Youth Fund: Bandage on Gunshot Wound

Three months prior to his unfortunate yet consequential passing, Meles Zenawi, the late prime minister of Ethiopia, had one of the three remarkable public addresses made at the Sheraton Addis, during the World Economic Forum for Africa, held in May 2012. The other two historical events where he had made profound speeches were inside the Millennium Hall observing Ethiopia’s second millennia; and, after he laid a cornerstone for the construction of the Great Ethiopian Renaissance Dam (GERD).

His appearance before the economic forum for Africa, a rare event held for three days in Addis Abeba, was no less than prognostication of the leadership that followed his. In one of the many sessions where panelists Werkeye called to acknowledge Africa’s leadership and award the continents social entrepreneurs, the four panelists spoke of what makes a leader a good leader.

During this high profile and world-class forum, some among the crowd spoke of character, confidence and capacity as qualities of leadership. Among the panelists, Gabon’s Ali Bongo said “honesty” matters to him most; and to Nigeria’s Goodluck Jonathan a good leader is a “fixer” of problems; while Namibia’s former Prime Minister, Nahas Angula, believed a leader should be “responsible.”

Meles was confronted with a question from a young South African on why leaders ideal and visionary in their youth “transform to sometimes ordinary thieves?”

“What is this poison that happens in these chairs of power,” the young lady quipped.

The late Prime Minister had taken the moment to bite on the global multinationals and their domestic subsidiaries, which allegedly loot the continent in organized fashion, and make the leaders “paid or unpaid facilitators.”

Thus, Meles believed a leader should have the “perseverance” to continue on the chosen path when the going gets tough and be “able and prepared to say no when the leadership is required to act in a manner that is not consistent with the long term interests of a country.” He had predicted that sooner or later the goings would no doubt get tough.

Barely five years after his passing, it is unfortunate to see his successors are unable to take a lesson or two from such a foresight. If there is anything that characterizes the administration of Hailemariam Desalegn, it is its populist propensity in trying to please everyone.

Teachers and federal judges complained about housing; the state is building it for them. Minibus drivers in the capital threatened to boycott because they were unwilling to comply with the city’s traffic regulation; the administration put the law on hold. Civil servants have difficulties accessing public transport; they have now dedicated blue colored buses serving them for free. The civil service was crying over the cost of living; they have the second wage adjustment in three years.

“We cannot please everyone,” Meles had said in what was perhaps his last public address.

Ironically, Hailemariam’s administration appears be desperate in doing exactly that in a bid to either appease rebelling voices or buy time when the going gets tough. The latest in this pattern is the kneejerk approach his administration dubbed as a “youth revolving fund,” dropped like a magic potion in response to the youth bulge seen over the past two years.

The Youth Fund, a 10 billion Br earmarked, has first surfaced when Mulatu Teshome (PhD), president of the Republic, addressed both chambers of the legislation in October 2016. It was among a couple of initiatives the government had pledged to consider in response to public discontent with regrettable consequences on lives and property. Yet, this fund was not incorporated in the federal budget for the current fiscal year amounting to 274 billion Br, legislated by parliament only three months earlier. Nowhere in the budget did it mention any plans to allocate 10 billion Br to a youth fund.

It only revealed the firefighting approach the administration has chosen to please the millions of young men and women thought to have caused the toughness of the going. It was a surprise package.

Certainly, the youth comprises the largest share of Ethiopia’s demography. It is this age group that suffers from high rates of urban and rural unemployment; nearly a quarter of the youth population (22pc) was unemployed in 2016. It is sensible for any government to prioritize job creation and optimization of education and skill in its policy formulations. If the Revolutionary Democrats feel obliged not to neglect the demands of such a large constituency, it should only be understandable.

Their shortcomings rather come due to “short-termism” of their youth fund, both on policy and practical levels.

The revolving fund is planned to target the youth aged between 15 and 29 in all regions of the country; two weeks ago, the Oromia Regional State approved 6.6 billion Br for the youth fund; Tigray Regional State two billion Birr and the Addis Abeba Administration three billion Birr. Young men and women in the target group can group in five to propose business plans and get loans without putting up any collateral.

It is a good sign of a government keen to do politics of provisions, hoping to tame the ones that are feared to cause unrest and headaches for the leadership. It comes from a political leadership with a misguided reading of the situation that the recent political unrests and massive discontents were caused by lack of jobs for the youth in the country. It could be a factor fueling the unrest, but to a limit. Nonetheless, the response of the administration is a hallmark of autocratic governments, which usually find it necessary to resort to this style of politics when they are unable to take the rough ride on transparency, accountability and rule of law.

From the 18th Century England to France and Ireland as well as 20th Century India and 21st Century Egypt and Tunisia, it is demonstrated that countries which prefer to practice the politics of provision at the expense of timely reforms and necessary concessions are only postponing their days of reckoning. A foremost authority on the politics of provisions, John Bohstedt, professor emeritus of Tennessee University, argues that people need to feel a sense of right, have the means to mobilize, and expect that their protest makes a difference to participate in violent riots.

Indeed, tens of thousands of Ethiopians across the country have made precisely that point over the past two years to no avail. In the meantime, the nature of their demands and expectations has evolved from the ones that can calm down due to responses that is typical of provisions of politics.

The popular demand, whether channeled through organized opposition or sporadic protests, is for inclusiveness in the political process and equity in the economic development. It is about instituting a system where the officials are transparent to the pubic and accountable to the law. It is about the full and unabrogated exercise of constitutional provisions.

Politics of provisions has obvious limitations to overcome such demands. It might calm things down for a while, but the danger still lurks in the minds of the youth. The administration cannot simply buy the silence of its youth, when they are really discontented with the politics of the country; and they are filled with rage.

At a practical level, the administration’s officials in charge of running the revolving fund have a lot to answer for. It is not clear what impact the new fund might have on the broad money supply that has reached over 445 billion Br in 2015/16, reflecting a 20pc annual growth. When the government injects an additional 10 billion Br into the economy, the central bank is likely compelled to order the printing of new notes, causing inflation.

With this revolving fund, the ever-present rate of inflation should also be considered. For the youth to benefit from this plan, inflation needs to be under control. This has to be something the administration reviews before giving false hope of change for the impressible youth.

If the youth plan is not successful and the loans are not paid back it can add another layer of economic downturn by creating a budget deficit, which has already tripled to 4.5 billion Br in the first quarter of the current fiscal year, compared to the same period last year. This might worsen in the current fiscal year if the government is not able to secure returns from the money it has decided to give out.

Most importantly though, the revolving fund needs to be focused on expanding the existing private sector, which employees the youth but operates under painful liquidity crunches. The major problem of small and medium businesses in Ethiopia is getting access to finance, a survey by the World Bank indicates close to 40pc of companies experience difficulties when trying to access finance, while the private sector in Ethiopia is scrambling to find resources, the administration could have used the existing infrastructure, with presence in the market and track record, to help ease some of the burden. The economy is also in need of skilled human capital, where the state could have played its rightful role of using part of the revolving fund for provisions of trainings.

Hence, the way the administration wants to go about the revolving fund seems to be a bandage on a gunshot wound. The problems are much bigger than just keeping the youth occupied on other things such as jobs.

Published on Jan 31,2017 [ Vol 17 ,No 874]



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