The Unchecked Industrial Stalemate at MetEC

In the books of the Revolutionary Democrats, under-development, primarily in its economic sense, is the source of internal and external threat to the nation-state.

They adopted and have been practising the agricultural development led industrialisation strategy accompanied by massive public infrastructure investments for more than two decades.

Now, in a calm mood, without publicly stating how the success of the agriculture sector could help industrialisation, they seem to be gearing towards an industrial-led economy.

For a government led by a ruling party that has a history of bending itself according to circumstances, this might not come as a surprise. What might be surprising and debatable are the strategies that the party presents to alleviate poverty, which is the number one enemy of the country in its own language.

With the aim of transforming the economic base to become a middle-income country, the government came up with five-year Growth & Transformation Plans seven years ago. To implement the successive plans and realise the aspiration of industrialisation, the late Prime Minister, Meles Zenawi, put forward building a military industrial complex as one of the major possible tools.

Hence, the Metals & Engineering Corporation (MetEC) was born in 2010 with 10 billion Br of capital as a hub for the nation’s factory productions, with the strategic mission of guiding the growth of small and medium size enterprises in the manufacturing sector. Recently, to support the same aspiration, the development of industrial parks has followed.

MetEC, a brainchild of Meles Zenawi, was modelled taking the experiences from Eastern Asian countries and the West.

Without undermining the fear of MetEC’s critics, who think that an active participation of the military in the industrial economy could be a force for bad, implying that national welfare benefits from the separation of the military and the economy, history has shown that developmental militarism could also be a force for good.

Indeed, industrial complexes managed by people in uniform have been a primary player in the rise of the many modern nation-states and their economic development. The United States, Sweden, South Korea, Taiwan, Israel, Argentina, Brazil, China, and Russia facilitated their economic development by having industries based in the military or being led by people from the military.

As the EPRDFites say now, many of these countries were rationalising that the direct involvement of military industrial complexes managed by disciplined, committed people with a sense of national pride in productive economic sectors helps to alleviate the source of social and national security threat that is under-development.

Though Meles saw competition, innovation, efficiency, quality, transparency, and a high sense of national pride in the military Weberanism to lead the process of industrialisation, the practice seems to support the opposite, which is the argument of the opponents.

In the world of the classical economists, the involvement of the military in the economy is unproductive, especially in a time where there is an absence of credible external threat and the rule of law, and when the military is often subject to partisan interests.

The history of coalescence of the military and the economy shows it was not all about success. In some countries in Latin America and Africa, the approach has also severely constrained development and has become a national burden.

Headed by Kinife Dangew (Maj. Gen), its chief executive officer (CEO), the state-owned military industrial complex’s fate seems to be in a dilemma. Whatever ambition it may have, a manufacturing company is measured by its efficient deliverability following all the legal and professional production processes. The assessment of MetEC differs, and it is becoming a source of national frustration and embarrassment. The extended delays, mismanagement of money, and disorganised work in the construction of the sugar and fertiliser plants are cases to tell.

Managers in uniform at the industrial complex are not transparent; they do not follow bidding and procurement laws and procedures of the country and the corporation. The companies they run are inefficient and wasteful. There must be a severe lack of qualified personnel and flawed project management in the corporation. Contracts are received and awarded without competition, no better with the procurement process.

Even though the legal establishment of the business organisations is under civil status, there is a deliberate confusion. At times officials in the corporation act as military when confronted by members of the parliament and civil officials, at other times act as civilians when they are confronted by members of the defence force. In practice, however, their management culture looks like a copy-paste of the secretive and hierarchical military culture. That is what the outcomes can confirm.

Instead of penetrating market share through competition, MetEC products are supplied to public organisations and the market with protection, at times at a higher price and lower quality. Needless to say, the uncompetitive nature of this corporation is widening the gap of the balance account and trade deficit of the country and killing the private sector. It could also have another spill-over effect. It may install the culture of corruption and unlawful business practice and less humanistic and modern business savvy management.

Unless it abides by the rules of public procurement and personnel recruitment, installs new business reforms instead of employing old hierarchical military culture, believes in competitiveness, and avoids inefficiency, MetEC will remain undoubtedly a burden to the country.

Especially, if the protectionist approach that the government is following towards this corporation is not halted, it means that it has declared death on the private sector, which is against its policy. The corporation seems to be at a critical time either to averse the situation by instituting a complete business reform and be a success story in the sub-Saharan or join the few countries in Latin America and Africa as a classic example of failure, and putting the country’s dream of becoming a middle-income in vain.

Published on Jul 20,2017 [ Vol 18 ,No 899]



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