Last month, coffee buyers across the globe had a rare glimpse into Ethiopians’ day-to-day experience, where {www:haphazard} policymaking is used by the government to interfere in and control people’s business whenever it feels like it. A new directive requiring the shipment of coffee in bulk container (a process of filling coffee in ‘dry containers’ fitted with a liner, as opposed to loading coffee packed in 60-kilogram jute-bags) suddenly surfaced in mid November and shocked the market.[read here] It was revoked thirty days later because of pressures from foreign diplomats, plummeting sales, and a cloud of fear of losing coffee buyers for good.
It’s not clear how it all began, but it appears some genius one day figured out the quickest way to “modernize the country’s export packaging and shipment standards” and the government decided to begin shipping coffee in bulk containers within two years. And, sometime during the 2010/11 fiscal year, an anonymous “investor” was granted a permit to import coffee blowers (machines equipped with a fan to generate a controlled pressure air current that throws coffee into containers, and a {www:suction} system to remove the dust created by the process.) Then, the operation began rolling out:
November 14, 2011 – the Ministry of Trade (MoT) concluded that “the conditions necessary for shipping coffee in loose container load are in place”. Therefore, Yakob Yala, State Minister of Trade, wrote a letter directing the Ministry of Agriculture to make sure that all coffee exports are shipped in bulk loads, unless exempted by his office, effective November 11, 2011. The letter described the initiative as a win-win-win proposition benefiting the country, exporters, and international buyers, thus the need to impose a restriction.
* The directive was not publicized nor published on the websites of the Ministries of Trade, Agriculture, or the Ethiopia Commodity Exchange (ECX).
November 30, 2011 – a coffee importer who was in Ethiopia at the time twitted a message which later landed on a Specialty coffee blog and beyond. The news stirred confusion and a rush of complaints from green beans buyers, distributors, and small to medium-scale roasters and retailers. The first breaking news blog post read:
“40,000 lbs in one big bladder or nothing out of Ethiopia is the word…coops are not exempt, this is wild. Lot separation in Ethiopia may now be illegal if this is true.”
December 3, 2011 – Ethiopian Coffee Exporters Association (ECEA) submitted a protest letter to Yakob Yala’s office demanding a revision of the directive to lift the broad restriction of bulk shipping. The board members of ECEA and ECX also held a joint meeting to discuss the concerns raised by ECEA.
December 8, 2011 – Yakob Yala convened with a group of coffee exporters to assess the progress of coffee export, which has been lagging behind the government’s ambitious plan of earning more than $1.1 billion in the current fiscal year. He complained that the quantity of coffee exported during the first four months of the year was short of the planned 66,400 tons by about 22,371 tons.
The exporters warned that the export may further decline and their customers may resort to other coffee growing nations unless the bulk shipment restriction is lifted promptly. They said, most of their buyers had already refused to accept the coffee in bulk containers and implored the authorities to consider a demand-based, progressive approach that ensures a smooth transition to bulk shipment. The State Minister won’t budge. He urged the exporters to speak in unison in support of the directive and tell their buyers to live with it. He assured them that, if any, the buyers abandoning Ethiopia’s coffee due to the restriction won’t be more than 5-10 percent – “a gap which can be easily filled.” “Tell them that we are doing all this for their own sakes,” he insisted.
Yakob Yala says the directive was issued after raising awareness among stakeholders. But, according to Reporter, only one of the 15 exporters who attended the meeting said his company didn’t have a problem with bulk shipping; the other 14 exporters strongly opposed the restriction. Haile Berhe Kinfe, Guna Trading’s head of the Agricultural Products Marketing Department tipped Reporter that bulk coffee shipping is a relief for large-volume exporters.
More than a dozen international coffee buyers submitted written complaints directly to MoT and, through diplomatic channels, to other authorities.
December 14, 2011 – According to The Reporter, members of the ECEA convened and concluded that “the directive was completely impossible to work with” and demanded that authorities revise the regulation. They also decided to explore fall-back plans, including submitting a petition letter to Prime Minister’s office. Separately, the ECX CEO Dr. Eleni Gabre-Madhin and Board Director, Ambassador Addisalem Balema confided with Yakob Yala’s boss, Kebede Techane, Minister of Trade.
December 15, 2011 – Kebede Techane called ECEA’s board members and told them that “the directive has been made null and void”. Again, the news was not published on the websites of the Ministries of Trade, Agriculture, or the ECX. The government’s two major developmental news agencies, Walta Information Center and Ethiopian News Agency did not cover the story either.
With that, a shocker came and gone, leaving the public with many questions to ponder.
In retrospect, the now defunct bulk coffee directive had fundamental flaws that make the very intentions behind the government’s decisions appear very suspicious, hence this public scrutiny of the defective policy to help inform the public of the sources of the eternal problems facing the nation.
A sound government policymaking process involves at least three major stages: problem definition & analysis, formulation, and implementation. This directive fails the test in almost all of these categories.
According to Yakob Yala’s letter to the Ministry of Agriculture, the directive was meant, in part, to modernize the packaging standards, reduce costs, maintain the quality of the coffee, and minimize theft.
In other words, the government defined the problem (modernize the packaging standards, opportunities for cost cutting, and need to minimize theft) and identified the solution (bulk shipment) and issued a broad directive with ambiguous enforcement instruments.
To begin with, the policy being sought here is merely a response to perceived problems and their consequences (backward packaging and theft, for example), rather than directly addressing the underlying causes of the real problems facing the coffee sector. By definition, this is bad policymaking.
It is true that bulk coffee shipment has a number of benefits and is, in fact, enjoying a growing popularity by large coffee shippers and producing nations, such as Brazil. The popularity is holding steady because, among many other advantages, of direct cost savings due to increased payload of almost 17% (a container can hold at least 3 more tons of coffee when loaded in bulk) and reduced inland transport movement (although the MoT letter erroneously states that it increases inland transport). So, the reason the policy failed so prematurely is not because bulk shipping is not appealing to shippers; it is rather because of the shallow analysis, lack of stakeholders’ involvement, and amateurish implementation of the policy. This can easily be revealed by deconstructing the directive into its hollow components.
First, the directive requires all coffee shipments, unless exempted by the MoT, to be shipped in bulk container, but does not disclose the criteria or procedures for requesting or making such an exemption.
Second, the directive disregards the fact that most of the ultimate buyers of Ethiopia’s coffee need their coffees packaged in small bags.
A considerable portion of the global coffee trade is conducted through distributors (companies who purchase coffee in full container lots and sell it in bags to roasters and retailers). It is estimated that only less than 30% of the world coffee is directly purchased by ultimate roasters. The rest of the coffee is purchased by independent importers for redistribution to small and medium-sized roasters directly or via local subsidiaries in consuming countries. Among the group that buy small lots directly or indirectly (from independent distributors) are the Specialty coffee buyers and roasters, whose numbers in North America alone ranges approximately between 3,700 and 4,500. Since most of these businesses often purchase small quantities of distinct microlots (small lots of fine coffees that buyers or roasters select in a given harvest season) to feature to their customers, it is vital that their coffees are packaged at origin in small bags so as to preserve lot separation when shipped in the same container with other lots.
At the other end of the spectrum are the large-scale buyers who often buy multiple full container lots at a time. These buyers are not concerned about lot separation as much as they care about maximizing profit by increasing payload and reducing inland fleet at the receiving end. Obviously, these companies do not need to be told by the MoT when and how to make use of ingenious shipping techniques, such as bulk containers.
Third, the far-reaching directive mostly impacts international buyers and importers whom the government has no control over. It didn’t cross the policymakers’ minds that, Ethiopia, a country with the least bargaining power in the world trade, is not in a position to dictate how its customers should ship their coffee. That the commodity coffee market is a buyers’ market where sellers compete among each other to attract more buyers, not the other way around.
Fourth, selecting the type(s) of bulk liners (big coffee bags usually made from virgin polyethylene in a size that is equivalent to the inner space of a container) is a matter of choice for importers and regulators in consuming countries, not shippers or exporters. Due to variations in the brands of liners that are licensed and recommended by consuming countries, the selection of bulk liners is exclusively reserved for the buyers. Ethiopia does not have the rights to override consuming countries’ regulations pertaining to the selection of these liners. It is for this reason that industry experts recommend that coffee exporters and shippers in exporting countries must first get the buyers’ consent before planning to ship in bulk.
Fifth, despite MoT’s claim otherwise, most of the stakeholders in the coffee sector have not been engaged during policy formulation. Only 1 out of the15 major exporters was excited about the directive. This indicates the extent to which the government attempted to involve the stakeholders – even the ones that are based in Addis Ababa – and considered their needs.
Sixth, the directive does not specify its enforcement mechanism. It does not spell out the measures that will be taken in an event some or all in the coffee sector ignore the regulation.
Finally, there was no apparent reason for making this a retroactive policy. By making the effective date of the restriction three days prior (Nov 11, 2011) to its enactment (Nov 14, 2011), the directive automatically changed the terms of trade for all the transactions that were in the pipeline. In so doing, the directive changes the legal consequences of not shipping in bulk container even for the trade deals closed under a jute-bag shipping agreement.
Bottom line, the directive was doomed to fail although it could have had a devastating effect, had it not been yanked, primarily on the smallholder family farmers that are organized under coops. Following a similar misguided policy that enabled ECX to control the coffee sector, only commercial farms and farmers organized under coops are permitted to engage in direct trade with buyers – the only marketing channel that ensures lot separation. The rest of the farmers (approximately 90%) have been deprived of their rights to engage in direct trade with ultimate buyers, and forcing their high-value coffees to be routed to ECX to be sold at commodity prices to buyers who are familiar with the recognizable geographic origins and also demand lot separation.
The question, now begging for an explanation is, what is the real motive behind the bulk coffee policy? Was this supposed to be another part – next to ECX – of a bigger plot?
Hundreds of Ethiopians who took part in the 2011 Great Ethiopian Run in Addis Ababa two weeks ago Sunday turned the annual event into a protest rally against Meles Zenawi’s dictatorship as the video below shows. The Federal Police arrested over 50 of the runners and released 27 by Friday. Their crime is peacefully voicing their opinion. The fate of those who are still in detention is not known. The runners chanted:
Woyanne Leba, Leba Leba, Woyanne Leba, Leba, Leba (Woyanne thief)
Ende Gaddafi Aykeriletim Tifi (He [Meles] will be slapped like Gaddafi)
Sanifeligachew 20 ametachew (They stayed 20 years without our wish)
Lately, the portrait of Ethiopia painted in the reports of Transparency International (Corruption Index) and Global Financial Integrity shows a “Land of Corruption”. That contrasts with an equally revolting portrait of Ethiopia painted in a recent broadcast of a fear-mongering three-part propaganda programentitled “Akeldama” (or Land of Blood) on state-owned television. The program aired on November 26-28 was intended to be a moral, and to some extent legal and political, justification of dictator Meles Zenawi’s “anti-terrorism law”. The program begins with a doleful narrator setting a doomsday scenario:
Terrorism is destroying the world. Terrorism is wrecking our daily lives, obstructing it. What I am telling you now is not about international terrorsim. It is about a scheme that has been hatched against our country Ethiopia to turn her into Akeldama or land of blood. For us Ethiopians, terrorism has become a bitter problem. In this regard, I have three consecutive programs prepared for you my viewers.
Displaying photos of alleged terrorist carnage and simulated blood droplets falling from the title of the program — dead bodies of babies and little children lying on the ground, fly-infested corpses of adults oozing blood on the asphalt, severed limbs scattered in the streets, burned vehicles, bombed buildings, doctors treating injured victims, a crowd of wailing women mourning at a gravesite, an old man crying his eyes out over the death of his wife at the hand of “terrorsits” and footage of the imploding Twin Towers in New York City on September 11, 2011 and on and on — the narrator accuses “ruthless terrorists” for having “destroyed our peace” and “massacring our loved ones”. In a plaintive tone the narrator exhorts:
“Let’s look at the evidence. In the past several years, there have been 131 terrorist attacks; 339 citizens killed; 363 injured and 25 kidnapped and killed by terrorists.
By displaying grisly spectacles of acts of alleged terrorist atrocity, cruelty, brutality and inhumanity from years past and by describing those acts with deceitful, deceptive and distorted narrative, “Akeldama” hopes to tar and feather ALL of Ethiopia’s opposition elements, inflame public passions and offer moral justification for Zenawi’s recent crackdowns and massive and sustained human rights violations.
The propaganda objective of “Akeldama” cannot be mistaken: Zenawi aims to vanquish from the active memory of the population any traces of popular support or sympathy for his opposition and critics by demonizing, brutalizing, dehumanizing, “villainizing” and virtually cannibalizing them. He wants the population to view the opposition as bloodthirsty gangs of conspirators blowing up defenseless babies, children, women and innocent citizens and unleashing terror and mayhem in every street corner in Ethiopia. The revolting and gruesome scenes and sequences of carnage and destruction stitched into the video are intended to lump together all of Zenawi’s opponents with Al Qaeda and Al Shabbab terrorists in Somalia.
“Akeldama”: Dictatorship, Lies and Videotapes
On the surface, few inquiring minds would disagree that “Akeldama” is sleazy melodrama. It has an exalted hero, dictator Meles Zenawi, the knight in shining armor, waiting in the shadows armed and ready to impale the wicked terrorists with his piercing lance. There is a damsel in distress, Lady Ethiopia. There are an assortment of scheming villains, conspirators, mischief-makers, subversives, foreign collaborators, and of course, terrorists who are cast in supporting roles as opposition leaders, dissidents and critics. It has a sensational and lurid plot featuring cloak-and-dagger conspiracies by neighboring countries, clandestine intrigues by Diaspora opposition elements, sedition and treason by local collaborators, and of course terrorism. Naturally, in the end, good triumphs over evil. Sir Meles Zenawi, knight errant, political wizard, archer and swordsman extraordinaire, delivers Lady Ethiopia from the clutches of the evil and sinister Al Qaeda, Al Shabbab and their minions and flunkeys, namely Ethiopia’s opposition leaders, dissidents and critics. Hollywood’s worst horror shows have nothing on “Akeldama”.
It is easy to dismiss “Akeldama” as dimwitted and ill-conceived horror melodrama. But that would be a mistake because as lame and as cynical as it is, its manifest propaganda aim is to present a morality play for the masses in an attempt to drum up support for Zenawi and preempt, prevent or stall the dawn of an “Ethiopian Spring”. Careful review of “Akeldama” suggests that Zenawi aims to accomplish a number of propaganda objectives: 1) tar and feather all who oppose him as terrorists, terrorist sympathizers and fellow travelers, war mongers, blood-letters and genocidal maniacs, and inflame public passions, promote hatred and incite distrust and suspicion against them; 2) create a climate of fear, loathing and intolerance and trigger mass hysteria against the opposition by concocting a crude propaganda brew of mass deception, mass distraction and mass demoralization; 3) divert the attention of the population from the pressing economic, social and political issues of the day by feeding their fears, accentuating their anxieties and concerns and encouraging them to passively accept Zenawi’s rule, and 4) provide justification why Zenawi has a moral imperative to ruthlessly crackdown and clampdown on his opposition.
The fact of the matter is that every major international human rights and other independent organizations dedicated to good governance has condemned Zenawi’s regime for gross human rights violations, corruption, lack of transparency and accountability and suppression of press freedoms. Zenawi understands that he has no moral legs to stand on and that he is running out of options. He rules by fear, intimidation, lies and deceit. Lacking any moral standing and little public support in the country, Zenawi now seeks to capture the moral high ground by presenting a pathetic and cynical melodrama.
His strategy is simple: To canonize himself, he demonizes his opposition and critics. By casting the opposition in the moral sewer, he hopes to capture the moral commanding heights. By portraying the opposition as bloodthirsty terrorists and baby killers, he hopes to mask his own bloody hands. By showing gruesome pictures of alleged atrocities by his opponents and by creating a message of fear and loathing, he aims to manipulate and frighten the population into supporting him. Ultimately, he hopes to create the public impression that all of the crackdown and clampdown on dissent, the violence against opponents and the complete closure of political space is morally defensible and necessary as measures needed to protect the population from “terrorism that has destroyed our daily peace” and “killed our loved ones”. Simply stated, “Akeldama” is Zenawi’s slick moral justification for his two decades of dictatorial rule, shutting down every independent newspaper and exiling journalists, jailing dissidents, muzzling critics and thumbing his nose at the rule of law and international human rights conventions.
The Strategic Use of Propaganda by Dictators
Hateful depiction of opposition elements by dictators is nothing new. In fact, all dictatorships in modern history have employed the media — everything from posters and newspapers to films, radio programs and now internet technologies — to moralize and pontificate about their rule while demonizing and mobilizing against their opposition, dissidents and critics. Joseph Goebbles, the grand master of propaganda, undertook a massive media campaign of fear and smear against the Jews which led directly to the Holocaust. The communists used “agitprop” (agitation and propaganda using drama, film, art, music) to win the support of the masses and to rail against the evils of liberal democracy (“neo-liberalism”), capitalism, human rights and so on. Agosto Pinochet’s coup against Salvador Allede in 1974 was followed by massive media propaganda campaigns depicting the liberal opposition as a bunch of communists and terrorists. Over 130 thousand Chileans and foreigners were tortured, imprisoned, killed or disappeared by Pinochet’s security forces.
For decades, South Africa’s Apartheid regime successfully used a slick propaganda campaign against the African National Congress (ANC) by “convincing” Western governments that the only choice to be made was between ANC communists and terrorists and freedom-loving Apartheid racists. Both John Vorster and P. W. Botha had the mindboggling audacity to portray the Apartheid system as a victim of terrorism, turning logic and facts on their heads, in their efforts to build and maintain Western support. They succeeded for a long time, but in the end their propaganda effort to delegitimize the ANC by legitimizing their illegitimate Apartheid system failed totally. “Akeldama” is no different. Zenawi portrays his regime as the victim of terrorism unleashed by the opposition, neighboring countries, Al Qaeda and Al Shabaab to bolster domestic and international support. He undertakes a fear and smear campaign aimed at tarring and feathering specific journalists, opposition party leaders, critics and dissidents as terrorists and enemies of the state while seeking to conceal and absolve himself of any culpability for massive and comprehensively documented human rights violations over two decades.
Dictators and Propaganda
But why do immoral and amoral dictators seek moral redemption? Political psychologists who have studied dictators point to a number of factors. One major reason is that all dictators are self-delusional and narcissistic (afflicted by morbid self-absorption and an over-inflated sense of self-importance). They believe their own PR (press release). They conveniently “convince” themselves that they are loved and venerated by their people, destined by Providence to save their nations and usher in a new era of freedom and prosperity (some call it a “Renaissance”). Gadhaffi swore until his last breath, “They love me. All my people with me, they love me. They will die to protect me, my people.” Gadhaffi was so narcissistically delusional that he declared, “I am the creator of tomorrow, I am here, I am here, I am here…. Libya is my country. I created it, and I can destroy it.” Rarely, if ever, was it about Gadhaffi’s love for Libya or Libyans.
All dictators see outside conspiracies being hatched against them every day. If there are protests, it is not because “my people no longer love me” or “they have come to outright hate me”, rather it is because outside agitators are making them do it. Gadhaffi was so detached from reality that he claimed the young people protesting against him were doing so because they were taking drugs. Mubarak, Gadhaffi, Ben Ali, Assad and Gbagbo claimed the protests in their countries were guided and manipulated by evil outside forces. Before his swift fall from power, Mubarak appeared on state television and accused foreign journalists, human rights activists, and foreign hands for fomenting the unrest. Assad in Syria blamed “saboteurs” backed by foreign powers for fomenting widespread civil unrest and chaos. He claimed the unrest were the result of “conspiracies designed outside and perpetrated inside Syria.” Gbagbo accused foreign envoys of seeking to turn the military aganist him. Ali Saleh of Yemen accused foreign agitators for protests that were taking place in the country. In a speech on Libyan state television, Gadhaffi declared al-Qaeda was responsible for the uprising in Libya. Likewise, Zenawi’s message in “Akeldama” is that the people love him, and the mischief-makers are primarily outside agitators, namely Diaspora opposition leaders, neighboring countries, Al Qaeda and Al Shabaab terrorists and their local minions and collaborators.
As I have previously argued,
Dictators see only what they want to see; and to avoid what they don’t want to see, they create their own convenient world of illusions cut out of the whole cloth of their personal beliefs, opinions and fantasies. As they continue to abuse power without any legal restraints and convince themselves that they are above the law and accountable to no one but themselves, they transform their world of illusion into a world of delusion. In their delusional world, they become both the “lone ranger” of the old American West “cleaning up bad towns and riff-raff” and the only custodians of the Holy Grail, with miraculous powers to save their nations. In their delusional world, there is room only for themselves and their cronies….
“Akeldama” II: Let Us See All of the Evidence of Atrocities Committed in Ethiopia
If “Akeldama” is indeed an accurate depiction of Ethiopia as the “Land of Blood”, it is manifestly lacking in evidence. That is why we MUST follow the exhortation of the narrator in “Akeldama” to take a “look at the evidence in the past several years.” It may be true that there were “131 terrorist attacks in which 339 citizens were killed; 363 injured and 25 kidnapped and killed by terrorists.” But is that all the body count? Let us really look at the evidence — not in bits and pieces, not in slivers and shreds, not in fragments and scraps — but the whole body of evidence, the totality of the evidence. Let us have an “Akildama II” and examine
the status of numerous detainees in three documented secret jails where they were held without due process of law and in flagrant violation of international human rights conventions;
Let the truth be told about ALL atrocities committed in Ethiopia, without exception. Let the chips fall where they may!
Never Missing an Opportunity to Miss an Opportunity
Instead of wasting time and resources hate-mongering and demonizing the opposition, critics and dissidents, Zenawi could have used the opportunity to highlight and brag about his achievements and accomplishments over his two decades at the helm. Instead of showing mayhem, dismembered bodies, dead babies and destruction, he could have showed the people what he is doing (and has done) to bring down inflation and eliminate economic privation. Instead of promoting national enmity by depicting brutality, he could have used the opportunity to promote national unity. Instead of spreading a propaganda of hate, he could have been a peace and reconciliation advocate. Instead of demonizing his opponents, he could have humanized them. He could have showcased all of his achievements in eradicating extreme poverty and hunger, establishing universal primary education, promoting gender equality and empowerment of women, reducing child mortality, improving maternal health, combatting HIV/AIDS, malaria and other diseases and ensuring environmental sustainability. Exhibition of such achievement could discredit any opposition claims and actions to legitimacy than the display of gratuitous horror, carnage, mayhem and destruction. But it seems Zenawi never misses an opportunity to miss an opportunity to do good, the right thing, the moral thing, the compassionate and humanistic thing.
It is not clear if “Akeldama” is the first in an endless series of melodramas calculated to demonize and dehumanize the opposition. It would be great to have an “Akeldama II”. But that is unlikely. There is little evidence to show that the lame and cynical piece of propaganda has gained any traction in the public. There is substantial anecdotal evidence which suggests most viewers in Ethiopia and the Diaspora are turned off by the gory scenes and deceitful exhortations of “Akeldama”. Even friends of Zenawi are said to have raised eyebrows by the excessive and extravagant display of gratuitous violence in the program.
At any rate, Tamagn Beyene’s masterful review of “Akeldama” delivers a totally devastating critique by pointing out numerous lies, factual errors, wholesale fabrications, distortions, exaggerations and fallacies. But credit must be given where it is due. Zenawi has once again succeeded in distracting us all from the real issues. Now, can we get on with the discussion of the issues that really matter such as of inflation, corruption, arbitrary detention, intimidation, maladministration, truth adulteration, balkanization, and the need for better collaboration, improved harmonization, effective communication and, most of all, genuine reconciliation….?
Land of Corruption or Land of Blood?
This past Summer, Zenawi, responding to an interviewer’s question about his feelings concerning the use of the word “famine” by the Oxford Dictionary synonymously with Ethiopia, said:
It is a mixed up situation. On the one hand, like any citizen, I am very sad. I am ashamed. It is degrading. A society that built the Lalibela churches some thousand years ago is unable to cultivate the land and feed itself. A society that built the Axum obelisks some 2-3 thousand years ago is unable to cultivate the land and feed itself. That is very sad. It is very shameful. Of all the things, to go out begging for one’s daily bread, to be a beggar nation is dehumanizing. Therefore, I feel great shame.
It is a crystal clear situation for me. I feel great shame that a society that built the magnificent Lalibela churches (one of the great wonders of the ancient world) and the obelisks of Axum should be known throughout the world not only as a “beggar nation” but also as land of corruption, land of blood, land of famine and land of living lies.
Previous commentaries by the author are available at:
(Bloomberg) — Ethiopia, Africa’s second-most populous nation, lost $3.3 billion to {www:illicit} outflows such as bribery and corruption in 2009, Global Financial Integrity said.
Mispricing of trade transactions to facilitate money laundering accounted for $1.9 billion of the funds in the Horn of Africa nation in 2009. The total lost was more than double the amount in 2007, the Washington-based advocacy group said in an e-mailed report.
Ethiopia earns 6.4 percent of {www:gross domestic product} from donor grants, compared with an average of 0.9 percent for all sub-Saharan African nations, according to the International
Monetary Fund. Illicit outflows exceeded the $2.8 billion in aid and export revenue earned in 2009, GFI said.
“There is no excuse for this,” former U.S. Ambassador to Ethiopia, David Shinn, said in an e-mailed response to questions on Dec. 12. “If this trend has continued into 2010 and 2011, then Ethiopia has a real problem.”
The government hasn’t had a full explanation of the figures yet, Communications Minister Bereket Simon said.
“Overall Ethiopia is a country where you can find financial discipline,” Bereket said in a phone interview from the capital, Addis Ababa, yesterday.
Ethiopia scored 2.7 out of 10 on Transparency International’s Corruption Perceptions Index 2010, with zero being highly corrupt. The country ranked 66th out of 157 nations for losing the most in illicit flows in the past decade, averaging $1.2 billion a year, GFI said. China was the highest ranked with $273.7 billion. After adjusting for economy size, only Kenya, Tanzania and Sudan had a better average from over 50 African nations, Shinn said.
“The calculations are largely picking up measurement errors and differences in weak data collection methodologies between countries, even though they will also include smuggling, underreporting to avoid customs duties and capital flight,” Stefan Dercon, chief economist at the U.K.’s Department for International Development, a major Ethiopian donor, said in an e-mailed response to questions yesterday. “But it’s extremely naive to assume that this is just {www:capital flight}.”
An Ethiopian man named Yared (his real name is withheld for his safety) went to Ethiopia a few months ago to sell his family house after his parents moved to the U.S. One of the reasons he decided to sell the house was that after hearing about the recent land ownership decree, he realized that a few years from now the house will have little or no value.
Yared succeeded in selling the house for 2 million Ethiopian birr. The buyer, probably some fool from the Diaspora, deposited the money in Yared’s account at the Commercial Bank of Ethiopia (CBE), which is run by the National Bank of Ethiopia (NBE).
After removing his furniture and handing over the house to the new owner, Yared went to the CBE to withdraw his money and either deposit it in a private bank or convert it into hard currency in the black market so that he can bring it to the U.S.
To Yared’s shock and surprise, the CBE management told him that the bank doesn’t have the money to give him and that he has to wait. When Yared asked how long he has to wait, the managers told him they don’t know.
Yared told an Ethiopian Review associate that he has been sitting in Addis Ababa for the past 3 months waiting for the bank to give him his money.
Ethiopian Review has been reporting that the financial system in Ethiopia is in deep crisis. Ethiopia’s central bank, the National Bank of Ethiopia, is running out of money because of huge number of borrowers who stopped making payments, not to mention the massive corruption that has been going on in the bank. NBE is also the personal piggyback of Meles Zenawi and Azeb Mesfin.
Those who are close to the regime know about the financial crisis and are getting their money out of the country as fast as they can.
The Woyanne junta recently ordered National Bank of Ethiopia (NBE) to print 50 billion birr [read here] to in preparation for further devaluation of the currency.
{www:COP17} is being hailed as “groundbreaking” as a deal was agreed after 14 days of difficult and, at times, deadlocked talks. One of the most contentious issues for Africa was the Green Climate Fund, which will go ahead despite anger at the overall failure of developed countries to commit investments. JANICE WINTER explains why this compromise is the best possible scenario.
Headlines last week declared: “Meles Zenawi cries foul over climate money pledges”. Well, that’s rich.
Leading Africa’s heads of state and government panel at the COP17 climate talks in Durban, the Ethiopian prime minister’s biggest emphasis was on the Green Climate Fund. Not only did he complain that funds pledged at Copenhagen COP15 in 2009 had failed to materialise, but also that, rather than being “new” money, much of it seems set to be recycled from existing aid budgets. He warned that such disingenuousness risked undoing the modest gains made towards the Millennium Development Goals and undermining the credibility of the entire process “in the eyes of the people of our whole continent”.
His position seemed reasonable enough: there was compelling scientific evidence that climate change will have a disproportionate impact on socio-economic development in Africa and that considerable financial investments were required from developed countries to assist Africa to adapt to the impact of climate change. But I am “of this continent” and something else risks undermining the credibility of the process in my view: that a corrupt dictator is provided with such an influential platform from which to hijack a critical cause for his own, probably illicit, interests. Coming from Meles, statements about credibility are hypocrisy at its most nauseating.
The Green Climate Fund is aiming for about $100-billion a year by 2020. The man clamouring for this considerable fund is regarded as one of the most repressive leaders on the continent. His government claims to have won a ludicrous 99.6% in the 2010 elections, jails the highest number of journalists in Africa using a law that criminalises dissent as terrorism and brutally tortures critics and opposition figures. Most crucial for this discussion, his government faces widespread, credible and sustained allegations of abusing Ethiopia’s enormous $3-billion of annual developmental aid as a tool of political repression and as a co-option mechanism to bolster his 20-year rule. Detailed and robust investigations include those by Human Rights Watch, The Bureau of Investigative Journalism, and Newsnight.
According to a report to be published by Global Financial Integrity later this month, Ethiopia has lost $11.7-billion to outflows of illicit funds in the last decade. In 2009 alone, the figure was $3.26-billion, exceeding both the value of its total annual exports and the total development aid it received that year. And it is on the increase. The candid finding: “The people of Ethiopia are being bled dry. No matter how hard they try to fight their way out of absolute destitution and poverty, they will be swimming upstream against the current of illicit capital leakage.”
Yet despite these exposés and a significant deterioration in the country’s human rights situation since the brutal post-election crackdown of 2005 (in which 199 people were killed in just four days), international development aid to Ethiopia has doubled since 2005. Something as critical as the Green Climate Fund should not repeat the serious failures of developmental aid in this regard.
Meles Zenawi’s international credibility lies largely in Ethiopia’s official double-digit annual growth rates since the questionable 2005 elections and its asserted progress towards the Millennium Development Goals. As exiled Ethiopian journalist Abiye Teklemariam writes, Meles has forged an image as “a technocratic, if dictatorial, leader who had been able to crack the code of east Asia’s rise and download it into an Ethiopian hardware.”
Conveniently for Meles, no independent institutions in Ethiopia exist to check the veracity of his government’s figures, despite the credible scepticism by some international economists and substantial discrepancies in conclusions about Ethiopia’s performance and progress toward the MDGs. Indeed, the average growth rate for Meles’ entire 20-year rule (including the purported fast-paced period of the past few years) is less than 5% (below the African average of 6%) and that the country only overtook its 1975 GDP in 2006. Even if we take his spectacular recent figures at face value, which would be very generous, these are not representative of his rule. And despite these impressive, if contentious, figures, the Ethiopian economy is characterised by very high inflation, widespread unemployment, a stagnant private sector and corruption.
Before the enormous intended investments are endowed to the Green Climate Fund, far closer interrogation is needed of the ways in which this money might be spent and by whom – whether, in fact, there would be effective guarantees that the funds would be spent on projects to counteract the impacts of climate change, or would instead risk being used by undemocratic leaders such as Meles to counteract the challenges of political opposition and dissent.
The figures for the Green Climate Fund have been calculated by the African Climate Policy Centre, based in Addis Ababa. As it currently stands, African countries and institutions would be eligible for direct access to the fund. Oh, and some of these countries would also be part of the governing structures ensuring their own transparency and accountability.
Before the Green Climate Fund becomes operational and offers developing countries direct access to significant sums of money, it is vital to establish firm eligibility criteria of countries based on an independent corruption index and a strong accountability mechanism to ensure funds are spent transparently. This is necessary to prevent the situation of other aid endeavours where direct access to funding and weak accountability procedures enable corrupt and undemocratic governments to augment their rule through the politicisation of foreign funding.
If the Arab Spring has taught democratic leaders and donor nations anything, it is surely the need for far greater caution before financially assisting – and inadvertently bolstering – repressive leaders and a climate of corruption.
An Ethiopian man named Yared (his real name is withheld for his safety) went to Ethiopia a few months ago to sell his family house after his parents moved to the U.S. One of the reasons he decided to sell the house was that after hearing about the recent land ownership decree, he realized that a few years from now the house will have little or no value.