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A study of 39 African countries from 1970 to 2010 found that for every dollar borrowed, up to 63 cents left the continent within five years. The money is often siphoned out as private assets, suggests Léonce Ndikumana, one of the researchers, based at the University of Massachusetts, Amherst. Some banks seem more interested in juicy fees than good governance.
China’s involvement in Africa has made it harder to assess the situation. Countries such as Zambia and Congo-Brazzaville have taken out opaque loans from Chinese companies. Angola has borrowed more than $19bn from China since 2004, mostly secured against oil. Such loans often have built-in clauses to review repayments as prices fluctuate, says Deborah Brautigam of the China-Africa Research Initiative at Johns Hopkins University. But there is little precedent for restructuring Chinese loans. Nor is China a full member of the Paris Club, which co-ordinates the actions of creditors when things go wrong.
Though much of the money borrowed by states comes from foreign investors, some is provided by local banks. They find it easier to buy government bills than to assess the reliability of businesses or homebuyers. Moody’s, a ratings agency, estimates that African banks’ exposure to sovereign debt is often 150% of their equity. So a sovereign-debt crisis could fast turn into a banking one.
“A FOOL’S bargain.” That is how Idriss Déby, Chad’s president, now describes the state oil company’s decision to borrow $1.4bn from Glencore, an Anglo-Swiss commodities trader, in 2014. The loan was to be repaid with future sales of crude, then trading above $100 a barrel. But two years later, as the price dived, debt payments were swallowing 85% of Chad’s dwindling oil revenue. For weeks schools have been closed and hospitals paralysed, as workers strike against austerity. On February 21st, after fractious talks, Chad and Glencore agreed to restructure the deal.
Chad’s woes recall an earlier era, when African economies groaned beneath unpayable debts. By the mid-1990s much of the continent was frozen out of the global financial system. The solution, reached in 2005, was for rich countries to forgive the debts that so-called “heavily indebted poor countries”, 30 of which were in Africa, owed to the World Bank, IMF and African Development Bank. With new loans and better policies, many of these countries turned their economies around. By 2012 the median debt level in sub-Saharan Africa (as defined by the IMF) fell to just 30% of GDP. Today the median debt level is over 50% of GDP. That is low by international standards, but interest rates are generally higher for African countries, which collect relatively little tax. Economic growth slowed in response to lower commodity prices. As a consequence, there is much less revenue to service debts. The pace of borrowing has picked up. The IMF reckons that five sub-Saharan African countries are already in “debt distress”, with nine more at high risk of joining them. Lending to Africa surged after the financial crisis, when interest rates in rich countries sank to historic lows. Fund managers chased the high yields of African government bonds and the profits from a commodities boom. The biggest lenders to Africa had long been Western governments. But since 2006, 16 African countries have sold their first dollar-denominated bonds to foreign investors. Interest rates in the rich world remain low, so several countries are scrambling back to the market this year. Senegal’s $2.2bn Eurobond was five times oversubscribed on March 6th. Borrowing makes sense for poor countries if it finances things like roads, schools and hospitals, which improve welfare and support economic growth. But the keenest borrowers in Africa are also feckless spenders. Take Ghana, which racked up debt as it ran an average annual budget deficit of 10% from 2012 to 2016. When a new government entered office last year, it found a $1.6bn “hole” in the budget. The new chairman of the state cocoa board found that a $1.8bn loan meant to fund cocoa production in 2017 was “all gone”.
Ghana got a three-year loan of $918m from the IMF in 2015, ensuring a degree of transparency. Commercial loans are easier to hide. In Mozambique, three state-owned companies borrowed $2bn in deals arranged by European banks. Most of this was done in secret. The proceeds were squandered on overpriced security gear and a bogus fleet of trawlers. An audit could not trace $500m. The once-buoyant economy sank and Mozambique defaulted on its debt last year.
Leveraged corruption
A study of 39 African countries from 1970 to 2010 found that for every dollar borrowed, up to 63 cents left the continent within five years. The money is often siphoned out as private assets, suggests Léonce Ndikumana, one of the researchers, based at the University of Massachusetts, Amherst. Some banks seem more interested in juicy fees than good governance. China’s involvement in Africa has made it harder to assess the situation. Countries such as Zambia and Congo-Brazzaville have taken out opaque loans from Chinese companies. Angola has borrowed more than $19bn from China since 2004, mostly secured against oil. Such loans often have built-in clauses to review repayments as prices fluctuate, says Deborah Brautigam of the China-Africa Research Initiative at Johns Hopkins University. But there is little precedent for restructuring Chinese loans. Nor is China a full member of the Paris Club, which co-ordinates the actions of creditors when things go wrong. Though much of the money borrowed by states comes from foreign investors, some is provided by local banks. They find it easier to buy government bills than to assess the reliability of businesses or homebuyers. Moody’s, a ratings agency, estimates that African banks’ exposure to sovereign debt is often 150% of their equity. So a sovereign-debt crisis could fast turn into a banking one. Disaster can still be averted in most African countries. Abebe Shimeles of the African Development Bank warns against sudden spending cuts, which would leave half-finished infrastructure projects to rust. Research from the IMF suggests that the least costly way to deal with fiscal imbalances in Africa is to raise meagre tax-to-GDP ratios, which have crept up by just a couple of percentage points this century. Other proposals aim to make lenders share more risk with borrowers by, for example, linking interest payments to growth or commodity prices. Some suggest changing laws in America and Britain, where most debt is issued, so that countries are not liable for loans agreed to by leaders acting without due authority. Organisations such as the IMF could be more robust, speaking out early when countries seem to be in a downward debt spiral. As it is, the costs of bad borrowing rarely fall on leaders or their lenders, which often makes politicians borrow (and steal) more. “It’s the common man that actually bears the brunt,” says Bernard Anaba of the Integrated Social Development Centre, a Ghanaian advocacy group. The people of Chad, now paying for Mr Déby’s foolish bargain, would surely agree.- For more click here for The Economist
Related (Oromian Economist Sources):
ECONOMIC COMMENTARY: THE DEBT CHALLENGE TO AFRICAN GROWTH, addisstandard/
By corroding and weakening governance institutions and the democratic values of human rights, gender equality, justice, and the rule of law, it has hindered the continent’s progress toward peace and prosperity. A 2002 AU study estimated that Africa loses about $150 billion annually to corruption. Illicit financial outflows, particularly in the extractive industry, cost the continent about $50 billion per annum – far exceeding the official development assistance that African countries receive from Organization for Economic Cooperation and Development countries ($27.5 billion in 2016).
The Ethiopian born Saudi tycoon, Mohammed Hussein Al-Amoudi and all the remaining detainees that were held at the Ritz-Carlton hotel have been transferred to Al-Ha’ir prison, a maximum security prison south of Riyadh.
The Middle East Monitor quoted the Arabic Al-Araby Al-Jadeed news site as saying authorities have transferred the remaining detainees being held at the Ritz-Carlton hotel to Al-Ha’ir prison because they have refused to pay large payments, 70% of their wealth, to secure their freedom.
The report said nearly 60 detainees were transferred to the most high security prison in the Kingdom. The prisoners include Prince Al-Waleed Bin Talal as Prince Turki Bin Abdullah and a number of government officials who refused to make the large financial payments for their release.
Among those transferred to the maximum security prison is Mohammed Hussein Al-Amoudi whose worth is 10.6 Billion dollars and owns businesses in hundreds of millions of dollars in Ethiopia. He works works closely with the TPLF oligarchy that granted him thousands of hectares of agricultural land and several prime plots in the capital Addis Ababa. He hit jackpot with gold in Ethiopia and has been mining gold for over two decades. His agricultural and construction projects stretch all across the country.
Early in November Crown Prince Mohammed Bin Salman ordered the arrest of about 200 princes and businessman accused of high level corruption.
But the purge was also seen as a move to raise money for the cash strapped Kingdom’s treasury. Authorities aimed at raising 100 billion dollars in return for the release of the suspects.
Prince Miteb bin Abdullah had been released after paying more than $1 billion for his release. And a few others had reportedly reached settlement for their freedom.
The Ritz-Carlton hotel is now available for booking starting next month, according to its website.
The TPLF regime’s military in addition to being killers they are also looters! They are looting the entire country in especial Oromia, which is the richest and largest region of Ethiopia.
TPLF’s military is deeply involved in contraband trades of wood charcoal, particularly in Oromia. They use military vehicles to transport charcoal. This military is responsible for the deforestation and environmental degradation in #Ethiopia. This was apprehended in Adama today.
An Ethiopian – born business mogul has been named in an anti-corruption crackdown by the Saudi Arabia government over the weekend.
Mohammed Hussein Al Amoudi, 71, was detained along with 11 princes, four current ministers and a number of former ministers. Saudi-owned Al Arabiya television said the probe is headed by Crown Prince Mohammed bin Salman.
Al Amoudi is an Ethiopian – born business man who holds both Saudi and Ethiopian nationality. According to Forbes, as at 2016, his net worth was approximately $10.9 billion.
His investments are linked to oil and global commodities. He is also listed as Ethiopia’s richest man and the second richest Saudi Arabian citizen in the world. He is one of two businessmen detained, the other is one Saleh Kamel.
His two main businesses are Corral Petroleum Holdings and MIDROC. MIDROCdescribes itself as “a global investment group, wholly owned by Mohammed Hussein Al Amoudi.
“It has substantial interests in petroleum, agribusiness, property, industry and industrial services, engineering and construction, tourism and trade and investment, largely in Europe, Africa, the Middle East and North Africa.”
Al Amoudi is said to have migrated from Ethiopia to Saudi Arabia when he was 19 and became a full citizen of the Kingdom in 1965. He built up a private fortune in construction and property before diversifying into the downstream energy sector with major refining and retail investments in both Lebanon and Saudi Arabia.
MIDROC has an international focus with three main operating companies: MIDROC Middle East (based in Saudi Arabia), MIDROC Europe (based in Sweden) and MIDROC Africa where the company’s focus is heavily on Ethiopia. It also has separately managed and significant petroleum interests.
His influence is remarkable. His people are loyal and will not do anything to antagonize him or the regime. If one has close relation to his circles they are guaranteed success. There are many Ethiopians that oppose the regime but will not dare utter a word for fear of alienation.Therefore, the news of his arrest is a huge deal. It is significant event in the history of the region and Ethiopia. This is an event that will quicken the demise of the TPLF as he was a significant player and ardent supporter. Al Amoudi has openly bragged that he is Weyane. But, what is the impact of his arrest and its repercussions? It is the biggest disruption that the TPLF has ever seen.
Sums of money that appear to be linked to corruption cases will be reimbursed to the Saudi state’s General Treasury. (Shutterstock)
Saudi authorities have announced that they will be freezing the bank accounts of suspects detained in the kingdom on corruption charges.
Officials said that there is “no preferential treatment” in the handling of their cases.
The Saudi Center for International Communication, an initiative of the Ministry of Culture and Information, said that sums of money that appear to be linked to corruption cases will be reimbursed to the Saudi state’s General Treasury.
The Saudi anti-corruption committee, which was set up on Saturday by King Salman’s royal decree and chaired by Crown Prince Mohammed bin Salman, had arrested a number of princes and ministers.
More ….
The former Saudi billionaire, Mohammed Hussein al-Amoudi, is under strict security guard in a room on the top floor of one of the most luxurious hotels in the Saudi capital after the Saudi authorities issued a decision to arrest him for his involvement in corruption cases inside and outside Saudi Arabia. And a group of former Saudi businessmen and officials.
Ethiopia- Oromia : police apprehended a man traveling with US$541,671
#Ethiopia– Oromia region pr head posted video saying region's police apprehended a man traveling with US$541,671 in Bordede, east Hararghe pic.twitter.com/IUvVXuK7yX
further more, @addisu_arega posted a picture of a man called Habanee Arabnuur and said he was traveling with a car having AA plate No. pic.twitter.com/olq8vngyS5
A substantial sum of money has been illegally flowing out of Ethiopia during the last decade. What is even more worrying is not just that the levels of out flows are high but also the sizes of illicit capital outflows have been rising at alarming rates. This rather unique pattern has attracted the attention of the general public as well as those of bilateral and multilateral donor agencies.
I will also attempt to put some flesh on the bones of facts presented in the GFI database. I will do so by shedding some light on the political economy context of the illicit capital outflow (IFFs) from Ethiopia.
Stolen money trails
The natural starting point is to get a sense of magnitude on the levels and trends. The GFI data is summarized and plotted in Fig. 1. For the time being we focus on the total flows, that is the heights of each bar denoting sizes of annual illicit money outflows. The sum of the blue and red colors gives total amount of money illegally moved aboard from Ethiopia during that year. This ranged from USD $0.4 billion in 2004 to USD $5.6 billion in 2010.
The average annual outflow was $2.6 billion during 2004 and 2013. This is a sizeable sum of money by any standard. For instance, according to estimates reported by the World Bank, the amount of official development assistant (ODA) Ethiopia received in 2010 was $4 billion but total amount of IFFs during that year was $5.6 billion.
This means in 2010 alone Ethiopia’s IFFs exceeded the ODA it received that year by $1.6 billion. In other words, Ethiopia’s IFFs amounted to diverting the entire aid money of 2010 to foreign banks and then still transfer abroad an additional sum of money.
During the entire period (2004 to 2013) the total amount of money that Ethiopia lost due to IFF was $26 billion. This amounts to stealing nearly $300 per citizen. Alternatively, the size of stolen money was about 11 times the total the amount of emergency aid being sought from donors in the current year to buy cereals from abroad and feed the drought victims.
Potential culprits
One may wonder – who are the culprits responsible for Ethiopia’seconomic fraud at such massive scale? The GFI categorizes possible perpetrators into three groups: (a) financial institutions; (b) complicit business counterparts, mainly importers and exporters; and (c) government officials.
In the Ethiopian case, it is reasonable to exclude financial institutions because there is no foreign bank operating in Ethiopia, and the domestic private banks are extremely tightly controlled. Ethiopia’s most influential banks, the Commercial Bank of Ethiopia (CBE) and the National Bank of Ethiopia (NBE), are owned and run by the government. Therefore, in the context of Ethiopia it is safe to include (a) under (c).
That is to say Ethiopia’s IFF can only be undertaken by importers, exporters or government officials. One would hasten to add that there is a huge extent of overlaps between government officials and big businesses in Ethiopia, since big businesses are highly interconnected with the government and/or they are directly or indirectly owned and run by government officials.
Money diversion channels
Now we can shift our attention back to fig. 1 and consider the breakdowns of the IFFs, the individual component denoted by the blue and red sections in each bar. The GFI applies a methodological framework that accounts for two types of illegal movements of money from one country to another.
The first one is export or import trade misinvoicing. This is measured by using a methodology called Gross Excluding Reversals (GER). This simply mirrors exports by one country with imports of another country and vice versa. For instance, items of imports recorded by Ethiopia should agree with records of exporters to Ethiopia in all aspects – value, quantity and quality.
The second one is various leakages in the balance of payments, measured by using the “hot money narrow” (HMN) approach.The latter one is often referred to as “net errors and omissions” in the balance of payment jargon. For instance, if a donor agency or country recorded $1 million grants to Ethiopia but this does not appear in the records by the authorities in Ethiopia, then the GFI records this as a leakage from Ethiopia’s balance of payment.
It is clear from Fig. 1 that the bulk of illicit money transfer from Ethiopia has taken place using trade misinvoicing, denoted by the blue component of the bar. In 2004, trade misinvoicing constituted only 14% of the total IFFs. In 2013, however, this proportion has grown to 100%, the entire IFFs began to be accounted for more and more by trade misinvoicing. For the entire period under discussion, $19.7 billion (or 76% of the total IFFs) was conducted through trade misinvoicing. The year 2010 is an exception – diversion of “hot money” dominated in that year; it constituted 55% of the total IFFs.
False invoices
Trade misinvoicing can take place in one of the following four ways: over invoicing exports, under invoicing exports, over invoicing imports and under invoicing imports. In Ethiopia’s case, the GFI report indicated import over-invoicing is by far the most important method of transferring money abroad. During the period under analysis, about $19.7 billion was transferred abroad through import over-invoicing.
It is critical to understand how import misinvoicing hurts the Ethiopian economy. This is important in the context of huge public construction projects with substantially large components of imports of machinery and other equipment. For instance, an acquisition of a set of machinery whose real value is $1 million is recorded with inflated invoice of $1.5 million.
The importer allocates project budget at the inflated import value, pays the real value to the supplier and then siphons-off the difference (in this case $0.5 million) and deposits it in a foreign bank account. The real damage to the economy happens in terms of inflated capital expenditure. Perhaps the opportunity large capital projects provide for corrupt officials could be the ulterior motive for the uncontrollable urge to attach such a high priority to large capital projects in economic development strategies.
However, it should be noted that public capital projects are often financed through commercial loans that should be paid back with cumulative interests in years to come. The economic return to capital project would partly depend on the cost consideration at project implementation stage.
The GFI also finds some export trade misinvoicing in Ethiopia’s foreign trade, over-invoicing by $6.5 billion as well as $3 million under-invoicing. In trade based money laundering, the most common types of misinvoicing are import over-invoicing and export under-invoicing. As noted above, the case of import invoicing has no complications – so much over invoicing has taken place and it explains the bulk of trade based money laundering in Ethiopia. However, the case of export over-invoicing is uncommon.
Export over-invoicing do happen although they are rare, e.g. China’s trade with Hong-Kong. Export over-invoicing is required when there is a need to plough back money from abroad and report it as inflated foreign direct investment. This is likely the case with Ethiopia where the authorities have been desperate to report higher foreign investments particularly in the first half of the period under analysis.
Ethiopia’s capital flights dwarfs rest of developing countries
It would prove useful to know how bad Ethiopia’s IFFs is relative to other countries. Fig. 2 below compares Ethiopia with its neighbors, the rest of Sub-Saharan Africa (SSA) as well as the average of developing countries (DCs). The comparison was done by expressing total illicit money outflowas percentage of GDP. The years are grouped into three intervals. For reasons discussed further below, it would prove useful to contrast pre- and post-2005. Accordingly, I have isolated 2004 and then divided the remaining years into two equal intervals.
This revealed astonishing patterns of illicit money outflow from Ethiopia which starkly contrasted with those for other countries. First, throughout the years Ethiopia’s records considerably exceeded those for its two immediate neighbors, Kenya and Tanzania. Second, a comparison of 2004 across the countries shows that Ethiopia’s illicit money outflow was way below the Uganda, SSA, and the DCs averages.
Third, the situation changed dramatically from 2005 onwards. Ethiopia outstripped Uganda, and then closed the gap with the SSA average. Fourth, Ethiopia’s average annual money outflows between 2010 and 2013 reached 11% of the country’s GDP, considerably exceeding the corresponding figures for the other countries – SSA (5%), DCs (4%), Uganda and Tanzania (2%) and Kenya (0.013%). Fifth, it is important to note that illicit money transfers abroad constituted smaller and smaller percentages of GDP for most countries over the years, implying substantial improvements in transparency in their economic management. The situation in Ethiopia sharply contrasts with this reality – illicit money outflow becoming a larger and larger percentage of Ethiopia’s GDP. This indicates transparency in Ethiopia’s economic management has gone from bad to worse over the years.
Today, the T-TPLF slicksters are trying to kill three birds with one stone: Rack up some PR credits to demonstrate good governance during the “state of emergency” and drum up popular support. They also believe they could divert and distract attention from their atrocious human rights record, including the Irreecha Massacres of October 2016, by showcasing their “anti-corruption” campaign. Last but not least, the cash-strapped T-TPLF bosses are hoping to squeeze American taxpayers for a few billion dollars (fat chance under Trump) by talking the talk of anti-corruption while walking and swimming in corruption.
Author’s Note: If I assembled all of the commentaries I wrote on the T-TPLF’s corruption, it would comprise of at least two solid volumes. Back in 2013, I commented extensively on the range of T-TPLF corrupt practices in a number of sectors of the Ethiopian economy and society based on the World Bank’s 448-page report, “Diagnosing Corruption in Ethiopia”. (See my commentaries in 2013 at almariam.com.) I even coined a word to discuss T-TPLF corruption. It is “horruption”. Horrible corruption.
Every now and then, the T-TPLF bosses put on corruption show trials to distract the population, panhandle the loaner and donors and draw attention away from their criminality. They have done it again in July 2017.
Here we go again! The corruption prosecution con game of the T-TPLF
In May 2013, I wrote a commentary entitled, “The Corruption Game” of the T-TPLF.
That commentary dealt with the arrest of some two dozen “high and medium ranking officials of the Ethiopian Revenues & Customs Authority (ERCA) and prominent businessmen”. Among them were ERCA “director general” with the “rank of minister”, his deputies and “chief prosecutor” along with other customs officials. “Ethiopia’s top anti-corruption official” Ali Sulaiman told the Voice of America Amharic “the suspects had been under surveillance for over two years.”
At the time, T-TPLF bosses were in the middle of their recurrent internal power struggles in the aftermath of the passing of their thugmaster Meles Zenawi.
The recent arrests are part of the ongoing “civil war” within the T-TPLF. It is intended to send a message to others who may think about opposing the current faction of the T-TPLF that the sledgehammer of corruption prosecution will also be visited upon their heads if they want to try anything.
Simply stated, the current dominant T-TPLF faction is simply “killing the chicken to warn the monkeys”, to use a Chinese idiom.
Today, the T-TPLF slicksters are trying to kill three birds with one stone: Rack up some PR credits to demonstrate good governance during the “state of emergency” and drum up popular support. They also believe they could divert and distract attention from their atrocious human rights record, including the Irreecha Massacres of October 2016, by showcasing their “anti-corruption” campaign. Last but not least, the cash-strapped T-TPLF bosses are hoping to squeeze American taxpayers for a few billion dollars (fat chance under Trump) by talking the talk of anti-corruption while walking and swimming in corruption.
Belatedly, T-TPLF puppet prime minister (PPM) Hailemariam Desalegn is also trying to prove that, despite his repeated public cathartic confessions that he is the handmaiden of Meles, he is Mr. Clean, not Mr. Clone (of Meles). Desalegn is still trying to prove to the loaners and donors that he is a different breed from his thugmaster Meles. He wants to perpetuate an image of Mr. Clean cleaning the “House of Meles”. Oh! Behold in 2017 the “Dirty 3 Dozen” he bagged!
2017: Sleazy investigating greasy and cheesy for corruption
Over the past couple of weeks, the T-TPLF has been rolling out the rogue’s gallery of alleged corruption suspects. Among them are “high level government officials” and sundry other businessmen.
They even allegedly jailed the “wife” of one of the founders of the T-TPLF, Abay Tsehay.
The “wife” was arrested “while she was attending her son’s wedding family reunion ceremony.” Tsehay was at the wedding but not arrested.
Obviously, the wife was “arrested” to send a clear message to Tsehay.
But if allegations of corruption are to be thrown around, Tsehay should be at the very top of guilty-as-sin suspects.
Tsehay was Board chairman of the “Commercial Bank of Ethiopia”, the largest and oldest bank in the country, even though he had absolutely no financial background whatsoever! During Tsehay’s tenure, the Commercial Bank lost hundreds of millions of dollars.
Shouldn’t Tsehay be held accountable for that loss?
He was replaced by another T-TPLF ignoramus named Bereket Simon in 2011. Such was the height of T-TPLF nepotism and corruption.
It was clear to me in April that Tsehay was toast. Done. Finished.
As I indicated in my April 30 commentary, “The Good Kops/Bad Kops T-TPLF Con Game (Over) in Ethiopia”, I knew Tsehay was in deep doo-doo when PPT Desalegn dismissed a “study” done by Tsehay and his henchmen. “I don’t know [anything] about the study. It does not concern me. The study does not offer a correct analysis,” said Desalegn offhandedly.
I concluded that Desalegn would not have been emboldened to dismiss a report by a founding member of the T-TPLF unless that founding member was on his way out to pasture or something even worse. Alternatively, I reasoned that there is definitely a gang within the T-TPLF gunning for Tsehay. Either way, it was clear to me that Tsehay was history.
Curiously, Tsehay, a charlatan at best, must have been trying to reinvent himself as some sort of respectable academic or scholarly analyst when he put together a ragtag crew of “researchers” to issue a report. I suspected the T-TPLF gangsters ganging against Tsehay must have been offended by his bold report or considered it an effort by him to ingratiate himself with the public and gain ascendancy and tactically undercut them. After all, Tsehay practically called the T-TPLF “lawmakers” a bunch of morons who sit around rubberstamping whatever is sent to them by the “executive branch”.
What has happened to Tsehay is a clear indication to me that there is a “creeping civil war” among various T-TPLF factions today. The only reason the “civil war” has not broken out in public is because they are all tangled up in the same web and morass corruption and criminality.
The T-TPLF criminals know all too well that they must hang together or hang separately, to quote Ben Franklin.
Anyway, Tsehay’s cannibalistic T-TPLF friends threw him under the bus, just as he ganged up with them to throw so many others before. That is karmic poetic justice!
It must feel like hell to feel so disposable!
Back to the current corruption prosecution con game.
Just to maintain the suspense, the T-TPLF has been announcing arrests almost daily. Just yesterday, they announced the arrest of Alemayehu Gujo, T-TPLF “minister of finance” and the highest-ranking official in the roundup and Zayed Woldegabriel, Director General of the Ethiopian Roads Authority.
The “anti-corruption” prosecutors have completely avoided charging any of the top T-TPLF leaders despite mountains of evidence of all types of corruption and criminal wrongdoing. They have gone after the small fish and left the big sharks, the capo di tutti cappi (boss of all bosses) alone.
The fact of the matter is that the whole T-TPLF corruption prosecution is a bunch of horse manure!
For the T-TPLF to accuse its disfavored members, ministers and lackeys of corruption and criminal wrongdoing is exactly like Tweedledee accusing Tweedledum of taking his rattle (toy).
/‘Tweedledum and Tweedledee/ Agreed to have a battle;/For Tweedledum said Tweedledee/ Had spoiled his nice new rattle./Just then flew down a monstrous crow, As black as a tar-barrel;/Which frightened both the heroes so,/They quite forgot their quarrel./
Simply stated, the T-TPLF is just having an internal battle in their corruption nonsense over their 26-year-old rattle. They are quarreling over who should steal, cheat and rob the most.
That is exactly what the T-TPLF corruption prosecution con game we see played out today is all about. One gang of T-TPLFers quarreling with and battling against another gang of T-TPLFers about who should ripoff the most of their 26-year-old rattle (toy) called Ethiopia.
There is nothing new in the current corruption prosecution con game.
The T-TPLF bosses have been playing their corruption prosecution game to knock each other out from day 1.
The T-TPLF canned its first prime minster Tamrat Layne on corruption charges in 1996.
That cunning and ruthless thugmaster Meles Zenawi forced Layne, under threat of penalty of death, to admit corruption and abuse of power before the rubberstamp parliament.
Of course, Layne did nothing that every top T-TPLF leader did not do. If Layne could be convicted for corruption, then each and every T-TPLF member beginning with the thugmaster himself are all guilty as sin of corruption. But the corruption prosecution was a tactic used to neutralize and sideline Layne.
In 2002, Seeye Abraha, T-TPLF defense minister and chairman of the board and CEO of Endowment Fund for the Rehabilitation of Tigray (a T-TPLF rabbit hole of high corruption, money laundering, conspiracy and sundry other criminality) was also jacked up on corruption charges and jailed for six years. Following the Ethio-Eritrean war in the late 1990s, the T-TPLF had split into two groups, one headed by Meles, the other by Seeye. Meles tactically outplayed and outfoxed Seeye and consolidated power. If Abraha could be convicted for corruption, then each and every T-TPLF member beginning with the thugmaster himself are all guilty as sin of corruption. But the corruption prosecution was a tactic used to neutralize and sideline Abraha.
In 2007 when Ethiopia’s auditor general, Lema Aregaw, reported that Birr 600 million of state funds were missing from the regional coffers, Zenawi fired Lema and publicly defended the regional administrations’ “right to burn money.”
In 2009, Meles publicly stated that 10,000 tons of coffee earmarked for exports had simply vanished from the warehouses. He called a meeting of commodities traders and in a videotaped statement told them that he will forgive them this time because “we all have our hands in the disappearance of the coffee”. He threatened to “cut off their hands” if they should steal coffee in the future.
Barely eight months ago in December 2016, the T-TPLF announced it had arrested 130 unnamed individuals on corruption charges. An additional 130 were said to be under investigation.
Just yesterday, to add suspense to excitement, the T-TPLF called an “emergency meeting” of its rubberstamp parliament without a public explanation for the meeting. Apparently, it had partly to do “with lifting the state of emergency order”, but the “parliament” removed “immunity” from two members at the ministerial and high administrative positions and jailed them. (More on that comedic drama in another commentary.)
All the T-TPLF corruption prosecution crap is nothing more than a con game, an attempt to distract and divert attention from the fact that the T-TPLF is on life support, on its last legs.
But the T-TPLF is playing the same old con game. Corruption prosecution is the oldest trick in the book of dictators.
In any power struggle in dictatorships, it is very common for one group of power players to accuse members of an opposing group of corruption and neutralize them. It is less costly and uncertain than conducting coups. Corruption show trials are a powerful weapon in the arsenal of dictators who seek to neutralize their opponents.
Back during the Derg (military rule) days, the favorite charge to neutralize opponents was to accuse them of being a “counter-revolutionary” and jail them or worse.
To be blunt, it is the same _ _ _t, just different flies.
In China, Bo Xilai, once touted to be the successor to President Hu Jintao in China, Liu Zhijun and many other high level Chinese communist party leaders were prosecuted for accepting bribes, corruption and abuses of power. They were all neutralized and sidelined.
Yet in 2016 the campaign against corruption came to a grinding halt as “President Xi Jinping’s high-profile ahead of a period of change for the Chinese Communist party’s leadership.” Jinping became president in 2012 and cleaned house using corruption prosecutions to eliminate his opponents.
Putin jailed Mikhail Khodorkovsky (once considered the “wealthiest man in Russia”) on trumped up charges of “corruption” and gave him a long prison sentence.
In Russia, Vladimir Putin has used corruption prosecutions to neutralize his opposition and unfriendly power contenders. Putin’s favorite tactic to control his opponents is prosecution for money laundering. A few months ago, Putin arrested his foremost critic and anti-corruption champion Aleksei Navalny during an anti-corruption protest in Moscow and had him barred from a presidential run.
Putin jailed Sergei Magnitsky, a Russian lawyer, who accused Russian officials of massive tax fraud. He was beaten to death in prison. The U.S. passed the Magnitsky Act barring entry of officials involved in Magnitsky’s murder.
Tip of the T-TPLF iceberg of corruption
Corruption in Africa, and particularly Ethiopia, is a proven means of accessing and clinging to power. It is the grease that lubricates the patronage system where supporters are rewarded with the spoils of controlling power.
The core business of the T-TPLF is corruption.
The T-TPLF warlords who seized political power in Ethiopia in 1991 have always operated in secrecy like a racketeering criminal organization. Their principal aim for more than a quarter of a century has been the looting of the national treasury which they have accomplished by illicit capital transfers and by plunging the country into a bottomless pit of foreign debt.
Corruption prosecutions in Ethiopia have been driven not by any unusual or extreme corrupt behavior, since all T-TPLF bosses are deeply mired in corruption, but because of the recurrent divisions and struggles in T-TPLF power circles.
Anyone who believes the T-TPLF is engaged in corruption prosecution to improve good governance is simply delusional. The T-TPLF’s only reason for existence is clinging to power to conduct the business of corruption, not good governance or stamping out corruption. The only reason the T-TPLF is in power is because corruption courses in their bloodstream and the bloodstream of their body politics. Corruption is the hemoglobin that delivers life-sustaining oxygen to their anatomical and organizational nerve centers.
Without corruption, the T-TPLF will simply wither away, or implode.
The anti-corruption organizations and prosecutorial and investigative bodies are created and stage-managed by the top political leaders. The members of these bodies are hand selected by the top leaders. They intervene in corruption investigations when it gets close to them. The whole anti-corruption campaign is set up to make sure that the grandmasters of corruption and their minions at the top are immune from investigation and prosecution.
As I argued in my commentary “Africorruption, Inc.”, corruption under the T-TPLF regime is widespread and endemic. It includes outright theft and embezzlement of public funds, misuse and misappropriation of state property, nepotism, bribery, abuse of public authority and position to exact corrupt payments. The anecdotal stories of corruption in Ethiopia are shocking to the conscience. Businessmen complain that they are unable to get permits and licenses without paying huge bribes or taking officials as silent partners. They must pay huge bribes or kickbacks to participate in public contracting and procurement.
Publicly-owned assets are acquired by regime-supporters or officials through illegal transactions and fraud. Banks loan millions of dollars to front enterprises owned by regime officials or their supporters without sufficient or proper collateral. T-TPLF officials and supporters do not have to repay millions of dollars in “loans” borrowed from the state banks and their debts are overlooked or forgiven. Those involved in the import/export business complain of shakedowns by corrupt customs officials. The judiciary is thoroughly corrupted through political interference and manipulation as evidenced in the various high profile political prosecutions. Even Diaspora Ethiopians on holiday visits driving about town complain of shakedowns by police thugs on the streets. In 2009, the U.S. State Department pledged to investigate allegations that “$850 million in food and anti-poverty aid from the U.S. is being distributed on the basis of political favoritism by the current prime minister’s party.”
The fact of the matter is that the culture of corruption is the modus operandi of the T-TPLF regime. Former president Dr. Negasso Gidada declared in 2001 that “corruption has riddled state enterprises to the core,” adding that the government would show “an iron fist against corruption and graft as the illicit practices had now become endemic”.
Corruption today is not only endemic in Ethiopia; it is a terminal condition
The “holy cows” and “minnows” (fish bait) of corruption
Corruption in Ethiopia can no longer be viewed as a simple criminal matter of prosecuting a few dozen petty government officials and others for bribery, extortion, fraud and embezzlement,
The so-called “corruption investigations and prosecutions” today are no different from previous ones. They scapegoat the minnows, small fish while leaving the untouchable holy cows untouched.
Tradition has it that on the day of atonement, a goat would be selected by the high priest and loaded with the sins of the community and driven out into the wilderness as an affirmative act of symbolic cleansing. In ancient times, it made the people feel purged of evil and guiltless.
The individuals accused of corruption are low-level bureaucrats, ministers-in-name only and other officials-with-titles-only, suspected disloyal members and handmaidens of the regime. They all humbly and obediently served the T-TPLF bosses for years. Now the T-TPLF bosses want to make them out to be loathsome villains. The sins and crimes of the untouchable T-TPLF holy cows are placed upon their heads and railroaded them to prison.
The T-TPLF high priests want to show the public they have been cleansed and the nation is free from the evil of corruption. In this narrative, the corrupt T-TPLF bosses want to appear as “anti-corruption warriors”, the white knights in shining armor.
Business in the Sululta district of Ethiopia’s Oromia region is burgeoning. So why, despite abundant rainfall, does half the population have no access to fresh water?
People in Sululta queue for tap water. The local government has failed to provide water for most households in the area. Photograph: William Davison
Towards the end of the day at the Abyssinia Springs bottled water factory near Ethiopia’s capital, Addis Ababa, workers hose down the car park liberally. Outside the gates, residents of the Sululta area trudge along the road with empty yellow jerrycans that they will fill from muddy wells and water points.
Over the past decade, the town in Oromia region has attracted plenty of investment. A Chinese tannery, steel mills, water factories and hotels have sprung up.
The boom has also lured workers for the building sites that litter the district with piles of rubble, electric cables, and eucalyptus tree trunks used for scaffolding.
Officials appointed last year amid a wave of unrest admit that they do not know the exact size of Sululta’s population. The local government has failed to keep up with the town’s chaotic growth over the past decade, which has contributed to anti-government sentiment.
Although investing in water infrastructure is challenging for a poor country, funding is not the problem in relatively wealthy Sululta, according to Messay. Instead, he believes corrupt management of the land rush, a lack of demand on investors to protect the environment, and the government’s inadequate planning and data collection have contributed to the crisis.
“When the public burned the investments down, it was not that they wanted to damage them. It was our problem in managing them,” says Messay.
Initially peaceful, the protests that began in Oromia in November 2015evolved into the angry ransacking of government offices and businesses after security forces used lethal force to disperse crowds. Human rights groups estimate that up to 600 people were killed across the country.
Since then, Ethiopia’s multi-ethnic ruling coalition, the Ethiopian People’s Revolutionary Democratic Front, which controls all the legislative seats in a de facto one-party state, has embarked on what it calls a process of “deep reform” to try to address governance failings.
People in Yubdo village, in Ethiopia’s Oromia region, mourn the death of Dinka Chala in December 2015. Photograph: Zacharias Abubeker/AFP/Getty Images
In 2014 – the latest year for which data is available – the Ethiopian government received $3.6 bn (£3bn) in aid, while the government budget was $9bn, which included donor funding. Most cash for regional governments comes from federal transfers. However, the impressive statistics rattled off at development conferences are of little comfort to low-income workers in Sululta, who say they feel ignored by a government that has licensed more than five plants for bottled water while failing to dig enough wells or build pipes to houses. According to WaterAid, 42 million Ethiopians lack access to safe water.
Worku Deme, 40, who delivers cement blocks around Sululta, says the community wrote to government offices two years ago asking for action on water supply. But nothing has changed, he says, beyond the faces of the administrators who ask people to be patient.
“There is no one to care about us,” says Deme, as a woman walks past with a jerrycan strapped to her back.
The situation is especially galling for Sululta because the town is situated in the highlands, where rainfall is abundant for about four months of the year.
The national government, which likes to describe Ethiopia as the “water tower of Africa”, is investing heavily in hydropower, including the continent’s largest dam, in the Nile basin. However, past failures to tap water resources in the rain-deprived east of the country contributed to a fifth of the population needing aid during a drought that began in 2015, killing livestock and causing crops to wither.
In Suluta, there has been investment in boreholes and pumps, but mostly by the private sector. Abyssinia Springs, in which Nestlé Waters bought a majority stakelast year, pumps 50,000 litres an hour, which means its capacity is more than half that of the local government.
“There’s water everywhere. The only problem is the government’s willingness,” says a manager at another company, Classy Water, who did not give his name.
Many non-water businesses have dug their own wells.
According to Getachew Teklemariam, a former government economic planner, there has been a lack of water infrastructure planning that takes into account demographic and economic changes across Ethiopia. Instead, development has been piecemeal and household water supply numbers are sometimes inflated by officials for political gain. “With a lack of insight into the reality on the ground, most efforts at improving infrastructure have been uncoordinated and wasteful,” he says.
In January 2016, the government shelved its “integrated development plan” to expand Addis Ababa into surrounding Oromia areas following protests and criticism that the plan would pave the way for more evictions of Oromo farmers.
Today, locals in Sululta travel on public transport to queue for water at a tap built by the Sudanese-owned Nile Petroleum, or pay others to do so. At the end of the town, which mostly lies along one main road, residents collect water from a faucet provided by China-Africa Overseas Leather Products. But the tannery has been accused of polluting water supplies, and in January 2016 protesters invaded the premises. Last month, it was a base for about 50 Ethiopian soldiers monitoring the security situation.
Messay, a mechanical engineer who has worked in the public water sector for a decade, says the government has erred by placing only minimal demands on investors in its eagerness to create jobs: “They [the leather company] drop their waste downstream. It is killing the farmers’ cattle, it’s making the fertility of the soil deplete.” Managers from the firm did not respond to requests for comment.
Women collect water from a muddy well in Sululta town in Ethiopia, where the local government has failed to provide water for most households. Photograph: William Davison
Messay appears committed to solving the water problem but realistic. He is critical of property investors from the capital who, he claims, seized plots illegally, and of the “corrupt” land administrators who facilitated the town’s chaotic growth. “You expect them to be more responsible, as they are from a big city,” says Messay of the investors.
Turkish contractors are digging a borehole to increase the water supply, which Messay believes might be meeting half the demand.
Nestlé Waters says it wants to help and is funding Addis Ababa University experts to study the environmental and socio-economic situation of the area. The study might feed into another “integrated” plan and possibly an effort to turn Sululta into an “eco city”. But Messay is sceptical as to whether the corporation’s public interest is genuine, noting that there were similar noises from Abyssinia Springs when the water plant was built about seven years ago.
Mr. Steinman advises foreign democracy movements. He authored the novel “Money, Blood and Conscience” about Ethiopia’s secret genocide.
In what could be an important test of the Trump Administration’s attitude toward foreign aid, the new United Nations Secretary-General, António Guterres, and UN aid chief Stephen O’Brien have called on the international community to give the Ethiopian government another $948 million to assist a reported 5.6 million people facing starvation.
Speaking in the Ethiopian capital, Addis Ababa, during the recent 28th Summit of the African Union, Guterres described Ethiopia as a “pillar of stability” in the tumultuous Horn of Africa, praised its government for an effective response to last year’s climate change-induced drought that left nearly 20 million people needing food assistance, and asked the world to show “total solidarity” with the regime.
Women and children wait for care at an outpatient treatment center in Lerra village, Wolayta, Ethiopia, on June 10, 2008. (Jose Cendon/Bloomberg News)
Ethiopia is aflame with rebellions against its unpopular dictatorship, which tried to cover up the extent of last year’s famine. But even if the secretary general’s encouraging narrative were true, it still begs the question: Why, despite ever-increasing amounts of foreign support, can’t this nation of 100 million clever, enterprising people feed itself? Other resource-poor countries facing difficult environmental challenges manage to do so.
Two numbers tell the story in a nutshell:
1. The amount of American financial aid received by Ethiopia’s government since it took power: $30 billion.
2. The amount stolen by Ethiopia’s leaders since it took power: $30 billion.
The latter figure is based on the UN’s own 2015 report on Illicit Financial Outflows by a panel chaired by former South African President Thabo Mbeki and another from Global Financial Integrity, an American think tank. These document $2-3 billion—an amount roughly equaling Ethiopia’s annual foreign aid and investment—being drained from the country every year, mostly through over- and under-invoicing of imports and exports.
Ethiopia’s far-left economy is centrally controlled by a small ruling clique that has grown fantastically wealthy. Only they could be responsible for this enormous crime. In other words, the same Ethiopian leadership that’s begging the world for yet another billion for its hungry people is stealing several times that amount every year.
America and the rest of the international community have turned a blind eye to this theft of taxpayer money and the millions of lives destroyed in its wake, because they rely on Ethiopia’s government to provide local counterterror cooperation, especially with the fight against Al-Shabab in neighboring Somalia. But even there we’re being taken. Our chief aim in Somalia is to eliminate Al-Shabab. Our Ethiopian ally’s aim is twofold: Keep Somalia weak and divided so it can’t unite with disenfranchised fellow Somalis in Ethiopia’s adjoining, gas-rich Ogaden region; and skim as much foreign assistance as possible. No wonder we’re losing.
The Trump Administration has not evinced particular interest in democracy promotion, but much of Ethiopia’s and the region’s problems stem from Ethiopia’s lack of the accountability that only democracy confers. A more accountable Ethiopian government would be forced to implement policies designed to do more than protect its control of the corruption. It would have to free Ethiopia’s people to develop their own solutions to their challenges and end their foreign dependency. It would be compelled to make the fight on terror more effective by decreasing fraud, basing military promotions on merit instead of cronyism and ending the diversion of state resources to domestic repression. An accountable Ethiopian government would have to allow more relief to reach those who truly need it and reduce the waste of U.S. taxpayers’ generous funding. Representative, accountable government would diminish the Ogaden’s secessionist tendencies that drive Ethiopia’s counterproductive Somalia strategy.
Prime Minister of Ethiopia Hailemariam Desalegn attends the 28th African Union summit in Addis Ababa on January 30, 2017. (ZACHARIAS ABUBEKER/AFP/Getty Images)
But Ethiopia’s government believes it has America over a barrel and doesn’t have to be accountable to us or to its own people. Like Mr. Guterres, past U.S. presidents have been afraid to confront the regime, which even forced President Barack Obama into a humiliating public defense of its last stolen election. The result has been a vicious cycle of enablement, corruption, famine and terror.
Whether the Trump Administration will be willing to play the same game remains to be seen. The answer will serve as a signal to other foreign leaders who believe America is too craven to defend its money and moral values.
The Mo Ibrahim Foundation today announced that there is no winner of the 2016 Ibrahim Prize for Achievement in African Leadership.
The announcement was made following a meeting of the independent Prize Committee chaired by Dr Salim Ahmed Salim, and the Foundation’s Board meeting last weekend.
Commenting on the decision of the Prize Committee, Dr Salim said:
As I emphasise each year, a very high bar was deliberately set when the Prize was launched in 2006. We recognise and applaud the important contributions that many African leaders have made to change their countries for the better. But the Prize is intended to highlight and celebrate truly exceptional leadership, which is uncommon by its very definition. After careful consideration, the Committee has decided not to award the Prize in 2016.
The candidates for the Ibrahim Prize are all former African executive Heads of State or Government who have left their office during the last three calendar years (2014-2016), having been democratically elected and served their constitutionally mandated term.
Since being launched in 2006, the Ibrahim Prize has been awarded four times. The previous Laureates are President Hifikepunye Pohamba of Namibia (2014), President Pedro Pires of Cabo Verde (2011), President Festus Mogae of Botswana (2008), and President Joaquim Chissano of Mozambique (2007). Nelson Mandela was the inaugural Honorary Laureate in 2007.
The Foundation looks forward to hosting its flagship event, the Governance Weekend, in Marrakech, Morocco from 7-9 April 2017. The event will open on the Friday evening with a high-profile discussion titled ‘A Conversation on Leadership’, looking at the challenges of global leadership in the 21st century.
“General Gabre” the most corrupt Ethiopian officer in Somalia
Ethiopian military and political backing for sale by a corrupt officer called “Gabre” (Part 1)
(Suna Times )- The most Ethiopian corrupt military officer who is called Haile Gabre known by Somalis as General Gabre becoming extremely wealthy from the huge sums of money that he is getting from opportunistic Somali politicians who want to buy the sympathy of Addis Ababa, one of his juniors told Waagacusub anonymously.
“Atto Gabre was corrupted by Somali politicians and he also then corrupted Ethiopian senior officials so they will condone his wrong doing,” the officer who could not give his name afraid of reprisals said
“There was several vehicles that were taken from somali individuals by intimidation or corruption which were later donated by Gabre to most senior military officials and their family members,” he said.
Gabre had a business interest in United Arab Emirates in which he is represented by one of cousins
The bussiness is to give a better exchange rate of foreign currency for Ethiopians who want to import goods to landlocked hugely populated Ethiopia.
“Recently large construction equipment owned by Gabre were sent to Ethiopia on a duty free from Dubai through port of Djibouti,” an Ethiopian business man based in Djibouti said.
“All the materials belonged to Gabre but his name can’t be seen on the manifest,” he said.
Gabre most incoming generation is from Somali politicians who want to use his country’s support in order to come to power.
He also gets money from the funds donated by the west for the regional East African body known as IGAD, he is suppose to be a facilitator for Somali so called peace process.
The Ethiopian traitor started his murky business in very early 90 in Bay and Bakol region by selling small arms to rival warring factions in southern Somalia but he became principal corruption boss after 2002 when the major Somalia talks in Kenya started.
There is a famous Mogadishu saying “if you want the power in Somalia first corrupt Gabre and enjoy military and political backing of Ethiopia.”
Gabre is from the Tigre tribe which is ruling the country since 1992.
Most of his dark business is well known by many Ethiopians but no one dare to say a word of that as most of national secret service agents are from his compatriots of Tigre Libration Front.
The continuation of violence in Somalia us a surviving kit for Gabre and few other African corrupt officials, but he is the most ruthless money monger in that sector.
Somali elected president Mohamed Abdullahi Mohamed “Farmaajo” was requested by many people and political groups to declare Ethiopian secret service official Hailu Gabre persona non grata for intermingling in the internal affairs of Somalia and masterminding renewed hostilities.”The spy, Gabre, is rearming former warlords to foil the newly elected Somali president,” Ahmed Daud Ibrahim who is a local district official in Medina district said.
“Gabre is always working against the peace in Somalia because violence is the best chance for him to sell weapons,” he said.
The officer who falsely calls himself as General Gabre is a spy committed to serve only the interest of few Tigre ruling tribe of Ethiopian.
He is highly paid for his services by Somali politicians who want to come to power through corruption, violence and intimidation.
But he attracted extreme antipathy of those who care about Somalia.
“Everybody in Somalia knows Gabre is a weapons dealer, corrupt and saboteur,” Ahmed Tubako, a shop owner in Mogadishu said.
“He is part of the so called international community but Gabre is a cancer in the national interest of Somalia.” said Tabako.
Maryan Awale, elementary school teacher, warned that if the new president did not expel Gabre from our country then no progress will be made to rebuild Somalia.
“You can’t avoid sickness if you have bacteria in your food or or environment at home,” says Maryan who is 36 years old mother.
“Gabre is a combination of bacteria and virus that harm the nerve of our politics ,” she said by adding ” he is the most hated person in Somalia.”
Somali president was elected by overwhelming vote on Wednesday in Mogadishu to replace president Hassan Sheikh Mohamud who was rejected for corruption and misrule.
The Ethiopian Reporter (ER) newspaper has been presenting shocking facts about extents of corporate bankruptcies. These have escalated particularly since #OromoProtests started in November 2015. Such reports are becoming commonplace so much that we do not even pay much attention to them. We have been reading about a series of scandals related to Sugar Corporation, METC (the Military Engineering Complex), and lately that of the Ethiopian Railway Transport Corporation (ERC).
In this piece, I will briefly comment on the latest scandal, related to ERC’s murky finance. The ER stated quoted ERC management report and presented troubling accounts of the corporation’s escalating debt, currently standing at birr 102.5 billion or USD 4.6 billion. Let’s put this figure in a context – how big is it relative to the size of the Ethiopian economy?
Birr 1,031 or USD 46, if expressed as debt per person (dividing the figure by population of Ethiopia)
7.4% of GDP (expressing it as a ratio to Ethiopia’s national income)
About 50% of the income generated in the whole of Ethiopia’s industrial sector
180% of the whole of Ethiopia’s manufacturing sector (nearly twice the size of total income generated in the manufacturing sector, including small scale handcrafts)
By any stretch of imagination, ERC’s debt is a colossal figure. It is not something that Ethiopians would take as yet another financial scandal regading some corporate entity. At the end of the day, it is Ethiopians who would foot this bill. After all the money does not simply melt away, it must have been pocketed by some group who have been busy siphoning off public money. It is not without reason that the authorities have been so much addicted to mega projects. Such big projects have been convenient mechanisms for embezzlement.
We all recall circumstances through which the Addis Rail was started. A very large construction project was completed, completely revamping the Addis Road Networks. Though expensive, this was necessary. The ring road and the rest were completed. However, Addis residents barely started driving on the new and fresh looking roads when the government came up with some crazy idea – yet another mega project, a gigantic city rail network!
Ironically the rail infrastructure was put in place by digging up the newly build asphalt roads. It was madness. A logical next step would have been a tram rail system, which requires only a minor modification – burying the rails in the asphalt road so that the roads would be shared by trams and other vehicles. That option was not acceptable to the authorities because it was not big enough to generate perpetual business opportunities for their cronies.
Now we witness a rather ridiculous situation. By coincidence, the day the Addis Rail started operating, I was back home. The next day, as I was driving in Addis, I witnessed something sounding a comedy show – only one coach rail was moving up on that ugly structure. Well, in that case, if it is only a single coach that moves on it, then what is the point putting up that amorphous structure? I hear the number of coaches moving on those rail networks has been two, three, or four at most.
The bottom line is this. That kind of system can be supported only by a vibrant economy – a healthy economy that generates decent income for citizens! In a normally functioning and genuinely rapidly growing economy, business opportunities expand in all corners of a large city like Addis Ababa. This induces movements of people, commuting between their places of work and residences as well as between premises to do business. In the process income is generated and their capacity to pay for fares get enhanced. If all these things are in place, the public transport sector such as the ERC can balance its books, including meeting its domestic as well as foreign debt obligations.
The situation in Ethiopia is quite different, in fact rather perverse. To begin with, the Ethiopian Economy is growing rapidly only on paper and in official government statistics. The fact on the ground tells the exact opposite. There isn’t much vibrant business opportunity. People wish to travel but that wish remains only a desire – government policy has curtailed their capacity to pay fares at a rate that would make ERC profitable. So, ERC operates at much smaller rate than its full capacity, perhaps 10% to 20%. If circumstances would not change, ERC will never ever able to pay its debt. The principal and interest will accumulate and debt would escalate, as it already has, leaving behind a level of debt whose size will become larger and larger over the years as a share of GDP, industry and manufacturing. The debt per citizen will most certainly become even larger.
It should be noted here I confined my analysis only to the case of ERC. If I closely examine the implications of other financial scandals, it is possible to reveal how alarming each case is. In a nutshell the whole of the Ethiopian economy is in a dire state, whose severity is much more grave than most Ethiopians and the donor community may realize. The sooner the on-going madness is put to stop the better.
Every authoritarian regime has its own symbol of economic exploitations and monopoly either in an individual face or in an organizational mask.
Ethiopia, despite its success in persuading its western allies that it is combating poverty using its fast economic growth and democratization, remained to be one of the poorest and most closed countries where a group of few individuals control vast economic shares and absolute political power. Unlike many other authoritarian regimes, the most dominant ruling elite group in Ethiopia has a complex behavior in that it claims to represent a minority ethnic group from the northern part of the country, Tigray. In response it has gotten a relatively overwhelming legitimacy among the people of Tigray as compared to other regions; or at least many people, including myself, believe it receives better legitimacy only in that specific region.
Moreover, this elite group has established a chain of several multi-billion dollar worth business firms under a home-grown umbrella called EFFORT, ‘Endowment Fund for the Rehabilitation of Tigray’, which was originally established to serve a harmless looking purpose of ‘rehabilitating’ Tigray, a war-torn region deprived of a fair chance to prosper during decades of successive regimes. In the past 25 years of TPLF’s dominated political rule in Ethiopia, therefore, EFFORT has emerged as one of the leading economic powerhouses in the name of ‘rehabilitating’ the region.
What is in the name?
On the surface, EFFORT is an umbrella company for a group of businesses which are involved in major industrial activities in Ethiopia, such as banking and insurance, import and export, media and communication, construction, agribusiness, and mining, among others.
Having started with an initial capital of around US$100 million, EFFORT’s worth has now reached more than a staggering US$3 billion in paid capital, creating more than 47,000 employment opportunities.
EFFORT companies were first registered as private share companies owned by some of the top leaders of TPLF. Later on, however, the companies were re-registered as “endowment” companies whose profits will not be divided to individuals, according to the 1960 Ethiopian civil code. However, top officials of the TPLF, the most powerful member of Ethiopia’s ruling party EPRDF, remained as the CEOs and GMs of these companies; and some of whom reportedly own small shares designed to motivate them in helping EFFORT stay competitive.
‘The original sin’: How did TPLF accumulate its wealth?
EFFORT’s official profile claims it was established by using seed money from the liquidated amount of capital of the Tigrayan People’s Liberation Front (TPLF), accumulated during Ethiopia’s 17 years civil war of the militarist Derg regime to establish these companies.
In 2008, Aregawi Berhe, a former veteran of TPLF who later on left the party, did his Ph.D. dissertation on ‘The Political History of TPLF’ for Vrije Universteit in Amsterdam, somehow corroborates the story. In his account of the party’s earliest times, Aregawi wrote about one of the first successful operations that the then guerilla fighters ever had: ‘Axum Operation’. It is a military operation that succeeded in raiding a police garrison and a bank in the historic city of Axum in the north during which the TPLF fighters made away with “substantial amounts of arms and ammunition and 175,000 birr (US$ 84,000)”, according to Aregawi.
Having started by raiding public banks, members of the TPLF continued to accumulate wealth and went on to dominate the contested use of ‘aid money’ for political purposes before the party came to control power in 1991. TPLF had also founded the Relief Society of Tigray (REST), a humanitarian wing, during the civil war. “By June 1985,” wrote Aregawi Berhe, “REST had received more than US$100 million from donors in the name of saving famine victims. [… however] the late Meles [Zenawi’s] proposal for the allocation of the relief aid money was as follows: 50% for MLLT [Marxist-Leninist League of Tigray] consolidation, 45% for TPLF activities and 5% for the famine victims.” Predictably, Aregawi’s claim, especially that of aid money allocations, has been vehemently denied by the current TPLF leaders.
Gebru Asrat, another former TPLF veteran who later on established an opposition political party Arena Tigray, has briefly raised this issue in his book, ‘Lualawinet Ena Democracy beEthiopia’, (Sovereignty and Democracy in Ethiopia), and said that the guerilla fighters used to get a lot of money in foreign aid and; ‘it was up to the TPLF [leadership] to allocate which money goes where.” Gebru neither confirmed nor denied Aregawi’s claim that aid money was used for political purposes. If anything, he is of the view that it is impossible to make such allegations.
However, legally questionable ways of accumulating wealth seemed to have continued within the party even after it took control of state power. Ermias Legesse, a former Communication State Minister, who is now in exile, has recently published his second book, ‘Yemeles Leqaqit’, in which he raised multiple controversial points against the establishment and functions of EFFORT.
In Chapter six of this 565 pages book, Ermias tells several stories on how EFFORT used to get its finances unfairly from the Ethiopian state and how it transferred it to its own account. Ermias went an extra mile to display a letter written in 1994 and was signed by the then Prime Minister, Tamrat Layne, demanding the Addis Abeba Health bureau to refund TPLF’s medical expenses of the civil war time. The money requested amounted to more than four million birr (almost 67% of the city’s annual budget at that time), but the total amount paid by the Ministry of Health was actually 17 million birr. Ermias also wrote that the medicines that TPLF had distributed to the locals during the civil war, for which it had requested a refund, was actually robbed by the guerilla fighters from public pharmacies. The money that was paid back in such a bizarre demand by the then Prime Minister was put in TPLF’s accounts.
Of continued sins & controversies
Companies that are currently under the umbrella of EFFORT were originally established as PLCs having a few members of TPLF leaders as shareholders. Later on, in August 1995, they were re-registered as ‘endowment’ companies and still remained under the umbrella of EFFORT.
The re-registration of these PLCs as ‘endowment’ companies was done to justify that these companies were established using the money donated by the shareholders of the preceding PLCs, which in itself portrays a picture that EFFORT, as a conglomerate of these companies, did not use public money to be established. According to the Ethiopian civil code, endowment companies are legally prohibited from distributing their profits to individuals. This fact effectively obscures the few individuals controlling these companies behind a party cover.
In 2004, the Amharic version of the ‘Ethiopian Reporter’, a bi-weekly newspaper owned by a former member of the TPLF rebel group, published series of stories concerning EFFORT and its debt in public banks, including the controversial cancellation of the debt. (The copies of these publications are annexed in the latest book of Ermias Legesse, referred above.)
According to this series of publication, EFFORT had borrowed 1.7 billion birr from the state-owned Commercial Bank of Ethiopia (CBE) which later on has risen to 1.8 billion birr debt including the interests. First, CBE officials have denied and said that ‘they did not loan money to EFFORT’. But later on CBE had transferred the debts to yet another state-owned bank, Development Bank of Ethiopia (DBE), for ‘better management’. Finally, DBE reported that the amount of money loaned to EFFORT was ‘none performing’ loan. Ermias claims that the CBE had loaned EFFORT the money with no collateral in the first place. The following year it was reported that DBE, the bank that took over the loan for “better management” was facing a bankruptcy of some 3.5 billion birr; certainly not exclusively attributable to the loan provided to EFFORT, but due in a significant part to it.
The other controversy surrounding EFFORT lies in the manner in which its businesses affiliates operate. Its leaders claim that their extreme obedience to the rule of law and their refusal to bribe local officials often poses a great challenge to their operations, disadvantaging their businesses. However, EFFORT companies are generally known to enjoy a great deal of support from officials. A good example to prove this is a rare ruling by a federal court on the 19th December 2012. The federal First instance court at Lideta ruled that one of EFFORT’s companies, Mega Entertainment Center, which was led by the widow of the late PM Meles Zenawi, Azeb Mesfin, has been running its business in a fraudulent manner by reporting more expenses than the actual and without paying value-added taxes collected from its customers during the preceding eight years.
But the secrecy of most of these companies is such that details like this come to the public’s knowledge only when there is disagreement between stakeholders; this time, it was between Azeb and another management member of Mega, Eqoubay Berhe.
Still, just what is EFFORT?
According to a letter by former US ambassador to Ethiopia, Donald Yamamoto, which was one of the Wikileaks documents, Ex-TPLF veteran Seyee Abraha (who later on fell from favor and was subsequently jailed for corruption) was quoted as saying the objectives of EFFORT during its foundation were “to study, and then establish profitable companies that use locally-available resources and provide employment [opportunities] for Tigray.” In this sense, EFFORT, even though it also gets raw materials from and markets its end products to other regions in Ethiopia, mostly (though not exclusively) hires Tigrians.
In principle, its profit should be used to rehabilitate the region. However, many Tigrians despair the fact that the “Endowment” is merely used by a few corrupt TPLF elites to enrich themselves. Former veteran and ex-president of the Tigray region for a decade, Gebru Asrat, in his book mentioned above admitted that the “endowment” was being exploited by a few TPLF top leaders; he suggested that there must be ways of diverting EFFORT’s profits/wealth to the people of Tigray as the endowment belongs to the Tigrians. His suggestion indicates a return, once again, of the endowment to a share company in which as many individuals could become shareholders. Many Tigrian pro-democracy activists agree with Gebru Asrat’s suggestions.
What do ‘others’ own?
Without a doubt, other regions of Ethiopia have also suffered significant social and economic devastations during the 17 years civil war before it ended in 1991. Military expenditure was Ethiopia’s biggest expense during the entire rule of the militarist Derg regime. Suffice to say, therefore, other regions also needed ‘endowments’ of their own.
It seemed it was in response to this concern that TPLF ‘provided’ seed money for other rehabilitation funds. In Oromia regional state is Dinsho endowment, which was established in 1992 and was renamed Tumsa Endowment for Development of Oromia in 2001. It is led by top officials of the OPDO, the party representing the region within the EPRDF coalition. In Amhara regional state is ‘TIRET’, first established in 1995 and went on to incorporate several pre-existing companies. TIRET is led by senior officials of ANDM, the party representing the region within the ruling EPRDF. And in Southern Nations Nationalities and People’s Region (SNNPR) is WENDO trading, which was established in 1994 and is led by senior officials of SEPDM, the party representing the region within the ruling EPRDF.
Seyee Abraha has admitted: “TPLF gave a portion of its capital to each of the three parties within the EPRDF to establish their own endowment funds”. However, the combined numbers of companies run by these three ‘endowments’ are less than twenty; whereas at least 24 companies are listed under EFFORT; (some put these numbers as high as 380). The nature of secrecy surrounding this delicate matter means one may never find out the real figures.
Nonetheless, the three “endowments” run by OPDO, ANDM and SEPDM were supposed to create employment opportunities for more than 80% of Ethiopia’s population as compared to EFFORT’s targeting of 6% of Ethiopians in Tigray regional state.
According to a research titled ‘Rethinking Business and Politics in Ethiopia’, published in 2011 by Sarah Vaughan and Mesfin Gebremichael, “[TIRET] companies employ only 2,800 staff, as compared with the more 14,000 permanent employees or 34,000 contract staff of EFFORT and its companies.” And the poorest regional states of Ethiopia, namely, the Somali, Afar, Benishangul-Gumuz and Gambella regions do not have ‘endowment companies’ of their own to help them rehabilitate their respective regions, although they are politically administered by EPRDF’s sister parties.
What’s not and what’s owned by EFFORT?
There is a big deal of confusion in identifying EFFORT’s business complexities. Selam Bus Share Company is a good example. Established in 1996, 99.6% of this interregional transport service providing company share is held by Tigray Development Association (TDA); the rest is held by individuals. Although Selam Bus board members, as are EFFORT companies’ board members, are members of the TPLF, EFFORT has no registered share in Selam Bus. However, Selam Bus is a company many people name first when asked to list EFFORT’s businesses. This blurry ownership status is perhaps one of the reasons why Selam Buses were targeted by the last year’s widespread public protesters in Oromia and Amhara regions.
Dejennna Endowment is another example. Established to ‘help promote development in Tigray,’ on the surface Dejenna Endowment is a part of the Relief Society of Tigray (REST). There are 11 companies listed under Dejenna Endowment in its website. In 2009, Dejenna has merged with EFFORT following the appointment of Azeb Mesfin, widow of the late Meles Zenawi, as head of the later. Companies under EFFORT usually hold shares in one another’s companies so that one pulls up when another fails. However, until today little is known about the merger of EFFORT and Dejenna. Besides, the information on the official websites of the two endowments mis-inform readers as if the two are independent of one another. But, some of the companies that are known to be under EFFORT are actually listed as the properties of Dejenna endowment.
The Sheger vs Mekelle narrative
By now, keen observers of the relationship between politics and business in Ethiopia can safely assume that business and politics in Ethiopia are radically divided into two major narratives in defining and perceiving the current TPLF dominated regime. I call these narratives ‘the Sheger narrative’ – a political narrative that is mostly advocated from here in the capital Addis Abeba, and ‘the Mekelle narrative’ – usually advocated by the people in Mekelle, the capital of the Tigray regional state, home to the all too powerful members of TPLF.
However, both narratives go beyond these respective centers depending on whose political view is solicited. The two narratives are only thoughts that do have majority acceptance in their respective centers. ‘The Sheger narrative’ (the most popular one) considers the TPLF dominated administration as a total failure that holds power by force; whereas ‘the Mekelle narrative’ generally sympathizes with the regime and considers it as a legitimate administration, albeit admitting some of its fault lines mostly due to the corrupt practices of some of its leaders.
This definition makes it clear how and why Tigrians (in most cases driven by ‘the Mekelle narrative’) and non-Tigrians (driven by ‘the Sheger narrative’) view the relationship between TPLF and EFFORT differently.
Tigrian pro-democracy activists’ criticism of EFFORT can be clearly seen by how they react to the manner in which former leaders of TPLF, who were expelled during the party’s infamous split in 2001, view EFFORT. Former top leaders of TPLF, Seyee Abraha, as we read him on wikileaks documents, and Gebru Asrat, from his book, both criticize EFFORT’s management. Both regret EFFORT’s failure to rehabilitate Tigray as was stipulated in its foundational principles. However, both believe the people of Tigray are the rightful owners of these ‘endowment’ companies under EFFORT.
On the contrary, most non-Tigrian activists and politicians disown EFFORT and also the rest of ‘endowments’ that are being manipulated by EPRDF leaders. Lidetu Ayalew, former leader of the opposition Ethiopian Democratic Party, and Dr. Berhanu Nega, current leader of the outlawed Ginbot 7, both condemned EFFORT as a party business that monopolized the economy, and both concluded the “endowments” should be dissolved or privatized. Similarly, many other activists want to (and sometimes advocate) boycotting EFFORT services and products to stop TPLF’s hegemonic march.
In the same manner, Tigrian activists claim other home grown charity organizations operating in Tigray, namely REST and TDA, are used to create grassroots networks to dictate the people of Tigray become loyalists of the TPLF, whereas non-Tigrian activists, such as Ermias Legesse, disagree and say these organizations are replicas of EFFORT to simply promote disproportionate social development of Tigrians at the cost of others.
This leads us to conclude that ‘the Mekelle narrative’ generally portrays EFFORT as an organization that rightfully belongs to the ‘Tigrian people’ which is unfortunately being exploited by few members of the top management for personal gains. ‘The Sheger narrative’, on the other hand, defines EFFORT as ‘a tool to exploit the wealth of Ethiopian people and create economic monopoly for the benefit of a [small] group’.
The red line
What is indisputable is speaking truth in a country governed by the TPLF dominated EPRDF is always a dangerous exercise; speaking the truth about EFFORT is even more dangerous. A tax controller from Adama, 100kms south east of Addis Abeba, who is now in Qilinto prison on the southern outskirt of Addis Abeba suspected of ‘corruption’ has recently told me that ‘EFFORT trucks were known to be untouchables on their way to and from Djibouti port’. Similarly, investigating companies under EFFORT is normally a red line no journalist in Ethiopia would like to cross, contributing to the secrecy of the ins and outs of the giant umbrella.
Concealed in this intimidating rubble are crucial facts about EFFORT such as details on tax returns. That is why this article cannot be taken as an exhaustive look into the functions of EFFORT and its affiliates, but just the tip of the iceberg to demonstrate in part some facts about the economic exploitations of the authoritarian regime currently governing Ethiopia.
What are we talking about when we criticise the networks of shell companies?
ACI, 8 April 2016
At the latest with the revelations of the Panama Papers, mass media and wider public joined a chorus of outrage over the hidden financial assets of politicians, celebrities and criminal organisations. According to ICIJ, the Panama leaks expose “a system that enables crime, corruption and wrongdoing, hidden by secretive offshore companies”. In particular, the Panamanian law firm Mossack Fonseca has become one of the main protagonists in bribery and money laundering scandals. These leaked documents disclose internal files that contain information on 214,488 offshore entities connected to people in more than 200 countries and territories.
What are the services of law firms like Mossack Fonseca? What are shell companies, offshore entities and so-called tax havens? Can they be used for legitimate or illegitimate businesses? What does the current legislation say? Here is a brief guide and explanation of what has been going on for decades in the hidden financial world.
To put it simple, shell companies are corporations without any active business or operations, or companies that passively own the shares of other companies. Shell companies are also referred to as international business companies, personal investment companies, or “mailbox”/”letterbox” companies. Generally, establishing a shell company is no different from setting up any other type of company.
There are legitimate purposes for shell companies, such as helping entrepreneurs gain cheaper and easier public listings on a stock exchange despite minimal sales turnover. Another example of legal use of shell corporations occurs in the case of hidden financial interactions between two companies: if “Company A” does not want to be associated with “Company B”, for instance because of its poor reputation, they can create a shell corporation through which the transaction can be concealed.
Nevertheless, this mechanism is being used to hide corruption and illegal financial transactions such as money laundering and tax evasion. Shell companies have the essential characteristic of being able to obscure the true ownership of an asset. By disguising both the ownership of the shell corporation and its activities, it is relatively simple to conceal the true origin and intent of large amounts of funds that might have been obtained through illegal actions such as drug dealing or other criminal processes.
Shell companies are often formed in so-called tax havens. There are dozens of tax havens besides Panama such as Switzerland, or Luxembourg and many countries in the Caribbean like the British Virgin Islands that provide little or no tax liability and financial information to foreign tax authorities.
The debate surrounding the legality of shell companies is characterised by pro-arguments that in particular focus on the distinct use and counterarguments that question the entire system of shell companies asking why a company should be allowed to hide financial transactions and assets.
Does law enforcement clarify the controversy? Here is the key issue of the discussion: law avoidance is possible and legally permitted – law firms like Mossack Fonseca are specialised to “protect” their clients from the law. Often, governments that harshly criticise tax avoidance and offshore finance are themselves beneficiaries of those strategies. In most cases public anger, accusations of being opportunistic or unethical and undermined political credibility bring about accountability of wrongdoings, not the judgement in a courtroom. Current laws do not require the creators of shell companies – such as Mossack Fonseca – to report who actually controls them. Further, the compliance with international anti-money laundering obligations remains low and inefficient since financial institutions may be negligent or incapable to perform due diligence to the appropriate depth. Anti-Corruption International fights for more transparency and less “legal corruption” in order to stop the immoral businesses of shell companies……
Leaked Bank Loan Record of Land Grabbers in Gambella
(The Gulele Post) – The following document contains names of individuals and companies who borrowed money from a branch of Development Bank of Ethiopia located in Western Ethiopia for the purpose of investment on farm land development. We have redacted some information to protect our sources. The data shows how much money has been borrowed, by whom and where the supported farm land is located. With exception of few cases, most of the land is taken from Gambella. http://www.gulelepost.com/wp-content/uploads/2014/09/Bank-Loan-for-Land-Grab_Ethiopia.pdf
78 % of land grabbers in Gambella are fascist TPLF from Tigray, evidence from Gambella state. Dhiba keessa qabxii 78 saamicha lafaa Gambella irratti kan bobba’ani woyyaanota/ ilmaan Tigreeti. Ragaa motummaa Gambeellaa irraa argame kan armaa gadiitiin mirkaneessa.
“All animals are equal, but some animals are more equal than others.”
-George Orwell, Animal Farm
“The very common way that the EPRDF and its agents try to shift the public attention from lack of human and democratic rights and the daylight looting of the country’s resources, is by referring to the ‘impressive’ economic development registered in their rule. If they are talking about the only region that they are exclusively devoted to developing, then, they are absolutely right.”
In TPLF /Tigray dominated minority tyrannic regime of Orwellian social and development policy, all nations and nationalities in theory are equal in Ethiopia, but in reality Tigray is more equal than others. This is not a development process.
According to UNDP report, while more than 45% of children in Tigray have achieved Net Lower Secondary Enrollment, the statistics for Oromia is only 16.9%, very huge inequality variations. The report indicated that while Human development Index (HDI) of Tigray is the highest (above national average), states such as Oromia, Afar, Ogaden and Amhara have the lowest HDIs, below the national HDI of 0.461. These are the outcomes of Tigray only, exclusionist, social, economic and development policies of the ruling regime. UNDP is not exposing the Tigray only growth and development strategy but we can read from its data and graphs.
As the TPLF has been engaged (https://oromiaeconomist.wordpress.com/2014/10/30/amnesty-internationals-report-because-i-am-oromo-a-sweeping-repression-in-oromia/) in destabilizing, robbing and massive evictions of people from their ancestral home and land grabs in Oromia, by all sorts of engagement, resource and soil transfers, it has conducting massive subsidized development in its Tigray home. In other studies, BBC Magazine in its 20th April 2015 publication under the title ‘ Turning Ethiopia’s desert green,’reports: ” A generation ago Ethiopia’s Tigray province was stricken by a famine that shocked the world. Today, as Chris Haslam reports, local people are using ancient techniques to turn part of the desert green. In the pink-streaked twilight, a river of humanity is flowing across Tigray’s dusty Hawzien plain. This cracked and desiccated landscape, in Ethiopia’s far north, occupies a dark corner of the global collective memory. Thirty years ago, not far from here, the BBC’s Michael Buerk first alerted us to a biblical famine he described as “the closest thing to hell on earth”. Then Bob Geldof wrote Do They Know It’s Christmas? – a curious question to ask of perhaps the world’s most devoutly Christian people – and thereafter the name Tigray became synonymous with refugees, Western aid and misery. The Tigrayan people were depicted as exemplars of passive suffering, dependent on the goodwill of the rest of the planet just to get through the day without dying. But here, outside the village of Abr’ha Weatsbaha, I’m seeing a different version. From all directions, streams of people are trickling into that human river.” http://www.bbc.co.uk/news/magazine-32348749.
Martin Plaut’s analysis which is based on world banks report is also interesting and important to refer here which is as follows:-
The World Bank has just published an authoritative study of poverty reduction in Ethiopia. The fall in overall poverty has been dramatic and is to be greatly welcomed. But who has really benefited?
This is the basic finding:
In 2000 Ethiopia had one of the highest poverty rates in the world, with 56% of the population living on less than US$1.25 PPP a day. Ethiopian households experienced a decade of remarkable progress in wellbeing since then and by the start of this decade less than 30% of the population was counted as poor.
There are of course many ways of answering the question – “who benefited” – were they men or women, urban or rural people. All these approaches are valid.
The Ethnic Dimension
But in Ethiopia, where Ethic Federalism has been the primary driver of government policy one cannot ignore the ethnic dimension.
Here this graph is particularly telling:
Tigray first
The answer is clear: it is the people of Tigray, whose party, the TPLF led the fight against the Mengistu regime and took power in 1991, who benefited most. What is also striking is that the Oromo (who are the largest ethnic group) hardly benefited at all.
This is what the World Bank says about this: “Poverty reduction has been faster in those regions in which poverty was higher and as a result the proportion of the population living beneath the national poverty line has converged to around one in 3 in all regions in 2011.”
The World Bank does little to explain just why Tigray has done (relatively) so well, but it does point to the importance of infrastructure investment and the building of roads. It also points to this fact: “Poverty rates increase by 7% with every 10 kilometers from a market town. As outlined above, farmers that are more remote are less likely to use agricultural inputs, and are less likely to see poverty reduction from the gains in agricultural growth that are made. The generally positive impact of improvements in infrastructure and access to basic services such as education complements the evidence for Ethiopia that suggests investing in roads reduces poverty.”
Not surprisingly, the TPLF under Prime Minister Meles Zenawi and beyond concentrated their investment on their home region – Tigray. The results are plain to see. https://martinplaut.wordpress.com/2015/01/23/ethiopias-poverty-reduction-who-benefits/
In its 2014 National Human Development Report, which has been written on the theme of “Accelerating Inclusive Growth for Sustainable Human Development in Ethiopia,” UNDP indicates that 25 million Ethiopians currently remain trapped in poverty and vulnerability. This and many Ethiopians just above the poverty line are vulnerable to shocks and food insecurity. Maternal health care has lagged well behind other health statistics and the availability of effective health care is inconsistent across the country. UNDP’s educational indicators suggest ongoing problems with the quality of education, as shown by retention rates and educational performance markers. UNDP says, perhaps most worrying from the standpoint of inclusive growth are the high rates of un- and underemployment in both urban and rural areas, especially as large numbers of productive jobs for the poor and near-poor are needed under current and projected labour market trends. Economic growth over the past decade has generally meant an increase in productivity and output levels in some parts of the economy, but these have been accompanied by increasing severity of poverty. The absolute number of the poor is roughly the same as 15 years ago and a significant proportion of the population hovers just above the poverty line and is vulnerable to shocks. Moreover, the severity of poverty 2 increased from 2.7 per cent in 1999/2000 to 3.1 per cent in 2010/11 (MoFED, 2013b). The prevalence of vulnerabilities and food insecurity are on the rise.
According to UNDP report, during the last three years (2010/11-2012/13), inflation was in double digits. The inflation rate, which was 18 per cent in 2010/11, increased to 33.7 per cent in 2011/12, declined to 13.5 per cent in 2012/13 and fell further to 8.1 per cent in December 2013. Other studies demonstrate that inflation figures have always been in double digits including 2013 and 2014 and at present.
Further, UNDP says with a Human Development Index (HDI) of 0.435 in 2013, the country is still classified as a “low human development” country, based on UNDP’s Human Development Index. Even though Ethiopia is one of the 10 countries globally that has attained the largest absolute gains in its HDI over the last several years, in the most recent Human Development Report (2014) Ethiopia ranks 173rd out of 187 countries. Thus, its Human Development Index (HDI) has not moved appreciably during the past decade, when compared with other developing countries that have registered similar growth rates. Looking at the HDI values of Seychelles, Tunisia and Algeria, which are in the high HDI bracket, and the other 12 African countries, which are in the medium HDI bracket, the major reasons why Ethiopia is still in the low HDI bracket are low education performance (particularly low mean years of schooling) and low GNI per capita. The minimum mean years of schooling and GNI per capita for medium HDI countries were 3.5 years and US$3,000, respectively in contrast to Ethiopia’s mean years of schooling of 2.6 years and GNI per capita of US$1,300. The inequality-adjusted Human Development index (IHDI), which is basically the HDI discounted for inequalities, is also computed for Ethiopia. Between 2005 and 2013, the IHDI increased from 0.349 to 0.459 indicating an average human development loss of 0.5 per cent per annum due to inequalities in health, access to education and income. According to (UNDP 2014), Ethiopia’s IHDI for 2013 was 0.307 in contrast to HDI of 0.435 indicating an overall human development loss of 29.4 per cent.
With regard to regional disparities in HDI values, while Tigray is significantly above national average, the four states of Afar, Somali, Amhara and Oromia have the lowest HDIs, below the national HDI of 0.461.
The outcome of the development strategy of Tigray only when mathematically averaged to the whole regions cannot hide TPLF’s Apartheid policy on Oromia and the rest as it is only the development focus for 5% of the 94 million population. Thus, Tigray is rich but Ethiopia is poor. Ethiopia is rich and fast growing only for development tourists those who lodge in Finfinne and tour to Tigray to take a sample and conclude the result for the whole states.
With regard to regional disparities in HDI values, while Tigray is significantly above national average, the four states of Afar, Somali, Amhara and Oromia have the lowest HDIs, below the national HDI of 0.461.
Another social indicator which demonstrates that Tigray is more equal than others is health services. UNDP’s report confirms that there are wide inequalities in the immunization status of children in Ethiopia. Children of educated women, rich households, and Finfinnee (Addis Ababa) and Tigray State have higher chances of being fully immunized. Children from the richest and middle income households are less likely to have no immunization at all (by 74 per cent and 57 per cent respectively) compared with those from the poorest households. Children from SNNPR, Oromiya and Amhara are 3.82, 7.00 and 3.65 times less likely to be fully immunized compared with those from Tigray, which has the second highest proportion of fully immunized children. According to UNDP, a report by Save the Children (2014) also raises concerns about equity in health services citing how immunization coverage is different among different income groups, and between urban and rural areas. According to the report, children from richest households are twice as likely to be immunized compared to those from the poorest households and children in urban areas are twice as likely to be immunized as those in rural areas. Based on revised data from the National Water Sanitation and Health Inventory, national potable water supply coverage increased from 58 per cent to 68.4 per cent between 2009/10 and 2012/13, reflecting an increase in both rural and urban coverage. Even though many health outcomes have improved significantly over the last decade, Ethiopia is still lagging behind on some measures. For example, Ethiopia has still higher than expected shares of malnutrition compared with countries at the same income level. What is especially striking about Ethiopia’s health data is the exceptionally high level of maternal mortality, given Ethiopia’s income level.
UNDP argues that that development can be inclusive and reduce poverty only if all people contribute to creating opportunities, share the benefits of development and participate in decision making.
Ethiopia at a Glance (UNDP Report Data)
Population: 85.8 million (2013)
GDP: US$46.6 billion (2013)
GDP per capita: US$550 (2013)
Annual Average Br/US$ exchange rate: 18.3 (2012/13)
Life expectancy at birth (years): 62.2 (2013)
Primary school gross enrolment rate (%): 95.3 (2012/13)
Births attended by skilled health professional (%): 23.1 (2012//13)
Contraceptive prevalence rate (%): 28.6 (2011)
Literacy rate (% of both sexes aged 15 and above): 46.7 (2011)
Unemployment rate (urban) (%): 16.5 (2012/13)
Unemployment rate among urban youth (15-29) (%): 23.3 (2011/12)
Areas further than 5 km from all-weather roads (%): 45.8 (2012/13)
Mobile phone subscribers (million): 23.8 (2012/13)
Companies allegedly linked to African criminals, fraudsters and money launderers have been given tens of millions of pounds of taxpayers’ money, a report has found, as the full scale of the UK’s foreign aid folly emerged.
The Private Infrastructure Development Group, an aid group set up by the Department for International Development which invests in projects in developing countries, also spent thousands of pounds on business class flights.
The report will raise further questions about the Government’s overseas aid budget, which has grown in recent years as ministers try to meet a commitment in the Coalition agreement to spend 0.7 per cent of the GDP on developing countries from 2013.
The UK government will have given PIDG £700million over the three years leading up to this March, meaning Britain has given around 70 per cent of the group’s income since it was set up.
However the report by the influential committee of MPs criticised the department’s management of the agency, saying DFID’s oversight of the group has been “unacceptably poor”.
In one case, PIDG’s Emerging Africa Infrastructure Fund invested almost £20million in a project designed to support the gas processing and distribution activities of Seven Energy, a Nigerian energy company.
“Seven Energy was named by the former Governor of the Central Bank of Nigeria in a 2014 investigation he conducted into the allegations of looting of Nigerian oil revenues,” noted the MPs.
PIDG’s Emerging Africa Infrastructure Fund also put almost £19 million into a power plant in the Ivory Coast, where a fellow investor was allegedly a notorious fraudster called James Ibori.
Ibori was jailed in 2012 for 13 years after admitting fraud of nearly £50million. The judge in his case said that the £50million figure could be “ludicrously low”, and that the amount pocketed by the former governor of Nigeria’s Delta state was “unquantified”.
Margaret Hodge, the chair of the Committee of Public Accounts, said that DFID’s oversight of the group had left it open to questions about the integrity of PIDG’s investments and some of the companies it partnered.
“Concerns were raised with us about the complex corporate structures that PIDG’s partners have sometimes established, making it difficult to be certain about the ownership of companies and creating a risk that those involved may have criminal connections,” she said.
PIDG operates around the world, in countries including Ivory Coast, the Democratic of Congo and Sierra Leone. Mrs Hodge said MPs accepted that these countries could be “challenging”, but that PIDG needed “much tougher scrutiny” from the department, which is headed by Justine Greening.
PIDG also left an average of £27million in a bank account for almost two years – earning interest of 0.016 per cent a year. The MPS said that the loss was likely to have been between £200,000 and £2million and said that the bank in question, SG Hambros, was likely to have made a financial return from the “idle” funds.
“We questioned how it had been possible for the Department, PIDG, and [SG Hambros] not to have been aware of this matter for 18 months,” stated the report.
DFID has been ordered to write to SG Hambros and demand a donation to charity working against Ebola in west Africa in return for the lost interest.
The foreign-aid quango also continued to allow staff to book fully flexible business class flights for two years after DFID ordered the group to “tighten up” its travel policy.
The National Audit Office found that between January 2011 and July 2014, PIDG employees booked 15 flights which cost more than £5,000 each, at a total cost in excess of £75,000.
“It is essential for public confidence in spending on overseas aid that the Department for International Development is able to demonstrate that UK taxpayers’ money is being used for its intended purpose – of helping the world’s poorest people – and not ending up in the wrong hands,” said Mrs Hodge.
“Every pound that is lost to fraud and corruption is a pound that could have been spent on educating a child, improving health systems or supporting economic development.”
Mary Creagh MP, Labour’s Shadow Development Secretary, attacked the government’s management of the agency.
“David Cameron promised value for money on aid but this report shows he has failed to deliver. The NAO and now the Public Accounts Committee have exposed that the Tory-led Government has been pouring hundreds of millions of pounds of taxpayers’ money into projects without checking where it went,” said Ms Creagh.
“Ministers have sat on their hands while Britain’s aid efforts have been undermined. If the Tories and Lib Dems don’t know where aid money is going then how can they measure if it is working?”
A DFID spokesman denied that PIDG had links to known criminals.
He said: “Britain’s investment in the Private Infrastructure Development Group (PIDG) has helped to create 200,000 jobs and driven £6.8billion of private investment into some of the world’s poorest countries, developing their economies and making them less dependent on aid.
“This PAC report suggests that UK funds are at risk of ending up in the wrong hands, citing alleged links between a convicted fraudster and a PIDG-backed company.
“These have been investigated thoroughly by the National Audit Office, as well as DFID and PIDG, and absolutely no evidence has been found to substantiate them.
“We already have strong oversight of PIDG’s activities and have recently clamped down on excessive travel rates. An independent review of their operations, backed by Britain, will ensure they continue to kick start growth in the developing world.”
DFID spending has attracted criticism over the years. Last year, the Independent Commission for Aid Impact so found that some British aid money was funding corruption abroad.
One development project in Nepal encouraged people to forge documents to gain grants while police stations in Nigeria linked to British aid were increasingly demanding bribes, the report discovered.
It also emerged that civil servants went on a £1billion spending spree in just eight weeks to hit the 0.7 per cent spending target.
Since 1970, Africa has lost at least $854 billion through capital flight which is not only enough to wipe out the continent’s total external debt of $250 billion but leaving around $600 billion for poverty alleviation.
By Menelaos Agaloglou
October 21, 2014 (Open Democracy) — Illicit flows are difficult to measure due to lack of reliable data. Global Financial Integrity in 2008 reported that Africa has lost between $854 billion and $1.8 trillion in the last four decades.
The flows seeking higher returns are directed towards western financial institutions and the process is being facilitated by tax havens, trade mispricing (by overpricing imports and underpinning exports on customs documents, residents can illegally transfer money abroad), fake foundations and money-laundering techniques.
Sometimes it is a response to economic and political instability or to high taxes placed on international trade. Frequently it is a way of hiding the illegal accumulation of wealth owed to corruption or criminal activity. Additionally, massive illicit flows can also be a reaction to a defaulting government debt or to a lost confidence on the economic strength of the country.
These outflows of capital seriously harm the efforts for poverty alleviation and socio-economic development. In the first place, investment has decreased, yielding negative implications for job creation, improvement of infrastructure and industrialization.
Illicit flows of money harm economic growth by stifling private capital formation and causing the tax base to remain narrow. Since it drains hard currency reserves, it encourages poor countries to borrow money from abroad making their debt crisis worse and curtailing public investment further. This burden is paid more by the poor since high levels of unemployment and increased inflation affects them more. Illicit flows increase inequality that can lead to political tensions and further poverty.
Interestingly, Africa has become a net creditor to the world despite its global image as an inactive recipient of aid and loans. It has the highest share of private external assets among developing regions. Since 1970, Africa has lost at least $854 billion through capital flight which is not only enough to wipe out the continent’s total external debt of $250 billion but leaving around $600 billion for poverty alleviation and pro poor growth.
Africa is the largest recipient of aid in the world. Vast amount of resources are being spent every year with the task of achieving poverty reduction and meeting the Millennium Development Goals.
But what’s the point of sending money in the region if the region sends it back? For the region as a whole, illicit outflows outpaced official development assistance by a ratio of around 2:1. Taking other statistics into account, developing countries lose at least $10 through illegal flight for every $1 they receive via the aid regime. It is logical to conclude here that it would have been more beneficial to keep the locally produced wealth and invest it in the continent rather than waiting for aid from abroad to safeguard basic needs.
A serious inquiry that needs further investigation is what exactly this amount (between $1 trillion and $2 trillion) being lost means in terms of schools, hospitals and infrastructure. For example, the Education For All 2011 report stated that current aid levels fall short of the $16 billion required annually to close the external financing gap in low-income countries.
This crime kills the economic chances of the region. In 1970 it sent abroad 2% of Africa’s GDP, in 1987 it sent abroad 11% and 8% of its 2007 GDP. Illicit outflows from Africa grew at an average 12% a year over the four decades. To have a chance to meet the Millennium Development Goals, African countries must attack the illicit outflow and try to recover what is now held abroad. If the amount lost could be returned, then development can be achieved painlessly with local resources finally putting an end to aid dependency.
Economic growth without reform that can keep the wealth locally reinvested will lead to more illicit capital flight, and not to less. Sub Saharan Africa had high growth-rates over the last decade. Illicit outflows have also increased during this period. If the resources gained from growth cannot be invested locally then pro poor growth will not be achieved and the continent will continue suffering from extreme poverty. The region crucially needs diversification of its economy, research and development in relation to its agriculture and an expansion of its social services both in urban and rural areas. Only locally-led efforts, with local resources, can succeed in bringing prosperity.
Former South African president Mbeki blamed multinational companies for the flow of capital out of Africa, whereas other people are blaming the growing African elite for wanting higher returns for their money. The alternative view is that this economic problem of the outflow of money is just one of the consequences of the real problem that generates all others: in many African countries, governments (even the whole apparatus of the state) lack legitimacy, and their policies and actions do not represent the whole of society but special groups with economic and political power. In most African countries there is no bargain among groups; just the imposition of power by a small elite.
An effective state can tax its citizens with a political settlement, a rational consensus between state and citizens whereby taxes will be used to further guarantee and protect their interests. At this point we can start perceiving the problem of illicit flows more as a political problem and less an economic one. It is necessary for African societies to address their weak state legitimacy by becoming more open political units, which will integrate the different groups from the societies they supposedly lead. On the other hand businessmen, in order to keep their wealth inside their countries, need to be sure that they will profit with a positive real rate of interest. Serious macroeconomic policies, such as lower fiscal deficits, low inflation and reduced monetary expansion need to follow.
In conclusion, capital flight places the whole burden of solving the problem upon African countries. However one views the problem, either as an economic or a political one, the burden is placed on these societies to solve problems through their own efforts.
It is true that African financial institutions are the smallest and least developed in the world. It is also true that they are not transparent – probably a symptom of their connection with the political establishment which also lacks credibility among the locals. But credibility, transparency and legitimacy are central ideas to development. It would be wiser to start our development discussions from these basics rather than wasting more resources and time setting more and more millennium goals.
About the author
Menelaos Agaloglou is the Head of Geography in the International Division of the Greek Community School in Addis Ababa. He is a researcher of the Center of Middle Eastern and Islamic Studies (CEMMIS), part of the University of Peloponnese in Greece. He has taught Conflict Resolution and English in the University of Hargeisa in Somalia and Social Studies at the Ahmadiyya elementary school in Sierra Leone.
Read @ Open Democracy http://ayyaantuu.com/horn-of-africa-news/draining-development-illicit-flows-from-africa/
BBC (4 September 2014) The ONE group says money lost because of corruption would otherwise be spent on school and medicine. An estimated $1tn (£600bn) a year is being taken out of poor countries and millions of lives are lost because of corruption, according to campaigners.A report by the anti-poverty organisation One says much of the progress made over the past two decades in tackling extreme poverty has been put at risk by corruption and crime.
Corrupt activities include the use of phantom firms and money laundering. The report blames corruption for 3.6 million deaths every year.
If action were taken to end secrecy that allows corruption to thrive – and if the recovered revenues were invested in health – the group calculates that many deaths could be prevented in low-income countries.
Corruption is overshadowing natural disasters and disease as the scourge of poor countries, the report says.
One describes its findings as a “trillion dollar scandal”.
“Corruption inhibits private investment, reduces economic growth, increases the cost of doing business and can lead to political instability,” the report says.
“But in developing countries, corruption is a killer. When governments are deprived of their own resources to invest in health care, food security or essential infrastructure, it costs lives and the biggest toll is on children.”
The report says that if corruption was eradicated in sub-Saharan Africa:
Education would be provided to an additional 10 million children per year
Money would be available to pay for an additional 500,000 primary school teachers
Antiretroviral drugs for more than 11 million people with HIV/Aids would be provided
One is urging G-20 leaders meeting in Australia in November to take various measures to tackle the problem including making information public about who owns companies and trusts to prevent them being used to launder money and conceal the identity of criminals.
It is advocating the introduction of mandatory reporting laws for the oil, gas and mining sectors so that countries’ natural resources “are not effectively stolen from the people living above them”.
It is recommending action against tax evaders “so that developing countries have the information they need to collect the taxes they are due” and more open government so that people can hold authorities accountable for the delivery of essential services.
The term capital flight has been given many interpretations in the economic literature and in the press, leading to confusion and misinterpretations. In the popular press, capital flight is presented as illegal or illicit financial flows. It is housed in the same domain as money laundering, tax evasion, transfer pricing, underground trafficking. Yet, while these activities are illicit, not all of them amount to capital flight. At the same time, while most capital flight may be deemed illicit. Capital flight may be illicit in one of three ways: when it consists of money acquired illegally and transferred abroad; when funds are transferred abroad illicitly by violating capital account regulations; when capital is hidden abroad and therefore not being subject to taxation and other government regulations. It is not possible to make this determination a priori from the data that is used to calculate capital flight, which involves a reconciliation of recorded capital inflows (mainly external borrowing and foreign direct investment) and the use of these resources (to cover the current account deficit and accumulation of reserves). The term capital flight means capital flows from a country that are not recorded in the country’s Balance of Payments (BoP). If all the ransactions were correctly and systematically recorded, inflows would balance out with outflows, except for small and random statistical errors as recorded in the ‘net errors and omissions’ line of the BoP. Where large discrepancies are observed, in other words, where there is substantial ‘missing money’ in the BoP, this is taken as an indication of the presence of capital flight.
Ethiopia’s capital flight is estimated at US$24.9 billion or 83.8% of the GDP
(Source: Political Economy Research Institute, the University of Massachusetts).
August 17, 2014 (PERI Research) — Ethiopia’s capital flight is estimated at about US$24.9 billion which is 83.8% of the country’s Gross Domestic Product (GDP). Ethiopia is ranked 8th in the group of 33 countries for which data are available but it stands first when compared to non-oil and/or mineral exporting countries. Even the latter was considered to be substantially lower than the actual flows give that large stock of immigrants. The true figure could be as high as one billion dollars. If so, Ethiopian capital flight would be commensurately larger than the estimated.
Capital losses through trade misinvoicing and unrecorded remittance
Substantial export underinvoicning (net outflows) couple with import underinvoicing (net inflows), with the balance resulting in a net outflow, as in the case of Sudan or a net inflow, as in the cases of Ethiopia and Ghana.
Unrecoreded remittances also contribute substantially to estimated capital flight in some countries. In Ethiopia, the volume of remittances reported by the World Bank in 2010 was about half the amount reported by the Central Bank ($661 million).
The following figures are in millions
(Source: Political Economy Research Institute, the University of Massachusetts).
The Corrupt Empire is uncompetitive: Ethiopia Is Amongst World’s Least Competitive Countries
Despite its damn statistics of massive long term paper growth of TPLF Ethiopia’s economy, the country is still ranked among the worst performing in the Global Competitive Index (GCI) 2013 -2014, recently released by the World Economic Forum. (see page 163 for the detail summary of the report). According to the report, Ethiopia dropped 15 places from last year’s 106th position to 121st among the 144 countries profiled.
The Global Competitive Index , which was introduced in 2004, measures how the combinations of institutions, policies, and other factors determine the level of productivity of a country. The GCI scores is calculated by putting together the 12 pillars of competitiveness, such as: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.
According to the ranking, Ethiopia is placed in the poorest pool of economic development possible (see, the following graphics). Ethiopia ranked as a “factor driven” economy which includes Nigeria, Liberia, Lao, Mali and Yemen.There are four stages of development with innovation-driven economies being the best pool of economies.
Ethiopian economic productivity is one of the poorest despite clear advantages of its internal market and economies of scale with population over 85 million compared to other African countries. Due to its population, it has a large internal market size (66 position), only next to Nigeria (the largest internal market size in Africa, also performing poor).
GCI has identified weak basic institutional requirements (118) of Ethiopia that account 60% of the index ranking: corruption, poor infrastructure, poor primary education, poor macroeconomic environment, efficiency enhancers and technological readiness.
The GCI has noticed with Ethiopia’s economy the following among the most problematic factors for doing business:
Access to finance, corruption, inefficient government bureaucracy, inflation, policy instability, tax regulations and inadequate supply of infrastructure. Technological readiness is also the worst performance:
Availability of latest technologies (132)
Firm-level technology absorption (139)
FDI and technology transfer (128)
Individuals using Internet, % (142)
Broadband Internet subscriptions/100 pop (131)
Mobile broadband subscriptions/100 pop (120)
Ethiopia with a population of over 85 million only produces $31.7 billion GDP with per capita income of $1 per day.
Key indicators, 2011
Population (millions) ……………………………………….85.1
GDP (US$ billions)* ……………………………….. ………31.7
GDP per capita (US$) ……………………………….. …365.2
GDP (PPP) as share (%) of world total …………..0.12
Sectoral value-added (% GDP), 2011
Agriculture …………………………………………………. ..41.9
Industry ……………………………………………………… .12.6
Services ……………………………………………………. ..45.5 Human Development Index, 2011
Score, (0–1) best ………………………………………. ….0.36
Rank (out of 187 economies) ……………………………174
Sources: IMF; UNFPA; UNDP; World Bank and GCI
The report noted that Mauritius has replaced South Africa (53rd) as the most competitive country in Sub-Saharan Africa. Ranked 45th position the country moved up nine places this year.The country’s best performance has supported by “transparent public institutions (ranked at 39th) with clear property rights and strong judicial independence and an efficient government (29th).”
Switzerland, ranked at number one is the most competitive country in the world. For top ten Sab Saharan African countries See:
Prosperity Index 2013
Ethiopian: 126/142.
75.6% say gov’t is corrupt.
Satisfaction with gov’t efforts to address poverty: 21.2%. The Governance sub-index dropped two places, to 118th, because of decreases in political rights, political constraints, the rule of law, and regulatory quality. http://www.prosperity.com/#!/country/ETH
The tyrannic TPLF group since seized power in 1991 has clearly engaged in massive corruption and unethical business practices without any constraints by national or international business rules. As a ruling force, it not only owns strategic sectors of the economy and engages in commercial and trading activities, it also puts private sectors those are outside its space of armed robbery in a hopeless no-win situation. The muscled economic dominance through such massive scale corruptions and brute forces has also been used as a political weapon to harass, incarcerate, dominate, weaken and control its political opponents to maintain its corruption empire for ever. The TPLF, the core corruption force in the present Ethiopian government, has transformed the economy from State ownership of the pre- 1991 to TPLF & Tigrayan elite private ownership by buying investment assets formerly owned by the government of Ethiopia. ‘At the same time, the TPLF has also started a huge investment program of its own through sham corporate structures.For example, the TPLF controlled Endowment Fund of Rehabilitation of Tygrai (EFFORT) is a conglomerate with an asset estimated well over a billion Ethiopian Birr involved in business investment in all aspect of the Ethiopian economy.’
Since the dictator TPLF seized power, it has been clearly engaged in massive corruption and unethical business practices by national or international business rules. As a ruling party, it not only owns strategic sectors of the economy and engages in commercial and trading activities, it also puts competing private sectors in a hopeless no-win situation. This preponderant economic dominance is also used as a political weapon to harass, incarcerate, dominate, weaken and control opposition forces in order to stay in power indefinitely.
The TPLF, the core political power of Ethiopian government, has transformed the Ethiopian economy from State ownership to the private ownership by political parties, mainly the TPLF, by buying investment assets formerly owned by the government of Ethiopia, as prescribed by the World Bank Report and political coercion by the United States Government. At the same time, the TPLF has also started…
From the outset TPLF defines itself as a liberator for one specifically racially defined group. And still after two decades on power, irrespective of its ostensible claim that it is under the umbrella of EPRDF, people of the same origin monopolistically has held the whip-hand; and the whole country has been cash cowed by one specific racial group while the majority is being treated as impediments.
The apartheid nature and characteristics of TPLF’s policies and behavior is as covert as possible to throw the majority into total muddle until it is too late. To put it bluntly, the fledgling apartheid system of TPLF is emerging through a frog boiling tactic.
The TPLF’s apartheid system can be described as a subtle state action designed to secure and maintain the Tigrian domination by furthering their Economic and Political interests through control over the majority Non-Tigrian population.
The following categories make the necessary, sufficient, and defining characteristics of the emerging tender-plant apartheid system in Ethiopia:
1. Economic Interest
Furthering the Tigrean economic dominance is mainly achieved through a threefold economic sabotage: i.e.,
Through the creation of Tigrian tycoons in every facet of the economy;
By building extractive business empire;
Through emasculation of Non-Tigrian business firms.
Let’s see each of the above points in detail.
1.1 The incubation of the Tigrian Racketeers: Unlike the loosely dispersed and individualistic Non-Tigrian business men, the Tigrian racketeers are a highly organized kleptomaniacs that are exclusively nurtured by the under-table action of the government in a way that:
– Favoring to get loan from state-owned banks with least or no collateral;
– Facilitating the bureaucratic process in the Custom office with least search procedure while this government office intentionally delays the items that belonged to the Non-Tigrian business men.
– Government toleration for their criminal act of tax evasion.
– For the Tigrian importers, letter of credit will be processed easily and access to hard currency is almost unlimited; whereas the Non-Tigrians must wait a minimum of 4 to 6 months since their application.
– The government has granted them key business sites under low bid.
– The government conducts special training programs and video conferences to create situational awareness among them and update them with first hand information. At this point, we must not forget that nowadays information is equivalent to money.
On top of that, they have been informed /’’trained’’/ and equipped with the following racketeering tactics.
1. Insider Trading: Obviously all key governmental positions are occupied by the Tigrian; which means any policy or information particularly related with business reaches to the Tigrian racketeers before the crowd gets it so they adjust everything in advance to suit to the new condition. And due to such a prior knowledge they net millions from insider trading.
They also have foreknowledge on every government auction however the Non-Tigrians get it lately from news papers. For insider information equals ‘’money’’ in a modern market economy, it is a great power in the hands of people who are the most cohesive and organized criminal group like the Tigrian racketeers. As a matter of fact, insider information is illegal both from moral and law perspective.
2. Dual Set of Ethics: In fact, the Tigrian racketeers have been informed directly or indirectly to practice a dual set of ethics:
I. An altruistic set of ethics for themselves and
II. A predatory one for the rest of Ethiopian people.
– They don’t compete with one another for a single niche of market;
– They don’t interfere with the monopoly controlled by other Tigrian racketeer;
– They are barred from underbidding fellow Tigrian racketeer.
– They are always cooperate with one another so as “not to lose the money of Tigray”
3. Team Strategy: Before we go to how they act in team, let’s see the psychological set up of the Tigrian racketeers and the Non-Tigrian business men.
The Non-Tigrian have been conditioned to think that everyone must be judged on his or her merits and that it would be immoral to be biased for his own race. The Tigrian racketeers, on the other hand, have been conditioned from early time of TPLF to think in terms of the good of their race.
Keeping this fact in mind, what they are practicing is through “Infect to insolvency and then wait to takeover” approach. For example, if they need to monopolize certain business sector they allocate a calculated sum of money to under bid the price of item which certainly makes the Non-Tigrian competitor unable to fight with irrationally low price then put the competitor company into insolvency and finally buy the company itself with a giveaway price and will apply “the abuse of dominance” once they control the sector.
In general, a cohesive and powerful team effort, dual set of ethics along with insider information consistently amasses collective power to the Tigrian racketeers over a scattered and individualistic Non-Tigrian.
1.2 By Establishing Extractive Trade Empire: An acronym EFFORT stands for the TPLF’s multi-billionaire trade empire called Endowment Fund for the Rehabilitation of Tigray. It was established by expropriating capital equipments from different parts of the country and by the infamous defaulted bank debts. Currently there is no business sector that is free from the involvement of EFFORT. It stretched from production to distribution, from finance to insurance, from wholesale to retail, from real-estate to horticulture, from mining to IT. Peculiarly, this trade empire hasn’t ever been audited by external auditor nor repays the loan it borrowed periodically.
Similar to the Tigrian private companies, EFFORT is also privileged in the following manner:
– It is awarded government auctions of big projects;
– Favored to borrow in billions without collateral and it is not subject to repayment;
– Equipped with insider information;
– Granted fertile land at a giveaway price by displacing tens of thousands of indigenous people from their ancestral land;
– Granted key mining sites without open bid;
– Market opportunity will be arranged for it by forcing regional and federal offices to buy products which haven’t a relevant importance or in an exaggerated quantity.
Surprisingly, almost 99.9% of the employees in these innumerable companies of EFFORT are Tigrian; which means that majority of the economy is occupied by either the Tigrian private companies or by the extractive trade empire called EFFORT; and they primarily privileged job opportunity for Tigrians. As the complete cycle of economic dominance and privileged labor market portrays, we are under a severe economic genocide.
1.3 Stifling of Non-Tigrians’ Business Firms: Obviously the playing ground is not level; and the whole situation is an uphill battle for Non-Tigrians’ business firms to survive all the barriers that they faced from the government bureaucracy and from economic sabotage of the highly privileged EFFORT companies and the cohesive Tigrian racketeers. Consequently, especially after election-2005 we have seen that many Non-Tigrian businesses have been either liquidated or down-sized.
2. Political Interest
The foremost plan of TPLF was to secede the Tigray region from the rest of the country and to establish a sovereign republic, as plainly stated in Manifesto-68 which was formulated by the triumvirate of Abay Tsehaye, Sebhat Nega and Meles Zenawi. However, through time they inferred that a sovereign republic of Tigray would be a weak and failed state. Then they changed their program to live together as a state-within-a state and TPLF’s role as a Quasi-Occupying Force.
Similar to the case for economic dominance, TPLF and Tigrians maintain their political dominance using racial solidarity as weapon against the Non-Tigrian Ethiopians in the following manner:
2.1. Surrogate Colonization /Repopulation/: The TPLF apartheid system has also been featured with Depopulation andPopulation-Transfer. The annexation of arable lands of the Amhara region like Humera, Welkayt, Tsegede, Alamata, Korem and so on, to Tigray province and depopulating the indigenous Amharas from those places and then replacing with Tigrians is a case in point of the surrogate colonization of the TPLF regime. The expansion of Tigrians is also continuing in west and north Gondar to annex the North Mountains after they learned that the North Heights are fields of Gold and other Precious metals.
2.2. Expropriation of Land /Landed Property/ Belonging to A Racial Group: As a matter of the truth, the people of Gambella have been denied its natural right of living on its ancestral land. And clearly we know that more than quarter of arable land of the region has been awarded to land grabbers at a giveaway price by TPLF megalomaniacs. But beside to this, more than 2/3 of the remaining arable land has been expropriated by Tigrian Mechanized-Farm owners in which it left more than 70,000 indigenous people for forcible relocation to the place where the soil is dry with poor quality and with no infrastructure. What worsened the situation was that the deployment of the TPLF mechanized army upon the unprotected civilians to enforce forcible relocation of the indigenous people. As a result, they became victim of genocide, rape and conflagration of their villages by TPLF militias.
2.3. Deliberate Denigration of Living Conditions of Non-Tigrian Racial Groups: This includes:
– Demolishing of business areas under cover story of investment which are mainly occupied by Gurage business men in the capital city of Addis Ababa. Particularly after election-2005, the Gurages have been profiled as “Accomplice of Neftegna” and currently as “Ginbot-7 Sympathizers”; and consequently, they are paying the expensive price ever for the alleged charge.
– Internal deportation and expulsion of hundreds of thousands of the Amhara people from different parts of the country by confiscation of their tenure and property is also one of the cruelest repressions of the racist regime of TPLF in order to break the potential resistance from this group by throwing them into absolute destitution and instability.
2.4. Infliction of Serious Bodily and Mental Harm upon Certain Racial Members: Tens of thousands of political and Conscience prisoners are concentrated in three federal and 120 regional major prisons. They are also found in an unofficial detention centers in military camps including in Dedessa, Bir Sheleqo, Tolay, Hormat, Blate, Tatek, Jijiga, Holeta, and Senqele. Majority of the prisoners are racially Oromo; and their alleged charge is “Sympathizers of OLF”. The number of Amhara, Gambella and Ogadenese political and conscience prisoners are also significant.
The condition of these political prisoners is extremely harsh, overcrowded and life threatening. Besides, the TPLF henchmen often use a series of torture and brutal interrogation to extract confessions including whipping on the soles of feet, over stretching of limbs, slow dripping of water on the head, slandering of their race, pulling out of nails, forcible extraction of teeth, weights suspended on testicles, plunging into spoiled water, solitary confinement in dark cell for long period of time, signing a confession, forced self-incrimination, threatening with injection of HIV infected blood, forcing to denounce others, burning with cigarette, insertion of bottle and hot candle into prisoners’ rectum, drowning into ice cold water for long period of time and beating with rifle butt, stick, whip, belt etc.
2.5. Access: No matter how the Non-Tigrians have the qualification for the high post in the army or the security apparatus or for key government offices, they have already been denied by the unwritten law of TPLF. Access to government-sponsored scholarship at the overseas is also highly secured for Tigrians.
In conclusion, Ethiopia is a country of nations and nationalities. So there must not be room for the socio-political and economic dominance of single race. All the people of Ethiopia must be treated as an empowered citizen. The fledgling Tigrian apartheid system must be nipped in the bud before it sparks the bloody genocide.
As a universal truth, no one ever negotiated successfully from weakness, but from strength. It must be our primary target to be strong. And, I do personally believe that awakening to the truth will make us strong. We are now in the middle of life-or-death struggle; if we fail to break the yoke of TPLF’s apartheid system the future of our people, the continuity of our race and the stability of our country will be at stake.
We have left nothing with TPLF; we have been cornered, humiliated, persecuted, harassed, assaulted, exiled, locked-in jail, tortured, expelled, impoverished by design, confiscated and decimated. We must not have room for the source of all these evil, TPLF, anymore!!! We must fight it by all possible means until we regain our freedom!!! We must struggle desperately until we tear apart the reins of the Quasi-Occupiers!!!
On the other hand, the Tigrians must also do their own homework before they are being treated as:
– Accomplice of Criminally guilty TPLF officials;
– Politically guilty as TPLF Supporters;
– Morally guilty as Tigrians;
– And perhaps, metaphysically guilty as Ethiopians.
October 21, 2014 (Open Democracy) — Illicit flows are difficult to measure due to lack of reliable data. Global Financial Integrity in 2008 reported that Africa has lost between $854 billion and $1.8 trillion in the last four decades.
OromianEconomist 
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