The Government of Ethiopia is broadly soliciting for development
aid, foreign-based business partnerships and financial investors;
yet, the unpopular ruling party has been accused of abuse of state
power, misuse of donor funds, widespread party-run business monopolies,
illicit financial practices and endemic corruption. It is time to demand
accountability from all involved and concerned.
The
Solidarity Movement for a New Ethiopia (SMNE) is a non-political and
non-violent social justice movement of diverse people that advocates for
freedom, justice, good governance and upholding the civil, human and
economic rights of the people of Ethiopia, without regard to ethnicity,
religion, political affiliation or other differences. The SMNE believes a
more open, transparent and competitive market economy, supported by
viable institutions and reasonable protections, which provides equal
opportunity, will result in greater prosperity to the people rather than
keeping it in the hands of a few political elites.
We
strongly contend that Ethiopia will not emerge as a dependable global
economic partner until the corrupt and illegal practices of the current
one-party regime’s monopoly end and existing blocks of entry to
non-party members are lifted. We also believe the global business
community as well as donors to Ethiopia can contribute by coming
alongside Ethiopians in the push for meaningful reforms. Such reforms
would include greater transparency and an opening up of economic space
to the private sector, without which growth and development—beyond the
benefit of the ruling party’s affiliates—will never be realized.
In light of this, the SMNE urges the international community, donor
nations, charitable organizations, and the international financial and
business community to make demands on the Government of Ethiopia (GOE)
for compliance with national and international laws. This must include
holding companies affiliated or owned by members of the ruling party,
including those businesses associated with their business conglomerate,
Endowment Fund for the Rehabilitation of Tigray, (EFFORT), accountable.
Additionally, measures should also strongly support restoring autonomy
to independent institutions, the judiciary, and the Media and upholding
the human and economic rights of the people.
Until these measures are taken, the SMNE urges these stakeholders in
the international community to withhold investments, development
financing and other forms of partnering with the regime and its cronies.
The ruling TPLF/EPRDF party has misused its state power and
expenditures of foreign aid to corner the market through its companies
and affiliates in all sectors of the economy. Illegal expropriation of
land and public resources, corruption, illicit capital leakage and
dubious allegiances riddle these secretive deals, putting prospective
partners at high risk for future liability or other uncertain
consequences.
The Oakland Institute in its July 17, 2013 press release:
“Development Aid to Ethiopia: Overlooking Violence, Marginalization, and
Political Repression,” warned the international community on the
dangers of unwitting complicity in creating this illegal monopoly of
business and civil society that provides the Ethiopian regime
development aid amounting to “an average [of] $3.5 billion a year,
equivalent to 50 to 60% of Ethiopia’s national budget.”
Likewise, the international community and investors have largely
ignored or, knowingly or unknowingly, become complicit with the
pervasive corrupt practices of many of the 100’s of companies owned and
operated by the Tigrayan Peoples’ Liberation Front (TPLF) that dominates
the ruling coalition government of the Ethiopian Peoples’ Democratic
Republic Front (EPDRF). “Companies under the Endowment Fund for the
Rehabilitation of Tigray, known as EFFORT, alone account for roughly
half of the country’s modern economy”, according to an IPS report titled
“Examining the Depths of Ethiopia’s Corruption.” The wife of the late
Prime Minister, Meles Zenawi, headed up the organization until only
recently.
Bloomberg News, in its October 27, 2009 edition, reported “Guna
Trading House Plc, owned by Ethiopia’s ruling party, said it plans to
become one of the nation’s biggest coffee exporters, raising concern
among industry observers that private industry may get crowded out.
The report quotes the late prime minister regarding the company’s plans
to expand in the industry. ‘We are intending to export to Europe, the
U.S. and China,’ he said. Guna is among at least four other companies
owned by the state or Prime Minister Meles Zenawi’s ruling party.”
Coffee Plantation Development Enterprise, Dinsho Trading P.L.C and
Ambasel Trading House P.L.C. are among coffee exporters under the
ownership of the ruling party that has been able to obtain favored
treatment from public agencies and enterprises due to the regime’s
control of these government agencies that should otherwise be holding
them accountable. Companies that fall out of line can suddenly fall
under the scrutiny of these agencies. As a result, those associated with
the ruling party are able to dominate key industries, including the
export of commodities. See some of the more visible companies and less
visible, like Wogagen Bank, Sheba Tannery P.L.C., Ambasel Trading House
P.L.C., and many more companies owned by the ruling party.
Another company within EFFORT’s group is Almeda Textile Factory.
According to the company, it is the biggest textile factory in Ethiopia.
It is one of the major exporters of textile products to the US market.
The company has had help in achieving this position through assistance
from US government agencies, made available through the Africa Growth
and Opportunity Act (AGOA). Additionally, according to the United States
Agency for International Development‘s News, they report giving
technical assistance to Almeda Textile Factory through the USAID East
Africa Competitiveness and Trade Expansion Program (COMPETE). They also
sponsored the company in an exhibit at the MAGIC Apparel Trade Show in
August 2009.
Essentially, the US government agency admittedly supported this
Ethiopian ruling party-owned company in its exports into the US market,
also allowing Almeda AGOA’s duty free import privilege, something that
was intended for independent businesses. This is in direct violation of
US anti-corruption laws.
Another ruling party-owned company, Addis Pharmaceutical Factory,
which dominates the local market, claims to be the largest
pharmaceutical manufacturing plant in Ethiopia. According to the
company, it manufactures “analgesics, anti-acids, antibiotics,
anti-malarias, anti-asthmatics, amoebicides, anthelmenics, cough syrups
and vitamin preparations.” Addis Pharmaceutical allegedly benefits from
the expenditure of health funding from development agencies.
The international community, including development agencies,
charitable organizations and investors, often have ignored the
implication of associating with the ruling party’s owned companies. This
is contrary to the public interest and is in violation of international
laws and regulations against corruption.
For example, in a press release on the appointment of the Bill and
Melinda Gates Foundation’s first official representative in Ethiopia,
the co-chair, Melinda Gates, said, “We invest more than half of our
resources in Africa, and we want to build closer and more effective
relationships with valued partners on the ground.”
According to the Foundation, “Ethiopia is an important focus country
for the foundation, which currently provides more than USD $265 million
in funding to partner organizations that are operating health and
development programs across the nation.”
In Ethiopia, ruling party controlled organizations and businesses are
nearly the only partners possible, creating an oligarchy similar to
what has happened in Russia and other countries in Africa where
totalitarian governments and their cronies pillage the economy and
resources to their own advantage and without regard to the people.
What appears to be negligence and a lack of doing due diligence on
the part of the foreign aid community and investors, including the UN
Millennium Development Goal (MDG), the Bill and Melinda Gates
Foundation, USAID, among many other agencies and investors,
unfortunately contributes to making it possible for the ruling party and
its affiliated companies to involve themselves in all kinds of shadow
businesses while eroding the prospects for viable independent businesses
to emerge and survive.
As a result, in the last decade the number of parallel shadow
business enterprises associated with the ruling party and affiliates
have mushroomed in every sector of the economy while at the same time
the international community has poured in billions of dollars in
development aid and investment without appearing to question the ruling
party’s extensive involvement in business and trade.
Global Advice Network on its Business Anti-Corruption portal
concludes in the profile on Ethiopia: “The [Ethiopian] government
strategy is clearly top-down, dominating anti-corruption institutions,
the anti-corruption debate, and the formulation of anti-corruption
policy. Despite the introduction of anti-corruption initiatives in
previous years, including the Federal Ethics and Anti-corruption
Commission (FEACC) in 2001, corruption remains widespread at many levels
of government administration in the country.”
In the findings of the Bertelsmann Foundation 2012 Report , they
assert: “Ethiopian society’s deeply ingrained clientelism does not
foster a culture of accountability and transparency, has fostered
cover-ups and non-enforcement of laws”. For example, they report:
“Competition laws aimed at preventing monopolistic structures and
conduct exist within some sectors, but are enforced inconsistently. A
Competition Commission was established in 2006, and by the end of 2007
had reviewed some 23 cases. Although informally provided, the strongest
complaints are against the government’s preferences for party-affiliated
businesses; [however], only trade-related issues were investigated. The
transportation sector, for example, is to a large extent in the hands
of business people belonging to the para-party sector. There are a
number of companies close to the government and the ruling party, which
leads to a lack of transparency and [high levels of] corruption.”
A World Bank 2012 report on Ethiopia reinforces the same, saying that
“high-level corruption is widespread within the construction sector,
and that it is dominated by the ruling party affiliated companies.”
Reports alone cannot fully capture the enormity of the ruling party’s
affiliated companies’ extensive involvement in all sectors of the
economy due to the ruling party’s control of:
1. Public agencies such as: Ethiopian Rural Land Management Agency,
Privatization Agency, Investment Commission, Commercial Bank of
Ethiopia, Ethiopian Agriculture Transformation Agency, Ethiopian Grain
Trade Enterprise, Development Bank of Ethiopia, The Federal Ethics and
Corruption Commission, Information and Communication Technology Agency
and others;
2. Trade institutions such as: Chambers of Commerce and Sectoral
Associations, The Ethiopian Commodity Exchange, Ethiopian Coffee
Exporters Association and farmers and trade union and associations;
3. Licensing and regulating of charitable organizations, which includes:
The Ethiopian Charities & Civil Societies Agency (ECCA) and
legislations severely limiting the kinds of activities—civic engagement
important to healthy societies—that organizations are allowed to carry
out if they receive more than 10% of their financing through foreign
sources, rather than through government funding under the Charities and
Societies Proclamation; resulting in the ruling regime’s operation of
hundreds of charitable organizations, including the Tigray Development
Association (TDA);
4. Public Media infrastructures, including Ethiotelecom, (the only
internet provider in the country) and Ethiopian Broadcasting Authority
(the only shortwave Radio and Television broadcasters in the country),
The Ministry of Communication and Information Technology
http://www.mcit.gov.et/
The UNDP commissioned Global Financial Integrity Report: ‘Illicit
Financial Flows from the Least Developed Countries: 1990-2008’, revealed
that “approximately US$197 billion flowed out of the 48 poorest
developing countries and into mainly developed countries, on a net basis
over the period 1990-2008. Trade mispricing—when imports are overpriced
and exports underpriced on custom documents—accounts for 65 percent of
illicit financial flows.”
The report ranked Ethiopia among the top ten worst countries out of
the forty-eight. As a recipient of the largest development aid in
Sub-Sahara Africa, the international community has the obligation to
hold the GOE and the ruling party owned business conglomerate and
facilitating organization primarily responsible and accountable.
In light of these concerns, the SMNE calls on the international
community, donor countries and organizations and financial institutions,
investors or business partners, either prospective or established, to
not ignore the overwhelming evidences of endemic corruption but to take
strong measures to ameliorate the problem to the best of their ability
through exposure, denial of services, investigations, criminal
proceedings and remedial actions. Some of these actions should include:
• Demand that the ruling party disclose and dissolve all its business holdings built on public resources and foreign aid
• Demand that the ruling party affiliated charitable organizations’
including EFFORT Group, disclose their financial holdings to the public
and cease operating charitable organizations
• Call for an independent investigation of the regime’s business and charitable activities
• Call for the immediate restoration of the independent Media, including
allowing the international Media to operate freely in the country with
full access to the public records
• Demand public disclosure of all records on foreign investment,
including land contracts for the purpose of commercial farming as well
as real-estate, mining and manufacturing
The SMNE urges the international community, donor nations and
organizations, Ethiopian political parties, civic and religious
organizations and the Media, at home and abroad, to pressure the
international community to:
• Not provide a blank check and diplomatic cover for the Government, the ruling party and its affiliated companies
• Require meaningful conditions be met as part of receiving development aid and diplomatic support
• Closely monitor the misuse of military and security assistance they or
others have provided that has helped the ruling party gain control of
the ways and means of the economy
• Open an investigation on crimes of corruption and money laundering on
the part of the ruling party’s affiliated companies, officials, and
family members residing inside or outside of the country, in their
respective jurisdictions abroad
• Close any access for the ruling party affiliated companies that do
business in the international markets until compliance with
international and national laws are followed.
The SMNE and partners advise all concerned organizations to use
established laws, agreements and protocols, where possible, to compel
the ruling party to abide by international and regional conventions and
protocols as well as to follow all applicable laws and regulations on
corruption both nationally and internationally.
Source, Abugida Yeadera Eda
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