19 June 2018

Ethiopia: Developmental State Vs Private Investment

While possessing majority ownership of some state-owned enterprises, Ethiopian Peoples' Revolutionary Democratic Front (EPRDF) has recently decided to open them up to private investment. Does this move contradict with the regime's long held ideology of developmental state?

According to the EPRDF's executive committee statement on June 5,2018, foreign investors can buy minority stake in Ethiopian Airlines,Electric Power generation projects and the Ethiopian Shipping and Logistics Services Enterprises and ,Ethio- telecom. A Corporate Leader with Global Experience in the Insurance Business and United Bank S.C Board Chairperson Zafu Eyesuswork says The privatization move has nothing to do with switching or maintaining the old fashion.

"As far as my concern , EPRDF has proven its maturity taking such action"

The government is now realizing that its power and capacity in developing the economy is not such strong , hence, the move will help the nation to achieve long- sought economic transformation -- from an agriculture-intensive economy to a more industrialized and knowledge-based economy one, he notes

For Government Communication Public Relations Head Mohammed Seid, the ultimate goal of developmental state is to privatize the companies that could assist nation to trickle down wealth and resources for all citizens.

EPRDF executive committee should have been actualized privatization much earlier but the reality on the ground had not permitted because wealth had not been accumulated, he says.

"If wealth is not accumulated properly ,rent seeking and anarchy could ruin a given nation. Thus, what has been done so far in this country is that using developmental state approaches, the government has been intervening in areas where private could not involve largely due to various economic and political impacts."

As to him, the recent move could be taken as a good example, public still retain majority stake or the lion share in Ethio-telecom, Ethiopian Airlines, electric power generation plants and Shipping Lines and Logistics Services Enterprises.

"So it is on the same lane of developmental state teaching In my view ,the move could give impetus to the nation's efforts in realizing sound economic transformation. Above all, it makes the people to be politically empowered and democracy will also be flourished ."

Mohammed further said neoliberal would like to minimize the role of State as guardian through letting the market to decide the economy . "But in practice we witnessed that when the financial crises and austerity surfaced across the west world. They had bought companies and took invention measures to save the collapse."

What is happening in Ethiopia based on the rationale of developmental state perspective where the intervention will be in place in selected economic corridor for the sake of citizens, he adds.

As to him, private enterprises operate more efficiently than those that are owned by the state, so actualizing privatization in Ethiopia adds values on performance of institutions .This is also the aspiration of developmental state teaching .

China, Taiwan and Korean recognized the potential contribution of the private sector in harnessing their economies and in coping up with the changes in the international economic environment that could be role model to Ethiopia approaches

Both agree that public owned enterprises largely suffer from budget deficits and public debts, which have become too much of a financial burden on the state. Many countries, across Africa thus deciding that the state should withdraw from economic activities that can be possibly handled by the private sector.


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