A seasoned politician with several years’ of experience in peaceful political struggle, Mushe Semu has retired from active politics and is now a career banker, working as a branch manager at one of Ethiopia’s private banks. Having contributed in the establishment of the Ethiopian Democratic Party (EDP), Mushe served under several different roles at the party until his retirement. He served an important role during the preparation of the party’s manifesto, detailing the political and moral ideologies of the party. Fortune talked to Mushe because he is well-read, articulate and up to date with current issues. And also, since his retirement from politics, he represents a relatively independent voice to make sense of the current situations in our country. Mikiyas Tesfaye Fortune Staff Writer talk to Mushe in this Exclusive Interview.
Fortune: Last week saw two statements from the EPRDF’s Council and the Prime Minister. It sounds like the party has evidence about the corrupt tendencies and incapacity of its leaders in different ranks. It sounds like a broken record player, as it was said before, particularly at last year’s Meqelle convention. What’s your take on this?
Mushe Semu: The problem is so huge that the party has lost the ability to make amends. Once corruption becomes so rampant, it becomes dangerous either to fight or tolerate it. EPRDF has its back against the wall when it comes to corruption.
Q: Do you think that it’s about capacity and not about willingness to take action?
MS: I believe there is a willingness to address the issue, but as I said, they are cornered. The mere presence of willingness to address the issue alone cannot bring about a satisfactory resolution, which is what the people are calling for.
What takes place on the ground is not only failing to deliver promises of ridding the ills, but the reverse. Individuals that the public know as corrupt are actually rising further up the power echelons.
Q: What dynamics have incapacitated the Party?
MS: The difference in internal attitude and balance of power in the EPRDF is the key factor in the Front’s inability to effect reform. Being a member of the ruling party, on some occasions, has become a guarantee to embezzle power.
Amongst this trap, it needs to act in a different way. I’m not saying they may or may not continue as a government, but rather that the EPRDF’s potential to rise to the occasion and heed to the call of the people is draining fast.
Q: Instead of redressing the damage corruption has done to the public, last week’s statement announced forceful measures on protestors. Is there any other way?
MS: The government may have the means to repeal the ongoing protest. But it will be bloody and stuck in people’s minds. It will push people into underground, creating clandestine and potentially dangerous resolves. Long term foresight is missing from this decision.
With the government’s efforts to switch off opposition, civil society and activist voices, they thought that they [EPRDF] had quelled the questions. But their efforts did little to stop the voice from the source. Again, now military action could stop the protest, but only as a time bomb underneath the surface.
Q: It has been a year since the country faced protests one after the other, in a geographically spread manner, and there are changing and growing questions and demands. What’s causing the unrests and what’s the way forward?
MS: For me it’s a question of rights, equality and equitable distribution of wealth. The youth in particular have demands to be afforded equal opportunities to have a shot at life and make it.
Take the Oromia, particularly around Addis Abeba’s expansion; it was a simple response to the irresponsible action of the government.
In the case of Wolqait, the government’s failure to provide quick answers to the people is a major mistake. People should not be inconvenienced for demanding their rights.
Force may help in bringing order sometimes, but in the long run, it is counterproductive and is bound to lose.
Q: Does that mean that the two protests are standalone and don’t share commonalities?
MS: They are the same and different at the same time.
In the Oromia region, the question of unequitable wealth distribution, particularly on land use, is a dominant feature of the protest.
In the Amhara region, there is the perception that the ethnic group has been targeted in various biases. There is an understanding that the current system has facilitated prejudices.
Both, however, are the same in their composition. They represent the largest regions in the country, with a large number of youth involved in the protests. In both cases, self-administration – federalism – seems to be demanded. Protestors argue that regional governments are puppets and do not serve the interests of the people.
Q: Is there a magic bullet solution for the Government?
MS: EPRDF really needs to start listening to people and put its invincible mindset, which borders on hubris, in check with reality. The geographic span the protests cover is significant in the country, so is the number of people involved. The government should refrain from intensifying the conflict.
Q: How do you see the Diaspora’s role in this – to the extent they could be defined as a uniform community? Assuming most of the entries on social media are coming from across the Atlantic.
MS: What you see on social media is horrifying and saddening. I don’t believe what is taking place on social media represents the Ethiopian people.
It’s very unusual in Ethiopia’s history and has a gruesome image. It’s hard to say that the views expressed represent the general public, but one thing that is for certain is that such activities help no one. Inciting attacks between ethnic groups, issuing assassination orders against individuals by posting their pictures and addresses, intimidating artists to force them to boycott their means of livelihood is not normal in this country.
From a distance, it is a simple matter. They [Diaspora] are not directly affected by the impact of the conflict. It is derived by ulterior motives – to come and rule or justify their choice to leave the Country.
It is an abuse of such a great platform; a hotspot for constructive discussions and a bridge for the limited press and expression of views. As it is now, it is serving as a platform for hate speech and incitement into the screens of tens of millions of people. There is no way to know the true identity of people on Facebook posting these materials. It’s also ironic how someone who claims is struggling for human rights calls for harsh measures against what it deems to be its enemy. A similar pattern is now being witnessed in Ethiopia to what transpired prior to the Rwandan Genocide.
There is also a question of authenticity in some of the posts being shared. People are now exploiting the separatist politics. There is so much anger on the ground and social media messages are manipulating the anger for another purpose.
Q: The government’s huge shield for dismissing popular protest is its acclaimed achievement on the economic growth front, including absorbing the shocks of El Niño. Has the country’s economy really absorbed the impacts of the drought and the political unrest that has been taking place in some parts of the country for several months now?
MS: Both estimates are relatively true, only using different models of calculation. The government’s claim is a result measured against the country’s GDP. Either way, if the economic growth is real, its impact on the everyday life of the people is minimal. The economic growth is also not coping with the rapid population growth in the country. In addition, as a society becomes relatively more affluent, its wants and needs will surely shift. For Ethiopia, which has been in the dark ages for the previous 40 or so years, the effect these infrastructure developments here and there bring is insignificant. In fact, the little glimmer of growth has resulted in an unmatched demand that is beyond the coping capacity of the economy. Corruption, administrative hustles and the lack of sufficient financing all play their role in diminishing the impact too. In Ethiopia, the success of individuals and the trickle effect it will have on society is not taken into consideration. Such inclinations, owing to the Marxist heritage of the ruling party, are non-existent in Ethiopia.
The EPRDF’s policy only caters for people at the very top of the food chain or those at the extreme end. Those in between, especially with formal employment, are highly taxed and have no way to avoid it. The vast majority of actors in the economy are lightly taxed.
Priority in economic betterment is increasingly afforded based on political affiliation in Ethiopia. Loans, land, markets and other resources are readily available for those with the right connections, despite being clearly ineffective to deliver on the taxpayer’s money they have been given.
The gap between the rich and the poor has risen over the years, highlighting the unequitable distribution of wealth in today’s Ethiopia.
The system does not encourage business-minded people, who can bring duplicative effect on capital that will avail resources to be shared by a larger portion of society.
The country’s economy is heavily dependent on the service sector, which is not labour intensive and does very little to create significant value to the economy.
Q: Despite all the cracks you have indicated, the government’s response to the drastic impact of El Niño was well liked. In actual terms, it has allocated as much as 800 million dollars to mitigate the impact of the El Niño-induced drought last year. How do you asses its response to the disaster?
MS: It may have paid the money. But having failed to dispense its responsibility in the first place to ensure families should at least have the necessary amount of food reserve to make it through a bad season, its assertion that it spent money from its coffers to curtail the impact is nonsensical. Couldn’t the money have been better spent if it was on sustainable development programmes?
The government should not pat its back for spending that money; it should have invested it prior to the drought to promote a drought resilient agriculture.
Q: Given this as a national threat, how do you rate the response? How do you describe the role of civil society organisations or the public at large in mobilising funds to provide aid for the drought victims?
MS: People should help each other out. But as donor fatigue grows and overall dissatisfaction in the State increases, participation of the public in providing aid diminishes. It is rather cruel, unheard of in Ethiopian history, but some wonder the impact they could have against such a large number of affected people, and also wonder if the contributions they make truly reach the intended target.
A private channel to mobilise resources and help those in need could have been useful, especially in light of a growing distrust in the State.
Q: But it is a reality that the government is committed to the manufacturing sector, boasting its one single project- a world class Industrial park, as officials prefer to call it. Yet a complete U-turn to the policy pattern it followed so far. Now the focus is on FDI led industrialisation. Which way do you go on this?
MS: I don’t want to take the debate to the level of benefits of Parks, but what is actually on the ground.
Despite the actual content, what I do not like is the idea behind such a huge plan, out of the ten in the pipeline, with no budget in place. With the commencement of the second Growth and Transformation Plan, there is this high tendency of setting ambitious plans without forehand knowledge of implementation capacity, which is clearly insufficient to meet the targets set. An irrational attitude is to say “let’s have an overtly extended plan; let’s try to fulfil the goals and there is no shame in falling to do so”.
Planning and implementing these ambitious plans will cost the nation dearly. No one takes responsibility or is held accountable for not having delivered on the outlined goals – nor never have they been in the history of the Country.
The government’s large sugar development projects are a good example. Instead of getting lost in several such projects, the government should have opted for just a manageable number of factories – say two to test the waters, and build on those, if the market demands. Industrial parks might have a huge chance of being the next sugar projects. The new vibe around the industrial parks also reminds me another disappointing experience. To a large extent, these initiatives are dreams and visions of someone who comes from abroad after completing their studies. Government farms and individual water reservoirs are examples where individual’s dreams have cost the society a great deal.
Industrialisation cannot take root with wishful thinking. The creation of assets, which in turn creates more assets, is the way to develop an economy.
Deeply reflecting, I see no reason why the Country opted for FDI industrialisation as a single driver of the sector and economic growth in general. I rather see merit in industrialisation anchored on small scale, cottage industries and building their capacities.
Most of our day-to-day consumption is manufactured by small scale cottage industries. Working towards creating a conducive environment for such entrepreneurs could change the lives of thousands, substitute imports and generate tax revenue.
The industrialisation approach, especially those with intensive capital investments geared towards exports, face a shortage of raw materials. Beyond creating jobs and generating foreign currency through exports, they have very little impact on the economy.
And once the comparative advantage of the host nation of the IP subsides, companies that have set up shop will jump ship.
Though the initiative should be appreciated, I don’t think it will take Ethiopia in the right direction to industrialisation. The policy should include sustainability and bring meaningful change to people’s lives.
Q: But the initiative saw the potential of some challenges and arranged huge incentive packages to engage local investors. Wouldn’t that balance the potential drawbacks?
MS: Every entrepreneur engages in a given business to maximise their profit. EPRDF’s developmental capitalist conception is a joke and goes against the very nature of a rational businessperson whose primary goal is to increase its profit. No one goes into business with job creation as their foremost objective.
We should ask if this industrial park will assist local investors to facilitate their way of doing business. The failure in small and medium enterprises to take up on the industrialisation torch is a manifestation of the guiding philosophies of the ruling government in the sector. SMEs, in my opinion, are usually busy blocking roads and selling peanuts and biscuits, and are far away from taking a meaningful role in industrialisation. I’ve never heard of an SME having a hundred million birr or half a billion birr in capital.
Q: The issue of the fair distribution of IPs across the various regions of the country is a hotly debated subject. What do you think should be the best approach to address the issue?
MS: Economic principles dictate the creation of assets. The whole idea behind the equitable distribution of IPs in all regions has no backing from an economic standpoint. Investing in a coffee processing plant in a non-coffee producing area or a cement factory with no cement raw materials is bound to fail from the very beginning. If a road cannot relatively cheaply facilitate the movement of goods and services, but is built merely to match what has been built in another region, it’ll be a waste of scarce resources.
IPs should be built based on their proximity to ports. The further the parks are established from export routes, the less competitive a company’s comparative advantage become. I don’t understand an economics where the goal is to reach each region.
Q: Forex has presented various challenges to Ethiopia’s trade and its shortage led to different illegal banking activities in managing Forex. How can this problem be addressed?
MS: First, the government’s debt servicing is on the rise. Major loans started to flow into the country roughly a decade ago and their maturity date is either already here, or fast approaching. In the past year alone, debt servicing consumed around 13 billion Br. I have always argued whether those loans were spent on things that would be able to service the debt, which also includes interest. Investing loans on unprofitable projects, resource wastage, corruption and embezzlement make serving debts an uphill struggle.
Secondly, all the money that has found its way in to the pockets of people in the community has given rise to increased demand, which, set against the background of limited supply, has caused inflation. The needs and wants of the society has risen without properly implementing import substitution programmes.
Thirdly, a great deal of money – as much as nine billion dollars – is subject of an illicit financial outflow from the country. Most of the hard currency that comes through remittances leaves the country in the black market.
Aid is also becoming scarce, considering the world has more humanitarian hot spots here and there.
The fall in the price of oil has helped Ethiopia in the face of the significant Forex crunch it experienced.
We also need to limit the types of goods we import. Simple things that can be easily manufactured here should be banned from import.
The government should consider Franco valuta, even though it’s considered as regressive, to address the chronic Forex shortage in the country’s trade. The Commercial Bank of Ethiopia handles most hard currency transactions aimed at servicing debts to China. Private Banks only scramble for what’s left in the form of remittances.
The shortage has opened doors for some illegal activities to take hold in some banks. The Central Bank has taken drastic action to curb such wrongs.
The ultimate solution to solve the shortage should be to boost exports and encourage remittances to use formal channels, so that the profit goes to the legitimate coffers.
Q: How do you assess the Central Bank’s action against some banks in response to their Forex management?
MS: In my view, what some bankers are accused of doing is very dangerous and still continues to rock the banking industry. Transferring resources through illegal channels from one bank to another or to appear competitive without having sufficient wealth has negatively affected correspondence with foreign banks. The government should intervene and its actions in this light are justified. It should implement strict regulatory mechanisms to mitigate such misdeeds.
When it comes to the allocation of Forex, it should be open for the markets to decide among banks.
Private banks have had a key role in introducing technological innovations in the country’s financial industry. Government banks, owing to their enormous capital, have copied such innovations from the private sector. Unless the private banking industry is encouraged, it is very difficult to enhance the country’s economy.
Q: Foreign nationals of Ethiopian origin are barred from owning shares in Ethiopian financial institutions. Despite such proclamation, some actually own shares in banks and have been paid dividends. But last year the Central Bank issued a circular strictly enforcing the proclamation. What’s your take on the state of limbo such people find themselves in, with unclear status to their shares and dividends?
MS: I agree on this stance too. Bank shares are a hot commodity, and I believe the local economy can carry the weight of purchasing shares. Its benefit should be limited to people within the country for now and the Diaspora can get involved in other investment options.
But I think the Central Bank and banks that have sold shares to foreign nationals should be held accountable. What was the Central Bank doing when the problem first occurred? Another complication in this case is shares bought by Ethiopians who went on to change their nationality. We need to close the historical chapter on the issue, charge those who are responsible and move forward with a clean slate.
Q: Any New Year wishes and messages?
MS: A new year represents a transition from the darkness of the rainy season, where people were and some still are tenants to nature’s incarceration as rivers cannot be crossed. The EPRDF should learn from such hope of transition into a bright future where basic freedoms are enshrined. It should think about ordinary folk who are demanding their rights, as opposed to preoccupying its energy on its enemies. This could potentially result in the de-escalation of conflicts. While respecting the people’s resolve to present their demands through peaceful means, actions by some groups against certain groups based on political inclination or other affiliations is going to breed more hatred in the long run.
So I call on all of us to calm down and think about our children and their future. The government has a huge responsibility; it has an opportunity to bring change for the better in the spirit of a new year.
I hope that Ethiopians pass this difficult time and that the New Year will bring prosperity and peace to all.
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