Though he still does not manage to win the hearts and minds of the crowd of diplomats residing in Addis Abeba, Prime Minister Hailemariam Desalegn is showing improvements in his grasp of the economy.
Of course, the bar could not be sent quite as high up the scale as the late Meles Zenawi. A simple comparison of Hailemariam's performance over the last year shows the road he has travelled in terms of capturing the nitty-gritty of the macro-economy.
His latest interviews with the state-owned media outlets, however, show that Hailemariam is no less statist than Meles. He seems to have a good understanding of theDevelopmentalStateline of arguments on pertinent economic issues.
Hailemariam's economic explanations are also sufficiently pragmatic. As it is typical with the EPRDFites, he often oscillates between principles and laws to set the distinction between the role of the state and the markets. Obviously, the balance is biased towards the state.
The line of argument is not specific to Hailemariam, nonetheless. It holds true to anyone from the club of Revolutionary Democracy. A powerful state with unlimited power to infringe into the bounds of the market is the fundamental pillar of theDevelopmentalState.
A direct result of this bias is a private sector whose growth is significantly limited by a state that continues to gain weight with each day. Of course, the claim by the EPRDFites is far from this.
If one is to go by the policy books of the EPRDFites, the existing Ethiopian private sector has been created since the fall of the Dergue. The economic liberalisation policies of the ruling party, which allowed the free flow of trade, capital and labour within the nation, has initiated considerable capital formation within the economy, eventually bringing the private sector into existence. Contributing to the private capital formation in the economy was the influx of capital from abroad in the form of foreign direct investment (FDI). This was assisted by the reformulation of the investment laws of the nation.
Certainly, this story has some element of truth in it. The liberalisation of the nation's economic sphere has given considerable momentum to the growth of the existing private sector.
Nevertheless, the story ends there. Little could be said about what the government has done over the last two decades to make the private sector the engine of growth in the nation. It is seen using the concept only when it faces Western economic critics.
Latest information about the growth dynamics of the economy show that Ethiopian growth is severely reliant on public investment. The nation, according to the latest economic update by the Wold Bank (WB), is the second in the world in terms of the size of public investment as a ratio of Gross Domestic Product (GDP). About 70pc of the average annual growth of the nation - which averaged around 10pc over the last 10 years - is contributed by public investment.
Evidently, the role of private investment in the economy is significantly hampered by the ever-expanding role of the state. It is obvious that a strand of investment contributing only around 21pc of the total investment in the economy can play a limited role.
What seems to matter most for the EPRDFites is keeping the annual figures of the economy on or above the double digit mark. Little concern is seen given to the composition of the growth and the sources thereof.
After 10 years of subsequent double digit growth, however, the Ethiopian economy stands at a cross roads. One of these roads leads to a progressive loss in growth energy, until eventually the whole process will return back to square one. The other takes to another era of fast growth, enabled by the growth in the private sector.
International experience shows that public investment has a lot to contribute to fast economic growth in countries starting from a lower base. SinceEthiopia's starting point is very low, any resource addition to the economy will have a growth aspect. But, there is a natural limit to this process.
Economic policymaking has also developed various instruments that could help stretch the limits of this process. Yet, it is only a player other than the state that could do it. And this player is the private sector.
Established on a profit motive, the private sector has an unlimited drive for growth. This drive is even significant in countries likeEthiopia, wherein the opportunities for growth are untapped.
Statist policies, such as a bias towards public investment, could only suppress this potential of the private sector and, hence, affect the future of the economy. It also reduces the growth multiplier effect of the public investment.
For the aspiring EPRDFites, this holds no good news. The dream of joining the club of middle-income countries could not happen without sustaining the rapid economic growth of the nation for another decade.
Economically speaking, the conundrum demands a change in the growth composition. There ought to be a deliberate resource shift towards the private sector.
Indeed, this will not be an easy task - both politically and economically - for the ruling officials. Politically, it might demand the creation of a political base that aligns electoral votes with changes in the structural pillars of the system. Economically, it entails raising the rate of private capital formation and the stock of private investment.
Focusing on the cumulative outcome of the shift might help. No political base, including the largely agrarian base of the Revolutionary Democrats, would benefit from a progressive loss in growth energy. It is in an expanding economic cake that larger benefits reside for all.
A continuously expanding cake could not be realised without a vibrant private sector. That is exactly why the EPRDFites ought to take policy measures that shift the growth momentum in the direction of their long overdue rhetoric of making the private sector the engine of growth. But, this time around, they ought to live it, rather than simply say it.
Deliberate policy measures - both financial and monetary - that could enhance the ratio of private investment to total investment in the nation ought to be the priority for both Prime Minister Hailemariam Desalegn and his ruling coalition. After all, it is in changing the grasp of policies to realities that power is justified.