How Revolutionary Kleptocracy is Fueling Unemployment in Ethiopia

Mastewal Dessalew
December 4,2018

I was in Ethiopia this past three weeks and I had tried to assess how things are changed since I left the country 6 years ago. I have observed many things in my short stint and one of the sad realities is the skyrocketing of the number of unemployed youths in the country; especially those who have a university degree, many of them in engineering fields. You would get at least one or two such unemployed university graduates almost in every household. It is these unemployed young people who rocked the country demanding political change in the past two years. While most of us are busy praising the political change, no one is talking how to tackle one of the root causes of the political upheaval. You would learn more from the books of Haddis Alemayehu than the government on what they are planning to address the issue. The internal power struggle and the ethnic rivalry has stolen the show that the economy is forgotten. Misguided economic and political policy that created structural economic problem in the country, corruption and ethnic politics are hampering the economy not to generate enough jobs.

Revolutionary democracy, I would rather call it revolutionary kleptocracy, is a policy the country followed in the past 27 years. Currently the country is neither a capitalist nor a socialist state, it is a crony capitalist state. The economy of the country is primarily dominated by either multibillion party companies like EFFORT or those individuals who have nexus with powerful politicians. The likes of EFFORT are leeches to the economy and their wealth is not primarily from adding value and productivity rather from their preferential treatment by the government. They get prime urban land for free or below market price, pay little or no tax and import-export tariffs, take money (not borrow) from the bank as they want, get government contracts without competition etc. These companies have neither the motivation nor the competition to focus on adding values to their products and improve productivity. Their presence and the unleveled playing field mean startups and independent private companies cannot compete with them. It is imperative to understand that these companies are the pillars of ruling the country by the party and any private company that manages to pose serious competition to them is considered a threat to the political system and treated accordingly. Unless this structural problem in the country is addressed, it would be difficult to create a competent and innovative private sector that would create jobs to the large number of unemployed youth.

Revolutionary kleptocracy has created a conducive environment for corruption and using rules and regulations to keep the status quo and protect the vested interest of the powerful. The day I arrived in Addis Ababa, it was all in the news that Ride, an Uber like tech startup, was shut down by the government after people who are currently operating in the traditional transportation sector complained about the startup. Without a court order, the government swiftly shut it down. The justification given was that it is against the rules and the regulation of the country to do such business. Considering the acute transportation problem in the country in general and in Addis Ababa in particular, contracting a taxi in Addis costs more than riding Uber or Lyft in major American cities, technology and innovation shouldn’t be sidelined to protect the vested interest of those companies and individuals that are garnering immense profit from the misery of the people. Embracing technology and innovation and promoting competition are key in improving the competitiveness of the country’s economy and in creating jobs.

Ethnic politics has also created a suitable environment for favoritism, corruption and embezzlement. Just ask what happened to GERD, METEC and the sugar enterprise to understand how ethnically organized mafias looted billions from the coffer of poor Ethiopia. Such grand scale organized corruption wouldn’t be that easy without ethnic politics and the ethnically shaped bureaucracy it has created. Besides promoting corruption and draining the resource of the country, ethnic politics is becoming a hurdle for labor mobility that it is becoming difficult for people to move and work in different parts of the country. While the world and its economy are becoming more integrated and globalized, regional states in Ethiopia and their economy is drifting towards localization than integration.

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