INSTITUTIONAL REFORMS MUST PRECEDE ETHIOPIA’S PRIVATIZATION SCHEMES - July 10, 2018


Yohannes Gedamu (Ph.D)

Ethiopia’s young reformist Premier, Abiy Ahmed, has outlined his administration’s vision for the country in a well-received speech as well as the question and answer session, that was conducted at the request of Ethiopia’s House of Representatives on Monday, June 18th, 2018. After the inaugural speech he delivered on April 2, 2018, the Prime Minister’s latest public performance at the floor of the parliament has been lauded by many in Ethiopia and the diaspora. The reform agenda, which critics had referred to for its lack of details, was also adequately addressed by the Premier.

Ahmed has defended political and economic reforms: Among others, the Prime Minister has addressed concerns raised by parliamentarians on wide-ranging issues of ethnic tensions and evictions, the idea of privatization project outlined by the Executive Council of EPRDF and the sensitive issue of the new administration’s plan to end the so-called ‘no war and no peace’ stalemate between Ethiopia and Eritrea. The back and forth between the Premier and parliament members also showed the clear divide within the incumbent coalition, EPRDF. As such, EPRDF seems to have two easy to point factions; these are those who support the reform agenda as sketched by Ahmed’s vision and those who attempt to keep the status-quo afloat.

The public concern over privatization plans is legitimate: The Premier’s performance has inspired so many and his vision seems more visible by the day as his idea of Ethiopian nationalism has now emerged as a uniting force in a country ravaged by ethnic tensions and decades of divisiveness. Ethiopians from all walks of life have even started a campaign to organize a massive rally in support of his reform agenda in the capital, Addis Ababa. Coming to his latest public speech, however, one of the new administration’s agenda, as explained by Ahmed, deserves further clarifications. The idea of privatizing giant state-owned enterprises such as Ethiopia-Telecom, Ethiopian Electric Corporation (EEPCO) and such well recognized national brands like Ethiopian Airlines and many others has aroused so many questions. The Prime Minister has attempted to calm down worries of Ethiopians who perceived the privatization agenda as auctioning the country. Ahmed addressed the issue saying the majority shareholder of such giant corporations will remain the Ethiopian government. Moreover, Ahmed also assured the public that the process could take more than two years and further plans will be unveiled to the public in a transparent and timely manner.

In that regard, it is crucial to look at what is behind the government’s proposal for partially privatizing such corporations. Ahmed has unequivocally stated that the country is experiencing an acute shortage of financial muscles that it needs to conduct formal businesses. According to the Premier, giant government projects are slowing down or are temporarily paused and private enterprises are suffering from dire scarcity of foreign currency, which essentially hurts the country’s ability to import much-needed goods significantly. Furthermore, Ahmed has also stated that Ethiopia is now unable to pay its debts in a timely manner, which also hurts the country’s ability to seek more funds in loans from international financial institutions and countries in addition to potentially damaging its credit rating. Therefore, besides solving such problems, Ahmed stated that such partial privatization programs would help increase the state-owned enterprises’ tendency to adapt to new technologies through funds that are to be raised while also improving efficiency and accountability of the said entities when it comes to service delivery. Regardless, a much deeper assessment of the economic problems the country is facing deserve renewed attention from scholars and government officials.

The Developmental State Economic Programs Deserves Timely Revisions: Here is why. While Ahmed’s rationale in selling the idea of privatization to the public has claimed many, issues of major concern remain unaddressed. And the problem is very much embedded in Ethiopia’s economic model known as the developmental state economic growth and development strategy. It has been almost a decade since Ethiopia started to experiment with the developmental state economic growth prescription as its motto for economic development. United Nations Economic Commission for Africa (