Procured with Pride, Delivered with Peril

With the impending Meher season, lawmakers’ focus shifts to the distribution of fertilisers. The conversation during the Ministry of Agriculture’s nine-month performance report has shifted from purchasing to distribution this year. While officials were content with the historic success of importing more than double the amount of fertiliser compared to last year, members of the Standing Committee for Agricultural Affairs chaired by Solomon Lale had concerns about the delivery.

“All the hard work will be rendered futile,” said Solomon.

Solomon believes the Ministry’s control of improved seeds and fertiliser distribution mechanisms should reach down to the kebele and wereda levels to ease farmers’ frustration, which he felt during sight visits.

“These are the sources of farmers’ anguishes,” he said.

The Ministry changed its procurement strategy for fertiliser this year through a newly formed Board which includes officials such as Mamo Mihretu, governor of the National Bank of Ethiopia (NBE); Alemu Sime (PhD), minister of Transport & Logistics; Alemtsehay Pawlos, chief of Cabinet; Semereta Sewasew, state minister for Finance; and Abie Sano, president of the Commercial Bank of Ethiopia (CBE). This strategy coincided with a global drop in fertiliser prices, which allowed them to spend 20 billion Br less on fertiliser despite an increment in quantity and an early procurement date.

MPs confronted Ministry officials over shortfalls in meeting fertiliser distribution targets, improved seed procurement, and coffee export objectives. They were able to meet 16pc of the fertiliser distribution targets, about 38pc of nearly a million quintals improved seed procurement plan, and less than the 1.2 billion dollars coffee export target.

About 6.2 million quintals (52pc) of the imported fertiliser had been distributed until May 13, 2024, according to Sophia Kassa (PhD), state minister. But for her, the discussion which has evolved from procurement of fertiliser the previous year to delivery is a milestone by itself. She noted the surge in the distribution since the report was submitted to parliament due to the rise in demand in the Meher farming season.

“Our distribution followed seasonal cultivation patterns,” Sofia said, “We have reached all our destinations.”

The chairman intervened, sharing discrepancies in fertiliser distribution, particularly in Central Ethiopia and certain parts of the Amhara regional states. A few other members echoed the concern with locations of their own.

Alemu Jemberu, an incumbent MP from Amhara Regional State, said that farmers in northern Shewa weredas with over 100,000 people have not received fertiliser. Another MP pondered if the increased attention given to wheat had disrupted the previous cycles of fertiliser deliveries by reflecting on the experiences of potato farmers from Arsi Zone, Oromia Regional State. Wheat coverage from last year has increased by three million hectares, accounting for 42pc of the total farmland developed through irrigation.

The only opposition member in the Committee, Bartema Fikadu from Ethiopian Citizens for Social Justice (EZEMA) warned that the distribution issue may persist if not addressed adequately. He recalled last year’s performance report where Ministry officials reported that fertiliser would reach all farmers by the end of the year.

“It has not reached the farmers,” he emphasised.

However, the comments did not sit well with the State Minister. She reminded the MPs of the prevailing security concerns in the region, indicating that drivers and security personnel had even risked their lives to ensure fertiliser reached the farmers. Major stock had been warehoused in Debre Berhan town until the proper passage to farmers could be guaranteed, according to Sophia.

“We have been sending them with military convoys,” she told Fortune.

Sophia said illegal channels exist in some parts of the country where people were caught red-handed pretending to be from unions. She disclosed seizing 250qtls hidden with sugar on the day of the presentation.

Farmers’ productivity is not limited only by the available fertiliser stock, as nearly a quarter of the country’s farmland has become acidic.

Eyasu Elias (PhD), state minister for Agriculture who has studied soil science for the past two decades, was content with the progress made during the year— a nearly 1.4 billion Br financial package from Prime Minister Abiy Ahmed (PhD) for limestone procurement and distribution. While he acknowledged the process may be time-consuming and the amount was far from meeting the country’s requirements, he expects progress over the coming years if the financial allocation continues.

“It’ll probably remain an issue until your terms end,” he told MPs.

Members of the standing committee also expressed concerns about how the massive cultivation of wheat had not translated to a decrease in wheat products in urban areas or a marked increase in food security. The Food & Agriculture Organisation (FAO) report exposed alarming levels of food insecurity in Ethiopia where 70 million people do not have consistent access to meals while over 25 million people go by days without food.

Minister of Agriculture Girma Amente (PhD) pinned the success in food security achievements in integrated supply chain, mechanisation and private sector engagement. He said some food insecurity arose from poor market linkages, not a mere lack of production where better logistics, cold chain facilities and massive expansion on five key products (wheat, maize, sorghum, barley and teff) would make a difference.

“There are parts of the country where ripe fruit merely rots away,” he said.

Girma said mechanisation towards increasing productivity would not translate to a combiner and tractor for each farmer but would be marked by increased use on the current farms developed in clusters.

“Mechanisation means much more than tractors,” he said, “It is about increasing economies of scale”.

The Minister urged for private-sector engagement to improve seed provision for farmers. He believes that allowing foreign companies to settle in agrarian communities will scale up their productivity.

“Our farmers need to observe the benefits physically,” he said.

Nyala Insurance Thrives Despite a Storm of Claims, Regulations

In a year marked by remarkable growth, Nyala Insurance surged ahead, buoyed by impressive gains in investment income and life insurance. While navigating fierce industry competition and regulatory constraints, the firm defied conservative critiques, with its executives steering Nyala to a rise in gross written premiums. This was despite economic headwinds evident as its liquidity soared and paid-up capital climbed, positioning Nyala as a formidable contender against competitors like United and Nile insurance firms.

Yet, the sharp rise in claims paid, driven by soaring costs, proved relentless in the insurance industry.

However, the company netted 273.31 million Br in profit, a 23.9pc growth from the previous year. This positioned it among competitors such as Nile Insurance’s 298.3 million Br, and Global Insurance’s 67.1 million Br, though United Insurance outpaced it at 327.02 million Br.

Incorporated in 1995 with a seven million Birr paid-up capital, Nyala Insurance has expanded its six founding shareholders’ base to 66 as of last year. During the general assembly meeting in December at the Sheraton Addis Hotel, these shareholders celebrated a 5.67pc surge in Earnings Per Share (EPS), translating to 35.4pc, nearly three percentage points higher than the industry average for private insurers.

Board Chairwoman Sara Surur (MD) attributed the company’s continued success to the “effective implementation” of a strategic plan.

Nyala’s profit growth stemmed from substantial increases in investment income and the life insurance business, with gross written premiums rising 46.3pc to approximately 1.33 billion Br. The figure is noteworthy compared to the industry average of 903.2 million Br, excluding Zemen Insurance. It also represented five times Global Insurance’s 290 million Br, nearly 400 million Br higher than Nile Insurance’s 938.1 million Br, and 198 million Br short of United Insurance’s 1.51 billion Br.

London-based financial analyst Abdulmenan Mohammed (PhD) noted that shareholders have much to celebrate in a highly competitive industry, describing Nyala’s success as “instrumental in the growth” seen in motor, fire, bond, and other insurance categories.

“The gross written premium is quite impressive,” he told Fortune.

However, Abdulmenan observed a conservative tendency in Nyala’s retention of gross written premiums, with significant ceding to reinsurers. Nyala’s ceding rate was 44.6pc this year, slightly higher than the 42.7pc of the previous year. According to the financial analyst, Nyala’s executives must combine increased retention rates and sound risk management policies to address the overall risk.

“Observation of several years indicates that,” said Abdulmenan.

Nyala’s CEO, Yared Molla, who has run the firm for the past 11 years, contested this observation, arguing that the type of policies underwritten determines retention rates and are compliant with the National Bank of Ethiopia’s (NBE) regulations.

“There is no cookbook formula for this,” Yared told Fortune.

He argued that if the restriction on the amount that insurance companies can invest in other assets were removed, Nyala and other insurers could have earned more income. Nyala’s investment income grew by 27.6pc to 261.1 million Br, while total operating and financing expenses increased by 21.8pc to 270.82 million Br.

Despite the growth in gross written premiums, Abdulmenan pointed out that a lower retention rate, substantial claims paid, and provisions set aside undermined Nyala’s underwriting surplus, which fell by 6.5pc to 310.82 million Br. Commission earnings rose by 22.5pc to 113.14 million Br, and the company also paid more in commissions, with an increase of 56.4pc to 44.67 million Br.

A considerable rise in claims paid and other provisions was noted, with an increase of 77pc to around 370.81 million Br, lower than United Insurance’s 463.54 million Br and Nile Insurance’s 443.5 million Br, in an industry where claims average around 341.1 million Br. Yared attributed the rise in motor and life insurance claims to skyrocketing prices of vehicle spare parts, maintenance costs, and medical expenses.

“We are still below the industry loss ratio,” he noted.

Yared, who has an impressive 30-year career in the insurance industry, studied management at Addis Ababa University and did his postgraduate studies in Business Administration at Greenwich University in England. His professional journey began at the state-owned Ethiopian Insurance Company, where he rose to deputy CEO. He later joined Ethiopian Health Insurance and gained international experience as a risk management consultancy executive at a US-based company. He is a PhD candidate at the Paris School of Business.

Under Yared’s managment, Nyala’s total assets increased to 3.82 billion Br, with time deposits of around 585.82 million Br derived from shares and bonds. Close to 108.76 million Br in property investments were made, accounting for 45.7pc of Nyala’s total assets.

According to Fasil Asfaw, manager of a branch in the 22 Mazoria Wuha Limat area, his branch had a strong record in premiums and benefited from corporate customers.

However, Fasil noted that fierce competition and a general slowdown in investment throughout the economy posed challenges during the year. A general lack of appetite for non-mandatory insurance products, excluding marine and third-party insurance, restricts industry growth.

“Customers have become extremely sensitive to prices,” Fasil told Fortune.

Nonetheless, after 12 years as branch manager, he feels that Nyala’s growth, despite the challenges presented by security issues and a deceleration of economic growth, positions it as a formidable player in the industry.

A ratio analysis of Nyala’s balances revealed increased liquidity in absolute and relative terms. Cash and bank balances rose by 67pc to 555 million Br, with the ratio to total assets increasing by 3.3pc to 14.5pc.

“Nyala has a reasonably high liquidity level,” Abdulmenan observed.

Nyala’s paid-up capital grew by 17.9pc to 830 million Br, nearly threefold of Global Insurance’s 242.5 million Br, short of Nile Insurance’s 834 million Br, and 10 million Br shy of United Insurance. Its capital and non-distributable reserves represent 29.9pc of its total assets, indicating a solid capital base.

“That should be used to increase shareholders’ returns,” said Abdulmenan.

Shareholders were not available for comment.

Walking on a Wage Wire

A recent regulatory change that removed the wage requirement for workers under private employment agencies, is sparking concerns about exploitation and a potential violation of worker rights. The law requiring agencies to pay workers at least 80pc of the salary received from the client company was revoked four months ago.

A Supreme Court ruling in favour of the Abay Private Employment Agencies Association, representing 12 member agencies, led to this change. The decision follows a dispute centred on Article 33, part of a regulation concerning worker wages. They argued the directive issued by the Ministry three years ago aimed to enforce an 80/20 rule over salary remained open for discussion and the Ministry overstepped its bounds. They claimed the Council of Ministers, not the Ministry, has authority over wage-related issues.

“We fought by ourselves and won,” said Abel Worku, board chairman of the Association.

The ruling in favour of the Association has opened doors for other agencies to follow suit which ultimately led the regulation to be revoked by Nigussu Tilahun, former state minister for Labour & Skills. The Confederation of Ethiopian Trade Unions (CETU), representing about a million workers nationwide, was sidelined during this process.

Ayalew Ahmed, the vice president of CETU, is critical of the Ministry’s lack of consultation.

“They decided this without talking to us,” he said.

Ideally, the Tripartite Labour Advisory Board, comprised of labour unions, the government, and employers, should have discussed such matters. However, CETU’s requests for immediate discussions with the Board have been met with repeated postponements by the Ministry.

“Meetings have been lagged,” Ayalew said.

Officials at the Ministry acknowledge the gap in overseeing the case. According to Brook Ketema, an employment facilitation expert at the Ministry, they were focused on internal structural changes through reforms, which limited follow-up capacity on the case.

“There was a gap on our side,” he said.

Brook said they are addressing it now; they have begun collecting data from both the agencies and the workers’ side to make an informed decision.

However, the Ministry’s subsequent inaction on appeal has raised concerns about the livelihoods of about 50,000 workers under private agencies. Asfaw Abebe, the president of the Federation of Tourism, Hotels & Service Union, fears this could lead to widespread abuse by employment agencies.

In a strong letter to the Confederation of Ethiopian Trade Unions (CETU), he decried the Ministry’s decision and its potential consequences. Asfaw said employees’ rights are violated with lower wages, and deteriorating working conditions that have escalated for the past few months.

“It has been dreadful,” he said.

His concerns are echoed by the Confederation of Amhara Trade Union, representing over 15,000 workers under 15 agencies. For the past few months, they have been unsuccessfully trying to negotiate with agencies to maintain the 80pc wage rule, established before the ruling.

Awol Hamid, head of the Kombolcha Union Confederation, blames the Ministry’s inaction for the current situation. He argues that agencies are exploiting a legal loophole to justify lower wages, longer work hours, and denied leave for employees. He fears this will make it impossible to control agencies and protect worker rights.

“Everything has turned into chaos,” said Awol.

The concerns are heightened with a recent study by the International Labour Organisation (ILO) based on a survey of 400 agency-recruited workers. It paints a grim picture, uncovering widespread violations of worker rights, including inadequate health and safety standards, unfair contractual agreements, and limitations on unionisation rights.

It seems to have escalated to retaliation against workers who speak out. Biniyam Worku, a technician employed by Siltun Balemuya, a prominent agency operating for over 31 years, was dismissed recently. Biniyam, who is also the board chairman of the Agency’s Workers’ Union, alleges he was targeted for his efforts to uphold worker rights.

“They don’t even pay us a quarter at this point,” he said.

Employment agencies, however, defend the recent changes.

Demelash Gulilat, the financial and marketing manager at Siltun Balemuya, feels the narrative is one-sided, focusing solely on worker rights without considering the agencies’ perspective. He contends that the 80/20 rule creates financial burdens for agencies, arguing that capping service providers’ fees is unfair.

“This is a free market economy without minimum wage laws,” he told Fortune.

Demelash denied claims of retaliation against workers for advocating for their rights. He explained that suspensions at Siltun Balemuya result from workplace misconduct, not union activity. However, he acknowledged the financial challenges faced by agencies, arguing that these difficulties are often overlooked in the current discussion.

“Our major contributions have been overlooked,” he told Fortune.

Authorities in Addis Abeba were having issues in the private employment agency sector before the recent changes. Sebehadin Sultan, the employment expansion director at the Addis Abeba Labour & Skills Bureau, which oversees 326 agencies, revealed that the Bureau had recently shut down seven agencies for lack of permits and poor working conditions. He is concerned that the new ruling will further complicate their efforts.

“It has made proper regulation difficult,” he said.

Ethiopia’s labour market faces a tough road ahead with about three million young people entering the workforce every year, far outstripping the available formal jobs. This is coupled with widespread informal work and working poverty, estimated in 2022 at 86pc and 18.3pc, respectively. Private employment agencies play a key role in connecting workers with jobs. However, removing the minimum wage requirement for these agencies raises concerns about exploitation and potential violations of worker rights.

Experts like Aida Awol, chief technical advisor at ILO, call for a new legal framework that protects workers’ rights while considering the needs of employment agencies.

“Agencies’ needs should also be considered,” she said. “They are running a business after all.”

She observes weak and ambiguous regulatory capacity open for loopholes. While advocating for a system that accommodates both parties, she recommends setting minimum wage laws as a long-term solution.

Workers are bearing the brunt of the issue. Their woes are exemplified by Tikuye Abere, employed under the Biraro Employment Agency in the Amhara Regional State. For him and 3,000 workers, Tikuye said the struggle has taken another form. Working as a security guard while supporting nine family members, Tikuye claims payment amounts have been fluctuating for a while.

“We’re struggling,” he said.

How Reliance on Western Powers Undermines AU’s Founding Vision

Two weeks ago, the U.S. State Department made a customary diplomatic trip to address the political crisis in several countries in the Horn of Africa, aspiring to shape the region according to Washington’s strategic interests.

The Special Envoy for the Horn of Africa, Mike Hammer, travelled from Washington to Nairobi, engaging in discussions with senior Kenyan officials about the political instability in Ethiopia, particularly implementing the Pretoria Peace Accord. He held talks with senior officials from the African Union (AU) in Addis Abeba, where he also urged Ethiopia’s leaders to end the violence and displacement of civilians due to the conflicts in the Amhara and Oromia regional states.

Simultaneously, Tom Perriello, the special envoy for Sudan tasked with coordinating U.S. policy on Sudan, visited Uganda, Kenya, Egypt, and Saudi Arabia. He met with Washington’s main partners in these countries to advance efforts to end the Sudanese conflict. Meanwhile, J. Peter Pham, former U.S. ambassador and special envoy for the Sahel region, is reportedly shaping White House policy on Chad and the broader Sahel region.

Washington’s recent moves demonstrate its determination to fortify and sustain its national interest in and toward the African continent. However, questions arise about the AU’s increasing hope of looking towards the White House and other Western capitals for solutions to the political turmoil in its member states rather than adhering to its charter designed to address Africa’s problems. Its predecessor, the Organisation of African Unity (OAU), was formed in May 1963 and later transformed into the African Union 39 years later to make the continent a relevant international political and economic player. Yet, the current political and economic crises besieging African countries challenge this vision.

The Democratic Republic of Congo, for instance, remains entrenched in a devastating crisis, part of a series of civil wars that have roots in Cold War proxy conflicts between the Soviet Union and the United States. Following the assassination of President Laurent-Desire Kabila in 2001, the country’s political situation has worsened. Continuous conflicts, health crises like Ebola, and persistent instability plague the country, with the AU offering little beyond lip service.

In Libya, the situation took a drastic turn in March 2011 when a NATO-led coalition initiated a military intervention, legitimised by UN Security Council Resolution 1973. It resulted in the slaying of its leader and the eventual collapse of the Libyan state. Despite the African Union’s Charter, the organisation failed to support the Libyan people during their trying times.

Somalia has also been a perpetual concern for the AU since 1991, yet the AU has struggled to resolve the crisis in Mogadishu. The renewed instability and acts of terrorism have yielded the AU’s efforts largely ineffective, often overshadowed by Western countries’ proposals that fail to address the root causes of the conflict.

The longstanding conflict between Ethiopia and Eritrea, which persisted for two decades in a state of neither war nor peace, was ultimately influenced by former President Trump’s bold policy shift. Without this intervention, the AU might have continued to struggle to broker peace between the two countries.

These are a few illustrations of AU’s haplessness in the face of the continent’s myriad political and economic disasters. Its leaders increasingly rely on Western guidance to respond to the upheavals, putting the efficacy and institutional independence in question to meet its foundational objectives. Moussa F. Mahamat, the chairperson of the African Union Commission, is set to step down early next year. Djibouti, Kenya, and Somalia have put their candidates forward to succeed him. However, merely changing the chairperson is unlikely to bring change worth discussing.

The founders of the OAU envisioned an organisation dedicated to freeing Africans from colonialism, preserving the sovereignty and territorial integrity of member countries, and upholding African dignity. Yet, under Mahamat, the AU appears to have fallen short of this vision, often seen as ineffective in addressing the continent’s critical issues.

Why has the AU become a Union that is good for nothing?

The answer lies in its incapacity to assert autonomy, dependence on external actors for solutions, and failure to implement its charter effectively. Without a significant change in strategy and leadership, the AU risks remaining in the shadow of Western influence, unable to fulfil its potential as a unifying force for the continent. The continent requires a fundamental shift in approach to achieve political and economic stability.

Hintsa Andebrhan (hintsa1974@gmail.com) worked as a researcher with the United Nations Population Fund and IPAS International Ethiopia.

 

SAVING LIVES, ONE SHORTAGE AT A TIME

Behind the nondescript facade of a drop-in centre in Addis Abeba, a quiet struggle unfolds nightly. Among those seeking refuge is a 25-year-old sex worker, driven by financial hardship from waitress to the streets. The centre, offering essential services like showers, meals, and STI tests, also provides a crucial lifeline: condoms. Yet, a severe shortage looms, leaving women to fend for themselves in a perilous gamble with their health. The bi-weekly allotment of eight condom packets from Population Services International (PSI) Ethiopia barely scratches the surface of their needs.

Ironically, this scarcity persists despite Ethiopia’s soaring HIV infection rates and dwindling funds from international donors. The Ethiopian Pharmaceutical Supply Services (EPSS) and NGOs like DKT International and PSI Ethiopia scramble to cover an annual demand of 250 million condoms but only manage to provide about 100 million. Free condom distributions, once common in universities and public spaces, are now a rarity. Health centres have cut down their giveaways drastically, capping them at three packs per person, under the pretext of preventing resale.

Health officials blame the restrictions on alleged abuse. The heads of the pharmaceutical supply services at the Addis Abeba Health Bureau insist the caps are necessary to curb resale. However, health centre managers tell a different tale of overwhelming reliance on donor support as government supplies fall drastically short. They recount receiving a fraction of requested supplies from EPSS, with donors stepping in to fill the gap. Yet, the restrictions remain, ostensibly to ensure wider access.

The Ministry of Health acknowledges the supply shock post-COVID-19, justifying its focus on high-risk groups like sex workers and adolescent girls. Those in charge of HIV prevention argue that strategic prioritisation is essential amid declining global funding. The targeted approach, however, leaves institutions like Addis Abeba Science & Technology University in the lurch, exacerbating sexually transmitted infections (STI) and unwanted pregnancy cases among students. A public health officer at the University lamented the rising demand for condoms he cannot meet.

Compounding the crisis is the stark irony of rising condom prices amidst the shortage. Pharmacists are forced to add markups to already inflated wholesale prices, pushing condoms further out of reach for many priced between 40 Br and 60 Br. While DKT Ethiopia attempts to respond by selling at subsidised rates, the convoluted procurement process and customs delays only add to the woes. Its managers urge health officials to intervene in price caps to bridge the gap.

Ethiopia’s battle against HIV/AIDS poignantly reflects global funding disparities and local inefficiencies. The quality of imported condoms is another concern, with a portion failing to meet standards and being destroyed or returned. Officials of the Ethiopian Food & Drug Authority, a federal agency, recall the sharp decline in quality this year, a grim reminder of the complexities plaguing public health efforts. The fight for a healthier future continues, marred by irony and systemic flaws.

When a Bite Ripples to Sustenance

Food waste represents a loss of economic value throughout the supply chain. Farmers lose revenues, consumers waste money, businesses incur costs while governments invest resources to manage it all. Imagine if everyone could contribute their excess. Pooling resources through organised efforts could make a huge difference, writes Bereket Balcha (bbalcha5@yahoo.com)

 

As I was about to reach the Abrehot Library last weekend, the rumble in my stomach reminded me of my skipped lunch. I glanced at the clock – nearly 6 PM. Since I had left my reading glasses at home and browsing the stacks without them proved to be difficult, I decided to treat myself to a late meal.

Craving something hearty, I steered towards Mesqel Square, hoping to find Kitfo, a spicy minced meat dish. As I debated options near the area, a familiar steakhouse from my university days, “Girgiro Ajejo Siga Bet, was spotted. A wave of nostalgia washed over me with the restaurant’s logo featuring prime Harar bovine at the now-demolished Arat Kilo location. I decided to give it a try.

The restaurant buzzed with anticipation as the Arsenal-Manchester United match loomed. A friendly waiter confirmed my order, and I settled in with a bottle of sparkling water to watch the game. The Kitfo arrived shortly after, with a grand presentation for what I thought would be a simple meal. Lifting the lid of the traditional basket (Moseb), I was surprised by the massive portion, generously adorned with cheese and minced kale.

The portion was immense, far larger than I had seen before. However, I knew it would not be possible for me to finish it all so I decided to set aside a portion of it to avoid leftovers. My usual distaste for leftover meals lived with me for years as a self-imposed value. I believe one should only consume what is necessary.

While conserving resources is one important aspect, leftover foods also account for frequent visits by rodents and unwanted insects in households.

Wasting this well-prepared meal felt wrong considering a third of food wasted globally each year. According to the Food & Agriculture Organisation (FAO), nearly 1.3 billion tons of all food produced for human consumption worldwide is lost or wasted annually.

With a full stomach and a takeout box in hand, I set off to find someone who could use the meal on my way home. My initial attempts near Urael Church and Sahlite Mihret area proved fruitless. Recent construction had displaced the usual spots. The streets towards the Ayat area were deserted. I spotted a young woman in tattered clothes by the roadside. Perhaps this was my chance.

But as I lowered the window and approached her erratic movements and gestures gave me pause. I drove on, a heavy heart replacing the earlier disappointment. Just when I had nearly given up hope, a hazy silhouette of a person clad in a white shawl caught my eye around the roundabout near the Mekedonia area. The man seemed to be packing up for the night. It was a profile I had been searching for. With renewed hope, I lowered my window and greeted him.

His enthusiastic response was a welcome change. Hesitantly, I offered the Kitfo asking if he could stand to receive it or needed further assistance. He fumbled slightly to his feet, then limped slowly towards the car. Relief and gratitude washed over the man’s face as he accepted the takeout box. For him, the aluminum package was more than food; it was a small gesture that resonated deeply. He said that it was not his plan to stay in that spot but understood why he lingered.

The moment lasted long after I drove away. It prompted me to explore wastefulness.

While food waste is usually associated with developed nations, the per capita statistics tell a different story. China and India produce more household food waste worldwide at an estimated 92 million and 69 million tons every year, according to Statista, an online platform. This is unsurprising, considering both countries have by far the largest populations globally. However, per capita food waste production is estimated to be highest in Western Asia and Sub-Saharan Africa while Ethiopia ranks a shocking 10th. Post-harvest losses, transportation and storage issues contributed majorly.

It felt wrong to learn this in a country where people are facing severe food insecurity. Food waste represents a loss of economic value throughout the supply chain. Farmers lose revenues from unsold produce, consumers waste money on food they never eat. Businesses incur costs associated with disposing surplus or expired food while governments invest resources in managing waste.

The world has enough resources for everyone. It is a matter of awareness, sharing, and organising effectively. The government school feeding programs are a shining example of where it is possible to make a real difference. Kids are getting the nutrition they need, which allows them to focus on their studies and live healthier lives. Seeing this success makes me wonder – what if similar programs could be implemented more widely? Communities, religious organisations, and volunteer individuals could all play a part in tackling food insecurity.

Although everything starts at a personal level, I realise that one meal would not fundamentally change the situation. Things should be done on a larger scale as well. Raising consumer awareness is a start. Meanwhile, improving food distribution systems, implementing better storage and preservation techniques, and developing policies and regulations to incentivise waste reduction are necessary.

I envisioned a systemic address, like the one in the UK, where surplus food is redistributed from restaurants and supermarkets to those in need. Imagine if everyone, individuals and institutions alike, could contribute their excess. Pooling resources through organised efforts could make a huge difference.

What Fiscally Sound Industrial Policy Can Do

I recently discussed industrial policy at the International Monetary Fund (IMF). The IMF has historically been a sharp critic of industrial policy. However, as many of its client countries embrace the concept, the Fund has recognised the need to clarify its position and update its guidance.

IMF economists have long worried that industrial policy can cause undue harm to a country’s fiscal position. But, while some industrial policy tools do demand significant fiscal resources, others do not. For example, entry control costs very little when the government permits only a certain number of qualified firms to operate in strategic sectors.

The logic behind entry control is simple: a few firms earning profits in an oligopolistic market is better than many firms reaping no profits in perfect competition, not least because profits can be re-invested in the selected firms. The policy also causes the rate of return to exceed interest rates – good for boosting private investment in manufacturing, which typically offers lower rates of return than services, with longer time horizons.

Entry control can be effective when an emerging economy with limited market size, resources, and technological capabilities seeks to enter new sectors and initiate new projects. But, the government must choose firms wisely – accounting for factors like plans to import or license necessary technologies and to collaborate with other partners – and arrange financing. Entry control has been successfully implemented in China, Japan, and South Korea (where, for a time, only two or three firms were permitted to produce automobiles or provide wireless telephone services).

Local content requirements, which oblige manufacturers to source a certain share of the final value of a product domestically (the localisation rate), also have limited fiscal costs. Such requirements can support job growth, boost domestic value-added, and contribute to upgrading critical industries. That was the case for China’s wind turbine industry, which Danish firms dominated until China’s government introduced a set of supportive policies, including local content requirements, in the 2000s. Within a decade, domestic firms accounted for almost 90pc of the Chinese wind turbine market.

China also implemented local content requirements in its automotive sector, rewarding higher localisation rates with lower import tariffs. Imported parts and components of final goods with localisation rates of 40pc to 60pc were subject to a 75pc tariff, compared to a 60pc tariff for goods with 60pc to 80pc localisation rates.

But, local content requirements violate World Trade Organization (WTO) rules; China had to reverse them before its 2001 WTO accession. To help cushion the blow for local component manufacturers, which now faced greater competition from foreign firms, the government introduced new tariffs on imported parts and components. As a result, localisation rates have continued to increase among leading automotive manufacturers in China, reaching some 80pc in the 2010s.

Malaysia also achieved some success with local content requirements – which helped to increase domestic firms’ share of the small-car market from 30pc in 1992 to 60pc in 1996 – before reversing them in 2004. Thailand tried something similar, but had to abolish the policy prematurely, at the WTO’s request; its full potential was not reached.

Local content requirements appear to be coming back—most prominently, in America’s recently introduced industrial policy, the Inflation Reduction Act (IRA). China has filed a complaint at the WTO about the IRA over what it claims are discriminatory subsidies that favour domestic producers. Given the WTO’s record of forcing countries to roll back local content requirements, especially those accompanied by subsidies, its handling of IRA-related disputes will be telling.

Import tariffs protecting nascent industries are a third industrial policy tool worth mentioning. Whether tariffs are effective depends significantly on which metric one considers. For example, one study found that tariffs reduced total-factor productivity in South Korean industries from 1963 to 1983. But, others, including Korea, show that tariff protection did boost Korean firms’ export volumes and enable them to expand their market share over roughly the same period (1967-1993).

This is appropriate. When an economy is in its earlier stages of development, productivity growth is not the primary objective. Far more important is increasing output and enabling firms to expand their market share so that they can take advantage of economies of scale, invest in technological upgrading, and create more jobs.

For example, it was thanks to high tariffs on imported cars (up to 82pc) that Hyundai was able to capture 44pc of the Korean market with its first own-brand car, the Pony, within a year of its introduction. Though the Pony was never able to compete in foreign markets – it cost 1,850 dollars in the United States, compared to 4,500 dollars in South Korea – tariff protections effectively guaranteed domestic profits, enabling Hyundai to expand and invest in research and development.

Tariff policy need not be a blunt instrument. South Korea’s asymmetric approach – extremely high tariffs on consumer goods (to protect export industries) but considerably lower tariffs on capital goods – accounted for the economy’s specific needs at the time. Government protection was linked to export performance, which meant that firms were still exposed to foreign competition. This combination of domestic market protections and discipline from world markets was one of the most essential features of Korean industrial policy in the 1980s and 1990s, not least because it ensured that late entrants still had a chance.

Industrial policy can help countries cope with growing economic and political uncertainty. But the details matter. Any IMF guidance on the issue must not only highlight fiscal prudence tools, but also emphasise the critical importance of striking the right balance between protection and market discipline.

How Soaring Interest Rates Propel Economic Growth against Convention

The U.S. experience challenges traditional economic theories and suggests that higher interest rates can coexist with robust economic growth. The importance of flexible and dynamic economic policies that adapt to changing circumstances is evident. As the global economy evolves, policymakers must consider diverse strategies to promote sustainable growth, ensuring that economic benefits reach all segments of society, write Andrea Sequeira (austinesequeira@gmail.com), an independent consultant, and Andrea Sequeira (andreasequeira031@gmail.com), an economics student at the University of Warwick interested in contemporary global economic developments and their effects on the public policy of developing countries.

 

The recent economic performance of the United States offers an intriguing case study that challenges long-standing theories about the relationship between interest rates and economic growth. Historically, economists such as Ricardo, Marshall, and Keynes asserted that lower interest rates stimulate economic activities by reducing the cost of borrowing, thereby encouraging investment and consumption. However, the U.S. economy’s post-pandemic experience presents a potential counter-narrative.

Post-pandemic, the U.S. economy saw a sharp rise in inflation, with rates jumping from 1.4pc in 2020 to 6.5pc in 2022. Prominent economists, including Ben Bernanke and Olivier Blanchard, attributed these inflationary pressures to the large-scale fiscal packages deployed during the pandemic. Despite the Federal Reserve’s efforts to tame inflation by hiking interest rates, inflation remains at 3.4pc. Paradoxically, the economy is booming, exhibiting growth rates that defy traditional economic expectations.

When the Fed initiated rate hikes to curb inflation, the U.S. economy grew at a modest 2.5pc. Today, even as the Fed maintains high rates, the economy is expanding at a robust 4.2pc. Job creation is strong, and corporate profits are on the rise. The S&P 500 has grown by eight percent since the first rate hike, while corporate profits have increased by six percent, suggesting a radical shift in interest rate theory. Higher rates might be driving higher economic growth.

One factor fueling this growth is the large influx of interest payments into the economy. Two years ago, the U.S. government’s pandemic support packages led to significant budget deficits, financed primarily through high-interest government debt. These debt instruments, yielding an estimated 50 billion dollars a month, have funnelled substantial sums into the hands of investors, boosting consumer demand and spurring economic activity. The influx of capital into the consumer market illustrates a fundamental economic principle that consumer spending drives growth.

Contrary to its usual preference for expansionary monetary policy, the Fed has kept interest rates high, observing the economic gains. This approach provides a critical insight. Putting money in consumers’ hands can stimulate demand and drive growth, regardless of whether the method is fiscal stimulus or high-interest debt payments.

The American experience contrasts sharply with other countries’ strategies for stimulating economic growth.

India, for instance, has focused on increasing public spending on infrastructure, averaging 3.5pc of GDP over the past decade. The investment in capital goods, such as expanding railway lines and constructing highways, was designed to boost economic activity through enhanced public infrastructure. Similarly, countries like the UAE, Singapore, and several European countries have invested heavily in the service sector, leveraging their limited capacity for physical expansion.

Critics argue that such approaches, leading to significant public debt, could result in stagflation — too much money chasing too few goods. However, the U.S. example suggests that strategic public spending and investment can lead to sustainable growth, even despite high debt levels.

The resilience of the U.S. economy, capable of absorbing both short- and long-term shocks, stems from dynamic policymaking.

In contrast, many sub-Saharan African countries struggle with economic growth due to heavy reliance on external assistance and high domestic taxes. They often view public debt as untouchable, resulting in marginal public and negligible private investments. Consequently, large portions of the population face extreme poverty, and job losses are rampant.

Despite signs of economic revival in countries like Ethiopia, Nigeria, and Senegal, high tax rates and a lack of radical reforms impede sustained growth. At the launch of a report on Africa’s economy in December 2023, by the Economic Commission for Africa (ECA), its economic affairs officer, Nadia Ouedraogo, stated the need for robust resource mobilisation strategies to finance sustainable development. She advocated for strengthening tax systems, curbing illicit financial flows, improving debt management, diversifying financial instruments for long-term investment, and reforming the global financial architecture to create a more equitable international system.

In essence, Ouedraogo’s recommendations underlined the importance of raising funds for development, increasing public spending to jumpstart the development cycle, and opening up markets internationally. Tax reforms can leave more income in the hands of individuals and corporations, encouraging savings and investment and creating a multiplier effect throughout the economy.

African countries often receive advice on climate-resistant sustainable development. While climate-positive investments are crucial, it is essential to recognise that today’s developed countries built their economies and resilience to shocks over the past century, long before concepts like climate sustainability were prevalent. It would be wise for sub-Saharan Africa to prioritise the economic development of its ordinary citizens, aligning with emerging economic theories that emphasise the role of consumer spending in driving growth.

Our Children, Our Responsibility

After two blissful years of raising their son, my neighbours began a daycare search deciding that it was time to return to work. Their ideal setting was a facility with cameras accessible to parents, offering a comforting glimpse into their child’s day. Unfortunately, such transparency seemed nonexistent. Settling for a centre near the grandparents’ house for emergencies, they embarked on a visit only to be met with a scene that shattered their trust and left them forever scarred.

A usual knock on the open gate turned into a horrifying revelation. Minutes ticked by with no response, an unsettling silence broken only by their growing unease. Deciding to peek inside, they were met with a sight that defied comprehension. An elderly staff member was hitting the head of a one-year-old. The child, a regular at the daycare for a few months, had been crying, coughing, and vomiting incessantly. But, it fell on deaf ears, met only with further blows from the supposed caregiver.

Other staff members stood by as silent witnesses. Although they were choking with disbelief and outrage, my neighbours mustered their courage demanding the woman stop. The primal urge to protect the defenceless child overwhelmed the father. He lunged forward, only to be restrained by the other staff members, a tangled mass of limbs and desperate pleas. This intervention seemed to snap the lady out of her trance, realising that there was an audience.

With a mix of anger and relief, my neighbours quickly scooped up the sobbing child. While comforting him,  they learned the horrific assault stemmed from a diaper that needed change – a basic need twisted into a cruel punishment. Leaving the child in the hands of these individuals was unthinkable. They demanded the owner and the child’s parents be brought in immediately.

The wait stretched into hours. As they sat amidst the unsettling silence, their attention turned to the other children ranging from six months to two years old. None displayed a hint of joy. The room was filled with a cacophony of cries, devoid of playful laughter or the warmth of interaction. The staff resorted to shoving food into the mouths of these distressed infants while the gagging reflex was met with harsh words.

Gratitude for their fortuitous arrival washed over my neighbours. Unknowingly, they might have become unwitting guardians, rescuing their own son from a similar fate.

When the owner finally arrived, her initial reaction was a predictable denial. Any accusations of wrongdoing were met with feigned ignorance and promises of improvement. Shockingly, she pleaded with them not to inform the child’s father, who seemingly assumed the sole responsibility of picking up and dropping off his son.

Refusing to be complicit in this cover-up, my neighbours insisted the father be brought in. They watched as the man arrived and listened to the harrowing account of his son’s abuse, tears streamed down his face. He was the sole parent to his son, leaving the use of daycare as the only option to be able to provide financially. The man’s pain spoke volumes, and they did not want to add to his already overflowing heartbreak by asking more questions. They watched silently as he rushed his son to the hospital, fearing internal injuries from the repeated blows.

My neighbours’ determination finally yielded results. They pressured the owner to inform all parents whose children were enrolled at the daycare. The revelation explained the recent inconsolable crying spells many parents had observed in their own children. It brought the glaring inadequacies within the childcare system. They opted to leave their son’s care to his grandparents.

As a parent myself, this shattered my long-held belief in the automatic respect accorded to elders. We cannot simply rely on assumptions or outward appearances. A thorough investigation, talking to current and past experiences of parents, and surprise visits become paramount in ensuring our children’s safety.

I started doing random research on child daycare centres on the potential benefits of well-managed facilities. The results suggest these environments can accelerate cognitive development, enhance language skills, and foster social interaction. However, concerns remain. Opponents point to the increased risk of infections, the potential for stress due to parental separation at a young age, and the possibility of behavioural issues later in life.

My own brother’s experience offered a contrasting perspective. His son, enrolled in daycare since the age of six months, did suffer from frequent infections. However, the daycare also nurtured his social skills and vocabulary, making the transition to kindergarten a smooth one. Crucially, my brother and his wife exercised meticulous due diligence. They interviewed parents, researched the facility’s reputation, and conducted multiple visits before entrusting their son to their care.

There should be a hotline to report such abuses. Parents must demand background checks and mandatory training programs for daycare staff while surprise inspections by qualified authorities should be a regular occurrence. At the same time, facilities must implement open-door policies, allowing parents unannounced visits to observe their children’s environment and interactions with staff.

There is no denying the irreplaceable role parents play in a child’s life. The love, affection, and guidance offered by a parent form the bedrock of a child’s emotional and social development. However, for many families, daycare has become a necessity. Work schedules, financial constraints, or single parenthood can make daycare the only viable option. The duty falls on parents to become proactive advocates for their children’s well-being.

Stuck in the Paper Chase

I recently caught up with a former classmate from my postgraduate program, and our conversation took an unexpected turn when she revealed a shocking truth – she no longer possessed her degree. I was stunned, recalling her successful defence a day before mine. She explained that an examiner suggested revisions that might improve her grade. Initially hesitant, especially being close to giving birth, she eventually agreed. But life’s demands intervened.

She gave birth and never submitted the revisions. When verifying her credentials for a job years later was necessary, the university questioned the missing revisions. Despite her explanations and the department’s support, the campus board ultimately invalidated her degree.

Over coffee, she recounted the saga, detailing how subsequent family responsibilities and unexpected events hindered her from completing the process. It did not mean much for the university management. In the end, the institutional rigidity had left her without her hard-earned academic credential. My anger simmered as she described the wasted months through a bureaucratic maze. Her story left me speechless and resonated with a deep sense of injustice. Years of effort, money, and dedication seemed erased by an administrative hurdle.

While upholding academic integrity is important, universities must find a way to recognise extenuating circumstances. A readily accessible online record system with clear revision timelines could have made a world of difference.

The system failed her. But universities’ shortcomings run deeper. The process to get a clearance or other related services such as getting student copies feels like an outdated maze. Juggling work and family from afar, phone inquiries are met with dead ends. Missing files, bureaucratic hurdles, and a general lack of empathy from the registrar’s office is a recurring theme. It felt like a system designed to make students pass through obstacles instead of supporting their success.

My own experience echoed hers. Years ago, collecting my degree turned into a battle at the entrance due to a security guard clinging to outdated protocols. Lack of digitisation, empathy, and clear communication is evident. No wonder my friend, facing similar hurdles and living far away, opted for phone calls. The process discouraged in-person attempts.

Bureaucracy and lack of adaptability is a barrier for getting services in academic institutions. This inertia coupled with the reluctance to embrace digitisation fully, leaves many students and alumni stranded in a quagmire of administrative hurdles. The human cost of such inefficiency is unacceptable.

In a digital age where information flows seamlessly across borders and boundaries, the archaic practices of manual paperwork seem downright unjust. But, these are the very challenges that many students and alumni face when attempting to go through bureaucratic space of academia.

We need to fight for a better system where unprecedented issues are dealt with thoughtfully. We cannot give up the fight. Students, alumni, and faculty should play a role, advocating for online portals for document submission and retrieval, with clear instructions and progress tracking.

Universities should invest in user-friendly interfaces and staff training to improve communication and empathy. Student support services should be accessible online and offer flexible options for those juggling life’s demands. By demanding change, we can transform universities into institutions that truly support student success, both during their studies and beyond.

SHIFTING PAVEMENTS

 

Fresh pavements are laid around the Bole area, partly suited for pedestrians and bicycles. This lays the ground for a grand corridor development project 10Km long and 47.5hct wide by the Addis Abeba City Administration. The capital has been transformed in a matter of months after the project was initially kicked off with the demolition around Piassa. Closely supervised by Prime Minister Abiy Ahmed (PhD) and occurring across five major lanes, the corridors have split public opinion. While most of the development plans derive from the structural master plan devised seven years ago, new elements have been introduced by the corridor.

 

FADING FLAVORS

 

A historic building around Piazza area that housed restaurant Castelli within its walls is undergoing renovations. Its story dates back to the Italian occupation. Piazza, meaning “open square” in Italian, was imposed as the name by Mussolini’s forces during their 1930s occupation of Addis Abeba, particularly the Arada District. Piazza has thrived as a centre of commerce and culture until the ongoing development project which has resulted in the demolition of some areas. Few buildings such as this were left to preserve the architectural heritage, creating a mix of old and new.