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Month: December 2019

Right-of-Ways, Roads Delayed: Addis Construction Projects Burden Business Owners

Posted on by Web Master

Unlike her schedule for the first five years, Aynalem Worku now opens her mini-market only in the morning and after working hours in the afternoon.

At the end of last month on a weekday around noon, Ayni Mini-Market, located near Ararat Hotel in Yeka District, was closed.

Joining the grocery retail business seven years ago, the owner of the mini-market used to open the shop early in the morning and close its doors at night. However, this changed in the middle of last year.

Aynalem, who pays 4,000 Br a month for rent, excluding electric and water bills, now opens the supermarket from 7:00am to 10:00am in the morning and 4:00pm to 7:00pm in the afternoon.

Previously, her customers parked their cars at the door of the mini-market. This is not the case now, since they cannot park there because of the unfinished road widening project.

Her shop is located alongside the Ararat-Kotebe road project, which was launched in February 2017 with a budget of 534 million Br and a schedule of being completed in two and a half years.

By now, the road should have been finished; however, at this point only 30pc of the work is currently completed.

Since the road is dusty and unsafe for parking cars, Aynalem’s clients are not willing to visit her shop during construction hours. The dust that blows into the shop also damages her grocery items, forcing her to close her shop during day time hours. She also laid off her two employees.

“Now, business is very slow,” she said, adding that she is even borrowing money from her husband to pay the shop’s rent. “The items on the shelves are getting outdated and spoiled.”

The delayed road project that has hurt Aynalem’s business was awarded to two local companies after being split in two. It has a six-kilometre length and a 30m width.

The first contract lot of the project, which extends from Ararat Hotel to Kotebe Metropolitan University with a 3.1Km length, was awarded to Diriba Defersha General Contractor for 273 million Br.  The company was supposed to finish the construction of the road in October 2019.

Tekleberhan Ambaye Construction Plc, another prominent local firm, was awarded the second lot that covers the 2.8Km section between Kotebe College and Kara for 261 million Br.

The project is one of the 40 active road construction projects underway in the city. Beside the Ararat to Kotebe project, several others have been delayed as well.

Multiple factors caused the delay, according to Ferehiwot Debele, operations manager of Diriba Defersha.

The lengthy process of mobilising the site, using the area as a marketplace by the local community, design revisions, problems with material supply and lack of skilled human resources are the major factors for the delay, according to Ferehiwot.

The contractor also faced an external problem of rights-of-way, the legal right established by usage to pass along a specific route through grounds or property belonging to another.

Tiumay Weldegebriel, communications director at the Addis Abeba City Roads Authority, which completed 22 projects in the last fiscal year and planned to launch 40 new projects this year, shares Ferehiwot’s view.

Along with boundary demarcation issues, design revisions and the under-performance of contractors are the general causes of road delays, he says.

“Unless the contractors place their machines and construction equipment on the sites,” says Tiumay, “residents do not voluntarily leave the premises.”

The same happened with Ararat to Kotebe road.

Because of right-of-way issues, stemming from the work site running through old neighborhoods with elderly residents who do not want to comply, the district office was not able to evacuate the premises until this October, according to Tiumay.

The old road had a 14m width, but the upgrade widened it to 30m. Thus, the road passes over the boundaries of the residents, which has created tension.

There were also debates with Kotebe Metropolitan University, which will lose some part of its land to the road widening.

After settling all these in December, the construction of the road recommenced in September, almost two years after the project kicked off.

Tiumay also attributes the inefficiency of some contractors as a source of project delay. These companies have limitations in handling holes, construction waste and digging trenches, according to him.

“We receive many complaints,” he said, “and we write warnings to contractors to correct the issues raised.”

The Authority requires the contractors to pave ways to give mobility access to the community, especially in the rainy seasons and sprinkle the roads with water at least twice a day in the sunny seasons to minimise the amount of dust that rises from the construction.

But many have failed to do so, according to the communications director.

In Aynalem’s estimation, the contractors that are working on the Ararat to Kotebe road do not sprinkle water on the road, with the dust forcing her to close her shop during the day time.

Cordova Academy, a private primary school found in Nifas Silk Laphto District near Qera, is also a victim of a delayed road project.

For the current academic year, the Academy planned to enroll 800 students, but actually enrolled just 540, according to Mohammed Adem, principal of this branch of Cordova, one of five branches operating under the Academy, which has been in business since 2008.

Students and families are not happy with the hollow ground, ditches which are full of water, and the up and down nature of the land around the gate of the school, according to Mohammed.

“Staff and students faced incidents of mugging because of the conducive environment to criminals offered by the muddled fields and cramped neighborhoods,” Mohammed said.

There was a large pond under the cliff located next to the gate of the school, which worried parents. Three weeks ago, city authorities drained the water after repeated complaints, according to the principal.

Cordova is located on the road that extends from Qera Beret to Gofa Mebrat Hail Condominium. The road was awarded to Melcon Construction Plc in 2017 for 214 million Br.

The 30m-wide road project stretches for 2.1Km and was planned to be completed within a year of the contract award, but it has only progressed 40pc.

Melcon Construction Plc recently completed the construction of Alemtsehay Bridge to Winget and has progressed well on the construction of Haile Garment to Jemo square road.

“We’ve got a good experience of finalising projects on time,” said Elias Teka, the general manager of Melcon. “Issues related to rights-of-way caused delays on this particular project.”

Electric poles and telecom fibers were not relocated on time, which played a part in causing the delay, according to Elias.

Another challenge was that groups of juveniles from the surrounding area demand 20 Br to 25 Br a cubic metre when trucks load construction materials at a quarry site, Elias added.

“They force us to pay up to 413 Br a vehicle for trucks with a capacity of carrying 16.5 cubic metres of soil and gravel,” he told Fortune.

When there are road projects delayed with forceful problems, the city’s Roads Authority renews the contractual agreement under the condition that the contractors revise their plans and take emergency measures to complete their work backlog as fast as possible, according to Tiumay.

For the companies that fail to deliver the roads, the Authority takes two measures: taking the contractor to court for punitive damages or terminating the project.

While awarding companies for new projects, the Authority requires contractors to accomplish 75pc of the projects they are already awarded before they get a new one.

Fikadu Gurmessa (PhD), a transport geography lecturer at Addis Abeba University for more than a decade, believes that political will is needed to complete delayed projects.

“It is the determination of the government to take measures against delayed projects that will address the issue,” Fikadu suggests.

Delays bear lots of costs, including the land itself, which is exposed to erosion. It will also affect the mass transport operations that most people use every day, according to Fikadu.

Starting from the next fiscal year, things will not go as usual, according to Tiumay.

For the upcoming projects that will be constructed in the coming three years, the Authority has already identified the projects, according to Tiumay.

“We’ll give the data to the city and district officials to prepare all the preconditions ahead of the commencement of any project,” Tiumay said.

However, Mohammed, the principal at Cordova, has already become frustrated and lost hope.

“Next year we won’t get half of the students, since most of them are too frustrated with the road,” he said.

On the other hand, Ferehiwot of Diriba Defersha states that her company is also frustrated with city road projects, due to the disputes over land ownership rights.

“We prefer to work on provincial extended roads, as they are less complicated,” she said.

Nile Bounces Back to Steady Growth

Posted on by Web Master

Nile Insurance sprang back from a slow performance last year to achieve a 74pc increase in profit by netting 110.8 million Br.

Earnings per share (EPS) also went up by 55 Br to 327 Br. Still, last year’s EPS is lower than the 546 Br/share recorded three years ago. Two years ago, the profit and EPS of the company plunged by more than half due to massive expense claims.

Nigus Anteneh, CEO of Nile, attributes underwriting measures in general insurance premiums, claims management and accounting life premiums as reasons for improved performance of the company in the past fiscal year.

“Life insurance was not accounted for in the earlier performance report,” said Nigus.

Two years ago, Nile Insurance transferred 22.5 million Br to the life insurance fund, causing the income decline. Nile used to report life insurance premiums every three years, since it was not able to get a local firm to carry out an actuarial performance appraisal.

The firm is now required to report life insurance every year, according to Mekdes Aklilu, chairperson of Nile’s board of directors.

“We used to hire foreign firms for the work,” Mekdes said. “However, after the implementation of IFRS, we’re conducting the assessment every year as part of the overall performance report.”

In the last fiscal year, the value transferred to life funds plummeted to 1.5 million Br from 22.5 million Br in the previous year.

As a strong performance, Nile managed to increase its retention rate, reduce its claims, and significantly reduce the money transferred to the life fund.

However, the gross written premium dropped by three percent to 438.8 million Br, and out of this 82pc was retained, two percent higher than the preceding year. The company received 27.7 million Br as commissions,  a 22pc increase.

Abdulmenan Mohammed, a financial statement analyst with close to two decades of experience in the area, attributed the stiff competition in the industry as a reason for the reduction in gross written premium.

“The management should be concerned about it,” Abdulmenan cautioned.

Along with fierce competition in the industry, underwriting measures contributed to the reduction in gross written premium, according to Nigus.

“Last year, Nile used a selective approach to exclude high-risk premiums,” Nigus explained.

The management excluded high-risk motor premiums, particularly Sino and Isuzu trucks, minibuses, and automobiles such as the Toyota Vitz, which were found in the high-risk category among the motor insurance premiums, according to the CEO.

Claims paid last year also depicted a 13pc decline and reached 203.5 million Br.

“Nile should continue controlling its risks,” Abdulmenan suggested.

Nile’s investment activities last fiscal year were not as successful as the previous year. Income from interest and dividends fell slightly by six and nine percent to 47.8 million and 20.8 million Br, respectively.

Nile’s total assets have increased by 24pc to 1.4 billion Br. Out of this, 24pc was invested in interest-earning time deposits and 14pc in shares. The investment in interest-bearing accounts went down from 53pc, mainly due to huge investment in fixed assets.

Reduction in time deposits made to increase investment in fixed assets must have caused the marked decline in interest income, according to Abdulmenan.

Nigus agrees on this point, mentioning the 87 million Br payment the firm settled to Rama Construction, which is engaged with the finishing work of the firm’s headquarters building in the Financial District of the capital.

“As Nile has considerable receivables,” Abdulmenan said, “it should improve its investment activities.”

The expense of the company also showed a marked growth of 23pc in salaries and other operating costs to 108.8 million Br, which the expert noted as concerning.

“The management of Nile should keep an eye on expenses,” Abdulmenan said.

The board chairperson argues the expansion in expenses for salaries and benefits is justifiable in terms of staff retention and inflationary pressure in the economy.

The liquidity level of Nile increased considerably in terms of value. The 42pc surge in cash and bank balances reached 40.5 million Br. The ratio of cash and bank balances to total assets remained the same at three percent, whereas, the cash and bank balances to current liabilities showed a slight increase by one percentage point to six percent.

“The liquidity level at Nile is small,” said  Abdulmenan. “The management should take extra caution against a further reduction.”

Nile registered a 21pc increase in its paid-up capital to raise it to 366.1 million Br, with its total capital and non-distributable reserves reaching 427.7 million Br, accounting for 30.9pc of its total assets.

“This shows that Nile has strong capital, so it should use its capital to earn more income,” recommended Abdulmenan.

Beef not for Dinner as Butchers Decry New Taxes

Posted on by Web Master

The current fasting season of Gena, the Ethiopian Christmas, did not force all butcheries in the capital to close their doors. But it does not mean that all of them are open either since most of them remain closed until the holiday.

Some open doors to serve customers like Biruk Eshetu, a teacher by profession who is fond of beef and enjoys eating it raw at his regular butchery.

A resident in Gotera Condominium, Biruk comes from the southern part of the country where beef is considered a cultural food consumed every day.

“I see myself as one of the primary consumers of beef,” Biruk says.

Since last week Biruk observed that a lot of butcheries are shuttered or have increased their prices. He learned from business owners that the reason was the tax increase that was imposed on them.

The closure of the butcheries followed the enactment of a directive that was issued by the city’s Revenues Authority recently.

Five years ago, the tax Authority found it difficult to collect tax from meat shops because of the lack of accurate data on the number of cattle slaughtered by the butcheries. Due to this, the sector was exposed to mischievous activities, according to the Authority.

Considering this, a group of individuals from the city’s Abattoirs Enterprise, Revenues Authority and meat sellers association established a team. The team classified the tax collection system into four categories, making the weight of the cattle the basis for the tax estimation.

The meat of cattle weighing 214Kg and above was considered a very high standard product. Cattle at this level were taxed at 3,821.30 Br each.

The second category, high standard meat, pertained to cattle ranging between 173Kg and 214Kg, which were taxed at 3,232.80 Br a head.

The middle standard meat designation referred to livestock that weight between 110Kg and 173Kg, which were taxed at 1,627.35 Br each.

The low standard product specified livestock between 84Kg and 110Kg, which were taxed at 1,053.15 Br a head.

However, in practice, the taxing system was instead applied using two schemes. The first scheme merged the first three higher-quality beef categories into one, which all cost 1,971 Br in taxes a head, and kept the fourth category as it is. Regular butcheries were under the first scheme, causing them to pay a higher tax for better cuts of beef.

Under the second scheme, cooperative meat shops, kebele recreational centres and institutional meat shops under employee associations only paid 1,052.15 Br for every category of beef they serve, which is why they typically offered cheaper prices.

Butcheries under both categories, however, are required to submit a monthly financial statement with the number of cattle they slaughter to the tax office. However, butcheries pay the annual tax based on this monthly data at the end of October. This is why the industry is suddenly up in arms.

Due to the unpredictable price of meat, the Authority was supposed to revise the tax every six months based on the data from the Addis Abeba Abattoirs Enterprise, according to the directive. However, that was not applied, and the businesses were paying tax at the fixed rate over the past couple of years.

The revision made last year has pushed up the tax that normal butcheries pay by more than 300pc in some cases, because they now pay taxes based on the market price rather than the old fixed price.

Cooperative meat shops, kebele recreational centres and institutional meat shops must now pay taxes for each head of cattle at 84 times the average retail price of a kilogram of beef in their district. Normal butcheries must now pay taxes calculated at 122 times the average retail price of a kilogram of beef in their district. The Revenues Authority will now revise the market price every six months if it changes.

The latest revision, which was made last year but enacted this year, angered many butcheries and triggered them to close their doors or raise prices.

Tagay Qurt Bet [raw meat shop], which is located in Kirkos District in Gotera, is one of the butcheries that closed its doors after the revision.

Tewodros Bogale founded the shop that has been in business for the past two years. It has been selling an average of four to five cattle a month with three employees.

“Since December 9, 2019, we haven’t been selling meat, and the shop is empty,” said Biruk Birega, a chief butcher at the meat shop. “We’re unhappy about the new tax collection commands.”

After the announcement of the new change, the number of cattle that go to the Addis Abeba Abattoirs Enterprise also significantly dropped.

Last week the Enterprise performed below its capacity, according to Atkelti G. Michael, public relations head at the Enterprise. Before late October, the Enterprise had been slaughtering a maximum of 900 cattle a day. However, the highest number of livestock the Enterprise slaughtered last week in one day was 250.

“It was due to lack of stock provided,” Atkelti said.

Even those butcheries that keep their doors open and sell beef have already increased their prices by 40 to 100 Br a kilogram.

Daniel Tamiru, who is in his mid-30s and resides in Gofa Mazoria, also witnessed the price increase of meat over the past year.

Two weeks ago he bought a kilo of meat for 360 Br only to find that two days later the price had increased by 11pc. A kilogram of beef is sold at 400 Br a kilogram in a country that has a population of 60.4 million cattle, one of the largest figures globally.

The 50-year-old Addis Abeba Meat Sellers’ Association, which has 457 members, argues that the members were not informed about the new system in advance.

Members learned about the new directive when they went to pay their annual tax to the Revenues Authority, according to Mitiku Meshagu, deputy president of the Association.

“It was unexpected for most of the butcheries to hear the change,” Mitiku explains.

Protesting the changes, the Association has filed grievances to six government institutions including the Prime Minister’s Office and the city’s Revenues Authority appealing for the removal of the new taxing system.

Nibret Brihun, a tax assessment team leader at the city’s Revenues Authority, argues that the time demanded the revision and the recent directive was prepared five years ago.

“Since 2015, the price in the market has changed due to inflation,” he said. “Adjustments are made based on current situations.”

Nibret also says that before the directive was amended, the Authority conducted a market assessment.

However, after the complaints from the Association, the Authority formed a three-member appeal committee. The team is comprised of members from the tax information collection team, tax assessment directorate and a new research department of the Authority.

“As soon as the committee finalises examining the appeal,” Nibret points out, “we’ll present the findings to the director-general.”

Yohannes Woldegaberial, a tax law expert who was a prosecutor at the former Ethiopian Revenues & Customs Authority, believes that such types of problems result because of the incapability of the tax collectors who used an old system.

“The sector has no structure, and the transactions in the market are unsystematic,” Yohannes said. “As a result, the directive is arbitrary, and it lacks fairness.”

Yohannes recommends the Authority conduct a comprehensive assessment before amending such kinds of directives and engage stakeholders in the process.

Mitiku claims that the government is putting pressures on the butcheries while failing to regulate the uncontrollable market.

“The government has no control over the illegal meat trade and slaughterhouses,” said Mitiku.

 

 

Coop Bank Opens Full-fledged IFB Branches

Posted on by Web Master

Cooperative Bank of Oromia inaugurated two full-fledged interest-free banking (IFB) branches in the capital at Ayer Tena and Bole Michael on December 18, 2019.

The Bank, which has 389 branches, becomes the third to open a full-fledged interest-free branch next to Commercial Bank of Ethiopia (CBE) and Awash Bank.

CBE inaugurated the first full-fledged IFB branch around Bole Michael on September 7, 2019. It also opened four more full-fledged IFB branches in September and October. Awash Bank started IFB services with its new branch dubbed “Ikhlas” in Bethel area.

In 2013 the National Bank of Ethiopia issued the directive that limited IFB to a window service. Following that, 11 of the 17 private and state-owned banks had been providing the service.

However, last June, the National Bank of Ethiopia issued the directive for the establishment of full-fledged interest-free banking (IFB), on June 18, 2019.

Cooperative Bank generated 3.7 billion Br in income last year and disbursed a total of 24.4 billion Br in loans and advances.

Prospectuses and the New Commercial Code

Posted on by Web Master

A prospectus is a document through which an issuer of a security (mainly shares) discloses material information to potential investors. It is a document prepared when a company wants to offer its shares to the public or in other cases when it wants to be listed in a securities market. As a general rule, a prospectus must contain all the financial and non-financial information that potential investors and the public require in order to make an informed investment decision. And it must be properly regulated by the authorities to protect the public from misleading information by issuers of shares. This is not the case in Ethiopia.

In Ethiopia, public offerings of shares are used to raise financial capital from the public. But there is still a lack of a sufficient legal regime and organisational structure to properly regulate information these companies provide in the form of a prospectus. The Ethiopian Commercial Code of 1960 is still the only law regulating prospectuses. The Code has not been amended apart from a few provisions. There are recent efforts to amend this code, but the provisions on prospectuses are entirely unaltered. Hence, questions must be raised whether the rules on prospectuses in Ethiopia lack the advancements made in other jurisdictions. And this needs to be addressed as the country seeks to reform its economic structure.

In order to achieve middle-income status by 2025, the Ethiopian government has recently unveiled what it calls Ethiopia’s Homegrown Economic Reform Agenda as a well-coordinated response and blueprint to propel the country’s economic progress. In this Agenda, one of the overall developmental goals for the next 10 years is building an emerging market economy with a modern policy and institutional framework by building an efficient, resilient and well-functioning financial market system that provides affordable access to finance for investors and consumers.

The Agenda also mentions that this will be achieved by amending existing laws and legislating new laws that can cope with the ever-changing commercial and financial sectors. This hopefully includes amending the Commercial Code.

The Code states that an offer to subscribers shall be made through a prospectus during the formation of share companies. As mentioned above, a prospectus must generally contain all the financial (assets, liabilities, initial capital and so forth) and non-financial (founders, directors, purpose and so forth) information that potential investors and the public require in order to make an informed investment decision.

In other countries, a prospectus is also required when a company wants to be listed in a securities market. Although working toward a securities market for the near future, Ethiopia does not currently have one. But the lessons and laws drawn by the new Commercial Code can be used similarly when the time comes to enact regulations for the securities market.

Leaving this aside, the focus in Ethiopia should be on the public offering of shares. In general, one of the key legal consequences of a company’s decision to go public is the requirement to prepare and publish a prospectus.

The inadequate law surrounding prospectuses in Ethiopia can have significant shortcomings in protecting potential investors. Enticed by the advertised profit prediction of a business, lots of investors are subscribing to these companies without being given a prospectus detailing the risks of the potential investment.

Securities like shares are complex investment instruments that are intangible. They are neither produced nor consumed. Therefore, in large part because of this nature, securities and the securities market can be susceptible to fraud and manipulation. Investors and the public at large subscribing to the shares will question the legal system as to whether a proper mechanism is in place to protect their interest in case the issuers deceive and manipulate them. In order to avoid these pitfalls and mistrust by investors and the public toward companies, the law needs to carefully and effectively regulate prospectuses.

The issue of prospectuses and the legal regulations surrounding them are a complex process subject to extensive legal requirements in most jurisdictions around the world. For instance, in the United Kingdom, prospectuses are regulated by combining frequently amended European Union directives and regulations with the handbooks and guidelines from the concerned government authority and other supplementary laws. However, this is not the case in Ethiopia. To date, five provisions in the Commercial Code are used to govern prospectuses.

Safeguarding the rules on prospectuses might lead to proper information being disseminated to investors and the public. Given the importance of information in a prospectus, it is surprising that it has not been a subject for academic researchers in Ethiopia. Plus, the newly prepared Draft Commercial Code of Ethiopia has not amended the previous provisions of prospectuses. Therefore, it is important to mention a few aspects of how it can be amended.

For instance, there is no requirement for approval and registration of the draft prospectus by regulatory authorities before issued and offered to the public contrary to other country’s mandatory approval. The Commercial Code states that an offer to the public shall be made by a prospectus. The word “shall” indicates a mandatory requirement. However, the Ministry of Trade (MoT) does not currently require issuers to provide a prospectus before they issue shares to the public.

Another issue is that the Code does not clearly establish if communications other than printed documents form part of the prospectus. In Ethiopia, soliciting the public to subscribe for shares has been made mostly through brochures, phone calls, internet and oral communication. Advertisements by radio and television are also used in order to offer shares to the public. And the Code does not address the question of whether or not these means are considered part of the prospectus. This will mean that citizens who may have been misled by such advertisements will find it difficult to bring legal action on the basis of the Commercial Code. The defendant might argue that these were just advertisements and are not legally binding statements.

The concept of an informed decision must also be raised. As already mentioned, a prospectus must contain certain information. Mainly the assets and liabilities, financial position, profits and losses (if it applies) and prospects of the issuer. Thus, the question now is, whether the information required to be disclosed is sufficient enough to enable subscribers to make an informed decision. An informed assessment is, therefore, a result of relevant and sufficient information contained in a prospectus.

The informed assessment test is not a test based on the information that a professional would require. Rather, it will be on the information a layperson would expect. Hence, a prospectus must contain all of the information required for lay investors to make an informed assessment, including warnings and risks. This seems to be the reason that most countries require a prospectus to be presented in a form that is comprehensible and easy to analyse.

There is also a reasonable person standard for the information to be included in a prospectus. In fact, the duty of considering what fulfills the information necessary for an informed assessment should lie with those who prepare it. These people must consider the level of information that is required for an investor to make an informed decision on the security offered. The people responsible for the contents of a prospectus may include mainly the issuer (the entity issuing the securities), founders or directors and anyone else who authorise themselves to be named responsible for the prospectus.

In this regard, the Code also neglected to clearly identify who is responsible for preparing a prospectus and failed to articulate the liabilities of founders/issuers in cases where an offered prospectus to the public contains untrue or misleading statements or omits the relevant information for investors’ decisions. This will again leave subscribers with no clear guidelines on who to bring legal action against.

What is required of a prospectus is that the responsible people prepare it to contain all of the information necessary to enable the investor to decide in an appropriately informed manner. This does not mean discussing absolutely all information, as a prospectus is not expected to be a textbook on management or finance. Instead, it must let an investor decide whether to invest in the security by taking the risk.

At the moment, the MoT is working on a directive to deal with prospectuses. However, its contents, approval procedures and date of enactment have not been determined and a copy of the draft is inaccessible. This makes it difficult to further comment on the anticipated changes to the definition or list of documentation for a prospectus in Ethiopia.

But for now, the new draft Commercial Code should analyse the provisions on prospectuses and include additional provisions to protect the public from misleading information from companies. These new provisions might also help when the time comes to open a securities market in the country. A prospectus is a crucial document in any securities market and practising how to regulate it from now on will enable lawmakers to lay grounds for better codes and laws when the securities market becomes operational.

 

The Prime Minister’s Nobel Peace Prize: Dividends and Expectations

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As most other Ethiopians, I watched our Prime Minister’s acceptance of the Nobel Peace Prize on December 10, 2019, with something like awe. The Nobel Prize, for Peace of all categories, is simply not something that has ever been on the Ethiopian radar, and the acknowledgement of this rare honour has been immense. It was not only the Prime Minister who was honoured in Oslo but Ethiopia in all her culture and glory.

Prime Minister Abiy Ahmed (PhD) gave a careful and balanced acceptance speech in which he placed his political concept of medemerat front and centre of the policies with which he is leading Ethiopia.

However, we all know that the nomination of the Prime Minister for this particular acknowledgement has not been without its detractors, and as the citation before the honour went, Prime Minister Abiy won the prize for his efforts in establishing peace between Ethiopia and Eritrea, and in the Horn at large.

We also know that the Nobel Peace Prize can be a tricky assignation–Henry Kissinger, the American Foreign Secretary, was awarded the Prize despite his role in the disastrous war against Vietnam. President Barrack Obama won it a few weeks into his Presidency, and more recently, Daw Aung San Suu Kyi, the de facto leader of Myanmar, has been asked by a group of eight laureates to return hers, following her defence of her country’s genocidal treatment of the minority Rohingya Muslims.

The Nobel Peace Prize will have lasting significance for Ethiopia if it empowers our leader to build on the good things he has started. However, any global recognition is a double-edged sword, and the Nobel will have failed us if it makes the Prime Minister dig in his heels when it comes to dialogue and further diminish his tolerance for dissent, or if it creates a sense of complacency where none is warranted.

Abiy has done wondrous things in the past two years, but even the most ardent of his supporters will agree that he has accepted the Nobel Peace Prize with the country on a precipice. A few weeks following the announcement of his win, he managed to bring together eight distinct parties into one, heralding the end of the EPRDF as we know it when the new Ethiopian Prosperity Party gets its accreditation from the National Election Board of Ethiopia. The Prime Minister and his bold vision for the country have already transformed the political landscape.

I do not claim to have sufficient insight into the politics at the top, and I think that as a highly popular leader, we can fairly say that he garners widespread sympathy and good will. It cannot be easy to balance between a rock and a hard place that he navigates every day, and I hope that along with the Nobel Peace Prize comes the requisite wisdom to take Ethiopia off the edge and onto a relative plateau of peace.

The concerns that seek the heart and mind of the Prime Minister, as soon as the dust settles following the celebrations, relate to the state of security and the duty of the government to protect its citizens. Our excitement over the Prize won by Abiy does not mean that we forget what social media activists have dubbed the October 2019 massacre. We are not out of the woods when it comes to justice and the quest for security. Ethnic-based blind hatred continues to cost us the lives of university students at a regular rate, and it will be the challenge of the Prime Minister to create the platform for peace for which he has just won a global prize.

News of the Nobel Peace Prize win by Abiy may receive a mixed reception in our internally-displaced people’s camps. Ethiopia now has a larger population of displaced people than Syria or Yemen – 2.3 million Ethiopians in 2018 by the government’s own count. The Prime Minister has only made one public visit to an IDP settlement, and international aid actors complain of the premature return of populations of IDPs risking further violence and retribution by warring militia groups. The win of a Nobel Prize for Peace amps up the moral obligation on the winner to pay closer attention to the plight of Ethiopian citizens who have lost their homes and way of life.

When it is not politics, it is, of course, the economy. We know that the Prime Minister inherited empty coffers and much has been made of the new Homegrown Economic Reform Agenda. In the days leading up to his acceptance of the Nobel Peace Prize, the government has signed a large deal with the International Monetary Fund, worth 2.9 Billion dollars.

We understand that our economy is cash-strapped and perhaps this give-and-take with the overlords of the economic order is what we need. The economic policy under the medemerrubric takes a firm stand against alignment with either neoliberalism or a command economic system, but to my non-trained eyes, the economic approach of the reform certainly seems to be of a neoliberal bent. What is wrong with a neoliberal approach if it gets us out of the economic quagmire we are in?

The new Nobel laureate and his government will have the difficult job of balancing economic welfare with economic growth. Over 80pc of Ethiopia’s children live under the multi-dimensional poverty line, and if previous administrations with their pro-poor and developmental growth models struggled to feed our population of 100 million-plus Ethiopians, the “pragmatic” approach of the economic reform path has its work cut out for it in terms of protecting the very poor segments of the Ethiopian population.

The women’s rights movement that I serve celebrates the Nobel Peace Prize awarded to Prime Minister Abiy while still anticipating delivery on the promises made in the early part of the reform. The gender-equal cabinet that is one of the sources of pride of the reform have not always translated into gender-sensitive policies, and we risk a backslide on the gains of the previous administrations when it comes to gender justice and equality. Reports from aid agencies indicate high levels of sexual violence in IDP camps that are currently receiving scant attention.

The education road map that will be implemented from the next academic year onwards lost a major opportunity to embed steps to enhance the attainment of girls in elementary and secondary schools, and the newly passed Political Parties and Election Law does not legislate for women’s participation, even in terms of membership. The current decision to deploy federal police onto university campuses is not reassuring to gender equality activists who know of accusations of rape and failure to provide protection to female students by those who are tasked to guarantee their safety on multiple university campuses. The Ministry of Women, Children & Youth Affairs remains under-resourced to carry out its oversized mandates.

A large proportion of the Ethiopian public supports our leader, and we hope that his recent international recognition will further propel his office to consolidate on the gains promised.

No policy is perfect, and no leader is perfect, not even one who is now a Nobel laureate. However, the great leader that Prime Minister Abiy can become one day will listen to the concerns of ordinary citizens and learn as much as he teaches. I fervently hope to see him grow into that role, befitting the title of a Nobel Prize laureate for Peace.

Divorce Story

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I have never been married, let alone divorced. But I am old enough to have figured out that each marriage is different in its own way and encompasses a great many subtleties younger people such as I would probably neither understand nor are interested in finding out.

But even still, Marriage Story is a scary movie. If the message of the average romantic comedy is that we all should sometimes take risks and indulge in what our hearts desire, Noah Baumbach’s latest directorial outing says something entirely different. It warns that unless we compromise until nothing but a shadow of our former selves is left, there will always be moments where the relationship will feel like a stupendously massive mistake.

Marriage Story is not for couples looking to have their hearts warmed and their doubts about each other playfully dispelled. Like 2011’s Iranian breakout movie A Separation, it is the horror movie of films about relationships. Unlike the Iranian movie, this one takes place in a first-world, at least partially liberal, country with strong legal institutions, thus is understandably far less scary.

The film opens with Charlie (Adam Driver) and Nicole (Scarlett Johansson) telling the audience what they each love about one another. The way they tell it, their relationship seems to be a match made in heaven.

It is not. After a decade of living together, they have grown too tired of each other. Nicole believes that she has compromised a great deal because of her transition from the screen to stage acting and by moving to New York from Los Angeles. She feels that she has lost a good chunk of her youth to Charlie and his idea of a good life. Having been offered a starring role in a promising TV show that shoots entirely in the City of Angels, she will take the opportunity and redeem a sense of control she has not felt ever since her early 20s. If this means that her marriage will fall apart, she believes, then so be it.

Charlie sees things completely differently. He loves New York. A successful, yet not affluent, stage director, he believes that his work has meaning, that Nicole has significantly upgraded her career in joining his theatre company and that their marriage is just peachy. He loves her mom, and she loves him too and adores their only son.

He also still loves Nicole and believes that she had from the very beginning been happy with the career choices he made for her and the city he has chosen for them to stay in. That is until she “decided not to be.”

At first, their divorce seems to proceed largely without acrimony. But since Nicole has no plans to return to New York but to live for the foreseeable future in Los Angeles with their son, she gets herself a feisty lawyer, Nora (Laura Dern). Threatened by the possibility of losing custody of his son, Charlie too hires a fiery lawyer. The fact that the lawyer is played by Ray Liotta says all that needs to be said about the vicious downward spiral the divorce takes. It is never a good sign when a character that needs to be played by Liotta is introduced.

Marriage Story is not so much about the pain of losing a loved one but the sociological and financial toll it takes. Separation is depicted as a conscious uncoupling. The couple has hit a wall and no longer see a way of moving forward. The best decision, they agree, is to go their separate ways. This is no easy task and has emotional consequences on both partners. But as long as both are in agreement, it truly is the least painful part of the process.

Divorce is far more complicated. It implies a separation of property, partial or lack of guardianship of a child and disintegration of social networks. The couple suddenly become parties and their separation no longer is about them but the property they own, the child they raise and the people they know and are related too.

The film owes its strength largely to its at times comedic but mostly sardonic and sharp-edged dialogue. This is thanks to Baumbach – who himself had been married once to an actor who then filed for divorce in Los Angeles – who understands that every utterance and exchange of words between a couple whose relationship is biting the dust often is interpreted in the worst possible way by both of them.

Like in Frances Ha, Baumbach’s 2013 indie hit, which would have been hailed a masterpiece by now had it come out at least two decades earlier, the filmmaker finds the subtle feelings and circumstances that have such resounding impacts on the lives of the characters in focus.

But in the end, I remain curious as to why Baumbach titled the film Marriage Story. It is misleading. It is about the dissolution of a marriage.

Is there anything to read into the fact that despite having a son with his current partner, Greta Gerwig, with whom he wrote Frances Ha, they never married? Does he believe that separation, and then divorce, is the rational conclusion to any marriage where both partners strive to achieve their dreams? Is Baumbach telling us that separation is the true story of a marriage?

The performances, as is often the case with any good movie, are excellent. Johansson manages to radiate the penchant and yet purposeful persona of her character, while Driver, the American Benedict Cumberbatch, gracefully assumes the role of a man that is good at heart but can be incredibly egocentric most of the time.

But it is Dern that outshines everyone with her portrayal of a no-nonsense lawyer that would rather see the world burn than a woman getting the short end of a stick during a legal divorce proceeding. Her character, which deserves a TV show of her own, is determined to make sure that if women have trouble getting the upper hand in a heavily patriarchal world then they will surely get it in divorce.

Ethiopia’s Jobless Economic Growth

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Ethiopia has gained a reputation as one of Africa’s fastest-growing economies in the last 15 years. Perhaps until 2016, the International media has widely showcased the country’s growth performance and credited the government with clarity of vision and commitment for growth. Yet the Ethiopian economy has failed miserably in terms of generating a sufficient number of jobs for the country’s growing young population. As stellar as it is, the growth of the past decade and a half can be characterized as “jobless growth”.

This has in part to do with extremely high labour supply, as Ethiopia has seen an influx of young people entering the labour market. In fact, in the past five years, nearly half a million young graduates have joined the labour market. While exact data is not available, the economy has not succeeded in creating jobs for a sizable portion of this job-seeking population. Joblessness is especially a pressing problem in urban areas, where a record high migration from rural youth further creates massive job demand that is not matched by the economy’s employment potential.

A recent World Bank report has revealed that at least 11 million Ethiopians, about one-tenth of the population, are unemployed. Some two million join the job market every year where they struggle to find suitable job openings. It is not surprising, therefore, that youth unemployment in urban and rural parts of the country has contributed to the social and political turmoil the country is facing. Especially since 2015, youth unemployment has been cited as an immediate cause of the growing social unrest and mass protests that have weakened political stability in the country.

Until recently, the challenge of job creation has not been handled sufficiently by Ethiopia’s growth and transformation plans. The government of Prime Minister Abiy Ahmed (PhD), which came to power in April 2018, seems to recognize the need for urgently improving the employment prospects of Ethiopia’s youth. Soon after coming to power, Abiy installed a new cabinet that has been entrusted with the weighty responsibility of bringing peace and stability. In recognition of the severe social and political impacts of youth unemployment to the country,  Abiy’s government has made it a top policy priority to create jobs for millions of young citizens. The Prime Minister stressed this important responsibility in one of his most recent public remarks, where he stated, “The development and growth of Ethiopia will be measured by the number of jobs created.”

The formed Job Creation Commission aims to generate at least three million jobs per year and a total of 14 million jobs over the coming five years. This will require significant policy reforms toward extending access to education, improving infrastructure, and attracting local and foreign investment. We have seen a large number of commendable initiatives that aim to address this pressing problem. The current economic policy aims to create a vast number of jobs by developing several economic sectors including tourism, mining, ICT and agriculture.

The Investment & Jobs Creation National Committee and the Doing Business Committee, both of which are led by the Prime Minister, have already marked key milestones toward enabling greater job creation by the private sector. A national entrepreneurship strategy has also been launched to enable greater venture creation by supporting entrepreneurs.

These are astounding policy initiatives, but their success will depend on the government’s ability to coordinate their successful implementation. The country has immense opportunities for economic growth, which the government should successfully exploit to create jobs for the unemployed. If effectively implemented, there is no question that these policy initiatives will go a long way toward relieving the deep causes of social unrest that are introducing political instability.

How should these multiple policy initiatives be oriented to overcome Ethiopia’s legacy of jobless growth?

The following policy areas should receive due consideration if Ethiopia’s growth is going to advance inclusive growth and prosperity for its millions of job-seeking youth.

The government must make genuine efforts to advance agricultural transformation. Ethiopia is an agrarian economy with a large share of the population living on agriculture. A key policy priority, therefore, should be modernising agriculture to increase the sector’s productivity and boost the country’s ability to feed itself. This needs to be attended by other policy interventions to develop economic sectors that can absorb the workers who are shed by a modernized and productive agricultural sector. The best way to do so is developing new labour-intensive economic activities such as agribusiness, light manufacturing and services that have strong forward and backward linkages with agriculture. Effective development policy should thus anticipate and prepare for increasing urbanisation that results from agricultural transformation. As the population moves from rural areas to urban areas, the government needs to develop diverse urban development programmes that create industrial and service jobs. The gradual shift of labour away from low-productive agricultural sectors to high-productive manufacturing and service sectors will eventually boost income per capita and productivity.

There also is a need for boosting the growth and competitiveness of the private sector. The government has rightly emphasised the importance of small and medium enterprises for job creation. Indeed, the private sector is slowly becoming a major employer in larger cities across the country, particularly in Addis Abeba. Unfortunately, it is beset by significant structural constraints that limit its ability to become a reliable mechanism for job creation. A vast array of policy initiatives are needed to alleviate pressing constraints and boost the competitiveness and job creation potential of the private sector. For example, there is a need to facilitate access to credit and other forms of capital to small and medium enterprises that face severe financial constraints. Public-private partnerships can be used as a development strategy to boost the investment and productive potential of the fledgling private sector. The government should also foster a favourable regulatory environment and facilitate access to crucial infrastructure including land and basic services like water and electricity. There is particularly a need for a fundamental shift in the role of government from being a sole provider of jobs toward becoming an enabler of job creation through private sector growth.

There is a need to make significant investments on human capital development. To realise the productive potential of Ethiopia’s youth, there is a need for a systematic and sustained policy effort toward building the professional and technical expertise of the youth.

This requires heavy investment in universities and vocational institutes to provide targeted programmes that advance skills development and professional training in various fields, including technical skills and science and technology. In recognition that the job market of the 21st century is changing radically, there is a need to focus on ICT and digital skills, while also building the capacity of the youth in entrepreneurship and business development. Building the human capital of the youth should be the mainstay of the government’s strategy to facilitate the country’s transition toward a modern and competitive economy.

Correspondingly, there is a need to link the country’s education and training programmes with overall economic growth and transformation strategies. For example, universities and colleges should be encouraged to use the recent Homegrown Economic Reform Agenda as a blueprint for designing their curriculum and skill formation strategies. This ensures that there will be a match between the demand and the supply side of the labour market.

Where necessary, the relevant government ministry offices should work closely with the private sector and universities to aid them in aligning their education and training programmes with the overall economic growth and transformation plan. To gauge the jobs created and to formulate and adopt good policies at the macro level, the Job Creation Commission should provide timely and reliable labour market information and statistics for all its stakeholders. Moreover, the government should also make sure that the selection and appointment of bureaucrats is based on merit rather than mere political affiliation.

The experiences of other successfully industrialised countries in East Asia and elsewhere suggests that the daunting employment challenges that are facing Ethiopia are not unsolvable. They only need a persistent and clear-eyed strategy to pursue a policy of economic growth that delivers employment opportunities at the required volume and pace.

Point in the Middle

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According to my Facebook, we are all feminists who are keen to see equality while spreading love or sarcastic memes at one another. Facebook and Instagram, along with most other social media platforms, filter out what we see through algorithms, making the world feel smaller. Social media affirms and reaffirms what we feel, cementing our thoughts into immovable walls: walls we are now building, instead of the bridges we should be extending to meet one another.

The middle ground is nowadays the least appreciated space. In-between every encounter that we have, there is a gap in where we meet. Most lessons have been taught in the idea that if we can convince someone to come over to our side of the gap, we have somehow won. If someone is wondering, “Winning at what?” then we are on the same page. As we formulate how one really wins at life when life is not a competition, the journey of finding that middle ground continues.

I had a conversation recently with someone who in many ways would not have crossed my path. We sat and discussed what we hoped our nation could look like, and the opposite poles we had found ourselves on the spectrum of what we both envisioned as right. We both shed tears for what has been lost. The fundamentals of what we wanted were to build on love, for everyone to feel heard, and somewhere in between we began to understand one another.

This encounter with a stranger made me realise how much we had both missed when giving power to those who were not willing to understand one another. We were being taught that we were enemies when the truth was far from it. We are united in our thirst for a better Ethiopia. At the forefront of that better Ethiopia are our public servants.

Public servants wake up starting off the day better than how they end it. Mornings in most offices run better than the afternoons. Even though there might be various reasons, I make the assumption that the hours spent with hundreds of customers could not have been easy.

As the Ministry of Trade & Industry has recently announced, they will be unveiling an Online Trade Registration & Licensing Service that will be assisting citizens who are interested in the creation of a business. Anyone who has walked into the business registration offices would know it is hard to do so for lack of the information available.

There is a frustration everyone who walks into these types of institutions faces. The places are often disorganised, with masses of people, papers plastered everywhere with non-useful information on them and somewhere an annoying welcome sign blinks. It is like a twilight zone of bureaucracy, yet this is the reality. But even this is also half of the reality. We blame and point fingers standing at the other side of the window. And while all this can be frustrating, the people providing the service are also just that, people. They serve thousands of people who are not always nice, providing the information they are not well-trained on.

While those running the desks are often the faces that take on the wrath of public frustration, they also do not always deserve it. While many of us end up in these institutions with dreams that we are trying to make into realities, for many of them behind the desk, it has been a long journey of watching people come and go, always unloading anger on them. I wonder while we have it in us to complain of everything that goes wrong, do we take the time to thank those that go out of their way to make sure our files are done well and give us reliable advice?

The road to development is tedious, and it is rewarding. That being mentioned, skipping from one method of work to another without fully utilizing one, does not guarantee confidence.

While some jobs are becoming obsolete, humans’ adaptability should also follow. We should all be learning the logic of the practical consequences of work and bureaucracy. I fathom the uselessness of our schooling that apparently did not prepare any of us to do our taxes, open a business or learn which public office is responsible for what.

For all of us, understanding the logic at which our country functions is the simple and most important part of building forward. Today, to do so we would have to dismantle all that we have learned to expect and begin with a new coat of understanding. In recognition of all we have contributed to the decaying of our community, we can continue to ask ourselves what our individual actions are contributing to the positive journey ahead. Each of our actions will matter.

The Common Good

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Alexandria, Bangkok, Basra, Mumbai, Shanghai and Ho Chi Minh City are some of the well-known cities in the world that could be submerged under rising tides by 2050, according to one recent study. Around 150 million people will be affected by this.

As the year comes to a close 2019 is slotted to be the second or third warmest year in recorded history. There has been exceptional global heat, retreating ice and record sea levels driven by greenhouse gases from human activities according to the World Meteorological Organisation.

Average temperatures for the five-year (2015-2019) and ten-year (2010-2019) periods are almost certain to be the highest on record.

It was with these loud alarm bells ringing from such statistics that the UN Climate Change Conference – COP25 – took place from December 2-16 in Madrid. It brought the world together to consider ways to strengthen the implementation of the Paris Agreement. Coming as it did at a time when new data shows the climate emergency debate is getting out of the abstract into the practical impacts affecting people’s daily lives, there were great expectations attached to it.

However, despite evidence that is hard to ignore clearly showing that worsening climate change is impacting people’s lives everywhere, whether from extreme heat, air pollution, wildfires, intensified flooding or droughts, the outcome of the summit was very disappointing.

There was a striking contrast to the optimism and determined energy of the Paris Climate Summit – COP21 – which resulted in an unprecedented agreement signed by 196 countries. What a difference four years can make. And what a difference leadership makes.

The leaders of the big and influential countries at the time were at the forefront of the summit and were really engaged with the proceedings and building consensus for the common good of humanity.

This time around there was a demonstrated lack of leadership from the big countries, who have abdicated their duty and responsibility to tackle the issue head-on. They seem to prefer to bury their heads in the sand.

More importantly, this may be yet another indication that this has become a post-dialogue world. Many times in history before, in the face of overwhelming challenges that were confronting the destiny of man, world leaders have been able to come together and come up with a solution to pull the world back from the precipice, be it after the world wars, the Cuban Missile Crisis or indeed for almost a century now since man has acquired the technology to wipe out its own species.

Unfortunately, there seems to be a lack of strong leaders who can step in to do that these days. Not only that, but a culture of mutual understanding and respectful dialogue to reach creative solutions that are a win-win for everyone has been replaced by a winner-take-all mentality. The rich and the powerful now seem to feel immune to the suffering of the less fortunate.

But that is only an illusion. If one was sailing on the Titanic, it would not much matter whether one is dining at the captain’s table or sweating down in the engine room. One could have the band play in ever louder tones in an effort to shout down the screams of the panicked. But at the end of the day, everyone on the ship sinks together. That is why it is important to work for the common good. It is better to sail together than to sink together.

By the way, the Ethiopian political situation is no different. It is wise to face the reality that having a common destiny, even not necessarily of one’s choosing, but imposed by geography and history, means having the obligation to work for the common good. Failure to do that will result in a common demise, not with winners and losers.

Nine Billion: Generous but Woefully Inadequate

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Africa’s economic reform track record is replete with high expectations and shattered dreams running in alternate cycles. After nearly 50 years of revolving reforms of all sorts and hundreds of billions in development aid, Africa has failed to dislodge itself from what the economist Richard Nelson called the low-level equilibrium trap. Africa’s reality remains the same, but the narrative alternates between boom and bust, depending on who tells it.

In 2000, the front page of The Economistmagazine painted Africa as “The Hopeless Continent.” A decade later, the esteemed editors of the magazine went gung-ho happy hunting and declared “Africa Rising.” Eighteen months later, came another front-page hoopla, heralding and splashing “Aspiring Africa” in technicolor.

In 2016, McKinsey & Company released a glowing report titled “Lions on the Move” narrating Africa’s economic performance as a metaphorical prelude to an era that will rival Asia’s growth path that was trailed by Asian “dragons and tigers” and Latin American “jaguars.” Alas, Africa, we were told, was “emerging” as in emerging nations.

Africa’s story depends on who is telling it and why rather than what needs to be told. In 2000, the year The Economistbranded Africa “hopeless” and condemned it with a dismissive line “the world might just give up on the entire continent,” the World Bank painted a hopeful and capable continent that can claim the 21st century. This was in a report titled “Can Africa Claim the 21st Century?” The question was affirmatively asserted with an assortment of caveats.

Each depiction has a grain of the proverbial truth. For The Economist, the grain was Sierra Leone. Since the difficulties facing Sierra Leone “seemed so intractable, and since Sierra Leone seemed to epitomise so much of the rest of Africa,” the entire continent was reduced to a state of hopelessness.

The grain in the World Bank’s report that was twisted and hammered until it confessed the proverbial truth was the art of generalisation fortified with an overdose of “must do” and “should do” prescriptions of an impossible reform agenda to justify the wishful prospectus. For example, “to succeed in the 21st century”, the report stated, “Africa has to become a full partner in the global economy.”

The fact is Africa – bar South Africa – has little say in becoming a “full partner in the global economy.” Its virtual absence in the G-20 is a case in point. The G-20 is a fraternal society for the affluent and affluent-to-be that “promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability.”

Poor African countries are invited as observers to hear others discuss the global economy, as if they are visitors from Mars. Yet the World Bank expected them to claim the 21st Century.

If one dares to peel off the surfaces of The Economist’sand the World Bank’s reports and dares to peek into the story behind the story, one would find the same proverbial grain sprouting into two contradictory narratives. To do that one needs to look into what happened in 1994.

The year 1994 was the 50th anniversary of the World Bank and the IMF. It was also the year the “50-Years is Enough” global campaign was birthed. The campaign set off an avalanche of research that led to a growing body of consensus on the chronic failure of Africa to shake off its poverty-stricken image, despite hundreds of billions in development aid.

The Economist’spessimism was a reflection of the manifested frustration of donor nations who saw no reason to continue funding the development efforts of a continent that was showing no sign of development. Between 1990 and 2000, the GDP growth for Sierra Leone was negative 2.2pc. The average for Sub-Saharan Africa was a meagre 2.2pc on the positive side of the ledger. The continent’s population growth was 2.7pc during the same period.

Not surprisingly, the World Bank’s report came at a time the institution’s track record was under relentless attack, not only from the right but also from the left. Its flagship report was a rallying cry for continued support, understandably with a glaring prospect of Africa claiming the century. It was sprinkled with high hopes and grounded in unattainable dreams. It was part shazamand part abracadabra.

Fast-forward to 2011, 2013 and 2015 and take a closer look at the narratives painting Africa as “Rising”, “Aspiring” and, above all, as roaring “lions on the move.” This time around, the trick was picking a few countries that were performing reasonably well, such as Ethiopia and Rwanda, and extrapolating their realities into a trend for continental Africa.

The average GDP growth for Sub-Saharan Africa between 2001 and 2011 was 5.3pc. The growth for the period between 2001 and 2015 was slightly lower at five percent. Though reasonably good, it was nothing to write home about, considering poor countries are expected to grow much faster than rich ones, because they are starting from a lower baseline.

Add to this the seemingly constant 2.7pc population growth and you will see how fast the positive narrative starts to blink. This did not stop McKinsey & Company from extracting the “lions on the move” storyline out of it.

By comparison, the average GDP growth rates for East Asia (excluding high income countries) between 2001 and 2011 and 2001 and 2015, respectively, were, 9pc and 8.5pc. Bring the 0.8pc population growth into the development calculus and it is easy to see the Asian “dragons and tigers” metaphor as a deserved depiction of the continent’s development. The corresponding GDP growth rates for South Asia was 6.3pc in both periods coupled with a 1.6pc population growth. This may not qualify the sub-continent as a fire-spitting dragon. But it sure portrays it as a limping tiger, considering the consistency in its performance.

I have provided an explanation for the observed difference between Asia and Africa in an article headlined “PM’s Vision Is Like a Ferrari With Borrowed Engine” in the October 5, 2019 issue of this newspaper.

Let us zoom in on Ethiopia, arguably the top performer in Africa, registering strong recovery and dramatic growth rates between 2001 and 2015. But beneath the lustre of encouraging performance lie a host of challenges. To speak of the economic challenges only, the country’s growing income inequality, exacerbated by unsustainable and increasingly bulging youth unemployment, tops the “God forbid” category of lurking problems.

To top it off, Ethiopia has underdeveloped financial institutions and markets, including banking and capital markets, starving the entrepreneurial class of access to credit and stifling the private sector from becoming the engine of growth and employment. Add to these low productivity sectors, including agriculture and industry and the chronic shortage in foreign exchange to import capital goods (machine tools) and technology. That explains the proverbial unbudging stonewall Ethiopia must break through before the “lion on the move” can advance forward.

Consider, too, the 2.8pc population growth and there emerges a country with an impressive average economic growth of 9.2pc between 2001 and 2015 inextricably entangled with under development, if not chronic poverty. If this is the case with the continent’s best performer, it behooves us to ask the question: “Is there any hope for the continent to break out of Nelson’s low-level equilibrium trap?”

Africa’s track record of the last 50 years fails to inspire confidence unless there is a paradigm change in its reform regime. Ethiopia is best positioned to introduce a bold paradigm shift in its reform regime and manage to rally the donor community to help fund it.

The country is at a watershed moment. National and international factors are aligned in its favor. Nationally, the ongoing reform, though limited in breadth and depth, enjoys broad political support. Internationally, multilateral and bilateral funding agencies not only support the reform agenda but are also generously footing the bill.

The nine billion dollars in development aid Ethiopia is expected to receive, including in concessional loans from the World Bank and IMF, is generous by historical standards and unprecedented for the country. Ethiopia should be grateful. But the package is woefully inadequate to tackle the country’s economic woes in all its dimensions and dislodge it from the low-level equilibrium trap.

Ethiopia needs to avoid the all too familiar revolving reforms and develop a new strategic and bold reform paradigm to build a critical mass of complementary reforms. Its international partners are likely to support it with preferential interest, provided it is shown to create a robust and transformational development and arouse confidence and trust to make Ethiopia an anchor for regional security and stability. For the policy wonks among us, the case for a preferential development assistance to Ethiopia has been made before in these pages [ VOL 19 , NO 974].

Abiding by Rule of Law to Save Lives

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Going out for evening walks almost daily is our family’s exercise routine. It is not uncommon for us to witness horrific and fatal car accidents on the highway around the Bole area where we walk.

It is heartbreaking and painful to witness accidents that are taking the lives of individuals who were alive and well a minute ago. It is even sadder that most such incidents occur as a result of lawlessness, both by pedestrians and drivers.

There are insufficient safeguards to protect pedestrians and poor enforcement by authorities. Public transport providers such as minibus taxis and Higer buses take the middle lane of the highway, because it allows them to drive at a much higher speed and saves time.

The problem is when passengers reach their destination and get off in the middle of the highway, they are forced to climb highway fences, which leaves them highly vulnerable to  accidents. In so many of our walks, we find senior citizens and women with children calling us for support to help them jump from the middle lane of the highway to the sidewalk lane.

Most of these pedestrians tell us the public transport assistants and drivers told them they are taking the middle lane of the highway, despite the passengers pleading with them to take the outside lane which will allow them to get off on the sidewalk.

Private-public transport service providers admit to being insistent on taking the middle lane, despite passengers wishes. The minibus taxis and Higer buses call out to passengers, shouting “bemeahle,” which translates to “through the middle highway lane” in front of the Ministry of Transport route control staff.

Drivers claim that the middle lane allows them to increase the frequency of transporting people in a short time by avoiding traffic jams. Drivers and their assistants from Bole to Megenagna admit to destroying the highway fences at night to create an opening for passengers to pass through between the fences. Anyone passing on this road can witness such openings that allow people to pass through. Damaging public property by irresponsible citizens should not be ignored.

My family and I have witnessed horrific accidents that happened to individuals who prefer to jump over highway fences instead of safely crossing bridges. It is sad to see some senior citizens fall for this unlawful and dangerous trend that is costing lives. I have spoken to people who would rather risk their lives and jump on highway fences instead of crossing bridges that are built to keep passengers safe from car accidents. This wrongful mentality is putting so much pressure on drivers who are forced to keep an eye on highway fences to make sure no one is jumping out. On countless occasions, I was inside vehicles who come close to hitting these highway fence jumpers who suddenly disrupt the flow of traffic.

The number of fatalities should alarm us all. This week, in four public hospital emergency rooms I attended for observation, more than 90pc of patients came in relation to car accidents. In Ethiopia where only a little over a million vehicles operate, 4,597 people have lost their lives just last year, while 7,400 people were severely injured. These accidents caused over 800 million Birr worth of property damage.

Even in the midst of these disasters, drivers take pride in driving intoxicated and violating traffic rules in the absence of traffic police. Public transport drivers publicly chew chat hampering their rational judgment on duty. Lives were lost and properties damaged because of this. Sadly, irresponsibility comes from all angles.

One late evening this week a military patrol vehicle passed a red light at Meskel Square almost smashing a vehicle coming from the other side. Ethiopia is a country where even the authorities themselves are not ashamed to break the law.

The rules and regulations put in plays to address traffic accidents should be implemented by all. Action-focused awareness creation, responsibility-taking, strict implementation of traffic rules and bringing behavioural change to drivers should come from everyone.

Successfully implementing road safety that everyone respects should be given attention by policymakers, traffic police, drivers and the public.

A curious takeaway should be that these accidents are caused mostly by human error. Fortunately, most road accidents are preventable. Effective road safety implementation is essential to tackle the extensive problem. This approach should work toward mindset change by improving the traffic system to create safety awareness among drivers and pedestrians as well as making the road infrastructure safer.

While having laws is undoubtedly vital, the focus should be to encourage people to make the right decisions that can help them and others. Self-control by the very same people that make use of the vehicles and streets could better prevent traffic accidents.