25 November 2012

Ethiopia: Information Drought


I would always remember the meeting that I once had with a renowned car dealer in our fair city. Not that the guy was popular but his statement was as definitive as a summary of policy document. If there is one thing that defines the nature of the Ethiopian business sphere in the coming years, the dealer told me, it would availability of information and the access that people would have to it.

It is this statement of the businessman that I remain to remember. I even consider it as the one thoughtful statement that I have heard in my last two years of active engagement with both local and international business.

Indeed, the ups and downs that the dealer has passed through have made me realise the benefits of information. His account of his own business path goes back to the time that he decided to join the auto dealership sector without any information about cars and dealership.

There was no available institutional information that he could benefit from. His going started with no information and tightly held capital. That is indeed a painful experience, by any standard.

Yet, it is exactly the experience that many businesspeople in our fair nation pass through. It could even be said as the prototype of doing business inEthiopia.

Lack of institutionalised information about varying business opportunities is the major challenge an investor inEthiopiawould face. If at all one could find information about the sector that she likes to invest in, it would be raw, poorly recorded and with no supporting analysis. No doubt that investing on such a base would obviously have an inherent risk.

That seems to be exactly why Ethiopian businesspeople often are highly sensitive to risks. There is even a popular perspective that a starter ought to lose.

A recent conversation with a business analyst friend of mine also reminded me of the same challenge, albeit at bigger level. His analysis of big manufacturing firms in the country have shown him that only a handful of them know their input and output market well. Their little knowledge about available opportunities of raising capital, selling products, establishing networks, training human resource and obtaining technologies establishes the core of their underperformance.

In contrast, the market in other countries provides institutional solution for the problem. It manages to initiate the establishment of breeds of institutions, from pollers to specialised consultancies, which help bridge the gap. It is unfortunate that these kinds of information aggregators, as they are often called, are absent in our fair nation.

The many consultancy companies in our fair nation do not do information aggregation. They rather undertake feasibility studies, base line surveys, assessments or evaluation studies.

Instead of serving as aggregators, hence, they make use of aggregated information. It is sad that none of them could see the inexistence of market information as an opportunity to capitalise on.

A prove to their complacence is the information that many of them post on their websites. Their focus is to list the title of as many of the feasibility studies or assessments they have conducted as possible. Some even include a boring list of clients that they have worked with. It is puzzling that even local branches of international information aggregators are seen settling for the same equation.

It is obvious that the whole situation puts investors at limbo. Surely, there is little that can be done without information. And little of it exists institutionalised inEthiopia.

Cognisant of the trend, a Western diplomat based in Addis Abeba recently shared me his observation that doing business inEthiopiais largely a 'cousins' dealing'. He even goes to tell me that he often think the cousins factor is the major driver of business in our fair nation. What a description!

That is exactly why the rich is getting richer, whereas the poor is getting poorer, in this side of the world. So much as information is asymmetrically held by the few and information scavengers are inexistent, money flows in one direction only.

Any agency that looks to change this equation, then, ought to invest in this gap. Availing information about the local business sphere, its competing spheres, its competitive advantages and its global linkages is a trade left for no one inEthiopia. Amazingly, though, there can be no economic success without it.

Getachew T. Alemu is the Op-Ed Editor for Fortune.

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