As the new government to be led by the re-elected Prime Minister Hailemariam Desalegn warms up to get into the real job, after months of procedural politics, new feelings are emerging in every corner of life in the nation of 91 million people. From disappointment to excitement, various feelings swirl on the horizon as if looking for their comfort zone. With each new appointment though, there is some thread of alliance that reveals itself.
Of course, no force is as strong within the EPRDF, as its centralised democracy principle. This means that threads of affiliation become relevant only if entertained under the guiding principles of developmentalism. The fact that the party has stayed in power for over two decades, however, means that the probability for interest groups to consolidate is high.
This is true of the nation’s emerging private sector. Unlike the early days when the sector lived under confusion, especially in terms of its relationship with the state, it has progressively reached a point where it has become clear with its interests. Although the late awakening is better than the alternative, there is still a great deal of uncertainty about the state-private sector nexus.
Partly, the state of affairs relates to past trends. The relationship of the state and the private sector has passed through multiple ups and downs. Shocking surprises, sudden love affairs, abrupt suspicions, and slow comebacks have all been part of the 24 years of relationship. Behind most of the twists and turns, however, lies a state that constantly adjusts itself to shifts in power fundamentals.
In the early 1990s, the state was up for a strong and vibrant private sector. It was common to see government officials declaring the private sector as the engine of growth. And it all had to do with a state trying to adopt itself to the capitalistic world without losing its socialist roots.
This trend went on until early 2000s. With the intra-party crisis, the views within the ruling party on the private sector diverged. Alongside the popularisation of Bonapartism, consequent to a phenomenon described as “the spoiling of the core”, concepts of corruption and opportunism became prevalent. So did the differential treatment of some businesses.
As if to rub salt on an injury, the eventful election of 2005 came with its own baggage of divergence. A critical mass of the business community stood on the side of the opposition, leaving a huge stock of disappointment within the camp of the Revolutionary Democrats, and the relationship lost its track of balance altogether. What followed the election season, marred with crisis, was an era of huge suspicion between the state and the private sector.
Furthering this trend, was the progressive ideological evolution of the state under the leadership of the Revolutionary Democrats, which brought developmentalism as the guiding theory. As a result, the state assumed the central place in the political economy. This led to the classification of the private sector into what the ruling elite termed “developmental’ and “opportunist”.
Lately, though, there have been signs of change. The trust deficit between the state and the private sector is narrowing; and the level of productivity of business engagement has emerged as the connecting line.
Underpinning the shift is the desire of the state to see the economy transforming from an agrarian to an industrial base. It seems that the ruling elite has come to see limits to the ability of the state machinery they oversee, in terms of realising structural shift, and hence the importance of the private sector. It is this very economic fact that defines the recent cozying of the state with the private sector, be it foreign or local.
There can be no more pleasing experience for the private sector than this. A state that has once been full of itself is now trying to extend open arms to the private sector. It would be naïve to assume that the openness will be absolute, in both its nature and practice, but the latest move is itself a step in the right direction.
As if to affirm this shift, higher government officials have started to underline the role of the private sector in the industrialisation effort. The draft plan for the sector, included in the draft of the Second Growth & Transformation Plan (GTP II), clearly states that a “productive private sector” is vital for the shift to an industrialised economy. The latest ministerial line up also tells a lot about how pragmatic the Revolutionary Democrats have become in addressing the concerns of the private sector. It is important to note the splitting of the former Ministry of Urban Development, Housing & Construction (MoUDHC) into two ministries and the formation of a Ministry of Public Enterprises to take on board issues faced by the private sector.
Reading between the lines of the latest speeches in the high echelons of power, including Prime Minister Hailemariam Desalegn, one would see that a new era of mutual trust between the state and the private sector is emerging. Signs are that the state under the EPRDFites is, slowly but surely, dismantling its suspicion of the private sector. It all may mean that the era of distrust is gradually winding down.
If the signs hold true, then, a better balance between the state and the private sector in the economy may be eminent. This will translate into structural balance, job creation, a stable investment regime, better human development and enhanced national stature.
As the new wave of trust emerges, though, there still is a huge wall that hinders its development. Not that this wall is new, but it has reached to a new level of thickness. The wall – constructed of systemic levels of corruption and opportunism – is so huge that it could bounce any effort of reform back to square one. If the new era of optimistic relationship between the state and the private sector is to be furthered and sustained, then, tearing down this wall will be important.
In a way, a new line up of ministers could serve this purpose. Armored with political commitment and leadership skills, the new cabinet could take decisive action in deoxygenating established interest groups, dismantling lines of affiliation, closing doors of opportunism and deactivating channels of corruption.
No such effort could be effective with the actions of the state only, however. The private sector ought to also play its role in tearing down that wall. By way of doing business in the legal manner only and abhorring corrupt practices, the private sector ought to stand firm and committed in furthering the optimistic future.
Surely, the hands behind the wall of “rent seeking” are strong, resourceful and tactful. Yet, they need to be defeated, at any cost, if the optimistic projection is to come true. And therein should be the focus of both the state and the private sector.
Much has come true in the form of mutual understanding between these two pillars of development. Yet, it is only lately that the understanding is changing into mutual trust. As corruption and opportunism stand to take things back though, both players need to invest in fighting and defeating them.
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