Collective Good: Fruit of Individual Success




It is not hard to explain why Ethiopia’s economy remains uncompetitive. It is because businesses are not allowed to compete. When they do, it is with local firms that seldom present a threat given the enormous demand that exists. If one loses a customer, there is always another just around the corner. This is how the financial sector operates.

But as in politics, Ethiopia’s economy is a walking contradiction. While we celebrate that we are one of the biggest recipients of foreign direct investment (FDI) in Africa, significant chunks of the service sector remain closed. In some cases, such as telecom, largely even to local investors.

This is because while EPRDFites believe that foreign investment would help the manufacturing sector grow, similar liberalisation at the commanding heights of the economy should be refrained from to pay for mega projects or to protect local firms.

As far as the economy is concerned, health and sustainability in the long-term are more likely to be realised if services that affect the majority of businesses are well-dispersed, affordable and of high quality. Privatisation is not a panacea. There is nothing wrong with the government providing services as long as there is no preferential treatment – in terms of access to loans or by means of regulations.

Instead, Ethiopia’s developmental state model has been patched together not out of reasonable economic theories but as an ad-hoc assortment of policies that have given way to macroeconomic disarray. On the surface, there seems to be an improvement, but upon further scrutiny, the faults are glaring.

We are told roads and hydroelectric dams have been built and that there is better access to higher education. What is played down is that the roads deteriorate too soon, the power generated cannot be adequately distributed and universities encourage rote learning rather than innovation.

A replay of this unfortunate state of affairs has been playing out in a case that started at the Intellectual Property Office, passed through to the High Court, then to the Supreme Court and finally arrived at the Council of Constitutional Inquiry of the House of Federation.

It concerns Six Continents Hotels, an international operator of hotels. Six Continent applied to register Crowne Plaza Hotels & Resort as a trademark after it entered a into a franchising agreement with a local firm. But there is an existing entity, Crown Hotel, that is operating in the country. As a result, application for registration was denied to the hotel operator.

But a tribunal at the Trademark Office overturned the decision, at which point the owner of Crown had to take the case to court, which upon appeal reached the House’s Council, which ruled against the local hotel. Last month, the copy of the judgement was given to the local legal representative of Six Continents.

The Council believed that refusing to award the trademark to Six Continents would close opportunities for FDI and that the duo could coexist without creating confusion.

The latter basis for the ruling seems reasonable. Although it may look like a case of David versus Goliath, if the tables were turned, the unilateral use of a trademark by a well-capitalised multinational company can constrain the competitiveness of smaller firms.

Trademark protection is necessary, but it should not be enforced arbitrarily. Although there will be a degree of confusion in the use of a similar name by two providers of the same service, it is still crucial to assess the size of the conflicting parties and the design of the symbols. After all, it is hard to confuse David for Goliath.

And it is this issue only that should have been considered. But in the arbitration of this case, the judgment document also sites the national interest. Six Continents creates more jobs and bring in more hard currency, as well as allowing the transfer of know-how and technology. For the sake of the collective good, the local player is sacrificed.

It comes back to a selective application of laws as is seen fit from the perspective of short-term goals of the state at the expense of the private sector and the long-term economic outlook. There is a repeated failure to address the non-professionalism of the bureaucracy, proactively apply monetary and fiscal policies, clamp down on public sector corruption and stimulate the economy without having to spend billions.

It is the easiest possible route to development that we are attempting to take. But without the necessary structural and policy reforms, the nation would be trapped in a cycle of debt stresses, foreign currency shortages and inflation. Most importantly, innovation, which drives productivity, will be crowded out. And whatever has been expensively built will buckle under these stresses without a sure foundation.



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

Published on Aug 04,2018 [ Vol 19 ,No 953]


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