Abiy Ahmed's First Three Months

For most of the past two years, Abiy Ahmed was best known for being one of the major driving forces behind the economic revolution and reforms in the state of Oromia. But for the last 90 days, his actions as the new Prime Minister of Ethiopia have been grabbing the headlines.  Since he took power, changes and reforms have been announced almost every day. Among these reforms were the decision to fully or partially privatize key state owned enterprises; unconditional acceptance of the Algiers agreement-a peace agreement between the governments of Eritrea and Ethiopia signed on December 12, 2000, in Algiers, for the formal end of the Eritrean-Ethiopian War, which lasted from 1998 to 2000; and the release of thousands of inmates charged with and convicted of corruption and terrorism.  He also negotiated the release of thousands of Ethiopian prisoners in neighbouring countries.  Abiy reshuffled, appointed and demoted several members of the council of ministers; and even removed key officials in the military and security apparatus. The Premier also called on exiled opposition parties and media to open offices in Addis Ababa. 

The sweeping changes that Abiy undertook in a short period of time has enabled Africa’s youngest leader to garner tremendous support.  As a result, a team of released prisoners, bloggers and artists teamed up to organise a rally in Addis Ababa on June 23, in support of the premier’s mission of deepening nationwide reforms. On the day, millions of people flooded the Meskel Square chanting songs of support for the Prime Minister. The rally was going peacefully until a bomb was thrown to the stage. Although the attack didn’t cause fatalities on the spot, some victims later passed away while receiving treatment. EBR’s Samson Berhane explores the reform agendas of the premier and the challenges ahead.

When Prime Minister Abiy Ahmed (PhD) was sworn in before Parliament on April 2, 2018, he vowed to bring stability, unity and reform to the country. Initially there was a division between people who perceived him as just having the appearance of a reformist, without substance, and those who believed Abiy would honour his pledges. Others preferred to wait before making any judgment. Despite diverse expectations, he has made a hopeful start in his first days in office. At the very least, his ascent to power brought about a sharp drop in tension, although there is still much to be done. In fact some sceptics question if indeed Abiy’s accent to power can restore peace in the country. They base their claims on the continued mass eviction of Ethiopians in some parts of the country, including in Abiy’s home state of Oromia and the Southern Nations. A bomb attack during a rally of support on June 23 in Meskel Square, attended by millions of people highlighted the mixed feelings about the changes he has made. In spite of the rumours circulating among some in Addis, Fitsum Arega, Chief of Staff of the Prime Minister’s Office, could not confirm if the bomb attack was an attempt to assassinate the Prime Minister. 

Unlike previous leaders, Abiy has had to accomplish a lot in the first three months since he was appointed Prime Minister. A flurry of changes and reforms, that have sometimes been  perceived as strange, have been announced almost every day, giving Ethiopians a glimpse of what the future could hold for a country undermined by political violence and ethnic based conflicts, as well as a sluggish economic trajectory under the reign of his predecessors. 

But making such sweeping changes has required Abiy to walk a political tightrope. He has had to deviate from the policies and ideologies of the Ethiopian People’s Revolutionary Democratic Front (EPRDF), in power in Ethiopia for 27 years. His changes have revealed his intentions to introduce widespread policy changes from the get-go, including his decision to lift the state of emergency, fully or partially privatize key public owned enterprises, unconditionally implement the Algiers agreement -- a peace agreement between the governments of Eritrea and Ethiopia that ended the Eritrean-Ethiopian border war, and the release of thousands of inmates charged with and convicted of corruption and terrorism acts including Andargachew Tsige, who was on death row. His conciliatory speeches about forgiveness, peace, love, and brotherhood in many cities across the nation were designed to return a sense of unity and restore people’s confidence in the country. 

Many argue that any assessment of Abiy over his three months in office should not be so much about concrete results, basing their opinion on the fact that any new leader tends to be oblivious about governing, and Abiy needs to be allowed time to find his footing. Others, however, including some of his party comrades, assert he is going too far. But these arguments work in an ideal world where leaders are given time to even make mistakes and learn. 

Unfortunately, Abiy has to live in the country he inherited. Instead of having to learn, the Prime Minister has had to unite a politically alienated country, a ruling party on the edge of collapse, an economy in decline, and a disconcerted population calling for dynamic change. While speaking with people in Gondar and Bahir Dar towns, Abiy himself openly described how difficult and challenging the task ahead is, by mentioning the trouble he went through to facilitate the release of two monks who were arrested on terrorism charges. Although he didn’t say it word for word, his remarks indicate the tough resistance to the changes he has been advocating for, even from his own party. 

Despite many confrontations, Abiy has kept the wave of reform going, by allowing exiled opposition leaders to return to Ethiopia and engage in discussions about reforms, as well as balancing pragmatic power in executive, military and intelligence establishments. Such actions have strengthened the hope of many Ethiopians; even those who lost their loved ones to the political violence in the states of Amhara and Oromia over the last three years happily greeted him during his visits. However, a significant portion of the population, who have learned from the countless empty promises of EPRDF in the past, still remain cautious. But the majority were astounded and even surprised by his pace, leading some on social media to coin the term Prime Minister Abiy Bolt. 

Globally, his acceptance has been remarkably positive. Despite the US State Department’s official release of a report regarding human rights abuses a few weeks before Abiy’s inauguration, a statement released by the US Embassy in Addis Ababa after his appointment struck a hopeful tone. “This year has seen positive steps as well, including the release of thousands of prisoners. We are also encouraged by strong and clear statements by Prime Minister regarding the need for reforms,” read the statement.

In addition to getting a nod of approval from western governments, Abiy received warm welcomes when he visited Saudi Arabia, the United Arab Emirates, Djibouti, Sudan, Egypt, Rwanda, Uganda, and Somalia. He even managed to secure the release of hundreds of Ethiopian prisoners during his foreign visits. 

Flip-flop Politics

After being assigned as the chairperson of EPRDF, Abiy, who received 108 out of 180 votes during the 17-day meeting by the EPRDF’s Council to elect the party chairman three months ago, started distinguishing himself from his predecessor just one day after his swearing in. He went to Jigjiga in a bid to find a solution to the conflict between the states of Oromia and Ethio-Somali, which resulted in the displacement of almost one million people. He then went to Ambo, the epicentre of the three-year anti-government protests in the state of Oromia, before continuing on to Meqelle, Gondar, Bahir Dar, Assosa, Hawassa, Neqemte, Gambella and Welkitie towns to meet the local people. 

During his meeting with communities in Gambella he stressed that secularism does not always work, while during his visit to Hawassa, Abiy promised to include term limits for the prime minister in the constitution.

His local tour was followed by the lifting of the state of emergency and the release of more than a thousand inmates, including political prisoners and former government officials, such as Melaku Fenta, former director of Ethiopian Revenues and Customs Authority, and his deputy, Gebrewahid Woldegiorgis, as well as Alemayehu Gujo, former State Minister for Finance and Economic Cooperation who was charged with corruption acts and arrested after a parliamentary vote repealed his immunity.

Although a large number of people supported the release of prisoners, some people were wary. “While pardoning political prisoners is reasonable, I don’t see the point of releasing officials and business people charged with and convicted of corruption to bring about national reconciliation,” argues Beyene Petros (Prof.), a member of the four pary coalition Medrek Party.  

Mekonnen Fisseha, an assistant professor of law at Mekelle University, has similar concerns. “The release of prisoners, the majority of whom were charged with terrorism, grand corruption and other high crimes was not clear to many of us. In fact, [that] undermined the rule of law,” he said.

Abiy, however, begs to differ. “First we need to be clear about what terrorism is and who is a terrorist. Terrorism includes the use of force by government in order to prolong its power,” Abiy told members of Parliament on June 18, 2018. “EPRDF and the government have already apologised for many of the mistakes we made to stay in power, which includes torture and we need to forgive each other and move ahead.” As a first attempt to level the political field, he dined with leaders of civic societies, media outlets and opposition parties at the Jubilee Palace where he promised to create a conducive political environment that will benefit his party, the country, and the public. For some, however, the charm offensive is nothing but an extension of the rhetoric of the ruling party. “Although Abiy is a visionary leader, the chance that change will happen in the country is low, as the ideology followed by EPRDF doesn’t allow him to widen the political space,” said Beyene, pointing to the discomfort of the Tigray People’s Liberation Front (TPLF), one of the coalition of parties that makes up the EPRDF, regarding the way in which the executive committee of the ruling party makes decisions, as laid out in a recently released statement about the country’s ongoing situation. 

But Abiy’s charismatic leadership skills were on full display when he held talks with members of the Council of Ministers, televised through the state-owned Ethiopian Broadcasting Corporation. The Prime Minister, who has prior experience in military intelligence, also met with the high level army officers with the aim of bringing about reforms,  like ensuring institutional neutrality and independence in the defence force.  “The army should be loyal to the country and the constitution, not to the ruling party. It also should be a force that must accept the orders of the leader of the country,” Abiy told army officers, also announcing that his government has plans to build a naval force.

In a rather bold move he also relieved five long serving officials, including Sebhat Nega, formerly the head of the Foreign Relations Strategic Research Institute, Tadesse Haile, formerly an advisor to the Prime Minister for trade and industry policy planning and execution, and Kassu Illala (PhD) and Mekonnen Manyazewal from the institute of Policy Research. Abadula Gemeda, who was appointed as a security advisor to the Prime Minister after officially resigning as speaker of the House of Representatives, and Girma Birru, former Ethiopian Ambassador to the United States, were retired. Less than a month before, he reshuffled the cabinet, and appointed 10 new ministers, and 40 state ministers and directors. 

Only two months after taking power, Abiy rocked the military and intelligence establishment by replacing long serving chief of staff of the National Defence Force Samora Yunis (Gen) with Seare Mekonnen (Gen). In the same day, he appointed Adem Mohammed (Gen), chief of the Air Force, to lead the National Intelligence and Security Agency, a position held by Getachew Assefa, who served at the institution for over 15 years after the death of Kinfe Gebremariam in 2001.

The power shakeup, however, does not seem to be acceptable to some, including TPLF. The party denounced the recent reshuffle and departure of high level officials at the federal level in a statement released last month, saying it is against the principle of the party. Taking this into account, the party requested an emergency meeting of EPRDF’s executive body and council, which have 36 and 180 members respectively. Such realities portray a deep mistrust among the coalitions, according to analysts. “It is not clear whether he is acting within the EPRDF rules or he is acting as stand-alone Prime Minister,” says Mekonnen. “Factions have already been created.” 

But this didn’t stop Abiy from reconsidering the Algiers agreement. On June 5, 2018, the executive committee, chaired by Abiy, announced its decision to unconditionally accept the pact, with the aim of normalizing the relations between Ethiopia and Eritrea.  

While many western countries and analysts describe the situation between the two countries as ‘no war, no peace’, Abiy prefers to call it ‘a war with no deaths’. “The time when the country invests in the war must be over. Rather, we want a road and railway linking Asmara and Addis Ababa,” he said. 

 Convincing Eritrean President Isaias Afewerki to sit down and discuss matters that affect both countries for the first time since war broke out between the two countries in 1998 was a victory for the new PM. “The events and developments that have unfolded in our region in general and in Ethiopia in particular in the recent period warrant appropriate attention. Ethiopia is now at a turning point or transition,” Isaias said in a televised speech on Eritrean Martyr’s day, on June 19, 2018. “For this reason, and outside myopic considerations of public relations stunts and advantages, we will send a delegation to Addis Ababa to gauge current developments directly and in depth as well as to chart out a plan for continuous future action.”

Many people have supported EPRDF’s move to negotiations and restoration of peace with Eritrea. However, some have a different view on the issue. Residents of Erob, in the north of the state of Tigray, demonstrated against EPRDF’s decision to implement the agreement. Their concerns are also shared by Mekonnen. “The EPRDF Executive Committee’s decision to implement the Algiers agreement unconditionally does not seem right or timely,” argues Mekonnen. “In the first place, it is not clear how the recent decision differs from the previous one or how it will be implemented. I don’t see any circumstances changing in the rush to accept without any preconditions. It would be better to postpone until internal security is fully restored.” 

Abiy, however, argues there is nothing new when it comes to the Algiers agreement. “The Parliament and the Council of Ministers approved the Algiers agreement 16 years ago. The government also notified the Africa Union of its approval,” he told MPs. “So no new decision has been made by the government.”

A Change in Business, Economy

Echoing the political landscape, business has been very challenging in the last three years for many retailers, wholesalers, service providers, and manufacturers, primarily due to public unrest in the states of Oromia and Amhara. Street clashes between security forces were common and left hundreds dead, thousands displaced and many businesses closed. The appointment of the new premier meant a slowdown in unrest. Ashenafi Melka, a manufacturer and a wholesaler of shoe products, witnessed these changes. “Back then, we were unable to even pay salaries to our employees. But since April, our revenues and customer numbers have greatly improved,” explained Ashenafi, who owns a manufacturing company in Burayu and an outlet in Merkato, the largest open air market in Ethiopia. 

Kidist Habteyes, a cloth wholesaler in the same market, has had similar experiences. “Although the chronic shortage of foreign exchange has worsened, there is a noticeable change in the business,” said Kidst. “The number of customers has more than doubled since Abiy was appointed.”

Hotels, transport service providers, and manufactures are also amongst the businesses that have benefited from the peace and stability that came about after Abiy came into the picture. Retailers in various towns and regional states, who were insecure about conducting business in the capital, are now seen more often in Merkato. 

The financial industry has also felt the change. EBR spoke to tellers at the Commercial Bank of Ethiopia, Bunna and Oromia International banks, who revealed that there has been an increase in deposits after Abiy came to power.

Yet the issue of foreign currency continued to be a constant headache over the past three months. Unfortunately, it was during Abiy’s time in office that the country’s forex reserves reached historic low- unable to cover even a month of imports, according to sources. It was this situation that pushed the administration to make the decision to sell some of the shares of key state-owned enterprises, including Ethiopian Shipping Lines and Logistics Services Enterprises and Ethio telecom. Abiy has of course explained the economic merits of the partial privatization of these enterprises during his appearance before parliament on June 18.

This unprecedented move comes with a plan to expand mixed ownership or full privatization of some sectors, including railways, industrial parks and sugar. “Allowing the private sector to participate in these sectors makes the growth of the country more inclusive” reads an official statement from the ruling party. 

Kebour Ghenna, executive director of the Pan African Chamber of Commerce and Industry, is one of the individuals who opposed the EPRDF’s decision, although he recognized that some individual proposals for privatization have considerable merit. “I personally oppose the privatization scheme that transfers profit earned by public institutions to private individuals,” Kebour wrote on his Facebook page.

Atlaw Alemu, dean of the College of Business and Economics at Addis Ababa University, argues privatization should not be taken as a temporary solution. “What matters is allowing private entities to flourish in sectors that are solely controlled by the government. In doing so, it is possible to realize competitiveness, productivity and efficiency.” 

One of the contentious public institutions whose shares are expected to be made available for sale is Ethiopian Airlines, one of the biggest airlines in Africa, with international destinations covering five continents. The Airline, which recently signed a management agreement to jointly develop Zambia and Guinea Airways, is one of the most profitable public institutions in Ethiopia, with a profit of USD232 million last year. Likewise, the Shipping Enterprise and Ethio telecom registered gross profits of USD370 million and USD1.1 billion, respectively.

Experts say that knowing the motive behind the privatization is important to conclude whether the recent decision of the ruling party would be beneficial to the economy or not.  The public institutions are up for sale, either partially or fully, not because the government has a desire to promote the private sector, argue scholars. Rather, it is a desperate response to the foreign currency crisis.

“These actions don’t show that the economy is opening at all. It should be noted that the majority stakes of key public institutions will remain in the hands of the state, and that the industries which have been closed to foreign investors are still closed,” explains Abdulmenan Mohammed, a financial analyst based in London. 

Abiy doesn’t deny that the country is desperately in need of foreign currency. “The country has been borrowing massive amounts of money from external sources in the past. Since the projects started with borrowed money have yet to be finalized, the country is unable to service its debt,” he said during his second appearance in the Parliament. “There should be economic reforms to tackle this challenge.”

But Abdulmenan says that it is doubtful that Ethiopia is in a position to open up key sectors such telecom, logistics and airlines to foreign investors, or that privatization of key public enterprises, most of which are highly indebted, will have a positive contribution to the economy. “What is important is to make sure the privatization activities are done in the best interest of the public. The question is how the government will discharge this responsibility properly. To do so, bringing ailing enterprises back on track, reforming the market, and crafting a transparent privatization process and instituting accountability are crucial.”

On top of such doubts, there are also worries about the actual procedures of the selling of public enterprises. It is feared that the highly-indebted and loss-making nature of the enterprises, whose debt is around 30Pct of the GDP, will be an obstacle for the transfer of shares to private entities. “It is going to be very difficult to sell the state owned enterprises as most of them are in a shambles,” stresses Abdulmenan. 

Eyob Tesfaye (PhD), an economist and policy analyst, agrees. “Considering their complex debt structure and assets, it is difficult to sell the enterprises in less than two years,” he remarked. Such hurdles are not singular to Ethiopia. The Indian government faced similar challenges when it tried to privatize Air India, which has more than 126 aircrafts, primarily due to its crippling debt and dreadful operational performance. 

Both Eyob and Abdulmenan suggests Ethiopia needs to first change the laws, prepare a regulatory framework and set up regulatory bodies, so as not to repeat the failures of other countries that have privatized their strategic public enterprises. 

The future may look bright for Abiy Ahmed’s administration, but the pitfalls that sank the leaderships of his predecessors are still present. Until the talk is translated into action, however, the day to day life of the Ethiopian people who have lost so much in the last three years is still up in the air.


6th Year . June 16 - July 15 2018 . No.63


 

 

Samson Berhane

Editor-in-Chief

samson.b@ethiopianbusinessreview.net

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