Examining the Depths of Ethiopia's Corruption
By <
http://www.ipsnews.net/author/ed-mckenna/> Ed McKenna
<
http://www.ipsnews.net/reprinting-articles/> Reprint |
27.09.2013
ADDIS ABABA/LONDON - Ethiopia may be one of the fastest-growing, non-oil
producing economies in Africa in recent years, but corruption in this Horn
of Africa nation is a deterrent to foreign investors looking for stable
long-term partnerships in developing countries.
"Bankers, miners and developers presenting projects to investment committees
in countries that fare badly in corruption rankings frequently struggle to
get investment. Corruption raises red flags because it makes local markets
uncompetitive, unpredictable and therefore largely hostile to these
long-term players," Ed Hobey, the East Africa analyst at the political risk
firm <
http://www.africariskconsulting.com/> Africa Risk Consulting, told
IPS.
On May 11, in the biggest crackdown on corruption in Ethiopia in the last 10
years, authorities arrested more than 50 high profile people including
government officials, businessmen and a minister.
Melaku Fanta, the director general of the Revenue and Customs Authority,
which is the equivalent rank of a minister, his deputy, Gebrewahid
Woldegiorgis, and other officials were apprehended on suspicion of tax
evasion.
But the arrests have raised questions about the endemic corruption at the
heart of the country's political elite
Berhanu Assefa of the Federal Ethics and Anti-corruption Commission of
Ethiopia told IPS that these arrests highlighted how corruption has
insinuated itself into the higher levels of officialdom.
"Corruption is a serious problem we are facing. We now see that corruption
is occurring in higher places than we had previously expected. Areas
vulnerable to corruption are land administration, tax and revenue, the
justice system, telecommunications, land procurement, licensing areas and
the finance sector," he said.
Ethiopia ranks 113 out of 176 countries on the Corruption Perceptions Index
of Transparency International, a global civil society coalition that
encourages accountability. The country has also lost close to 12 billion
dollars since 2000 to illicit financial outflows, according to
<
http://www.gfintegrity.org/> Global Financial Integrity (GFI), whose
statistics are based on official data provided by the Ethiopian government,
the World Bank, and the International Monetary Fund (IMF).
Dr. Getachew Begashaw, a professor of economics at Harper College in the
United States, told IPS that there was a fear that the recent high profile
arrests were merely political theatre designed to placate major donors such
as the World Bank and the IMF, and to give credibility to the new regime's
fight against corruption. Prime Minister Hailemariam Desalegn took over
leadership of the country after Prime Minister Meles Zenawi died in August
2012.
"They are using this as a PR stunt to appease not only the donors, but to
also dupe the Ethiopian people. Because many non-party affiliated Ethiopians
in the business community are complaining, and this complaint is trickling
down to the average people on the streets," he told IPS.
According to the World Bank, companies held by business group the Endowment
Fund for the Rehabilitation of Tigray (EFFORT) account for roughly half of
the country's modern economy. The group is closely allied with the ruling
Ethiopian People's Revolutionary Democratic Front (EPDRF), an alliance of
four parties.
EFFORT is a conglomerate formed from assets collected in 1991 by the EPRDF
to rehabilitate the Tigray region in northern Ethiopia after it had been
decimated by poverty and conflict. The Tigray People's Liberation Front
(TPLF) is the lead party in the EPDRF coalition.
Tigrayans, however, only account for eight percent of the country's 90
million people. According to Abebe Gellaw, an exiled Ethiopian journalist
and founder of Addis Voice, a web platform that provides news that is
otherwise censored by the Ethiopian government, EFFORT has become a business
racket for the Tigrayan elite who are monopolising major sources of the
country's wealth.
"The TPLF controls key government institutions and a significant portion of
the economy. For over 15 years, EFFORT has been used by the TPLF to channel
public resources and funds to the coffers of the TPLF through illegal deals,
contracts, tax evasion, kick-backs and all sorts of illegal operations," he
told IPS.
Azeb Mesfin, Zenawi's widow, currently manages the multi-billion-dollar
business empire.
She claims her husband paid himself a modest salary of 250 dollars a month,
yet the online website "the Richest.org", which publishes the net worth of
the richest people in the world, recently divulged that Meles was in fact
one of Africa's wealthiest leaders having amassed a personal fortune of
three billion dollars. This has led many to question the provenance of the
erstwhile leader's wealth - when he had no known business engagements.
Illicit financial flows as a result of corruption are a major hindrance to a
country's development, undermining institutions, economies and societies.
According to the
<
http://africaprogresspanel.org/en/publications/africa-progress-report-2013/
> Africa Progress Panel's Africa Progress Report 2013, the continent is
losing more through illicit financial outflows than it receives in aid and
foreign direct investment.
A commitment to greater accountability and transparency to curtail illicit
financial flows should occur on both the national and international levels,
according to E. J. Fagan, deputy communications director at GFI.
"Reforms and policies are needed to strengthen customs enforcement and make
governing apparatuses more transparent. The international community can
create a multilateral system of automatic exchange of tax information that
African countries like Ethiopia can access, so as to make it difficult for
illicit actors to hide money and transfer large amounts of illicit money
without detection," he told IPS.
Begashaw added that corruption in the social sphere also breeds social
inequality, disenfranchisement and a breakdown in national unity and civil
society.
"The very existence of parastatals and TPLF-affiliated endowed business
conglomerates like EFFORT is a major source of corruption. The Birr
(Ethiopian currency) will depreciate and inflation will skyrocket. The
capacity of the state to provide public goods and services will decline.
Free market competition will be eroded. Government revenue will be reduced
and the budget deficit will rise.
"If they are really serious about combating corruption, they should start
doing so from the top," he said.
Received on Fri Sep 27 2013 - 17:01:13 EDT