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June 6, 2022 at 7:22 am #4165
By Fikir Getachew*
Though there is no consensus on a clear definition of what political transitions mean, O’Donnell and Schmitter argue that transitions “are delimited, on the one side, by launching of the process of dissolution of an authoritarian regime and, on the other, by the installation of some form of democracy, the return to some form of authoritarian rule, or the emergence of a revolutionary alternative”.
There is a global trend of fiscal decision-making by elites in authoritarian situations influencing the demand for democratic change. The unequal distribution of wealth and wealth making opportunities and the management of public funds have all played a part in (re-)creating and transforming relationships in societies. And Ethiopia hasn’t been an exception to this. In fact, the series of protests that had rocked the country in the years leading up to 2018 were as much about distribution of wealth as they were about politics and governance.
Authoritarian regimes often do not meet the basic expectations of individuals (and communities) and undermine the development of a healthy state-society relation. Hence, those calling for regime change generally seek the renegotiation of the social contract that intertwines citizens and the state primarily through reestablishing the legitimacy of the state in relation to service delivery, representation of previously marginalized sections of the population and upholding the principle of equal benefits and protections of the law.
Consequently, it becomes imperative that states in transitions observe simultaneous development of economic and social policies that are inclusive and address structural imbalances. Which follow from the drivers of the reform process demanding to redefine power structures in society – not just in terms of who holds the political offices, but also in terms of wealth distribution and wealth-making opportunities.
EPRDF’s Developmental State
Ethiopia’s political economy has historically been characterized by a centralized political power guarded by a unitary state until EPRDF first came to power and attempted to decentralize authority. However, decentralizing expenditures while revenue collection remained centralized did more harm than good.
Though the TPLF/EPRDF had been committed to a rigid Marxist Leninist ideology in its period of insurgency, it was forced to reinvent itself in order to navigate in a rapidly changing global order after the end of the Cold War – leaving it without an alternative coherent ideology. When it came to power in 1991, EPRDF became more amenable to donors conditionality. It took measures that were directed towards reviving the stagnating economy, removing barriers to private investment and enhancing the role of the market, seemingly jumping on the bandwagon of liberal ideology.
However, after 2001 the EPRDF took a stance articulating developmental state as its model for economic development greatly decreasing donors influence in significantly shaping development policies in Ethiopia. Yet, Ethiopia remained a trusted ally of the West in the Horn of Africa region and the world’s second largest recipient of total external assistance.
EPRDF’s developmental state was able to register record high growth rates, increased public expenditure on human capital and an expanded public investment all while maintaining a relative macroeconomic stability. In fact, with that growth rate the country was expected to become a middle-income country by 2022.
Lamentably, the high level of growth registered was used to justify the government’s ever-increasing authoritarian tendencies and to silence oppositions and critics. In fact, officials didn’t hesitate to publicly dismiss questions of Human Right abuses and democracy because “we can‘t have democracy with an empty belly”.
The government’s commitment to ensure a continued authoritarian single-party dominance that would allow the developmental state to ‘succeed’ meant that it would keep political contenders afar and fill the bureaucracy with corrupt loyalists.
EPRDF’s Political Finances
I agree with Nathan’s assertion that “political power [in Africa] is often a route to personal as well as client’s enrichment”. In pre-2018 Ethiopia, control over economic resources used to finance political activity were mainly in the hands of the EPRDF. Political finance sources, mainly through the control over State-owned Enterprises (SOEs) and the control over regional budgets, allowed politicians to allocate favors to their chosen constituencies as is evident in neo-patrimonial systems.
The biggest financial sources for the EPRDF were SOEs including the ones it inherited from the previous governments (like the Ethiopian Airlines, Ethiopian Sugar Cooperation, Ethiopia Telecommunication Corporation) and the party controlled endowment funds. Even though like in the cases of EFFORT-the endowment fund of the TPLF- the endowment and the party have been formally separated and the fund cannot directly finance the party, favors in the forms of employment opportunities, contracts, and procurement opportunities have been the norm.
Even if all EPRDF member parties had their own party controlled conglomerates such as Oromia’s Tumsa and Amhara’s Tiret these region/party-controlled businesses have not been able to match their Tigrayan counterparts in number, size, or reach across sectors and regions. This meant that they were unable to allocate favors to their constituencies compared to what EFFORT’s was doing in Tigray, which could potentially be used to explain why the protests that brought about the reform took place in all but the Tigray region.
As a matter of fact, conglomerates like EFFORT, which made up 60% of Tigray regional government’s domestic revenue, provided a strong and independent sources of regional political finance to an extent that they were able to provide a comparative financial independence that allowed the regional government to mount a challenge to the federal government even when federal budget allocation to Tigray had been limited to the local administration.
What the “lewet” had in store
The cauldron Ethiopia now finds itself in has been a result of years of tensions and center-periphery confrontations. The 2018 reform that was much applauded by many was expected to address not only issues of democracy, governance and Human Rights but also these gross injustices of wealth distribution. The post 2018 period has exhibited a drastic reconfiguration of political finance dynamics in the country such the intention to partially privatize banking and telecom sectors, to allow foreign capital into key industries, demonetization of the previous bank notes and the marginalization of Tigray, which was once a key hub in terms of political finance.
This, however, had not been a smooth ride as the EPRDF had become coterminous with the state and the changes within the government have had implications that translated into virtually all sectors. The pandemic that had hit the country’s economy in 2020, the war in the North that costed the government more than a hundred billion Birr in the first year alone, the drought that is affecting the lives of millions and the inescapable global economic downturn accelerated by the Ukraine war are all ruling exacerbating preexisting conditions.
Though initially the government had been introducing what appeared to be coordinated policy measures (like the changing of bank notes and restrictions of cash flows) that would bring more financial flows into the formal system restrict illicit financial flows they clearly were not sufficient. And the measures taken by the government amid all this conundrum has been an appalling prioritization of ergonomics that is seen by the expenditure of millions of birr in renovations of federal offices across the capital and mega projects like “beautifying Sheger” and superficial quick fixes to structural problems that require structural solutions.
What does the future hold?
The Covid-19 pandemic and its vaccination has revealed the greatest and most lasting divide between the wealthier and poorer worlds. As the world economy is gearing back up, investors would want predictability and stability. Hence, multi national corporations will not opt to rely on work-forces with low vaccinations for fear of continual defects in their production, this could hold true for Ethiopia where more than 80% of the population is yet to be fully vaccinated.
The government’s reckless spending, the outlandish investments on tourist attractions, the closure of hundreds of industries which in turn are increasing unemployment, the rising costs of necessary imports including food and fuel coupled with the general context of war and the multiplying power centers is likely to lead the country into yet another political crisis if left ignored. And even though, the partial privatization of the banking and telecom sectors, and Ethiopian Airlines, could fill immediate gaps in the country’s finances it will not be a permanent solution that would address broad-based economic questions of everyday citizens.
Indeed, with the current trends survival could be unaffordable to Ethiopia’s most impoverished. Hence, the government must find ways to increasingly subsidize social support programs and avail essential goods to lower income groups to cushion the heavy hit that will disproportionately affect low income groups.
Though IMF’s new report forecasts Ethiopia’s growth to be 5.7% in 2023 and the government itself seems to be rethinking its overenthusiastic privatization projects, it is apparent that it is highly in favor of a greater liberalization of the economy. Hence, progressive forces in Ethiopia must be able to hold the government accountable in the inclusive restructuring of the country’s economy to ensure that whatever measures will be taken will be neither at the expense of the majority that is Ethiopia’s poor nor at the expense of democracy.
* Fikir Getachew is the Executive director of Youth Alliance for Leadership and Development in Africa-AAU (YALDA-AAU)
* Publisher’s Note: This contribution is part of a series of stories CARD publishes to encourage intellectual discourse among the youth in Ethiopia. If you want to make contributions or respond to this particular piece, please email your draft to us via email@example.com.