By Haile Kebret
The second issue that has been the source of hope and an inspiration to the people who have been ‘dealt an unfair hand’ is the hope of breaking this misery and joining the Middle-Income countries soon. We all know that an improvement in a country’s national income (which the status simply indicates) is necessary but not a sufficient condition that their lot will change. For Ethiopians who know the depth of their poverty but who have never been told otherwise by both their leaders and donners that Ethiopia will become a middle-income country before is, however, music to their ears. This gave them hope and a belief that there is light at the end of the tunnel, after all. Politicians know this and have repeatedly announced it in their speeches, as the country president’s recent speech testified.
According to an old (Rostow 1960) stages of growth theory,
economies pass through some identifiable stages of economic development.
Regardless of one’s faith in the strict sequence and parameters of the theory,
I argue that Ethiopia was approaching or at least putting the pre-requisites
for what Rostow then called an economic take off. In sum, skipping the
nitty-gritty aspects of applicability and relevance of the theory in the
Ethiopian case, the various investment initiatives in basic industries (
including all those in the various Industrial parks), the expansion in
infrastructure (utilities, roads and railways, for instance), the huge progress
in social indicators (health, education) and as a summary of all of these
achievements, the overall economic progress as summarized by a double digit
economic growth registered until 2018 clearly resembled to what Rostow called
the take-off stage. Short of matching all the elements, for brevity one can
conclude all the developments that had taken place in Ethiopia, clearly suggested
the beginning of that take off stage in which Ethiopia was about to embark on
the ‘promised land’ of joining the middle-income countries by 2025. Among the
many initiated building blocks, this was premised on the advances in building
the infrastructure for generating enough electric power grids that could jump
start, support and sustain such economic growth. I hope I am wrong, but these
sources of hope that have started to be felt seem to be on the verge of being
dashed taking the economic take off stage with them. For tractability, let me
dwell on the last two: the prospect of completing the Renascence Dam and
joining the Middle-Income countries soon.
As many previous observers noted, the Renascence Dam is far
more than a source of electric power for Ethiopians. It is an iconic project
that united all Ethiopians (regardless of ethnicity, religion, and generation)
and stimulated their pride and future hope. In addition to these unquantifiable
benefits, electrification is a pre-requisite for an economic take off or
restructuring the economy towards the industrial phase. According to
preliminary estimates , its contribution not only to the domestic but also the
regional economies was estimated to be substantial. And Even in the absence of
being used as a direct input in domestic production, its potential contribution
as a source of foreign exchange, fish production and limited irrigation were
also presumed to be significant.
Despite the above huge potential contributions of the dam,
however, Ethiopia has a formidable foe in completing this Dam as has been
witnessed thus far even if it overcomes the huge financial burden it imposes on
the subsistence economy. This foe is smooth on the outside but rough on the
inside with many tentacles that both scratch and kill thanks to its friends in
high places and well-choreographed history. To be blunt, Egypt’s insistence on
maintaining a forceful colonial agreement which was unfair, illegal and
disproportionate in the distribution of waterflows is putting the prospect of a
peaceful completion of the Dam complicated at best and uncertain at worst.
Despite showing some deceptive flexibility, it goes one step
forward when its unfairness is exposed but goes two steps back when it thinks
the balance of power is in its favor. In short it has refused to play fairly on
the basis of a mutual benefit (or win-win solution) to all; instead its
position of sharing the flow of water is based on rigid outdated privilege it
was accorded by a colonial regime which Ethiopia was never signatory to. Let me
recoup few points related to the opportunities offered and the provocation
initiated by Egypt:
a. All Ethiopian Authorities (beginning PM Meles
who initiated the project to current leaders) attempted to convince Egypt that
they have no intention of hurting Egypt or Sudan by building this Dam; they
even went out of their way to go to Egypt to explain to Egyptians why and how
the Dam will not negatively affect them;
b. Ethiopian authorities were doing this while still
Egypt was supporting and arming every Ethiopian opposition political group it
could think of destabilizing the country (including those who are now invited
to Ethiopia to be king makers by the current Ethiopian government);
c. But Egypt being the regional ‘spoiled brat’ that
it is, it wants to apply a colonial rule agreed between British subjects in the
19th century excluding the country from whom the water flows but never was part
of that agreement, Ethiopia. Since Ethiopia was not a British colony, what
governs any cross-border rivers is current international law and not what the
colonial powers enacted to water their cotton production during the colonial
era;
d. Egypt is bent on exploiting the Dam to calm its
domestic political unrest, create havoc in Ethiopia by supporting all opposition
groups and countries (Eritrea for instance) hoping to sabotage the Dam; its
support to neighboring countries including establishing military bases in
Eritrea and South Sudan and its sinister motive to create havoc in Ethiopia are
two glaring examples. The recent purchase of huge and very advanced military
arsenal from Russia to threaten and possibly bomb the Dam and its diplomatic
mobilization using the Arab League to warn Ethiopia to adhere to Egypt’s
demands are recent moves in that regard;
e. In addition to the Arab League, Egypt has
started to internationalize the issue of the dam. Ignoring the African Union
and regional organizations, it has started to appeal to the US government and
the world bank to be part of a mediation effort; unfortunately, the Ethiopian
government agreed to go along and the current foreign minister of Ethiopia
seemed happier to be photographed with Mr Trump than what Egypt’s maneuver and
the national interest implied; to believe that Mr Trump will be a neutral
mediator, a person who has probably broken a world record for lying and lack
of trust even to his rich allies let alone to Ethiopia or Africa in general
which he called S….countries is a cruel joke;
f. In sum, given the domestic political and social
environment in Ethiopia and Egypt’s aggressive and unfair recent stance, the
prospect of completing the project as initially planned is becoming uncertain;
What further strengthens this view is, despite the repeated pronouncement that
no external body will be involved except Egypt, Sudan and Ethiopia to settle
their issues, the new twist to involve the US government under Trump who could
easily be persuaded by adulation and his intrinsic bias towards Sub-Saharan
Africa (SSA) and the current Ethiopian prime Minister’s past history and
obsession to please all at any cost is This, I believe, is a bothersome
development. The already announced reduction in the number of turbines in
constructing the dam, the time it is taking to register noticeable progress,
the Ethiopian government’s insignificant attention paid for such a pivotal
project built by the unbelievable sacrifice of the poor, and more importantly
the current PM’s policy shift and questionable loyalty for national interest
does not offer confidence that it will be completed anytime soon, if at all.The second issue that has been the source of hope and an inspiration to the people who have been ‘dealt an unfair hand’ is the hope of breaking this misery and joining the Middle-Income countries soon. We all know that an improvement in a country’s national income (which the status simply indicates) is necessary but not a sufficient condition that their lot will change. For Ethiopians who know the depth of their poverty but who have never been told otherwise by both their leaders and donners that Ethiopia will become a middle-income country before is, however, music to their ears. This gave them hope and a belief that there is light at the end of the tunnel, after all. Politicians know this and have repeatedly announced it in their speeches, as the country president’s recent speech testified.
The worst part is, even those who are supposed to know the
current state of the Ethiopian economy are silent probably not to be on the
wrong side of the government’s media campaign. Not the subject of this note but
their silence when there is no justifiable reason why not only potential but
also actually profitable state enterprises are in the process of being
privatized is also a case in point. The crucial question seems to be, is the
hope of joining the middle- income countries any time soon dashed or delayed?
If so by how long? To answer these questions, it is important to recoup how
this narrative started and the assumptions that led to the prediction that
Ethiopia will join the Middle-Income countries by 2025 .
To cut the story short, let me briefly state the current state
of the Ethiopian economy relative to some of the main assumptions used to reach
the conclusion. In sum, observing these two scenarios one could easily conclude
that the hope of reaching at that stage is slipping away. Let me explain:
1. The current state of the Ethiopian economy:
- Inflation is double digit and is about to get
worst due to the exchange rate shortage caused by stagnant export sector and
heavy dependence on imports even for basic items and intermediate inputs;
- GDP growth has been declining from around 10%
until 2017 to around 7% in the last two years; and IMF forecasts indicate
Ethiopia’s economic growth will not exceed 7%, at least until 2024 .
- Debt to GDP ratio has reached in excess of 60%
and still climbing - more than half is external debt;
- With these weak fundamentals and the bursting
population pressure and the implied huge unemployment, the prospect of the
economy significantly turning around to achieve that goal is weak at best or
unlikely at worst if the forecasts hold.
2. But the bases of the prediction are much rosy:
- The crucial assumption (among many) used to
arrive at the expectation that Ethiopia will join the middle-income countries
by 2025 was that the economy will, on average, continue to grow by more than
11.3% per annum. This was the assumption of the best-case-scenario initially
suggested in 2008 by this author and later adopted by the Ethiopian Ministry of
Finance;
- The assumption for the worst-case scenario was
for the economy to grow at 6.3%; hence the actually realized and forecast data
is closer to the worst-case scenario than the best-case scenario. And according
to the worst-case scenario, Ethiopia will likely join the middle-income
countries not by around 2025 as the best-case scenario predicts but by the
worst-case scenario which is about a decade later.
- In fact, even the assumptions attached with the
worst-case scenario have not incorporated the current developments in the
country. These include: political turmoil, destruction of private enterprises
and the implied negative investment climate, the disintegration of law and
order and the overall political friction among various sectors of society.
These suggest that even the likelihood that Ethiopia will join
the middle-income countries by 2035 is a daunting task let alone by 2025 . One
might ask, what is waiting for ten more years after living in poverty for
eternity? Whatever the merit of that argument, such a delay just destroys the
hope and prospect for millions that were told there is hope at the end of the
tunnel since no light is visible!!!
Contact: interested readers may contact the author at
hailekebret@yahoo.com
