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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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  1. All your points make great sense. I hope someone will present your idea to Dr. Abiy as he visits the US soon. Thanks for sharing!

  2. Beautifully written appreciated reading the article. Obviously you are an expert in banking or finance.

    Only point is to make known that there are a few of us who wish to collaborate in social economic development minus any politics. You are absolutely right in recommending an independent governing body.

  3. Thank you very much for the information. Great points!!! I hope someone see this and pass to the person who is running the show.

  4. This is what I think of your points
    For 1 & 2, an NGO? the diaspora barely trusts Dr. Abiy as this article goes to show, so how would hundreds of thousands if not millions of ethiopians agree on who should run this organization. I think if he is smart enough to do this, he’s also aware of the ramifications; if this thing goes south he’s going to have to face the rath of the diaspora.
    3,4,5,6 &7 I think its the goverment’s obligation and ur right to know where your money is going, apparently so does the P.M in a recent conference he made clear that there is going to be a website and transparent way of doing things; you are preaching to the choir. And I don’t see a board of directors working out these people are bound to biased and I don’t see how they can be held accountable for their actions and be effective in any way, with the added fact of where exactly is this board going to reside and if we’re asking people to uproot their lives do they get salaries? Who pays? And r people in an office in europe or america going to decide what goes on everyday?
    As for the rest of your points. Yes,You should have a say in the political process and I agree except for the part where you liked yourself to the IMF… this is much more than you giving money in return for tax breaks, this is you having the opportunity to say that you helped your fellow ethiopian got education with the school u built, helped a farmer change his life because of your road…and much more

  5. The request of the PM is simple contribute? no donate with kindness and see the result if you are happy what is done you can donate again with delight by seeing the result actually according his words “test us for two years” therefore your idea is hood but you creating ananother burocracy which takes many years to establish. The need does not wait from being worth.
    As for me 30usd. Will not leave me broke to test the commitment of the government

  6. Although I believe with some of your suggestions at the same time I disagree with quiet a few of them. Particularly the reference about “If we are asked to contribute billions into the Ethiopian economy, we should be considered as partners in governing the nation”. You can’t be partner when you are thousands of miles away , if you are interested in politics why be partner when you can actually be a player? In the process you will be part of that change. I believe the current climate does give that opportunity for those who want to make changes and genuine differences in their country.

    You do come across as someone who invested a lot of time in articulating your assessment of what you think should be done with the PM’s suggestion.

    I believe this is just one of the many idea the PM has come up with, quiet possibly a responsibility by the diaspora who should play their part in rebuilding their country, which i believe welcomed by the majority of Ethiopians and I have no doubt friends of Ethiopians will be chipping in as well.

    I think we should give it the benefit of doubt and wait and see what come out of it, after all many have sacrificed with their life for the beloved country so what if your hard earned cash is invested for the benefit of present and future generations.

  7. Everything said above is good, however, by dragining this with all these issues we are not helping, we have to start contributing today, ETHIOPIAN MEGENBAT YALEN ZARE NEWU. Talk and leaving things for tomorrow is not helping. This has to be sorted out and we should start helping. The diaspora community should be able open an online site that can be monitored and supervised and make this smooth for all Ethiopians who are eager to help their country. Every wind should not below as to different directions, It is all about Ethiopia.


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