Battle of Economic Classes




It does not do much to Ethiopians’ collective morale that individuals such as Jeff Bezos, chief executive officer of Amazon, Bill Gates, founder of Microsoft, and Warren Buffet, often termed “the greatest investor of all time”, all have wealth worth more than the East African nation’s annual gross domestic product (GDP).

It gets worse. The world’s wealthiest one percent owns a little over half of the world’s wealth, according to Credit Suisse, a financial services company. And 183 of the tech billionaires have a total wealth of one trillion dollars, which is higher than the aggregate annual GDP of sub-Saharan Africa’s four largest economies, at least by 2016 terms.

There is change of course. Africa, and developing nations such as Ethiopia, are no longer as helpless as they used to be. The standard of living in Ethiopia has increased, there are more roads and better-looking houses. Education, although it has much to be said about on the quality side, has shown great strides quantity wise, with close to half a million students enrolled at 44 of the country’s higher learning institutions.

And infant mortality has decreased. There are more hospitals, though nowhere as many as there should be, and more healthcare officials. It has been a similar story for Africa, granted, at a slower rate.

Surprisingly though, none of these has translated into equitable income distribution. For instance, for the globe at large, the world’s richest only used to control about 42.5pc of the world’s wealth, a trend that increased even as the planet saw over a billion people rescued from extreme poverty in the 23 years from 1990.

Ethiopia does not do better here, even as the World Bank (WB) believes the nation has a more tolerable income inequality. Though nowhere at the level of, say, Switzerland, the country has a Gini coefficient – used to measure the dispersion of incomes – at about 30pc, better than most African countries’ measure of almost 40pc.

Most of that inequality thus comes out of urban areas, like Addis Abeba. A political centre of the continent, it is a city that plays host to important conferences, such as the ceasefire agreement between the warring factions of South Sudan last month. It is a diplomatic, as well as an economic hub of the country, where 10pc of the country’s tax revenues are collected.

And for long the city has been that image of prosperity, at least for those who could not afford to dream of Europe or North America. It has become a leading destination for the nation’s vast youth population. And with a large rural to urban migration, it has meant that the City Administration has to provide more job opportunities and services every year. Land and housing have been just as much an overwhelming headache.

Thus, Addis is a city that is home to many homeless as well as several real estate moguls. For a growing city, as well as a nation, the disparity in prices of services and goods, is staggering. One may find a same soft drink by the same manufacturer selling at a high-end restaurant five or six times its average price in regular cafes.

And as the middle-income status of the nation’s 2025 plan comes closer to realisation – though arguably not within that time frame – and most goods and services become expensive as businesses try to capitalise on growing incomes, the down and out will continue to be pushed out. This will serve as a contributing factor to public discontent, in urban areas, and inevitably rural ones.

What the trend globally shows is that when it comes to wealth creation, the speed tilts heavily towards that of the already rich. It is true that more people have been lifted out of poverty each year since the beginning of this millennium. It is also true that the world’s wealthiest are getting richer, but doing it at a faster rate. It is a competition in that resources are getting scarce; at some point, one will have to take from another.

Governments have options to ensure that this does not worsen the political environment, especially since there is already a perception in Ethiopia that prosperity comes from political affiliations. The government swears that it has put pro-poor policies in place to ensure that those economically downtrodden benefit and can turn the tide.

And I am not one to downplay the efforts, though there is a case to be made for follow-ups and responsible implementations.

It is true that the government has put in place infrastructures, but roads start to deteriorate within just years of construction. There are Internet connections but social media finds itself cut off – a rough guess dozens of days out the year. There are more public universities than have been the case the whole of the country’s history, but they severely lack when it comes to fostering creativity. Instead, all 44 of them dole out similar curricula giving little thought to the fact that experimenting might just reinvigorate the often slighted education system.

For people with varying economic backgrounds to compete, adequate means of transportation and access to the Internet, health and education are factors that should not be negotiated on. If the government ensures the efficient provision of these, then it would have walked the talk on its pro-poor policies.



By Christian Tesfaye
Christian Tesfaye (christian.tesfaye@addisfortune.net) is Fortune's Op-Ed Editor whose interests run amok in both directions of print and audiovisual storytelling.

Published on Jan 06,2018 [ Vol 18 ,No 923]


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