Ethiopia looks to young technocrats to lead ambitious reform drive

Ethiopia looks to young technocrats to lead ambitious reform drive

New generation with international experience appointed to turn around tightly controlled, state-led economy
Reformist prime minister Abiy Ahmed has promised to open previously blocked sectors, such as telecommunications and energy, to foreign investment © AFP

 in Addis Ababa

(ft)—–Prime Minister Abiy Ahmed has broken with tradition in Ethiopia by appointing young technocrats with international experience to important economic jobs as he seeks to turn the country’s tightly controlled, state-led economy into a competitive free market powered by private capital.  The officials, including Eyob Tolina at the finance ministry, Abebe Abebayehu at the investment commission and Mamo Mihretu in the prime minister’s office, are leading the most ambitious aspects of Mr Abiy’s promised reforms, investors said.  Since taking office a year ago, the reformist leader has promised to overhaul the Ethiopian economy and open previously blocked sectors, such as telecoms and energy, to foreign investment.  To succeed, his youthful appointees must push through reforms to Ethiopia’s sprawling bureaucracy and navigate conservative political officials in the ruling coalition, many of whom remain suspicious of relinquishing too much control of the economy after 28 years of state-led growth.  For Mr Eyob, a former private equity executive and now state minister at the ministry of finance, the ruling party has no choice but to evolve.  “We had public-led economic growth and it did run its course, it was obvious,” Mr Eyob told the Financial Times in an interview in Addis Ababa. “If you didn’t make some pragmatic decisions and shift the course, it would have been a full-blown crisis so you needed to avert that.”  In 2016 and 2017, thousands of Ethiopians poured on to the streets, many of them frustrated by the lack of employment generated by an economic policy that had favoured infrastructure over job creation.

At the same time, Ethiopia was facing a fast-approaching debt crunch. Much of the economy’s double-digit growth in the past decade was driven by borrowing — largely from China. Although Ethiopia’s debt was low as a percentage of gross domestic product, compared with regional averages, its ability to service that debt with export revenue had become precarious, the IMF said in December.  In response Mr Abiy halted all non-concessional borrowing. “There was a need to pause, to finish what we already had, not to jump into new projects,” Mr Eyob explained. Having stemmed the bleeding, the focus in the next fiscal year would shift to attracting investment and boosting revenues, he said.  The first step is a privatisation programme, headed by Mr Eyob, which will include the sale of what is likely to be a large minority stake in Ethio Telecom, the state-owned mobile operator.  Mooted ever since Mr Abiy took office, Mr Eyob rejected suggestions the telecoms sale was already behind schedule. The government had undertaken a detailed market study, including researching regulators in 25 countries to understand the best model for Ethiopia, he said. The “fully-fledged process” would start in no more than a month, he said.

[perfectpullquote align=”left” bordertop=”false” cite=”” link=”” color=”” class=”” size=”16″] In a country where almost 70 per cent of the population is youth, it is only fitting that the administration reflects that age group

Abebe Abebayehu, investment commission

Mr Abebe, commissioner at the Ethiopian investment agency, said the prime minister had commissioned similar studies for the energy, rail, industrial parks and logistics sectors to identify how best to sustain growth, boost export revenues and create jobs.  “[Mr Abiy] is extremely interested to see a strong private sector that can generate jobs for the millions of youths that are currently unemployed,” said Mr Abebe, 38, who worked at the World Bank before Mr Abiy asked him to join the commission. “And I think that is consistent with the whole economic reform agenda. For so long economic growth has been fuelled by state investment and now the state should cede space to the private sector and play its natural arbiter role as a regulator,” he said.  “In a country where almost 70 per cent of the population is youth, it is only fitting that the administration reflects that age group,” he added.  For some Ethiopians, the talk of private enterprise is an abrupt departure from the developmental state envisioned by its architect, former prime minister Meles Zenawi, where the government controlled the economy’s commanding heights.  But other observers say the shift is subtler. Cepheus Capital, an Addis-Ababa based private equity firm, argued that, as it was under Meles, the government would still prioritise growth and was likely to continue to take an interventionist approach on issues related to land, industry and finance. The objectives for policymakers were expected to remain the same and it was the “tools” and timeframes that were being modified, Cepheus said in a recent report. “We see economic policy shifting its attention in three areas — from public to private activities, from capital to current spending, and from debt to equity,” the report said.  Mr Eyob said those changes were imperative to creating the jobs the Ethiopia population craved. Ethiopia’s population has doubled since 1992 to at least 105m, according to the World Bank, and is expected to reach 190m in 2050, by some estimates. About 25 per cent of those aged 15 to 29 are already underemployed  “I am not worried at all, especially with this reform and the right thinking,” said Mr Eyob. “We have significant assets, and as we open up, and as more private sector investment comes, this country can achieve a major breakthrough.”

1 Comment

  1. It should be noted that the habit of Infrastructure development is the most important habit that need to be developed for Oromia and Ethiopia .OLF could play big role in this since OLF got many skilled manpower that could contribute a lot with unlimited knowledges and experience in building Infrastructures. It was noted that derg’s Defense Construction Organization manager named General Tadesse once told METEC to bring back OLF fighters from Eritrea before even thinking of starting the Abay GERD dam construction project since General Tadesse The ex manager of Derg’s Defense Construction Organization knew OLF were the most skilled manpower.

    DERG’s Defense Construction Organization General manager always told METEC that OLF was the brain for Ethiopias engineering but METEC failed to listen to General Tadesse.

    Unlike the Sudanese government where the city of Khartoum is expected to reach growth of being the 6th largest city in the world by the year 2100 with Khartoum’s population growth reaching up to 56 millions residents, the government of Ethiopia is aware Addis Ababa will be the 20th largest city in the world with a population of 35 millions residents by the year 2100. That’s why the Ethiopian government is currently working to build infrastructures in Addis Ababa. Even South Africa is developing Addis Ababa’s infrastructures so people don’t migrate to South Africa from Addis Ababa in search of infrastructures . Currently the foundation is being laid to build infrastructures that sustain the 242 millions of Ethiopians that call Ethiopia their home by the year 2100, within eighty years and a half years from now.

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