The very process that brought the Developmental Democrats to the throne seems to have brought them the essentials of the popular systems theory. According to this theory, mostly applied by ecologists, a system is as good as its components. Any problem in the components could translate into a problem for the bigger system, and thereby challenge its very existence.
As a political force that aspires to build a functional federation, after overthrowing an unpopular military dictatorship that had been on power for 17 years, the ruling EPRDFites understand the value of all member regions of the federation. This value is not only about the political support that can be sourced from each, but also about the economic potential that each of the regions brings to the economy of the federation.
Arguable as the way they approached to establish the federation may be, the past two decades of experimenting federalism seem to have brought about visible economic and political benefits. By virtue of the constitutional provisions, adopted in 1995, therefore, the Ethiopian state has officially become an amalgamation of regions that combine to form a federation. The subsequent consolidation of power by the EPRDFites furthered the experiment to the extent of facilitating both the integration and the decentralisation, at the same time.
Whereas the decentralisation has empowered the regions to have autonomy over their internal affairs, the integration agenda has introduced the even bigger vision of establishing a harmonious political economy. A lot has been done to realise both of the objectives. Yet, the road ahead is also long enough to demand policy attention.
Economically speaking, the growth of the nation has a lot to attribute to the economies of the regions. Due, largely, to their differential comparative advantages, varying from large tracts of land to mineral resources, the magnitude and type of growth that each of the regions has been witnessing over the years has also varied.
If one is to go by the fiscal books of the federal government, this regional growth is connected with the fiscal transfers made to them from the federal treasury. This allocation has been ongoing in the form of budgetary subsidy and block transfers.
In the case of the budgetary subsidy, the transfer is made on the basis of a budgetary allocation formula defined by the House of Federations (HoF). Calculations often account for regional realities, from population to level of development. Under this allocation, which gets periodic reviews whenever a sizeable change occurs on its underpinning factors, inequality is attended by the very differences of the factors included in the formula.
On the other hand, block transfers are tailored transfers made to accomplish certain objectives. It is under this allocation that the federal government levers much power to attend developmental differentials between regions.
As far as the state under the leadership of the EPRDFites goes, the fiscal transfer has been undertaken effectively. Praise over the operations of the system continue to come from both the academic and development assistance circles. Where there is doubt is on the developmental results these transfers have brought to each of the regions and to the bigger picture of regional equity in the federation.
Going by the revelations of the latest meeting of the Council of Ministers, held two weeks ago, it seems that the issue of regional inequity will continue to be a headache for the system that the ruling Developmental Democrats are aspiring to build. In the meeting that discussed the performance of the nation’s economy over the past three years of the Growth & Transformation Plan (GTP), regional inequity was mentioned as the challenge for the sustainable development of the nation. Sadly, though, there was nothing that came out of the meeting in the form of a strategy to attend to it.
As reports of the meeting show, for instance, the prevalence of poverty has declined by three percentage points to 26pc, between the 2011/12 and 2012/13 fiscal years. The average ratio of tax to gross domestic product (GDP) has reached 12.5pc, way lower than the 19pc average for sub-Saharan Africa, up from 11.5pc in the previous fiscal year. Other aspects, such as education, healthcare service provision, water supply and sanitation and rural road expansion, have all seen improvements during the last fiscal year.
Worryingly, however, all of the aspects continue to witness considerable regional differences. Larger regions, such as Oromia, Amhara, Tigray and Southern Nations, Nationalities & Peoples, stand at a better footing than that of the relatively smaller regions of Somali, Afar, Gambella and Benishangul-Gumuz.
These differences seem to see no narrowing, regardless of the sharp increase in resource generation and transfer. It seems that regional gaps are appearing as one of the major challenges for the achievements of the ambitious targets the EPRDFites set out in their GTP.
Of course, the difference has been there even before the ruling Developmental Democrats came to power. It even served as an impetus for the armed struggle that overthrew the pseudo-socialist military junta.
Nonetheless, its latest case is unique in that it is not driven by low public investment, as had been the case for long. It instead relates to the implementation capacity of the regions.
As they stand, fiscal transfers to regions are not accompanied by technical and institutional support from the federal government. There exists no concrete strategy on improving the expenditure management of the regions.
As a result, no sizeable change is happening in the regional differentials of economic achievements. Major indictors of development, such as poverty rate, gross enrolment, dropout rate, infant mortality, maternal mortality, road density and electrification all embrace significant regional differentials. There seems to a longstanding dichotomy happening under the developmental sphere of the nation.
What seems to be missing from the sphere is a concrete strategy aiming to narrow these regional differences. Whatever is being done is getting done without essential strategic focus, integration and cooperation.
The query of the day, therefore, is whether the EPRDFites would be able to bring the strategic determination required to narrow down the developmental differences of the components of the system that they are entrusted to lead. Regardless of their determination, however, the challenge has continued to gain weight with each day.
Unattended, the differentials could grow large enough to destabilise the bigger system. It could also risk the hard-earned achievements of the past two decades.
This latest scenario helps no one. That is why attending to the underlying regional differences of the development that the nation is witnessing will be important.
No quick fix or projectised intervention will bring the change, though. What is in demand is a lasting institutional setup that could lever the interests of the autonomous regions, as well as the federal government, with the aim of bringing developmental balance within the federation. It is only then that the dream of realising a harmonious political economy could happen.
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