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Abiy’s “Homegrown” Economic Reforms Lack Transparency

Avatar: Amanuel Desalegn
Amanuel DesalegnAugust 21, 2020
EconomyOpinion
Abiy’s “Homegrown” Economic Reforms Lack Transparency
While Ethiopians are preoccupied with the political uncertainty caused by the postponement of elections due to the pandemic and recurring ethnic tensions and violence, Abiy Ahmed’sadministration is stealthily proceeding with its economic reforms. As it seems, neither the political uncertainty, nor the economic impact of the pandemic have influenced the pace of the reforms.On the one hand, this can be taken as a sign of the administration’s unwavering commitment to its liberalization crusade and on the other hand a manifestation of the pressure it is under from its external partners, International Financial Institutions (IFIs) and western governments. The later seems to be the case despite the government’s insistence that the reforms are home-grown.A Democratic Reform Without Meaningful Participation of CitizensAbiy Ahmed’s administration came to power promising to carry out democratic reforms and to set the stage for a democratic future for the country. But its actions surrounding economic reforms go against this stated goal. So far, the way the economic reforms have been handled has been misty and lacked a meaningful participation of citizens.Apart from sporadic reports and media briefings from the different branches of government, the public has not been informed about what is taking place, let alone engaging in open debates, which such important decisions require. There has been very limited public engagement, if any, during all the stages of the policy reforms.The administration seems more responsive to its external partners than the needs of the Ethiopian people. The IMF and World Bank on their part, kept on pushing for the reforms regardless of the policies lacking popular support. Though this comes as no surprise given their history of working with undemocratic and corrupt governments in the past.In what seems to be a convergence of interest between the technocrats in the administration and the IFI’s, policies that are going to affect the lives of tens of millions of Ethiopians are being carried out without the public’s approval.Winners and LosersDespite the government’s efforts to have us believe otherwise, the reforms it is undertaking are going to produce winners and losers. From the privatization schemes to the currency devaluation and financial liberalization, the entire catalog of policies will benefit certain groups in society more than others and most importantly harm many.Just to mention some examples: the partial privatization of the telecom company is expected to result in job losses. According to some estimates, as many as ten thousand people are expected to lose their jobs in the likely downsizing that will follow the transfer of partial ownership to a private entity. Not only that, the expected changes will affect everyone from the employees of Ethio-telecom and its customers to the street vendors whose livelihoods partly depend on selling scratch cards.The planned floatation of the currency is also going to have a disproportionate impact on the poor who depend on imported consumables. As we have seen in Egypt and Argentina in recent years, an abrupt change of the exchange regime has a potential to induce a spiral of inflation which in turn will lead to an increase in poverty and inequality. Local businesses that rely on imported inputs will also suffer from rising production costs.According to the administration, the continuous devaluation and eventual floatation of the currency in the next three years is aimed at encouraging exports. But past experience shows that the decline in the purchasing power of the Birr causes inflation but is hardly accompanied by any significant positive impact on export revenues.The administration is also working to expedite Ethiopia’s accession to the WTO, which if successful, is going to have a tremendous impact on the most important economic sector in the country; the agricultural sector. The country’s farmers will be forced to compete with subsidized agricultural products originating from rich countries. This also has a potential of undoing past achievements in terms in poverty reduction.The administration’s pursuit of quick fix solutions, that are dictated by its external partners, for the country’s economic ills, instead of truly independent structural reforms based on a pragmatic assessment of the country’s needs, is bound to have costly socioeconomic and political outcomes in the long run.Political Crisis a Shield Against ScrutinyWhile the turbulence in the political sphere is testing the administrations control over the country, it has also given it a free reign on economic policy. The fact that most political groups are mired in the ongoing crisis has given the administration an opportunity to pursue its policies without facing much scrutiny.However, with the government’s mandate ending within two months, the legitimacy of its actions on issues that will define the long-term material conditions of millions of Ethiopians is highly questionable. As it stands, elections will not be taking place anytime soon - which means the administration will implement at least some of the major reforms without having the proper political mandate from the Ethiopian people.The Media and Citizens Have ResponsibilityAlthough the government has a legal duty to inform citizens on such important matters, it would be naive to expect that it would fulfill that duty, considering its behavior so far. Thus, it is incumbent on the media and concerned citizens to demand transparency and increased public engagement. So far, there has been limited interest among political parties and groups on the issue, but recent developments such as the webinar organized by one of the political parties, Ethiopian Citizens for Social Justice, is encouraging.However, such isolated efforts will not suffice to force the administration to change course. Only a widespread pressure from citizens and the media will have such an impact. Therefore, opposition parties, the media and all concerned citizens should engage in demanding transparency and respect for the will of the Ethiopian people. Decisions of this magnitude should not take place without the consent of the people, thus should be put up for a vote in the coming election. After all, what good is democracy if citizens don’t have a say in matters that define their material conditions?
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A PIECE BYAmanuel Desalegn

Amanuel Desalegn is currently an MA candidate in International Development at Sciences Po.