, glance at him inquisitively, as if to say, “why don’t you do something?”
The officer is most unlikely to rise out of his stupor to do anything, because he does not have to.
Why should he when no one has lodged a complaint?
The wereda officials are sequestered behind their derelict desks, and he has his own contorted idea and understanding of what his duties are.
This is a city that operates in an atmosphere of near lawlessness, where the rule of law is flaunted openly. The citizens reside in an environment where few mechanisms exist for them to seek redress for wrongs perpetrated against them by rogue individuals, contractors and officialdom.
The line between authority and subordination are blurred since those who are empowered to administer and uphold the law, the wereda and the police, seem to operate in a haze of regulations, on a whim, without any defined standards, directions or rules of engagement and conduct.
There are no clear, easy means or access to redress perpetrated wrong; or any clear means by which to hold wrongdoers accountable.
The common folks simply acquiesce, since the power imbalance between them and the officials and the powerful has span out of equilibrium. The arbitrary nature of law enforcement communicates to the public that their rights as citizens cannot be protected even when they are aware of their rights.
For the most part, citizens lack knowledge of their rights, time or energy to navigate a Kafkaesque system of bureaucracy created by attrition rather than customs, history, or well thought out deliberative processes.
Any benefit that may have been derived from our past experiences in the culture of the rule of law was severed and dealt a fatal blow when the Dergue replaced the professional Imperial Police Force by its cadres, the People’s Protection Brigade; and when EPRDF dissolved what remains of the police force and assigned police work to its armed wing after taking power in the early 1990s. Perplexingly, even today’s military forces operate in the capital and rural areas of the country with policing responsibilities, a holdover from the era of military junta.
Today, solutions to problems of the administration and the rule of law are quickly scooped up into legislations, regulations, proclamations, edicts, directives and circulars that give cover to the deficiencies of governance. Troublesome issues of law and order are quickly handed off to directorates, committees, commissions, councils, boards, authorities and agencies to give the appearance that something is being done about it.
As a result, the actual on-the-ground inadequacies of the rule of law that confronts the citizens remains unchanged, and the political elite can go on congratulating themselves about reforms, egged on by local pundits and international admirers.
In an atmosphere of free-for-all law and order, an idle police officer can remain inactive in the face of blatant violations of the law, fearing no consequences for his inactions.
The truck eventually leaves the narrow road without servicing the septic tank. The construction material remains spewed across the lane, gradually diminishing, deteriorating and intermixing with the ground – now almost indistinguishable from the dirt and soot that covers the unpaved narrow road.
Capital Markets Revolutionise the Insurance Industry
If capital markets can indeed be realised, and there is enough rhetoric to believe that it is a matter of time, then the definition of insurance in Ethiopia would change.
At its most basic, it is the spreading of the risk of loss associated with a particular event among as many participants as possible. The practical business of insurance has often meant marrying the skill set – such as actuaries, underwriters and distributors – necessary to manage that risk with the capital necessary to support it. If this can be done successfully, then the basis for a modern insurance industry will have been laid.
Recent changes may have opened that traditional business model to disruptive innovation. An observer looking for a niche vulnerable to disruption could do worse than focusing on both insurers and the reinsurance sector. There is a great deal of opportunity in the sector given the increased appetite for security.
But the major challenges cannot be disregarded either. From shareholders that demand better returns and demanding customers to a challenging regulatory framework on capital adequacy, solvency and margins of safety, there is enough to dissuade the light-hearted from thinking of investing in the sector. The challenges though are not as significant in light of the growing economy. Change is inevitable in the sector
With technology rapidly increasing both the information available to non-traditional market participants and the ability to manage, analyse and utilise it, there appears to be clear potential for reducing friction.
A capital market will allow insurers to link their capital to securities. It provides them with an opportunity to fish better in troubled water while shareholders’ earnings get boosted. What such a market is good at is seeking diverse means of seeking those willing to accept safety for an acceptable return. This boon can also be extended to reinsurers – if there is more than one by the time there is a capital market – as they inherently converge to offer capital providers a place to invest with a reasonable return that barely correlates to most capital market risks.
The most recent report on the US insurance market noted the growing role of alternative risk-transfer capital in the insurance industry. While this remains a small share of the total capital committed to reinsurance underwriting, its growth continues to put downward pressure on reinsurance premiums.
Alternative capital, broadly defined, continues to enter the reinsurance market. Clearly, this marks a change from the traditional regulated reinsurer model and may lead to a redefinition of market roles. The question is what this means to the marketplace and its participants.
This includes not just insurers and reinsurers, but regulators, consumers and investors. It is hard to contend that alternative capital is the most viable venture that helps insurers as well as reinsurers to move their capital freely in any form of investment.
Shareholders and professionals and other participants in the Ethiopian insurance industry need to keep in mind the words of the great biologist, Charles Darwin.
“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change,” he said.
In the short run, change may spell struggle. But in the longer run, it may mean progress.
It is important to answer the question, why the insurance sector is still in its infancy in Ethiopia? Is the rate of return on the investment attractive? Do professionals update themselves on the ongoing change? Are managers vigilant in understanding business dynamics? And are regulators willing and capable to persistently amend their directives?
The lack of a strong insurance industry, in addition to a robust financial one, has contributed to the lack of a strong private sector. Investors, like everyone else, like to shun risk.
All the reasons for introducing change into the industry are there. What remains, as has been the case for long, is the fear that the short-term might be messy. We need to have a more liberal and open market that allows participants to take a bigger slice of their return in their venture through access to capital markets and more dynamically through access to the World Trade Organisation. Those who most effectively adapt may find themselves with a new competitive advantage in this new marketplace
The government must start readying the sector for multinational insurers through capital markets. The inability to bear mega-risks would be addressed through an option for insurers to raise their capital through a capital market. Access to outside markets will as well be important in bringing to the country knowledge and expertise.
Institutional Ethics Paves the Path towards Professionalism
As a university teacher, it is not hard to come by students and, even teachers, that do not abide by the principles and ethics of the higher learning institutions they attend. It goes a long way in explaining the lack of professionalism and integrity that is practised in the work place, in both the private and the public sector.
The problem cannot merely be regarded from the perspective of cultural or religious contexts, for these could be subjective, but professionalism in the workplace that is all too necessary for a productive citizenry.
This problem can seldom be addressed if we are not willing to acknowledge that it has its roots in the higher learning institutions from where the skilled human power is sourced. Students that spend years in institutions that do not observe basic institutional ethics standards cannot be berated for performing without principles when they finally join the labour market.
A starting point for considering institutional ethics are codes of ethical policies and procedures with guidelines on appropriate standards of behaviour. These policies should be part of public universities’ major strategy.
Ethics is the study of moral principles and conduct. Ethicists ask questions about what is right and what is wrong within our social and political contours. It is also about relationships and how we should interact and live with others.
It can be understood as a “set of rules, principles or ways of thinking that guide, or claim authority to guide, the actions of a particular group,” according to Peter Singer, an Australian philosopher.
Institutional ethics is concerned with the way in which people should conduct themselves within institutions. It is based on the assumption that individual responses to ethical issues are “necessarily constrained or supported” within organisations, and it is easier to act ethically in a culture that is deemed ethical than one that is not. Institutional ethics needs to be built into the operations and core decision-making processes of organisations.
In recent times, there has been heightened media and public awareness of unethical behaviours in higher education institutions such as universities. Examples include plagiarism by staff and students, various forms of cheating, sexual harassment in and out of the classroom, misuse of power and bribes. Campus youth are also becoming embroiled in substance addiction as a result of peer pressure and increased availability of the substances in Ethiopia.
The higher education climate is one that has undergone major reform and restructuring in line with managerial practices. In universities, these practices have included the adoption of private sector practices with a strong focus on outcomes, key performance indicators, monitoring and measurement, as well as tighter efficiency standards and accountability.
But poor management persists, and one of its consequences has been the erosion of ethical standards. It derives from the strong focus on bureaucratic rather than moral accountability. It is said that such a climate creates what is known as “morally mute managers,” who assess information through a bureaucratic lens.
Unethical practice is viewed as leaders who fail to support others who question unethical practices that take place within their organisation. Alternatively, unethical conduct by leaders is said to occur when they exert pressure on staff to act in unethical ways.
Ethical dilemmas occur when decisions that require a choice among competing sets of principles arise.
“Their emergence is unsurprising given the pressures and complexities of working within modern organisations. Universities are complex, pressured environments where academic leaders are faced with competing tensions and pressures when making decisions that affect diverse stakeholders such as students, colleagues, the local community, employers and corporate partners,” as the academics Lisa Catherine Ehrich, Neil Cranston, Megan Kimber and Karen Starr assert through references in a paper entitled “Unethical Practices & Ethical Dilemmas in Universities.”
Their paper details a number of tensions that lead to universities being unable to either put into place institutional ethics or follow through with them. The most relevant out of the bunch to the Ethiopian context are individual, and it might be added political, demands for higher education against labour market requirements, as well as the aspirations and expectations of individuals against the prevailing economic constraints and established cultural values.
Thus, establishing and strengthening institutional ethics can help battle the ever-growing managerial and academic ethical issues and the conflicts that arise in higher learning institutions. The most important takeaway is that students need to be trained in the path of professionalism, which not only requires their observance of institutional ethics but that managerial staff and teachers also abide by the rules.
The Diaspora Delusion
There never really has been a time when people chose to remain in their own countries despite the odds and unpleasant political and economic conditions. Of course, globalisation has fastened this process.
Many are journeying abroad hoping to find the shortcut to a better life. This is until reality kicks in and people struggle to make ends meet in a developed nation they had initially perceived to be a haven where earning cash was easy.
I have throughout my life attended countless ceremonies organised by parents when their children move away to a developed nation. Moving abroad is considered an achievement.
But once in the United States or Europe, they might find the reality to be different. They may give up a professional career to live on welfare or toil on a job they previously thought was beneath them back in their homelands. I know medical doctors and lawyers who took the leap from their long-established careers only to end up labouring on a job that barely satisfies their basic needs.
People who immigrate are either usually fleeing some sort of persecution in their native countries or are looking for better economic opportunities. The latter are referred to as economic migrants, and many of them might be skilled professionals.
Developed nations, for all the slack some of their citizens get for being “anti-immigrant,” do welcome a limited number of refugees and migrants, sometimes out of a feeling of sincere moral obligations and other times for political purposes.
Ethiopians from all levels of society are beneficiaries, but many of those that make it to developed countries are the sort that have gone to private schools and come from relatively well-off parents. Those who are actually in need of security from persecution are mostly left behind.
In a recent trip to London, I encountered many Ethiopians who described their life as traumatising. The salary they earn from one job is barely enough to make a living in one of the most expensive cities in the world, leaving them with a constant search for additional jobs and worries over affording their bills.
The situation is severe for illegal immigrants as they work and live by hiding from authorities so as not to risk deportation. It was hard for me to imagine that in a beautiful country such as England, and its hospitable public, Ethiopian immigrants are living in constant struggle.
Many live in fear and paranoia. They are terrified that immigration officers will one day step into their tiny, expensive rented rooms and deport them. Any sign of law enforcement and police sirens intimidates them, and unexpected doorbells shock them as if something has exploded. It is a life they never anticipated.
What both the legal and illegal Ethiopian immigrants have in common is that they have moved abroad looking for life the diaspora claim to have enjoyed, which is hard to find in the actual destinations.
I met an Ethiopian lady who is taking several medications for psychological distress because of the decision she made to live abroad. She had given up her high-paying job at the Italian Embassy in Ethiopia when she made the journey to the United Kingdom, expecting to start a much better career with a more rewarding income. To her dismay, the best she could get was a part-time cleaning job at a McDonald’s restaurant.
Most of the Ethiopian diaspora living in metropolitan London admit they are not honest about their life in England even to those close to them. Overseas, they might wait on street corners in the early freezing morning hours to be taken to work on any available job opening or to fill the gap of absentee employees. When visiting Ethiopia, they tell me they take out family and friends to expensive restaurants, accumulating debts that take them years to pay off. It is a life of lies where individuals lead a double life to fit into their families’ and societies’ unrealistic expectations while hiding their pain.
Moving back is rarely an option considering familial and societal pressures. Children who live abroad are overburdened as they are expected to scale up their families’ living standards in Ethiopia. Families in Ethiopia do not just expect to be supported financially but also presume that their relatives in the diaspora can take them abroad for vacation. The diaspora say they are content when their families are denied entry visas, because their children living overseas do not have enough income to support themselves and a visiting family.
Unfortunately, even to those well-educated at universities abroad, the saturated job market in developed countries does not provide enough job opportunities. In a hotel I was staying at, I met a young woman originally from Ethiopia. She was working as a receptionist at the hotel, although she graduated with distinction as a pharmacist in London.
I came and introduced myself when I heard her speaking in Amharic over the phone. It did not take us long to get along and start talking about her life in London. She told me about the unfortunate set of events that led to her becoming a receptionist, since she left Ethiopia at the age of 15. Fortunately, she had decided to move back to Ethiopia and look for a job in her profession.
Perhaps skilled returnees like that young pharmacist can shed light on the realities and struggles of life in developed nations as an immigrant from a developing country. Most people’s desire and motivation to live overseas comes from misinformation from those who live abroad. Some have indeed made it, but many have not. It is heart-warming to learn that there are those willing to speak truth to reality about the inequities of being a member of the diaspora.
Aquaman: Not Deep Enough
I feel bad for the DC Cinematic Universe. It undoubtedly has some of the most well-known superhero characters. It can more than match Marvel’s Spider Man and Iron Man with its Superman and Batman.
Marvel does not even have iconic villains. Perhaps the popularity of the Avengers movies could help level the scale with Thanos. Loki is famous, but he has evolved more into an anti-hero than a villain. On the other hand, DC has unforgettable, blood-curdling, infamous antagonists – the Joker and Lex Luther. Unfortunately, these merchandises are being wasted.
The Marvel Cinematic Universe has found a way of connecting with audiences, by presenting good plots and taking chances with story arcs. Essentially, the Marvel movies have a common purpose. They stand to show the essence of heroism is caring for humanity on an individual level. They are also light and rather linear with each installment organically integrating with each other.
The DC universe has never found its ideological footing, nor the proper mode of presentation. It is pulled between two forces: sometimes it tries to emulate the darker style of Christopher Nolan’s Dark Knight trilogy, while other times it tries to copy Marvel’s playful approach.
Unable to conform to either, the DC universe is confused, and the ensemble movies that came of it looked too cartoonish. They also had terrible plotlines. Suicide Squad, Batman V Superman: Dawn of Justice and Justice League were some of the worst superhero movies ever made. Surprisingly enough for a movie with such highly profitable assets such as Superman and Batman, the last one even had poor special effects.
But there could be some hope for DC, and it can be seen in outings that gear away from ensembles. The success of Wonder Woman, the best DC superhero movie to come out since the conclusion of the Dark Knight Trilogy, proved this. Its strength was in introducing to the cinematic universe a unique superhero, a female one – her commercial appeal must have been essential over the eagerness for a Captian Marvel movie.
The movie was also successful in world building, immersing audiences into the story of Wonder Woman’s upbringing. Aquaman takes a similar path.
Starring Jason Momoa as the title character, going by the name of Arthur Curry by day, the movie takes the action to the oceans, where the kingdom of Atlantis exists, albeit underwater.
Arthur is half Atlantean on his mother’s side, who was also the Queen of the underwater kingdom and is the source of Aquaman’s superpowers.
But trouble is brewing down in Atlantis. Arthur’s half-brother, Orm (Patrick Wilson), also one of the rulers of the kingdom, is fed up with Atlantean’s need to hide from the “surface people” – though it is never made clear why they decided to do so or how come Orm is the first to challenge this development in millennia. He is not too happy with the pollution of the oceans either.
But his plan smacks of an attempt to monopolise power within the kingdom, notably to a princess called Mera (Amber Heard). She and another inside collaborator, Nuidis Vulko (Willem Dafoe), figure the best means of countering Orm is by helping his older half-brother, Arthur, claim the throne.
There is just one hitch. Atlanteans, like many “surface people”, are racist and would never accept a half-human as their ruler. But Mera and Nuidis figure that Atlanteans may reconsider if Arthur can find the Trident of Poseidon, a powerful weapon that belonged to the first ruler of Atlantis, and would imbue the wielder with almost unmatchable power.
As Machiavelli put it, one should wish to be loved as well as feared, but if there has to be a choice, better go for the latter.
The unfortunate part is that this movie starts and ends like almost every superhero film ever made. It is always the hero setting on an adventure, meeting a girl, showing some potential to save the world, then losing miserably to the main villain, growing less confident, but finding a sense of purpose along the way, then growing confident all over again and finally beating the villain and saving the world.
This is the textbook superhero story arc, and Aquaman follows it religiously.
But the action was exciting. There could have been less slow-mo, but that could be forgiven. It is high-powered and more expressive of the destruction and stakes involved every time a superhero gets involved in hand-to-hand combat.
It will be interesting if it would be the likes of Aquaman and Wonder Woman – the latter of which also had a familiar superhero plotline and focused on action sequences and world building – that set the tone for the DC universe’s future. More inventive and clever plots would have been great, but this is still far more tolerable than the absolute trash the DC superhero ensembles were.
Beer Vs Culture
A circus show rolled into Hawassa earlier last month. They set up their vans, pitched their tent and began their activities. There was a promise in the air of a month full of entertainment, with only one thing missing, an audience.
This month-long event ran with an air of festivity that is rare for the city, yet there was a clear lack of interest by the populace. It is not that much different in Addis Abeba a year ago, where people complain that there is nothing to do, while multiple cultural and creative events are held bereft of audiences.
The culprits for low turnouts range from spending time watching TV to the internet. Just as guilty are the bars sprouting in every nook and cranny. A beer culture that has dominated our country has taken charge of our society. Other modes of entertainment fight for attention and, if lucky, get the scraps.
There is nothing wrong with enjoying a few drinks with friends, but when it becomes an institutionalised dominance of our nation’s cultural development, there needs to be some sort of intervention.
This is all the sadder given that in the last two years or so creative and cultural events in Addis Abeba were just beginning to get traction.
Interestingly enough, these same events have found investors and sponsors in the very beer companies whose brands are attracting people to the pubs of the city. While the beer culture is thriving, beer companies stand in the forefront of creative events in our city.
Indeed, they are some of the few companies that are willing to entertain sponsorship ideas for all types of creative endeavors. They are willing to support, because they know that sponsoring cultural events brings positive impacts to their brands. Those with more prestige can solicit the support of NGOs to fund their initiatives, while others, however creative their event, rarely have anywhere else to turn to.
I am not convinced that the path we are on is a healthy one. There is a sense of co-dependence that is slowly creeping in. And at this time, it may seem beneficial to both, yet a time will come when the beer companies, as the only benefactors, will become bold enough to dictate the content of the events.
When proposals are presented, depending on how successful the events have become, beer companies will offer to buy the event if one is willing to insert the names of their brand into the event title. Again, this is neither good or bad. Yet if we do not have alternatives, it puts artists in a position where they have no choice but to compromise.
Our creative and cultural events are already in a very fragile state. We lack spaces that are solely dedicated to showcasing these events and the costs associated with organising one are too high. It is thus no wonder that these events have become too closely associated with foreign cultural institutions or beer companies.
Those who claim that Western influence has diluted Ethiopia’s culture should be well informed that this is a consequence of Ethiopians inability to support the growth and preservation of indigenous culture.
There is a clear void when it comes to the arts, and there needs to be more to counter it. In a few years, unless we can cultivate the development of our own culture, others will appropriate it, and we will be left wondering what we could have done when we had the chance.
Commercial Properties See Rate Hikes: Indignation, Resignation by Tenants
Alemayehu Befikadu, a deputy manager for a plastics manufacturing factory, was busy organising a demonstration by tenants against rent hikes on a commercial property owned by the Federal Housing Corporation on Monday, December 17, 2018.
A graduate of economics and information technology in his early 30s, he was protesting in support of a firm where he works. The firm which was recently notified of an 11-fold rent increase that put the fee at a whopping 37,680 Br a month. It was not something that he and his co-workers were willing to accept.
“Volunteer friends and I circulated the news on Viber and Facebook, and a day later, we had 3,000 people registered,” said Alemayehu.
After holding an initial meeting between representatives of the tenants, they agreed to demonstrate at the head office of the Corporation last Monday, December 24, 2018, in Leghar.
And demonstrate they did. Beginning at 9:00am, a flock of indignant tenants made their way to the Corporation’s head office. An hour later, the building was surrounded in all directions with crowds eager to hear good news from representatives that had been allowed inside the compound.
At a little past 10:00am, representatives streamed out after their meeting with Reshad Kemal, director of the Corporation, to announce that an understanding has been reached.
“He proposed to meet all the tenants on January 3, 2019, after conferring with the management of the Corporation,” Alemayehu told Fortune. “The time and place of the meeting will be communicated through media outlets.”
Not everyone was satisfied with the Corporation’s response, saying they need something concrete right there and then, but the gathering broke up as the protesters dispersed eventually.
The crux of the demonstrators’ demands is that the Corporation should have discussed the rental hikes with the tenants. They reject prior discussion the Corporation held with tenants at the Capital Hotel saying that it was attended by only a handful of tenants.
They also reason that their rental fees should not be based on market prices, since tenants in most private commercial properties have better facilities, including lifts, generators and parking lots. The tenants also raised the conditions of the buildings to be taken into consideration as well as the type of business being conducted in the units.
This view is considered misguided by the Corporation.
“Parameters such as the convenience of the units for businesses, its condition, and the effective area of the property that is used for the business were taken into consideration,” said Kibrom Gebremedhin, director of communication affairs at the Corporation. “Regarding the market price, we didn’t use it to set the rental fee directly but to make comparisons.”
A survey on commercial rental rates for private businesses in what the Addis Abeba City Administration considers central business districts – Merkato, Piassa, Bole, Stadium and Megenagna – shows price variations based on conveniences, conditions of the facilities and age of the building.
The current average market price for a square metre of floor space is 560 Br in Merkato, 800 Br in Piassa, 950 Br in Bole and 584 Br in Megenagna. These prices do not include the rental fees for cubicles within the buildings, which can range from 3,000 Br to 4,000 Br a month.
For a square metre of commercial floor space for a property in the Stadium area, the average market rental cost stands at 1,275 Br. A similar size space in the same area for a property owned by the Corporation stands at approximately half that of the rental revision.
This is in comparison to a survey conducted by the Corporation, which concluded that 65pc of the tenants have been paying rental rates between 65 Br and 95 Br a square metre for commercial units.
A year ago, the Corporation started constructing 3,200 housing units to be built across the country at a cost of one billion Birr. The construction is part of a 16,000-unit housing development planned in the coming three years.
Notably, the Corporation did not consider floor levels when it revised the rental prices. For instance, for a building around the National Theater, the rent for the first-floor office where Alemayehu works has the same rate as a dental clinic on the fifth floor.
Tenants of privately held properties, however, do not see what demonstrators like Alemayehu are complaining about.
Betelhem Abate, who has a mobile phone and accessories shop at the Rift Valley College Building close to the Stadium, pays 4,000 Br for a two square metre floor place on the ground level.
“The complaints by the tenants are unwarranted since they have used the units for a long time and profited a great deal while their fellow citizens have suffered from soaring rental fees,” she said.
Nonetheless, the average rate of increase by 2,090pc on all commercial properties has raised the ire of many and has garnered criticism, even by those who are not tenants. Commercial properties represent 37pc of the 18,445 units managed and controlled by the Corporation.
The largest increase, 6,784pc, is registered in the Stadium area, while the lowest was for commercial properties in Lancha, at 521pc.
Currently, the highest rental fee paid to the Corporation is 345,509 Br a month. With the rental revision, the first for the Corporation in 43 years, the fees stand at 406,000 Br.
Habtamu Berhanu (PhD), a lecturer at Addis Abeba University’s College of Business & Economics for 16 years, considers these hikes appropriate given that the tenants have benefited for over four decades compared to those that paid market prices.
“The rental fee hike should not be linear and should consider the type of business and the conditions of the units,” he said. “But the Corporation has to negotiate over the prices and reach an agreement.”
He also suggests that the Corporation should conduct continuous property valuations and consider demolishing some of the buildings in severely deteriorated conditions and build new ones.
Meanwhile, some of the tenants are looking forward to January 3 to discuss the issue that they believe to be wrong, although some other tenants have already signed contracts based on the revised figures.
The management of the Corporation has received a daily deluge of grievances over the rental rate hikes for commercial units and promises to consider the complaints prior to the meeting.
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