Ethiopia: 2015 Marked a Sprint in Time, With the Ticker Moving in Different Directions

ADDIS ABABA (HAN) January 5, 2016 – Public Diplomacy and Regional Stability Initiatives News. So much has happened in Ethiopia in the span of one year. It could be said that 2015 marked a sprint in time, with the ticker moving in different directions, to a nation that saw more tidal events than in any other given year. The events that occurred over the year impacted the political, social, economic and diplomatic spheres of the nation and in some of the cases, were historic. The three-day visit of President Barack Obama to Ethiopia could be mentioned as one historic moment. Yet, it was not the only one. Instead, much happened that marked 2015 as unique.

The consistent story line reflected in most of the headlines on mainstream media was that of a nation witnessing rapid expansion of gross domestic product (GDP), with varying facets including infrastructure expansion. The Addis Abeba Light Rail Transit (AALRT) system topped examples of this, and the banking boom as well as the opening of new international brand hotels, served as other indicators. Reports by international financial institutions supported the headlines with numerical evidence.

In its latest Ethiopian Economic Update, for instance, the World Bank reported that the nation is well-positioned to become a middle-income country by 2025. Even the rather skeptical International Monetary Fund (IMF) claimed that Ethiopia’s growth is appreciable, in every sense of the word, although it challenged governmental data that show an average annual GDP expansion of over 10pc between 2010 and 2015.

It is not all good news, though. Much of what has happened in 2015 also challenged the growth narrative that Ethiopian rulers would like to be repeated through all media. From the ongoing drought, driven by El Niño, to the latest public protest in Oromia; from the beheading of Ethiopians in Libya by ISIS, to a foreign currency crunch, much of the news in the past year was in disfavour of the narrative the rulers would like to sell widely. This, of course, is not to mention the rather debatable end of a national election that saw the ruling coalition, EPRDF, and its affiliates controlling all the seats of regional and federal legislatures.

Of course, there was enough good to play in the balance. Not only did the year see traditional rivals of the Nile Basin, Ethiopia, Egypt and Sudan, agreeing to work towards consensus over the Great Ethiopian Renaissance Dam (GERD), but it also witnessed the ratification of the Second Growth & Transformation Plan (GTP II) to be executed between 2015 and 2020. The year also saw private and state-owned banks reaping unprecedented profits, showering their shareholders with sizable earnings per share (EPS). Yet, nothing was as cheerful to Ethiopians as the inaugural operation of the light rail system that is foreseen to bring a shift to the transportation scene of the capital.

It would be difficult to be conclusive about the resultant balance of the year, yet, considering the impact of the events, 2015 seemed to be characterized more by gloom than boom to the nation considered to be an example of “Africa Rising”. In this Year Review, Fortune recaps the main events of 2015, in no temporal and spatial order, other than their significance in the public sphere.

A Mourning Nation

Ethiopians of different creeds came together to denounce the gruesome beheading of 30 Ethiopian migrants in Libya by the terrorist group called Islamic State of Iraq & Syria (ISIS). The news came through a severely digitized video by the group’s propaganda arm that eventually went viral on social media. Shock, rage, sadness, confusion and helplessness were the combined feelings that took hold of Ethiopians at the time.

Public personalities, religious leaders and politicians alike came out to denounce the killings. A public gathering called to mourn the deceased at Mesqel Square, however, ended with a clash between mourners and law enforcement. Later, government announced that groups related to the opposition Blue Party and an outlawed armed group dubbed, Ginbot Sebat, were behind the violence.

Convening in Addis

Addis was at the centre of the global limelight with the Third Financing for Development (FfD) Conference hosted between July 13 and 16, 2015. The Conference, hosted at the United Nations Economic Commission for Africa (UNECA) Conference Hall, marked a watershed moment for the global development scene.

Although global development policymakers gathered in Addis failed to reach consensus on some issues, such as establishing a global body to supervise tax evasion and illicit financial flows, they managed to agree on a document titled “Addis Action Agenda”, a roadmap for the United Nations Assembly held in New York, on September, 2015, that ratified the Sustainable Development Goals (SDGs). The meeting was significant in that it was the largest in Africa’s ‘capital’ and stretched the capital’s accommodation offerings to their limit.

Historic Visit of President Barack Obama

Constricted CoffersOne of the momentous events of 2015 was the three-day official visit of President Barack Obama of United States to Ethiopia. The visit, in July 2015, made Obama the first sitting US president to visit Ethiopia. Much of the discussion that Obama had with Ethiopia authorities related to regional security, but trade and economic relations were also discussed. A notable moment of the visit was the press conference that Obama held along with Prime Minister Hailemariam Desalegn at the National Palace.

The President stood firm by the side of Hailemariam’s administration on democratic development. Yet, the high point of the visit was the speech that President Obama made at the African Union (AU). On that occasion he spoke candidly about the destructive avoidance of term limits by African leaders, lack of vibrant market of ideas, suppression of freedom of expression and prevalent youth hopelessness. The speech overwhelmed mainstream and social media for days.

Constricted Coffers

The past year saw yet another predicament related to Ethiopia’s foreign exchange reserve. As an economy with an export mainstay of primary agricultural produce, the nation’s foreign asset reserve is often suppressed. Complementing this situation is an import regime that is excessively biased towards capital goods. Throughout 2015, foreign exchange shortage and associated macroeconomic impacts made headlines. However, government consistently rebutted what seemed to be common knowledge, with Prime Minister Hailemariam saying “everyone who wants to have it can access foreign currency.”

Statistics from the International Monetary Fund (IMF) showed that the foreign exchange reserve of the nation remained well below two months of imports throughout 2015. The problem was reflected further in the growing gap between the formal and parallel markets. The average difference was 12.5pc, close to the 15pc overvaluation of the Birr that the IMF had proclaimed in its studies. Underpinning the whole problem was the shortfall in export revenue generation that happened under the First Growth & Transformation Plan (GTP I).

Train Time

For the first time in its history, Addis Abeba got a Light Rail Transit (LRT) system as addition to its transportation system in 2015. The rail network goes in two directions with a total distance of 34.47Km. Constructed at a cost of 475 million dollars, loan from China, partly repaid using the proceeds from the sale of two state-owned breweries, Ethiopia’s LRT system is the first in East Africa. Addis Abeba cheered much at the coming of the long-anticipated LRT, meant to bring some relief to commuters suffering from the city’s inefficient public transportation.

However, concerns were also high about the lack of integration between the LRT system and the other transportation systems. More worrisome was the public safety factor. It was the opinion of many that the LRT system was built without giving due consideration to public safety. This proved to be true as the LRT system saw many car accidents in the days closely following commencement of operation. Another complaint widely heard in relation to the LRT system was the impact that the restrictive yellow railway fences had on society, business and public service.

Is It 100pc?

The past year saw Ethiopians going to the polls and voting in the fifth national and regional election. The results saw the ruling EPRDF and its affiliates completely controlling the seats of regional and federal legislatures. In an election that saw a voter turnout of more than 90pc, EPRDF won 501 seats of the federal parliament, while its affiliates took the remaining 46 seats. The number 100pc, calculated by considering the affiliates as parts of the EPRDF, transpired widely in 2015, even if the number was not accurate in the strictest sense of the calculation.

To the many critics of the ruling EPRDF, including opposition political parties, the election result was considered a showcase to the end of multiparty democracy. Ruling party officials were quick to denounce this criticism. They even went so far as to pick examples, from Japan to Sweden, where dominant party system existed for long, without affecting the democratic process. Regardless, a team of observers assigned by the African Union (AU) pronounced the election as democratic. Irregularities, however, were reported in many localities, mainly in rural areas.

Dealing with Death

The United Nations called it the worst in 30 years. The drought in Ethiopia, caused by the El Niño phenomenon, exposed about 10 million people to the need for food assistance. The drought was one of the dominant headlines that grabbed the attention of the public in 2015, both in the mainstream and social media. It all started with the failure of the Belg rain in the 2014/15 fiscal year. At that time, the problem was limited to some of the semi-arid and arid areas of the country.

But, this was followed by the failure of the Meher rain, which not only extended the spatial coverage of the problem, but it also increased the number of people in need of food assistance. Numbers were quickly reviewed with the latest number standing at over 10 million, an almost five-fold increase from the first estimate. Government allocated more than 200 million dollars from its own coffers to mitigate the impact, while it also appealed for support from the international community. With the El Niño expected to make its impact well through 2016, however, there are concerns that the effects of the drought could get worse.

Going International

The Ethiopian hotel industry had a great year, in every sense. On the one hand, local companies managed to seal deals with renowned international franchise brands. As a result, 2015 saw additions that took the number of international hotel brands to 13. The deal that Sunshine Business Plc sealed with Hilton to build a resort in Hawassa and its opening of the Marriott Executive Apartments in Addis were two of the important events in the hospitality sector in 2015. The cheer of the industry was extended with Ethiopia hosting the African Hotel Investment Forum (AHIF) for the second time.

Considered a vital event in the hospitality industry, the Forum served as a platform for deal-making and disclosures. It was not all smooth, though. For the first time, the hotel industry had a consistent rating system applied to it. The rating, conducted by the Ministry of Culture & Tourism (MoCT), with the assistance from the United Nations World Tourism Organization, brought various surprises. The rating identified only three hotels – Sheraton Addis, Capital Hotel and Elily Hotel – as five-star hotels, out of the 95 hotels evaluated under the scheme. The rating of Hilton Addis as a four-star hotel was surprising to many, although most industry observers agreed on the result.

Gathering to Decide

August found Meqelle, capital of Tigray region, busy hosting the movers and shakers of Ethiopia for the 10th Congress of the ruling party – EPRDF. A pivotal event in the decision making process of the ruling party, the Congress saw thousands of VIPs flocking into the city to show their loyalty to the party and take part in the discussions. The gathering, preceded by congresses of the four members of the coalition, discussed major agenda items: the Growth & Transformation Plan (GTP), the implementation of the leadership succession plan and the lack of good governance. Despite the heightened expectations from the public to see new faces taking the wheel, the Congress made only few changes in the power structure. And Prime Minister Hailemariam Desalegn remained Chairman of the party.

Emboldened by an intra-party legitimacy and an overwhelming election victory, Hailemariam also formed a new government in 2015. Under the new structure, the executive was made to comprise 29 ministries and agencies. Typical decisions in the formation of the government were the establishment of the Ministry of State Enterprises, the splitting of some of the ministries into two, and the reduction in portfolio of some of them. In terms of personalities, the appointment of Damitu Habissa as minister of State Enterprises (MoSE), Abdulaziz Mohamed as minister of Finance & Economic Cooperation (MoFEC), Kassa Teklebirhan as minister of Federal & Pastoral Development Affairs (MoFPDA) and Getachew Reda as head of Government Communications Affairs Office (GACO) took the political pundits by surprise.

Getting Richer

Ethiopian banks reaped huge profits in 2015. As shown in their performance report for 2014/15 fiscal year, which ended in June, 2015, most of the private banks managed to sail through the economic waters effectively. This brought good news to the thousands of Ethiopians who have shares in these banks. Compiled data of the 16 private banks showed that they managed to earn profit before tax of 4.7 billion Br, an increase by 24pc year-on-year. After the provision for taxation, the net profit of the banks amounted to 3.6 billion Br. With total paid-up capital of a little over 10 billion Br, the banks stood well-capitalized to withstand shocks. But the year was not only about profit and better capitalization.

Instead, it was also about challenges in human resources and operation. Typical examples of these were the resignations of high-level officials from various banks, rejection of nominated executives by the National Bank of Ethiopia (NBE) and an operational matter that lead to the suspicion of the top-management at the Cooperative Bank of Oromia (CBO). The case with CBO, related to foreign exchange operations, led to the suspension of the Board Chairman, the President, two Vice Presidents and a Director of International Banking. In what seemed to be a surprise policy move by the government, the end of 2015 also saw the merger of the Commercial Bank of Ethiopia (CBE) and the Construction & Business Bank (CBB). Despite the turbulence, Ethiopia’s banking sector remained lucrative and buoyant.

Protesting a Master Plan

A second wave of public protest over the Integrated Master Plan between Addis Abeba and Special Zones of Oromia was one of the watershed moments of 2015. A protest started by students of higher education institutions and secondary schools slowly spread across Oromia and dominated the headlines in the last two months of the past year. It all stemmed from an Integrated Master plan intended to harmonise the economic development of Addis Abeba and its surrounding localities. With Addis and the surrounding localities living under separate administrations, however, the Plan faced resistance from students and the public. By and large, the perception was that the Plan latently intended to swallow the special zones into the capital.

According to the protestors, that could dislocate farmers, change the cultural-linguistic identity of the localities and facilitate land grabbing. Other issues, such as effective self-administration, full-fledged implementation of the Constitution, holding corrupt officials accountable and effective service delivery, were also raised by protestors. It was not all peaceful, though. Instead, what started as a peaceful protest ended up being a violent one, causing the deaths of dozens of students. The number of people who died during the protests range from 5 to 80, depending on the source referred. Government admitted that there might be some occasions where force was used excessively by the law enforcement units.

Source: addisfortune



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