An exposé on the Ethiopian diaspora trust fund – the cart before the horse? (Aschalew Aberra )

By Aschalew Aberra
July 19,2018

First off, whoever came up with this splendid idea should be greatly commended, but when it comes to its implementation, we should say not so fast.

Quite embarrassingly most of African nations in general and Ethiopia in particular are dependent on foreign aid for so long, this situation should be minimized if not totally halted.

A staggering 30 million Africans live in the diaspora. Per the 2010 census 250,000 Ethiopians (legally) live in the US only.

It is a common practice for those who live in the diaspora to send money for their dependents back home. So far this arrangement didn’t make a significant change neither in the lives of their loved ones nor in the national economy.

In fact, sending money for direct consumption is believed to exacerbate the inflation on consumer goods hurting those people who have no one abroad to send money to them.

It’s high time that the contributions of the diaspora should be made in a manner that significantly impacts the economy not only for the lucky few but for the entire nation.

It just came to my attention that the current Ethiopian regime has established a diaspora trust fund. They have even opened a bank account and they are asking people in the diaspora to make deposits.

The majority of the Ethiopians in the diaspora are currently euphoric about several events that are unfolding in Ethiopia. Because of this and the long awaited desperation to help their home country, many are expected to make contributions very soon.

But the caveat is: the majority of Ethiopians in the diaspora are believed to be economically and politically uninformed, if not illiterate.

It should be the responsibility of those politically and economically better informed people to share their concerns before the diaspora community starts dumping their hard earned money into the government coffers in the name of trust fund .

In my opinion, several measures should have been taken place prior to asking the diaspora to make deposits in the recently established trust fund account.

1. For several reasons, the trust fund should be managed independent of government interventions. The government should be completely out of it other than facilitating the smooth operations of the fund.

2. An independently operating non – governmental organization (NGO) should be established to manage the trust fund.

3. A bylaw should be drafted and should be made available online for the review and comments of the people in the diaspora.

If they opt to, community organizations in the diaspora can be involved in facilitating discussion forums.

4. A board of directors comprised from different foreign continents where the majority of the diaspora resides should be established in order to provide directions to the day to day operations of the trust fund.

5. A criteria or a formula has to be set as to how the funding should be made available to the beneficiaries.

6. A very transparent website should be created in order for the contributors to be able to obtain real time information as to how much money is collected and as to how their contribution will be spent.

7. The fund should be regularly audited and the audit report should be made available online.

8. The managers of the trust fund should discus with the pertinent foreign offices in the US, Europe, Australia, Middle East, etc with regards to the legality of the collection of the fund. I don’t think we want to have the repeat of the Abay bond debacle, where the Ethiopian government was forced to return the bond money and in addition they were penalized to pay in the tune of $6 million to the US government.

9. If possible negotiations should be made with these foreign nations, if the diaspora can get tax breaks for their contributions.

10. The World Bank and the IMF rightfully make some demands of economic and political reforms to take place as part of the aid or loan they are providing to poor nations.

It will only be reasonable for the Ethiopian diaspora to be allowed to be involved in domestic politics and to make few demands such as the establishment of democratic institutions and some constitutional and political reforms that are believed to benefit the society at large.

If we are asked to contribute billions into the Ethiopian economy, we should be considered as partners in governing the nation – we shouldn’t let ourselves to be treated as fat cows to be freely milked our hard earned money.

I believe the trust fund is meant for building social amenities such as schools and clinics.

In order to bring meaningful impact in the economy, in addition to getting involved in building non – profitable social amenities, the diaspora community should also be involved in building profitable industries in their home countries.

The major deficit in the African economy in general and in the Ethiopian economy in particular is the lack of labor intensive industries which are meant for reducing urban unemployment and transferring subsistence farmers into factory workers.

The people in the diaspora, instead of sending money directly to their dependents back home for immediate consumption, both the national economy and their loved ones will benefit if the money is spent on building industries in a form of joint ventures or share markets. Then, their loved ones can collect the proceeds from the profits of the industries in the form of dividends. This arrangement could be considered as killing two birds with one stone. Instead of directly consuming the money, the money will be invested in the production sector and those families could benefit from the profits.

Just my $0.02. Comments are highly appreciated.
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