Necessary economic reforms have long been delayed, but their relevance and inevitability are slowly becoming clear. Despite the necessity of reform though, inclusivity is an element that cannot be overlooked, writes Asseged G. Medhin (firstname.lastname@example.org), deputy CEO of operations at the National Insurance Company of Ethiopia (NICE).
It is great ideas and decisions that bring out the best in people and galvanises them to work and achieve greater outcomes together. It also attracts interests and resources that are needed by members of the team or organisation to realise their visions.
Decisions around corporate governance, the transparency of its operations, accountability and reporting are crucial. They demand rigorous research and much strength of mind to deal with once the decision is made.
Ethiopia’s financial sector has lacked, for more than half a century, great minds. The nation has incurred economic losses, regardless of the various political ideologies that have come and gone, as a result of poor management.
Before the Derguehad risen to power over four decades ago, the country had a demonstrably competent stock market. It was also during such a time that the commercial code of the nation, which exists to this day almost in its entirety, was drafted. Debating the importance of a stock exchange, or accession into the World Trade Organisation, are fruitful to the level that they would prove what has been established in the past and elsewhere.
One of the most important lessons we have to learn from the dynamic leadership of Prime Minister Abiy Ahmed (PhD) and his thematic view for an economic opening is the necessity of global competency. What is more, decisions have to adapt and mutate to resolve the tough issues that accompany global change.
We have dozens of financial institutions, an untapped market and human capital that is continually improving its capacity. Free market, as a matter of principle, has also been accepted by the incumbents of the past two decades.
The facts on the ground tell a different tale. Ethiopia can become a significant player in this sector by virtue of the size of its economy, and yet our policy makers and industry leaders have been unable to tap into the ample resources that are easily accessible.
One of the most critical challenges we have been experiencing in the financial sector is the rigidity of regulators and human resources following the growing economy of the country.
Policymakers should be clear about the ever-increasing need for foreign investors. The dynamic matrix within the system and associated inherent risks of opening the economy demands a fresh outlook.
A typical decision-making process like the one we have had for the past decades will not work. It should not be seen from the prism of developmentalism only but should be all-inclusive with a diverse outlook. All alternatives ought to be entertained without the inbuilt biases that have brought about regression and with the intent of optimising benefits from the regional and global markets.
We should not fear to compete aggressively against foreign businesses, starting capital and stock exchange markets, investing for the long-term and embracing dynamism. The competition will make us stronger.
Two decades of preparation should have been enough for the nation to open its economy. Policymakers believed that the consequence of taking on the Goliaths of the global market would crush local businesses. But this justification only takes us so far. The longer we close the gates, the less prepared our private sector would be to deal with a complicated and potent global market.
Local businesses are aware of the inevitability of liberalisation, and some are even hoping to test how their decisions and ideas will hold up when no longer suspended by the government’s economic policies.
Tapping into this wellspring of spirit will be the key to breaking the cycle of fear and getting results. It is a time when people are cautious but also optimistic to explore new ideas and entertain the potential for improvements. It is a time ripe for participating in a cooperative process that stimulates and produces win-win situations.
The fact that the government seems eager to listen is another excellent addition. The public, the diaspora and private players in the financial sector must be active in their insistence for forward-looking policy actions through various platforms.
An essential factor to ensure that ideal decisions are made is inclusivity. All relevant participants at every stage should be included in discussions. Their contributions will add to the proposed strategy, and national steering committees should be set up to help organise major economic decisions, such as the partial privatisation of state enterprises. The ongoing discussion about the nation’s education policy ought to be a good example.
Ethiopia’s economic growth so far should not be debatable but questionable as the distribution of opportunity has not been far-reaching. This should be addressed professionally with constructive debates on all issues of importance. The business community should be a driver of this change. The path should be toward more private-public partnerships, better enforcement of contracts and economic liberalisation.
We need to attract more technology, knowledge and currency. This can be realised if top-down decisions are made with foresight and if we have a comprehensive view of the problems on the ground.
For the financial sector, there is no shortcut around this fact. Delaying the inevitable will merely cost the nation. The policies, rules and regulations ought to change, and stakeholders must inform those changes at all stages.
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