One of Africa’s most promising economies is facing a fundamental problem by Business Insider

January 18th, 2016 Print Print Email Email

Ethiopia, which has averaged double-digit GDP growth over the past decade and enjoys a close strategic relationship with the US, is one of Africa’s emerging economic and political powers and an example of a country that’s improved its economic fortunes without opening its political space.

A January 11 Bloomberg News story hints at a huge problem the country might be facing moving forward.

According to Bloomberg, the Ethiopian government canceled a 2010 lease that Karuturi, an India-based agricultural company, had taken out on 100,000 acres of farmland.

Despite making an over $100 million investment in the country’s farming sector, Karuturi was accused of breaking its lease agreement in developing only 1,200 acres thus far. But the company claimed that it had received waivers from the Ethiopian government in the past, and said that it did not recognize the project’s cancellation.

According to Bloomberg, Karuturi had taken over land that the Ethiopian state had sold off as part of a controversial program in which the government leased 3.3 million acres of farmland to foreign investors after allegedly displacing some of that land’s original tenants.

It’s the kind of undertaking that would be substantially harder if Ethiopia were a multiparty democracy, rather than one of Africa’s most thoroughgoing dictatorships.

While Karuturi arguably stood to benefit from Ethiopia’s centralized single-party regime, it’s now learned the risk involved in pouring $100 million into an opaque authoritarian state.

And Ethiopia’s leaders, who want both economic prosperity and total political control, might soon find that these objectives aren’t nearly as mutually reinforcing as they’d hoped.

Women mourn during the funeral ceremony of Dinka Chala, a primary school teacher who family members said was shot dead by military forces during a recent demonstration, in Holonkomi town, in Oromiya region of Ethiopia on December 17, 2015.

Like Karuturi’s disappeared $100 million investment, the Addis Ababa expansion plan embodies the perils and contradictions of the Ethiopian regime’s long-term strategy of securing internal calm through economic growth and strong ties with foreign powers like the US and China.
As in past eras, the Ethiopian capital is being built up as a showpiece of the country’s modernity and development, and as a reflection of Ethiopia’s sense of its unique place in the world. Addis has one of Africa’s first light rails, a Chinese-built, 19.6-mile system that opened last year.

The city and the surrounding area are home to both of the country’s Chinese special economic zones, industrial parks where Chinese companies get tax breaks in exchange for operating in Ethiopia and hiring local employees. The Addis expansion plan would have incorporated neighboring areas into the capital district, enabling more holistic and centralized urban planning for a rapidly growing and economically vital capital city.

But the expansion plan also came at the expense of land in the Oromia Region — and it ended up exposing some of the deepest fractures in Ethiopian society.

The Oromo are Ethiopia’s largest ethnic group but have been historically excluded from centers of power. Because Ethiopia lacks an ethnic majority (and perhaps because it has a 1,500-year history rife with conflict between the country’s centers of power and it geographic and social periphery), the country’s regions are supposed to receive a certain degree of autonomy under Ethiopia’s 1995 Constitution, which actually gives the regions a right to secede under certain circumstances.

In practice, the center still holds all of the power.

The current Ethiopian government, which is entirely run by the Ethiopian People’s Revolutionary Democratic Front, which is descended from the militia that overthrew the ruling communist state in 1991 after a protracted civil war, is among the most oppressive in Africa.
The EPRDF regime is dominated largely by elites from the Tigrayan ethnic group. But its rule depends on a baseline of inter-communal harmony — just as it depends on the appearance of progress and economic growth.

The Addis plan is one instance in which these two objectives came into direct conflict. Protests over the plan, which Oromo viewed as a land grab undertaken by an oppressive and unrepresentative central government, broke out in late 2015. The government responded with a crackdown that killed 140 people, marking perhaps the deadliest outburst of political violence in the country since its civil war ended in 1991.

Even if the plan has been suspended, the Addis Ababa expansion push is an extension of aggressive growth policies that are fundamental to the regime’s self-image and possibly its survival, policies enabled by strong arm tactics that a country might not accept accept.

But the protests showed that economic growth and authoritarianism can’t paper over a general sense of frustration.

As Jeffrey Smith, head of the RFK Center’s sub-Saharan Africa-related advocacy programs explained to Business Insider, the suspension of the plan will do little to reduce popular discontent towards the regime.

“If the government is trying to head off larger protests and discontent in the country, then it’s much too little and much too late,” Smith wrote in an email. “During the protests, an estimated 140 people were killed and thousands were injured, opposition leaders and journalists were jailed, and the constitution was shredded … there has been no accountability for the deaths of protesters and dissent continues to be criminalized and violently suppressed.”

As with Karuturi’s apparent ejection from the country, the contradictions of trying to build a robust economy without genuine political freedom or basic transparency are manifesting themselves. But with the Addis plan, the stakes are much higher for the regime.

The Oromo protests are “engendering an intensified ethnic awareness that has also revitalized calls for genuine self-rule in the region,” Smith writes.

That’s a huge threat to a government that’s itself came to power following an ethnically fractious civil war. “I think leaders in Addis Ababa has gotten much more than they bargained for,” says Smith.

  1. eyassu
    | #1

    Ethiopia is the only country in the world where double digit economic growth and famine and starvation of millions are talked about side by side. one or the other is true.both these situations cannot surely exist side by side.

    tplf thugs who are masters of LIE ,FABRICATION, DISTORTION OF FACTS and corruption have been tirelessly repeating their LIE AND FABRICATION year after year ,hoping that in the end people would believe a LIE as being true.
    however , a lie is always a lie and however hard tplf looters and thugs try to disguise it , the LIE keeps showing up exposing Tplf ethno-fascist thugs for who they are.

    the millions of people facing death and starvation does not show double diit economic growth. Does it? unless a person is insane , you would not believe .
    such a lie.
    in a country where, essential commodities are scant and in short supply, talk of double digit economic growth is s total fantasy.

    even the humble sugart that you add to sweeten your coffee is becoming a luxury
    item that only those with connections to tplf rings can afford.

    Millions of children are seen scavenging for scraps of left over food thrown on rubbish hips along with vultures and urban hyenas and dogs.

    about 6 million people have been on constant food aid since 2002. Famine and hunger has never left the country despite what tplf thugs and their sponsors such as the World bank want us to believe .

    many millions of displaced and evicted Ethiopians from their farmlands are deliberately made to die of starvation , under a deliberate and calculated move by Tplf to give away and transfer land to so called investors consisting of arabs, chinese, pakistanis, indians….

  2. Ittu Aba Farda
    | #2

    There is a lot said and written about recent ruthless killings in the region of Oromia. This brutal act warrants an independent investigation to bring the perpetrators to an open court of law. Heads should roll on this one. The number of people shot to death must be accurately accounted for. This I mean every dead person regardless of ethnicity. Properties that were damaged by the rampaging mob should be identified and owners should be immediately compensated. Then once every criminal is bus-ed to the big house, civilized discussions and negotiations must be conducted between the people and the Oromia Region officials. My proud people of Oromia have centuries-old tradition of reaching amicable and win-win settlements when conflicts arise. It is my never dying yearning that my precious Oromos must join the advanced world through Industrialization and wean themselves from this backward agrarian form of livelihood. Primitive life confined to the soil pushing it, tilling it should be relegated to the past because it is not and will not be sustainable anymore. Looking down to the ground and looking up to the sky with haunted eyes should be no more. No more to start a family betting everything on it. Mother Nature has her own plan. She can turn the faucets by buckets full or not letting even a droplet at all. Industrialization should and must be welcomed with all open arms. My bet is not on those who sit on the top but on those juniors who work as engineers and planners. The concept of cottage industries must be looked at so those who have been eking out a living as small farmers can consider themselves stakeholders. All the Sebhat Negas, Aba Dulas and the wise alecks in all have enough money accumulated in their bank accounts where ever they have it. They should send those engineers to places like Taiwan and they can learn from that country too. Otherwise, they should always remember that they are sitting over a huge powder keg numbering in 100 million. As I said many times before all it needs or waiting for is for someone to make the wrong move. Arrogance, complacency and harsh response will be just that, wrong move. Winner-takes-all attitude will prove to be a disaster for everyone. They should heed the call made by the USA government for cool heads to prevail. Groups that are scavenging at dump sites in Asmara or speakeasies here in the back alleys of Minnesota or stinky ‘hafaas’ of Riyadh or Doha are just that, just scavengers waiting and wishing this legitimate protest to get out of hand. They are nothing coward opportunists and alchemy scholars. But they are also diehard bigots who play the ethnic card from the bottom of the deck. Some of them are former lieutenants of the ruthless Mengistu and now they are shameless boot lickers of another surviving Dracula of the Third Kind from Asmara. They have been switching sides like you know what. They are still spewing around hatred toward our brothers and sisters of the Amhara, Afar, Somali and lately towards our blood sisters and brothers of the Southern localities. They think they finally have their moments. They think they have Oromia on a silver platter roasted well and glazed to taste for them to slice up. That is slicing it up with all its natural resource glories with Al-Toweel and their media sponsors in Doha and Riyadh. No wonder they have Arabic names rather than history-laden Oromo(African) names. They are utterly a disgrace to my glorious Oromo people.

  3. Development without Freedom
    | #3

    Why does it always take a foreign journalist to point out how the Oromos have been oppressed?

    “The Oromo are Ethiopia’s largest ethnic group but have been historically excluded from centers of power.”

    It is not true the Oromos have been historically excluded from centers of power. There was no government policy that specifically targeted them. By the way there are no pure Oromos. Oromos are Ethiopians and like every one else and they were equally oppressed. There has been simply a lack of democratic government in Ethiopia.
    Foreign journalist must stop spreading lies that originated during colonialism era.
    It gives readers an impression that Ethiopia are tribal societies. But even after tribalism was imposed on them, by racist TPLF, Ethiopias have not become a racist society.

  4. Development without Freedom
    | #4

    The disagreements between Karuturi and TPLF is the disagreement between two thieves.

  5. ዘውዱ
    | #5

    Those who sing the so-called “double-digit growth of Ethiopia for the last 10 years” are either mercenary journalists who prostitute for money or institutions who have a lot to lose if it weren’t for this government. And of course the majority of Tigrayans and illegal beneficiaries from all other ethnics.
    If the country was growing as claimed, I am 100% sure everybody with a drop of Ethiopian blood, wherever they are, whould have hailed them for eternity. But that is not the case and hence the opposition from all directions.
    I have never heard of a country with every- few- years- recurring famine like in Ethiopia. That says a lot more than we are bombarded with about Ethiopia’s economic growth by deceitful people.
    A lot of journalists also keep on repeating like parrots that Oromos were excluded from power. For your information, Emperor Haile Selassie and Mengistu Haile Mariam were fourth generation Oromos.

  6. Dawi
    | #6

    Iyassu & zewdo

    Can I ask What do you say, when you read the following??

    “China is doing well, but you still see children begging on street corners with horrible diseases,” said university student Ariqua Furse, whose mother emigrated from Hong Kong” “Kids in some southern provinces don’t have access to education,” said Ji Da, a native of Chengdu, Sichuan. “We send them clothes.”.

    China is one of the top five poorest countries in the world. Over 6 million Chinese don’t have access to clean fuel to heat their homes and cook. At least 82 million people in China live below the poverty line.

    At the same time since 2013, the percentage of Chinese living below the poverty line has been cut nearly in half. Believe it or not, by 2020, China will replace the U.S. as the biggest economy, according to Standard Chartered Bank.

    In other words, don’t sweat it, there is no reason for you to doubt that huge poverty reduction and double digit growth is real in Ethiopia as much as “15 million” needing emergency food aid is.

    “double-digit growth of Ethiopia for the last 10 years” are either mercenary journalists who prostitute for money or institutions who have a lot to lose if it weren’t for this government.

    [[..double-digit growth of Ethiopia for the last 10 years” are either mercenary journalists who prostitute for money or institutions who have a lot to lose if it weren’t for this government...]]

  7. Dawi
    | #7

    Dev. without Freedom said:

    [[The disagreements between Karuturi and TPLF is the disagreement between two thieves.]]

    What a crock? Didn’t many of you call the 300 thousand hectare “lease” to Karuturi was literally a gift or “land sale” to Karuturi in 2011?

    Worst yet your friend Prof. Al wrote the other day …”..I knew exactly how the Karuturi project was going to go down..” ..”..Unless Karuturi is extremely visually challenged, he could have seen he was dealing not with doves but vultures. Isn’t it a little late now for Karuturi to complain about buzzards picking his bones clean?..”.

    I just wonder if the above is supposed to be a complement to EPRDF by Prof. Al? I say that cause the land lease had a 6 month advance notice prior to termination clause for failing to develop. We all read it then; now that clause is applied & the government took away the rest of the land; the company only developed 1200 hectares. Am I missing something?

    Be that as it may, there was a BBC article the other say with a title, “Why Ethiopia is making a historic ‘master plan’ U-turn”

    The conclusion they arrived to is a stark reminder for some in the opposition like Prof. Al to be aware of that EPRDF “..removes the rug from under the feet of its numerous critics..”.

    “..While shelving the plan would be a major retreat for the government, it is a sign of political maturity of the EPRDF, which has consistently been accused by rights groups of being heavy-handed towards dissent since coming to power in 1991.

    The step, even if temporary, also removes the rug from under the feet of its numerous critics and will earn it political goodwill from Ethiopia’s international supporters, including Western donors..”

    One can learn a thing or two from the above.

  8. Development without Freedom
    | #8

    What a crock. Quoting form here and there without saying much yourself does not make you smart. Next time tell us exactly why you do not agree with our comment above.

  9. Dawi
    | #9

    [[..Next time tell us exactly why you do not agree with our comment above...]]

    Dear Dev.without Fredom,

    Ok I hear you! – Let me clarify what I was trying to say.

    As it is proven with Karuturi’s case, the EPRDF land lease agreements had teeth; The lease is canceled for non performance. I also think the government trying to attract FDI to transform commercial agriculture in the first place was/is a noble idea; granted, they needed to take care of the people who are being displaced otherwise, the people will teach them a lesson the hard way as in today’s Oromia protest.

  10. Zewdu
    | #10

    You are very naive if you believe those cooked-up statistical data the World Bank and its kind would like us to believe. They are corrupt organizations who are out there to make money by saddling poor countries with debt and imposing policies that is favourable to them.
    Going back to my point, have the living standards of Ethiopians got any better in light of the double digit growths? In my view,it is emphatically NO.
    Let us compare the fortunes EPRDF has compared to the previous governments to help us compare the living conditions of the public.
    EPRDF’s sources of revenue are land for sale and lease, VAT and huge loans over and above the previous governments. They could have done a lot if they had the will because they do not have money constraints and no civil wars to fight. Instead people are impoverished and wearing salvage clothes.
    I yearn for peaceful transition to a democratically elected government of Ethiopia. May God bring peace and prosperity to Ethiopia.

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