Regions Seek to Promote Industrialization, to the Wrong End

Last week saw a series of events where the political bigwigs from the federal and the Amhara Regional State observed groundbreaking ceremonies for the launching of a number of industries across the region. Promoted under the Abay Industries Development S.C., a quasi-public company under the chairmanship of Tesfaye Getachew, who also serves as a vice president of the regional state, the coming into the market of these industries heralds the downing of a new political-economy in Ethiopia.

The Amhara Regional State is neither the first nor the lone force behind the formation of such companies, many of which are nascent. Authorities in charge of the Oromia Regional State have done as much, promoting the incorporations of quasi-public companies from Kegna Beverages to Oda Transport.

The idea for the formation of these enterprises in these regions is nothing but a novice. The political elite is under intense and often lethal pressure to respond to popular demands for jobs and wealth creation. Should leaders of these regions spend many sleepless nights worrying about the inevitability of youth bulge, it can only be understandable. These regions comprise no less than 60pc of the nation`s population, if the census of 2007 remains an ultimate guide.

Of this, Oromia region alone is home to an unemployed youth of 7.3 million, constituting 27pc of the total population, where 47pc of them are under the age of 14. The scene is no different with the Amhara region; at 28pc, no less than 4.8 million youth find themselves unemployed.

Little should this be surprising if this fact consumes the political elite with constant worries on the absence of schemes that keep the youth busy, if not engaged in a meaningful way. An army of unemployed youth is nothing but a political time bomb; a source of a recurrent nightmare for anyone who chooses to hold the mantra of leadership. If inactions in the face of such bulge make Lemma Megerssa and Gedu Andargachew, presidents of the Oromia and Amhara regional states, respectively, feel they are up the creek, they should have nothing to be blamed for.

Unfortunately, they are at the helm of political power in regional states that have little resources to manoeuvre within the immediate. The widespread and violent protests brought carnage to many towns of their respective regions were grim reminders that they have no luxury of time before they act in resolute manners.

The two biggest regions, with the largest demographic shares, have economies overwhelmingly dependent on subsistent agriculture. With the increase in family size and pressure from ever enlarging population, the family land size is shrinking, unable to support millions of youth desperate to find a means of livelihood. Neither is the national aspiration for the structural transformation of the economy to industrial-led has reached its momentum. Despite encouraging signs of growth in the manufacturing sector, whatever is there on the ground is too insignificant to absorb the workforce in the youth population.

Certainly, these are times that demand political leadership, which is about making choices based on foresight. These are moments where leaders such as Lemma and Gedu are tested on their courage to steer clear of populism and nationalism to chart the course out for a future that embodies hope for a population and dignified rule.

So have Messrs Gedu and Lemma appeared to have made their choices, arguably in the best interests of their respective constituencies. In their desperate urges to unleash industrial complexes, they have launched what their proponents hail as “economic revolutions” branded as “Amhara” and “Oromia.” Expectedly, their move has caused murmurs among members of the private sector and raised eyebrows of those political pundits. Not without reason, though.

Both regions have launched their respective industrial initiatives under a political environment where their umbrella organisation, the EPRDF, is far from achieving consensus on the alternatives for industrial transformation. There are at least two schools of thought debated along the corridors of power. Ironically, the second edition of the Growth & Transformation Plan incorporates an element of both, making both sides claim the document to reinforce their respective causes. In effect, it only reduces the debate down to the point of order and a matter of emphasis.

Equally articulated by veterans of the Revolutionary Democrats, albeit on the opposite side of the aisle, a group claims the way forward should be the support of the private sector to create satellite industries mushroomed near and around towns across the country. Small in size but linked to the farming communities around them, these industries can use agricultural produces as inputs, thus create a market for farmers, and provide jobs in hundreds of thousands. They can also help stimulate local economies, helping the communities around them transform to consumer societies.

No less are their adversaries potent in their convictions. The trouble they see with mushrooming of satellite industries is time, resources and technologies, all in greater constraints in a developing country such as Ethiopia. They also find it hard to see a viable industrial transformation in a place where industries are unclustered for reasons of many variables, most crucially the provisions of public infrastructure.

Although significant, this is the debate leaders of the ruling EPRDF chose to battle within the confines of their structure. They remain unresolved either by consensus or one side prevailing over the other.

The emergence of quasi public-private companies in the two regions is thus a new addition to the crossfire. They seem to be an afterthought by the regional administrations whose leaders were scrambling to please the public at a very crucial time. Beyond the public pronouncements of their formations, and photo ops during groundbreaking events, feasibility studies and copies of prospectuses for these companies are hard to come by, It is understandable they are rushed to calm down a discontented public that has taken centre stage in the past years, being generous and ready in giving out benefits. Welcome to the politics of provisioning, a rather tactical move loved by populist and nationalist parties across the world.

The ruling party – which has a historical aversion to populism – has adopted various initiatives in the past two decades to address youth unemployment, which has been a concern for any administration. Over a decade ago, the federal government adopted a strategy aimed at providing financial supports to micro and small enterprises, whose officials reported they had created over 10.5 million jobs in the first edition of the Growth & Transformation Plan.

The ruling party and its coalition members, and the administrations they run in their respective regions, do not seem to mind the need for consistency and harmonisation of their various initiatives and different policies. Such would be a result of confusion, only leading to repeating mistakes and the waste of meagre resources for result little to show for the time and effort they take.

In the absence of political reform with meaningful concessions, and the resolve to broaden the political space, the promotions of the industries in these regions can only be a therapy for a wrongly diagnosed ailment.

The public in the two regions has a lot more reasons to be discontented than the unavailability of jobs, as no small number of the young men and women shouting out on the streets have jobs that pay. Their protests were rather deep rooted over the issues of official corruption, maladministration, and abuse and misuse of power by the power that be. They wanted to make a point and send a message to the ruling party, demanding inclusiveness in the political process and equity in the economic development. It is not only about providing jobs or transparency and accountability. It is also about taking responsibility and exercising fairness.

Politics of provisions has its limitations in solving such complicated issues and significant demands. What it can achieve is a short-term solution that will quiet down the public until another problem turns its ugly head. The youth still have not gotten answers to the problems that have been bogged in their heads, and it will not disappear because they have been distracted by goodies from the federal government or the regional administrations. It is not that easy to make people, especially the youth that is filled with rage and anger, stay silent for long.

Despite their good intentions, the regional administrations will end up picking winners,  determined to see them succeed at the expense of others. The companies they help create and finance directly or indirectly with taxpayers money will have to compete for finance, resources and markets, if not for skilled labour. Politicians in powerful offices with vested interests cannot remain bystanders, when the companies they midwived lose in the cutthroat competitive world of business.

They will be compelled to intervene on the behest of their preferred companies, thus become instrumental in the consolidation of crony capitalism. The support may not come in direct financing from their respective budgets. However, governments determine who wins and loses in the market with their discretion on targeted tax credit, mandated purchases, or guaranteeing low-interest loans.

Nonetheless, the world is rich in the saga of cronyism, a policy of governments which impedes competition that is based on skill and mastery; misdirect resources from efficient allocations for optimum returns; breeds corruption; and undermines the legitimacy of the genuine private sector. Allowing crony capitalism rear its head, the EPRDF can only find itself back to square one, a recipe for social turmoil.


Published on Apr 22,2017 [ Vol 17 ,No 885]



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