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Ethiopia’s Governance And The Current Situation And Management of Natural Resources August 13, 2013

Posted by OromianEconomist in Uncategorized.
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Despite the change of leadership following the death of Mr Meles last August, there are few signs of any shift away from the prevailing state-led development model. Nonetheless, it is possible that the government could be forced into a policy turnaround if it is unable to secure the financing required to support its ambitious and underfunded five-year economic plan. At present, the plan is largely financed by direct central bank financing and by forcing private banks to purchase Treasury bills (T-bills); however, this strategy is both inflationary and unsustainable.”

Ethiopia became a de facto one-party state following the May 2010 general election, which more or less wiped out the opposition, after years of determined progress. The ruling alliance has strengthened its grip on power through a steady erosion of political liberties, including the use of controversial anti-terrorism legislation. However, the death in August 2012 of Meles Zenawi—the long-standing prime minister, who did much to hold the ruling coalition together—has taken Ethiopia into uncharted territory. In line with the constitution, the former deputy prime minister and foreign minister, Hailemariam Desalegn, has been endorsed as prime minister following the death of Mr Meles. Nonetheless, if Mr Hailemariam fails to stamp his authority on the coalition, the risk of ethnic and religious tensions will increase. Ethiopia’s population was nearly 85m in 2011 according to World Bank estimates, making it SubSaharan Africa’s second-most populous nation after Nigeria. Its population grew by an average of 2.7% a year in 1990-2011, and is expected to reach 120m by 2025, according to projections by the UN. There are more than 80 different ethnic groups represented in the country. The population is still overwhelmingly rural, with only 17% living in towns. Economic progress—and, in turn, political stability—will be heavily dependent upon Ethiopia’s continued access to foreign aid. In this respect, the government has faced criticism for its hard-line response to any domestic opposition. Indeed, it seems likely that, for the foreseeable future, the regime will  continue to protect its hegemony using restrictive legislation and periodic crackdowns by the security services. At the same time, as the largest country in the Horn of Africa, Ethiopia has positioned itself as a bulwark of Western states against Islamist terrorists in the region. This factor is likely to outweigh donor concerns about possible misuse of aid. The impasse with Eritrea over the two countries’ disputed border remains a significant political risk, although a return to all-out conflict (as occurred between 1998 and 2000) is not expected in the near future; Eritrea is unlikely to initiate any hostilities, since it would almost certainly lose, while the Ethiopian authorities are aware of the damage that renewed conflict would do to relations with, and funding from, international donors. The Ethiopian People’s Revolutionary Democratic Front (EPRDF)—an alliance of four main groups—won an overwhelming majority in parliament at the May 2010 election. Following the death of Mr Meles, the 180-member council of the EPRDF gave its unanimous—if belated—endorsement to his deputy, Mr Hailemariam. This suggests that the party wishes the latter to remain in the post, at least until the next elections, due in 2015. However, the longer-term prospects for EPRDF unity are more uncertain. Mr Hailemariam is currently attempting to rebalance the EPRDF—traditionally dominated by the Tigrayan People’s Liberation Front (TPLF).’

Ethiopia’s country profile by The Economist Intelligence Unit, 2013. To read the details on Ethiopia and other 24 African countries click the following links:

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