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Month: January 2023

Teamwork Makes the Dreamwork

Posted on by Tizita S.

The victory of the Ethiopian national football team against Libya in a qualifier game for the 1969 world cup had stirred pitches from fans that veterans from the former should not be fielded anymore. Almost sixty years later, Ethiopia lost in the African nation’s championship while fielding a mix of stars from seniors and youngsters.

Indignantly, after the intense match between the two countries in the cold days of Addis, I cogitated on how neglected local football has become. Foreign football grips the nation’s attention, especially the unending barrage of informed analysis from the media that could have been a manifestation of the country’s appreciation of domestic football.

What went wrong in last week’s game was the absence of effort by forwards, where the game matters most. The frustration led to the team collapse of the defenders and midfielders, resulting from the previous two games. It visibly sapped the players’ physicality at the end of what is presumed an easy game turned into hopelessness of advancing to the next round.

There was a checkered reaction from members of a social media page, “Ethiopian Footballers,” of which I am a member. It is common for almost all football fans to have fuming reactions, as the absence of comments is an utter portrayal of dismay from group members. As I was looking for venting ways to ease my anger, my mind travelled five decades back.

Thanks to having Addis Abeba Stadium close to my childhood neighbourhood, I have always been close to football.

Though games were few, they were typical for goal feasts and the national football icons of the time were famous for the goals they used to score with the national shirt. Also for playing possession-based football with a stint of highly individualistic showboating that haunts the team today. However, their records are nowhere near the all-time great scorer Getaneh Kebede, who is left at the eleventh hour of the current competition.

There is nothing random in the world of football. I enquired whether the team was prepped, explained to and heeded by the head coach, the ultimate organiser of victory. Readying the team required to focus on the importance of nutritional practices in optimizing his players’ physical well-being and performance over and above the meteorological conditions of Algeria, and thus the economy of energy from his players.

The aftermath was undoubtedly far from only the score line, yet a game analysis of our tournament balance sheet was due. The fans need to assess the level of passion, and physical literacy, as it competes with others. We throw the blame for what we presented to the competition on the twenty-eight youngsters, the head coach, or his team.

It was then I started pipe-dreaming with ideas that made us more competitive and help our attachment to football grow. Football is an open book to learn from and share what is best in life. Germany’s national team’s triumph at the 2014 World Cup is attributed to Ralf Rangnick, a 1998 coach of a second-tier team. Instead of German football’s three-man defences and man marking, he brought forward zonal marking, pressing and flat-back fours.

He was ridiculed at the time, yet Germany’s group-stage exit at Euro 2000, proved him right and freed the game not only from tactical stagnation, yet set the stage for a new generation of more tactically enlightened coaches like Klopp, with his trademark Gegenpressing team that reacts to a loss of possession by aggressively pressing their opponents to disorientate them and prevent them mounting a counter-attack. What looks awkward is the tactic involves deliberately conceding possession to be able to press an opponent in a particular area of the pitch.

Football can be linked to business as an avenue for ideas. Choosing the right people or ideas, developing and holding – a hallmark of competitive business, unleashing potential traits and weeding out the negative ones. Leaders can not make it independently, while employees must embrace teamwork. Just as in a match, a player may not pass the ball to a hogger lest they risk failure. Instead, the one who works cooperatively to help reach the win will most definitely get the pass.

I hope our National team will show us its bouncebackability with its following challenges by fielding players who read the game well and move with pressing logical patterns. I believe the goal thirst from our players is more the absence of psychological muscle than the physical.

Why Industrial Policy Back?

Posted on by Tizita S.

After decades of relegation to the fringes of economic thinking, industrial policy is coming back. With more countries enacting measures to support certain industries and establish new ones, the revival of industrial policy was a major topic at this year’s meeting of the World Economic Forum in Davos.

The United States’ 280 billion dollars CHIPS and Science Act is a new legislation that aims to expand the semiconductor industry to reduce America’s dependence on China and ensure its technological supremacy. Similarly, the Biden Administration’s misnamed Inflation Reduction Act (IRA) includes 370 billion dollars in energy-transition subsidies.

European Union countries, up in arms about the US programs’ discrimination against foreign suppliers and violation of international and EU rules prohibiting industry-specific state subsidies, plan to respond by relaxing their own subsidy rules. Meanwhile, one-third of the two trillion dollars in investment funding in the NextGenerationEU Recovery Plan will finance the European Green Deal, introduced in 2019, which will help member states invest in clean-energy projects.

And the trend is not confined to Western countries: Indonesia imposed a ban on nickel-ore exports to promote its electric-vehicle battery industry.

Such policies have existed since the dawn of the Industrial Revolution. In recent decades, however, economists have questioned their usefulness. The argument goes that governments should not be picking winners but rather let the market allocate resources across industries to reflect consumer preferences and technological possibilities. By the same logic, policymakers should intervene in the market only when they have sufficient information that some externality is causing the market to malfunction.

Even then, the detractors would say, governments might make matters worse by adding their own failures – for example, policy capture by rent-seeking players – to those of the market. With the Reagan-Thatcher revolution and the emergence of the Washington Consensus in the 1980s, these arguments became enshrined in a new orthodoxy.

But economic theorists have since come around to recognise the value of industrial policies. We now know that there are many cases where government intervention is justified. The question, then, is not whether industrial policies should exist but how they should be managed.

For example, learning by doing was seen as a large and important phenomenon that required policy interventions long before economists caught on. There is ample evidence that many firms and industries improve over time as they accumulate production experience. In 1936, the aeronautical engineer Theodore Wright formulated what is now known as Wright’s Law, which states that costs decline exponentially with accumulated production.

During World War II, the US Army used this law in its procurement contracts to reap cost savings. But the idea entered economics only with a paper by Keneth Arrow published in 1962. It has since been used to justify infant-industry protection, advanced market commitments, and subsidies like those included in the Inflation Reduction Act.

Market power is another imperfection that requires government intervention. To that end, the CHIPS Act enables the US to counter China’s dominance. The fear is that China can use this dominance as an economic weapon, in the same way that the US uses its dominance of the financial system and certain technologies to sanction other countries. The CHIPS Act seeks to reduce the American economy’s vulnerability to Chinese pressure.

These interventions are about tilting market prices to make certain industries, such as semiconductors or renewable energy, more profitable and hence larger than they otherwise would be. But another form of government intervention concerns the complementarity between public and private goods. For example, cars require roads, traffic lights, driving rules, and cops. Trains need tracks and stations. Electric vehicles require widely available charging stations. And all industries rely on workers with specific skill sets.

These inputs are affected explicitly and implicitly by government policies, which are essential to creating the right conditions for growth and widely shared prosperity.

The only way governments can supply the right mix of public goods is to engage with as many industries as possible. Industrial policies are not about picking winners but about ensuring that the supply of public goods enhances productivity as much as possible.

Because they cannot rely on the invisible hand of the market to coordinate the actions of thousands of public agencies and the effects of millions of pages of legislation, governments must be embedded and engaged. That is why in democratic countries, there are so many business chambers and lobby groups trying to influence the provision of public goods in ways that enhance their industries’ value-creating opportunities. These groups may also engage in rent-seeking, but democratic competition can keep such behaviour at bay.

None of this is to say that every government should imitate the expensive policies that seem to be in vogue these days. Policymakers should focus on their countries’ current problems and choose the most appropriate solutions. Copying other countries’ solutions to problems you do not have, or focusing on trendy issues that are not important, is a recipe for inefficiency, if not disaster.

For example, diversifying into new industries – a key goal in many countries – requires identifying the public goods that these industries require and helping them through the learning process. As decarbonization leads to the emergence of new markets and industries, governments are trying to figure out how to be part of the green transition. Other countries may want to reduce regional inequalities, integrate their universities into a vibrant innovation ecosystem, or accelerate development by addressing long-standing failures in providing key inputs such as electricity, water, mobility, training, and digital services.

To address these challenges, governments must have access to all the policy tools that could help them find solutions. Dismissing these tools as “industrial policy,” as some want to do, does not make them any less necessary.

The Multilateral Financing Paradox

Posted on by Tizita S.

Multilateral development banks (MDBs) have become the darling of policymakers nowadays. In a recent speech, US Treasury Secretary Janet Yellen called on the World Bank and other international lenders to support developing countries struggling with the effects of rising inflation and aggressive interest-rate hikes. And a recent independent report commissioned by the G20 concludes that these institutions are uniquely positioned to help governments achieve the United Nations’ Sustainable Development Goals.

The G20 report argues that these banks could expand their lending without hurting their AAA credit ratings were it not for excessive capital-adequacy requirements that limit lenders’ ability to take risks.

But which countries would benefit the most from an increase in multilateral financing?

While multilateral development banks play a critical role by providing long-term loans at concessional interest rates to low-income countries (LICs), the overwhelming majority of their financing goes to middle-income countries (MICs). A recent OECD report finds that 70pc of the loans went to MICs in 2020, following a large increase in lending to lower-middle-income countries (LMICs).

The problem is one of allocation, not volume. Clearly, MDBs must significantly increase their lending to developing countries struggling with extreme poverty and limited institutional capacity. Unlike middle-income countries, most developing countries have little to no access to capital markets. They are in dire need of financing, owing to the disproportionate effects on their economies of the COVID-19 pandemic, the war in Ukraine, and climate change.

Why, then, is multilateral lending so skewed toward middle-income countries?

The reason is rooted in the banks’ financing model. International lenders like the World Bank, the African Development Bank, and the Inter-American Development Bank rely on their perfect credit ratings to borrow cheaply and lend at higher rates to middle-income countries that have not yet reached investment-grade status or lost it. At the same time, lending to developing countries is somewhat separate and financed mainly through direct contributions from shareholding governments to LIC-focused bodies like the World Bank’s International Development Association (IDA). Without lending to MICs, the argument goes, the MDB model will not be viable. But with more MICs graduating to investment-grade ratings, multilateral lending could eventually dwindle.

Many low-income countries have been trying to reduce their dependence on MDBs; several have even borrowed in international financial markets for the first time in decades. But the current confluence of economic and geopolitical crises has stalled these plans. In the face of aggressive monetary tightening, most LICs have effectively lost access to capital markets, leading to painful negotiations with creditors and a looming debt crisis.

Ghana’s recent default could be a harbinger of future financial calamities. In recent years, the emergence of non-traditional creditors like China has allowed LICs to diversify their borrowing. But the opaque nature of resources-backed loans has raised doubts about the sustainability of such financing, which seems to have dried up. There are, however, some encouraging signs that China might join the Bretton Woods institutions in allowing low-income countries to restructure their debts.

While multilateral development banks should increase their lending to LICs, doing so is more complicated than many seem to realize. A major obstacle is these countries’ limited absorptive capacity, which leads to a scarcity of bankable projects. Likewise, the fact that most LICs have underdeveloped private sectors makes it difficult to scale up investments, particularly for lenders like the World Bank’s International Finance Corporation (IFC), which focuses on support for private firms. Moreover, the International Monetary Fund’s strict debt-limit policies can impede developing countries’ ability to borrow from MDBs – preventing LICs from accessing dozens of billions of dollars when they need it most.

There is no easy solution to this conundrum. Sending MDB staff to LICs could help to build these countries’ institutional capacities and implement projects. And increased coordination between multilateral lenders and the IMF could help to prevent future bottlenecks. But merely pressuring MDBs to lend more could be ineffective and even counterproductive. For example, lenders could be tempted to prioritize budget support – designed to encourage developing countries to undertake structural reforms they might have pursued anyway – over longer-term investment projects.

Simply put, lending more is not enough. To benefit LICs and their populations, international lenders must also focus on scaling up meaningful, transformative investments. Then, and only then, will the multilateral development institutions model finally reach its full potential.Rabah Arezki, a senior fellow at Harvard Kennedy School, is a former chief economist and vice president at the African Development Bank, a former chief economist of the World Bank’s Middle East and North Africa Region, and a former chief of the commodities unit at the International Monetary Fund.

When Life Gives Lemons, Make Lemonade

Posted on by Tizita S.

I spotted this woman who was standing by herself at a”small” wedding ceremony I had a chance to attend, exclusive to close family and friends. She did not precisely seem into the whole shenanigan. The bride’s relatives kept nudging her to join them, but she refused and lurked at the back. I kept watching her from across the hall, wondering why she looked unhappy. Then a few minutes later, I saw someone in my family talking to her, so I walked to them out of curiosity and said hello.

My relative introduced me to the lady as the bride’s aunt. We started talking about the bride and groom and how they had known each other since they were kids. On the spur of the moment, the lady burst into tears. I did not comprehend what was wrong with her, and I was afraid to ask lest I seem nosey, so I said, “Ayzosh”, an Amharic word roughly translates to mean, “it’s okay”.

She sobbed and said she was not fond of weddings because they reminded her of her failed marriage. The only reason why she came to the wedding was to support her niece. That explained why her relatives constantly tried to make her join the crowd. She went mute for a few minutes but started pouring her heart out once it was just the two of us. I was dumbfounded by what she said. It caused me to ruminate for days and I hope her story will inspire others in a similar situation.

Her 10-year marriage had conceived four children before it blew like dust in the wind. One day her husband resolved he had fallen out of love and left her for a younger woman. She did not go to work for almost a month, sending her children to her sister’s and locking herself at home, crying and drinking to numb the pain until she passed out. As she mindlessly scrolled through her social media, she came across a post that changed her life.

The person who posted the story was an old friend and a classmate talking about the heartbreak she experienced after her husband left her. She had an epiphany, her husband leaving her did not make her less valuable or less of a woman. Her worth was not determined by anybody but herself.

The post-divorce era is not as easy for women as they may believe they no longer have value in the world of dating. The body alterations after giving birth take a toll and a while to adapt.  Getting discouraged by the perception of the current beauty standards, some associate their worth with having an hourglass figure. When the marriage fails, women left with kids, bills, and stretch marks believe they are no longer desired.

They tend to regret their decision while picking their partners and blame themselves. But with a woman’s strength, anything is possible. A little self-care goes a long way to reaching the desired goal by making dietary changes, exercising and some skincare routines. Starting a relationship with kids will be challenging, but it is not impossible with the right person.

The social media post about how the old friend stopped feeling like a victim and regained control of her life, made the woman hanker for similar changes.

It was not easy, but she onset the road to healing. She started off by cutting alcohol from her life, complementing it with yoga and cooking classes. She confessed she still thinks about her husband and wonders what she could have done differently to save the marriage. She also occasionally cries, looking at her son, the younger version of his father. Although she still avoids weddings and many social gatherings, she admitted to slowly finding peace within herself and the journey to self-healing.

She mentioned not having regrets about marrying because, with the feeling, information and knowledge at the time, it was the right thing to do. She no longer feels like she has wasted her time seeing the decade bestowed on her four beautiful children that she adores. She continues to work on herself, hoping to find the right life partner.

Sometimes, bad things happen to prepare us for something good. The periods we refer to as mistakes in life are just lessons learned the hard way contributing to making us the better version of ourselves.

Rooted Problems Require Modern Solution

Posted on by Tizita S.

A young graduate I met,  asked me to find him a job so that he could make a living. I was shocked to see his academic transcripts corroborate that he was a medical doctor. He has exhausted all options for finding a job in his profession. The excuse given to him by the medical directors was the insufficient budget for salaries. Although hospitals are in desperate need of medical doctors like this young man, they are directed to reject employment as the Ministry of Health cannot hire all graduates irrespective of the high need.

The lack of job opportunities for medical doctors may not come as a surprise when glucometer strips, disposable gloves, masks, and alcohol are luxuries. It makes one question the foundation and the progress that is taking place in a country with a leader who pledged to make it a place of medical tourism. It breaks the hearts of those who take time to witness patients’ and attendants’ awful experiences with the incapacity to care for locals, let alone offer a healing hand to the world.

It is shocking how Ethiopia lagged far behind. Many financially well-off residents go on a medical pilgrimage to other African countries, the US and Asia to get the treatment their country cannot provide them.

The relatively better treatment of private hospitals comes with a high cost, while public hospitals shoulder the burden for most. Many can not afford to get treatments, beg for support from the public on the streets and on social media, or wait to die despite having a treatable illness.

People have lost faith in the diagnosis of a single doctor and eventually seek second and third opinions. They often end up more confused and puzzled than before. Many practitioners argue that Ethiopian physicians are capable in their clinical skills and diagnostic abilities. However, compared to the advanced technology the world has made acquaintance with, it is not satisfactory.

Last month, I witnessed my friend’s father receive news that his cardiac infarction was not treatable here. The doctor informed them their father’s days were numbered and could pass on at any moment due to his heart failure.

His family was exploring means to quickly raise funds for his treatment abroad. Luckily, to spare the man’s life and that of many other patients in the same situation, a group of volunteer medical doctors from Australia offered timely treatment to patients for free. They saved his life in a surgery that took less than an hour at the same public hospital he had received the unfortunate news.

With a handful of surgeons, radiologists, oncologists and cardiologists available for millions of people, many die awaiting their turn. Cancer patients wait years to get treatment. Those who travel from the regional states are advised to return to their town because of the long waitlist. And this is if they are lucky to see a doctor in the first place.

Visiting healthcare institutions is one of the most traumatizing experiences patients and attendants have to endure. The cancer patients I met at Tikur Anbessa Specialized Hospital have waited a year to get surgery. They say many of those they met at the hospital in their everyday waiting ordeal have passed away. These surviving patients have given up hope wishing to die as their fellow patients put an end to the languishing pain.

Professionals do not focus on patients with advanced illnesses. They do not think there is a point in wasting time on a ‘dying’ person. It is traumatizing to listen to medical professionals openly say, “the patient is almost expiring”. Medical practitioners admit to doing this and equate it to being understaffed and overworked. It is a vicious cycle as many also serve in other sectors because they cannot get employment in their profession.

Unfortunately, the medical sector is expected to evolve without introducing modern health solutions, medical equipment and human power. It is expected to advance without the vital investment cost. It is anticipated to improve without fixing the most persistent problems. Wallowing in hope without practically contributing to the progress will not bring change.

Openly accepting the problems is the beginning of the solution. Things can progressively improve by hearkening to the outcry of patients and medical practitioners. The terrible experiences and pain could ease if hospitals were better equipped.

Persistent problems lead to a more fractured medical sector that lacks public trust. It is difficult to fix the malfunction and lack of budget, but losing lives that can be saved is not easy either.

The solution involves the progression of medical practitioners by consistently upgrading their skills and the imperative financial contribution by the state to enable hospitals to treat all patients ending millions of people’s afflictions.

CLEAN SWEEP

Posted on by Tizita S.

A young shoe shiner goes door to door, offering his services around the Stadium area. It is common in the capital to see young rural migrants engaged in physical labour, scraping change to send home. CHR Michelsen Institute (CMI) estimates that one out of three rural households has at least one family member migrating to cities. Extreme poverty and lack of access to farmland force many to look for better prospects in the city. Upward income mobility has remained stagnant over the last five years, with ‘rags to riches’ stories becoming more infrequent.

 

WET CARRIAGE

Posted on by Tizita S.

A carriage around the Ayat area delivers water, as homes rarely access tap water in the area. Ethiopia has nine major rivers, and twelve big lakes, often called the water tower of Africa. However, UNICEF estimates that up to 80pc of communicable diseases in Ethiopia are due to a lack of access to safe water and sanitation. The second most populous country in Sub-Saharan Africa has the highest percentage of the population without access to potable water at 60pc, while the average daily consumption is less than 20 litres a day.

FRIENDLY SHOOT OUTS

Posted on by Tizita S.

Holiday activities at Jan Meda included penalty shoot outs for cash pay alongside other carnival games. The World Cup final in Qatar ended in penalty shoot outs this year, a global audience of 1.5 billion watched the spectacle. While the tournament’s ending had stirred planetary awe, the death of 37 workers during the construction of the stadiums had given the games a sour taste early on. The tournament broke records of the biggest budget of more than 200 billion dollars and the most spectators of 2.5 million people.

Investment Holdings Appoints Abdurahman Eid Tahir

Posted on by Tizita S.

Abdurahman Eid Tahir has been appointed as the Chief Executive Officer of Ethiopian Investment Holdings (EIH), a state-owned investment company, effective on January 25, 2023. The appointment comes days after Prime Minister Abiy Ahmed assigned the former CEO Mamo Mihretu as governor of the National Bank of Ethiopia (NBE).

Abdurahman served as deputy before his appointment, in which Mamo described him as a “passionate reformer”. He also served as head of Irrigation & Basin Development of the Somali Regional State.

EIH was established last year by a decree of the Council of Ministers with 100 billion Br capital, encompassing nearly thirty state-owned enterprises such as Ethiopian Airlines and Ethiotelecom under its fleet. Its subsidiaries are found in multiple sectors with more than 250,000 employees.

The holding has attracted sizable investment by establishing a co-investment platform in partnership with global investors. In addition, EIH has been mandated with seeing through the formation and establishment of the capital market, a responsibility regulators had previously shouldered at the central bank.

The investment holding, under Abdurahman, is now tasked to improve the portfolios of state-owned enterprises whose assets are worth two trillion Birr and annual revenues of 6.2 billion dollars.

EIH is mandated to take on international investment ventures in which dividends from enterprises under it are exempt from taxes and duties, excluding sub-funds and companies invested by the company.

ECX Introduces Digital Trade System

Posted on by Tizita S.

Exporters are to trade digitally with overseas buyers through an online Integrated Commodity Exchange Trading System.

The electronics exchange centre is currently found in the capital, Sidama, Amhara, Oromia and Southern Nations regional states. According to Netsanet Tesfaye, corporate communications manager at ECX, exporters have thus far been trading by coming to the Ethiopian Commodity Exchange office or logging into regional electronics trading sites. They can now trade online from their digital accessories from anywhere. The new system will have access to membership, warehouse operation and payment.

Ethiopian Commodity Exchange began operation 15 years ago with an Open Outcry Trading forum, but through the years has cooperated with software companies to upgrade itself and has been making way through online trading since 2015.

For the past five months, 1.5 billion dollars in revenue had been generated from the export sector. Oil seeds account for 72 million dollars, while crops and khat earned 74.6 million dollars and 116.5 million dollars, respectively.

Last week, the CEO of Ethiopian Commodity Exchange (ECX), Wendmagegnehu Negerana, and Ethiopian Artificial Intelligence Insitute director, Worku Gachena, signed a project charter to build the online trading system to be completed in the next six months.