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THE UK’S GENERAL ELECTION AND LABOUR’S POLICY OF NATIONASING PART OF BT (BRITISH TELECOMMUNICATIONS)

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Getachew Beshahwred

The United Kingdom will hold a General Election on 12th December; the second in three years and the third in five. There was no need to hold a General Election at this time. Under the Fixed Term Parliament Act, an election should be held every five years. Hence the next election is not due until May 2022. However, Boris Johnson, Like Theresa May in 2017 thought this would be an ideal time for him and for his party to hold a general election. Just like in 2017, the Tory Party, according to the opinion polls which are often found to be wrong, is more popular than the Labour party; and Boris Johnson, the Leader of the Tory (Conservative) Party is more ‘popular’ than Jeremy Corbyn, the leader of the Labour Party. However, the outcome of the election is not a foregone conclusion. In 2017, though Theresa May had an even wider lead in the opinion polls, she lost her majority in parliament which in the end costed her premiership. Hence anything could happen in this election too.
In any case the election campaign is well underway. The Conservative Party would like the main issue and campaign point to be Brexit. Their main campaign slogan is, ‘Let us get Brexit done!’. Once Brexit is sorted, the rest would be easier, they claim. The Labour party, which seems not to have a definite position on this issue, would like the election to be about other issues, like the NHS, public sector pay, the economy, education etc.

Some of their main policies are:

  • Hold a second referendum on Brexit
  • Increase health budget by 4.3%
  • Raise minimum wage to £10 per hour
  • Abolish university tuition fees
  • Free bus travel for under 25s
  • Build 100,000 council homes a year
    Renationalise some of the biggest privatised companies
    This coupled with other policies would result in a significant increase in the national debt. Both Labour and the Conservative party have promised higher spending without sufficient tax rises or spending cut elsewhere to keep the deficit falling in future years. Hence, whichever party wins the budget deficit is going to increase significantly. According to the National Statistical Office, by the end of March 2019, UK’s debt (public sector net debt excluding public sector banks) was £1,801 billion which is 83.1% of Gross Domestic Product (GDP). In contrast, according to Trading Economics, Ethiopia’s Debt to GDP ratio by the end of 2018 was 60%, and by the end of this year could reach 65%. As a result, any pressure by the IMF or the World Bank for Ethiopia to reduce its debt to GDP ratio should just be taken as an ‘advisory’ and should not be an excuse for privatisation. Selling off profitable publicly held companies just to reduce debt is short-termism and it may even result in an increase in National Debt, in the long term; when the profit from these companies dries up and ends up in the hands of investors some of whom would like their dividends to be in pounds and dollars. On the other hand, there is no cause and effect relationship between ownership and efficiency.
    In the 80’s and 90’s especially under the premiership of Mrs Thatcher, the UK government privatised a number of publicly held companies. Telecommunication, water, power and energy, rail, airline, bus etc companies were sold off. Many of these companies are now owned by foreign companies some of which are themselves owned and controlled by foreign governments.
    The labour party has been always against privatisation. However, the government led by Tony Blair and then Gordon Brown, though did not privatise any publicly companies, did not try to reverse and renationalise any of the privatised companies. It had consistently threatened nationalisation unless the privatised companies improve their services to the people.
    Now the labour party has made nationalisation a formal policy and has included it in its election manifesto. The opinion polls consistently suggested that the public, by a huge margin, support the nationalisation of Rail, Water and Energy companies.
    The party hast officially announced that it will nationalise the big six energy companies that supply gas and electricity to 75% UK households (EDF Energy, Centrica (meaning British Gas), Npower, E. ON, Scottish Power and SSE), National Grid, the water industry, Royal Mail, railways and the broadband arm of BT (British Telecommunications). The labour party will also change the way that companies it does not want to nationalise are supervised by the government. According to the Labour Party this nationalisation would be fiscally neutral ‘as bonds would be issued in exchange for shares.’
    This would mean a future Labour Government not only would nationalise some of the biggest companies, but it will also change the regulatory regime for companies that will not be owned by the government
    The biggest surprise in this policy announcement is the nationalisation of the broadband arm of BT. The aim of the Labour Party is to make available, ‘free at the point of use’ broadband service for all. Currently the availability of a good broadband service depends on where you live/work and the age of your house or office building. New buildings are better connected to the internet. The Labour party said it will nationalise the telecoms provider BT’s fixed line network to provide free full-fibre broadband for all. According to Labour, ‘the plan would require a sweeping upgrade of Britain’s internet infrastructure that would be paid for by raising taxes on tech firms such as Alphabet’s Google (GOOLE.O), Amazon (AMZN.O) and Facebook (FB. O).’ There is a huge question on the practical implementation of this policy and its impact on government finances.
    In any case when the United Kingdom is rethinking its privatisation policy (even a Tory government has brought back a Rail Company and the probation service under public control), Ethiopia is embarking upon a huge privatisation program of some of the biggest publicly held companies. There is nothing wrong in considering the policy of privatisation. In some cases, it may work but careful analysis and consideration is paramount. Privatisation is a huge and complex process some of which could be irreversible or too expensive to reverse. It may result in, as it happened in the United Kingdom, bad service to customers and increases in prices to customers, salary to executives and dividends to shareholders.
    The government has recently announced that it intends to complete the privatisation of the profitable Ethio Telecom by the end of March 2020. Why the Hurry? Unless it is pressure by donors and lenders, like the IMF and the World Bank, I can not see any justification for doing it in such haste without much public consultation and apparently without much of the Regulatory Regimes in place.
    It is also true that, the current government has no mandate for such a policy. In the United Kingdom, the Tory party put the policy of privatisation in its party manifesto on the basis of which it campaigned and won. As a result, it can claim that it has a mandate from the electorate for the policy of privatisation. The same should happen in Ethiopia.
    Hence, the privatisation Program should be delayed to allow time for consultation; genuine consultation. Then if the ruling party is still convinced, that privatising Ethio Telecom is the best option, it should include it in its election manifesto and obtain a mandate from the people who are the real owners of the company which has been put up for sale without their consent.

Getachew Beshahwred BA (Dist.), MBA, BFP, FCA, Cert CII, PMP is the Managing Director of GB & Co Ltd, Chartered Accountants and Management Consultants, London. Getachew can be contacted at getachew@gbandco.co

World Food Day 2019 in Ethiopia – Why we need to embrace circular food systems?

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World Food Day was celebrated around the world and in Ethiopia on 16th October 2019. Below are reflections from AgriProFocus Coordinator Meskerem Ritmeester, who organized the World Food Day event in Addis Abeba.

“The current linear food system that is focused on productivity has supported a fast-growing population and fueled economic development. Yet, it has not eradicated different forms of malnutrition. In fact, after a period of decline, world hunger is on the rise again, trending with an aggressive increase in overweight and obesity. Moreover, the linear food system has come at great cost to our environment and is no longer fit to meet our long-term needs. Transitioning to a circular food system has been identified at a global level as an opportunity to make our food system economically, socially, and environmentally sustainable. In short, a circular approach aims to make our food system eco-efficient, climate smart, and to reduce food waste and food losses significantly. Hence, a circular approach can contribute to food security and multiple other United Nations Sustainable Development Goals (e.g. SDG 1 No Poverty, SDG 2 Zero Hunger, SDG 3 Good Health & Wellbeing, SDG 12 Responsible Consumption and Production, SDG 13 Climate Action, SDG 14 Life below Water, and SDG 15 Life on Land). Properly nourished people can lead to healthy and productive lives and by protecting and nurturing the earth systems future generations can do the same.
The World Food Day in Ethiopia was organized by the international multi-stakeholder network in the AgroFood sector called ‘AgriProFocus’, in collaboration with The Embassy of The Netherlands in Ethiopia and the Wageningen University Alumni Fund on 16 October 2019. The main aim was to provide a place where government and research institutions, entrepreneurs and civil society shared inspiring insights into the challenges and best practices on the ground when striving for a circular food systems approach in Ethiopia. This event also created a space where multi-stakeholders partnerships were initiated across nations, sectors, and professions. The morning session started by informing our audience about the current trends and status of malnutrition globally and discuss the underlying root causes from a systems perspective. For this, keynote speeches were given by the MoA Food & Nutrition Coordination Office Director Ms. Alemtsehay Sergawi and The Ambassador of The Kingdom of The Netherlands (EKN) to Ethiopia Mr. Bengt van Loosdrecht. Ms. Alemtsehay Sergawi (FNCO) explained that, “unlike in many developed countries where most of the food loss occurs close to consumption, in Ethiopia, more of our food loss occurs earlier in the value chain, and closer to the production side. Greater coordination between food systems actors is required for us to address our food loss and achieve our nutrition goals”. Thereafter, a leading experts’ round table discussed topics such as the opportunities to use circular business models whereby Mr. Lars Windfuhr from Hyatt Regency Hotel in Addis Ababa and Mr. Gedion Shone (Woljeejii Agricultural Industry PLC – EM Technologies) shared their own success stories in turning food waste into a resource to be used again. Throughout the day, there was a food exhibition where 20+ food exhibitors were able to showcase their healthy and indigenous food products and other modern / digital technologies that support a healthy and efficient food system that reduces food loss and food waste. The afternoon breakout sessions (1. Circular Economy & The Land, 2. Circular Economy & Technology, 3. Circular Economy & The City) were used to give all the participants the chance to discuss in more detail the various aspects of circular economy for food security and to answer the “how” and “what” questions and showcase circular solutions fit for the Ethiopian context. Finally, NEED nutritional products and services PLC joined hands with AgriProFocus Ethiopia and invited mass media for a press conference during the World Food Day and broadcast a summary of the World Food Day in their TV Show called “Sewegna” on Fana Broadcasting Corporate (FBC) to inform the general public about the need to transform the whole food system in order to sustainably improve food & nutrition security for Ethiopia’s 100+ million citizens.
AgriProFocus is an international multi-stakeholder network within the AgroFood Sector. Although AgriProFocus is funded by The Netherlands Ministry of Foreign Affairs, it has AgriProFocus country networks in 10 African and 2 Asian countries, and worldwide 2500+ online platform members. In Ethiopia, AgriProFocus has over 2500 online platform members that are a mix of public sector (including knowledge institutions), private sector, and civil society actors that are all active in making the AgroFood sector more inclusive and sustainable in order to achieve food and nutrition security for all. AgriProFocus in Ethiopia uses the power of its network to create linkages, joint learning and influence higher level government through collective impact in areas related to urban agriculture, agroecology, horticulture and dairy sector development, and the inclusion and promotion of youth and women in agriculture. Feel free to become a member of the AgriProFocus network in Ethiopia to stay up to date about our activities and freely promote yourself, your products and services.”

ton.haverkort@gmail.com

Bemnet Alefew

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Bemnet Alefew

Name: Bemnet Alefew

Education: BA Degree

Company name: Oasis Printing and Advertising

Title: Founder

Founded in: 2017

What it does: Printing, website designing and advertising services

HQ: Gerji

Number of employees: 16

Startup Capital: 200,000 birr

Current capital: 1.2 million Birr

Reasons for starting the business: Providing good service

Biggest perk of ownership: Seeing the satisfaction of my customers

Biggest strength: I’m very sociable

Biggest challenging: Introducing new ideas

Plan: Reaching out to more people

First career: Web Designing and Graphic design

Most interested in meeting: Prime Minister Abiy Ahmed

Most admired person: My mom

Stress reducer: pending time with loved ones

Favorite past time: Listening to music, playing video games

Favorite destination: The Bahamas

Favorite automobile: Audi Q7, V8

The failure of Laissez Faire capitalism

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The collapse of the Soviet Union in 1991 and the rise of the high speed Internet have proved to be the economic and political undoing of the West. “The End Of History” caused socialist India and communist China to join the winning side and to open their economies and underutilized labor forces to Western capital and technology. Pushed by Wall Street and large retailers, such as Wal-Mart, American corporations began offshoring the production of goods and services for their domestic markets. Americans ceased to be employed in the manufacture of goods that they consume as corporate executives maximized shareholder earnings and their performance bonuses by substituting cheaper foreign labor for American labor.
Many American professional occupations, such as Software Engineering and Information Technology, also declined as corporations moved this work abroad and brought in foreigners at lower renumeration for many of the jobs that remained domestically. Design and Research jobs followed manufacturing abroad, and employment in middle class professional occupations ceased to grow. By taking the lead in offshoring production for domestic markets, United States corporations force the same practice on Europe. The demise of “First World” employment and of “Third World” agricultural communities, which are supplanted by large scale monoculture, is known as Globalism.
As World Bank and IMF study reports revealed, for most Americans income has stagnated and declined for the past two decades. Much of what Americans lost in wages and salaries as their jobs were moved offshore came back to shareholders and executives in the form of capital gains and performance bonuses from the higher profits that flowed from lower foreign labor costs. The distribution of income worsened dramatically with the mega-rich capturing the gains, while the middle class ladders of upward mobility were dismantled. University graduates unable to find employment returned to live with their parents.
American economic analysts stressed that the absence of growth in real consumer incomes resulted in the United States Federal Reserve expanding credit in order to keep consumer demand growing. The growth of consumer debt was substituted for the missing growth in consumer income. The United States Federal Reserve’s policy of extremely low interest rates fueled a real estate boom. Housing prices rose dramatically, permitting homeowners to monetize the rising equity in their homes by refinancing their mortgages.
According to American economic analysts, consumers kept the economy alive by assuming larger mortgages and spending the equity in their homes and by accumulating large credit card balances. The explosion of debt was securitized, given fraudulent investment grade ratings, and sold to unsuspecting investors at home and abroad.
Wall Street Journal reported that financial deregulation, which began in the years of President Bill Clinton and leaped forward in the regime of President George W. Bush, unleashed greed and debt leverage. Brooksley Born, head of the Federal Commodity Futures Trading Commission, was prevented from regulating over-the-counter derivatives by the Chairman of the Federal Reserve, the Secretary of the Treasury, and the Chairman of the Securities and Exchange Commission. The financial stability of the world was sacrificed to the ideology of these three stooges that “markets are self-regulating.” Insurance companies sold credit default swaps against junk financial instruments without establishing reserves, and financial institutions leveraged every dollar of equity with 30 dollars of debt.
When the bubble burst, the former bankers running the United States Treasury provided massive bailouts at taxpayer expense for the irresponsible gambles made by banks that they formerly headed. The Federal Reserve joined the rescue operation. An audit of the Federal Reserve released in July, 2011, revealed that the Federal Reserve had provided 16 trillion dollar – a sum larger than United States GDP or the United States public debt – in secret loans to bail out American and foreign banks, while doing nothing to aid the millions of American families being foreclosed out of their homes. Political accountability disappeared as all public assistance was directed to the mega-rich, whose greed had produced the financial crisis.
The financial crisis and plight of the banksters took center stage and prevented recognition that the crisis sprang not only from the financial deregulation but also from the expansion of debt that was used to substitute for the lack of growth in consumer income. As more and more jobs were offshored, Americans were deprived of incomes from employment. To maintain their consumption, Americans went deeper into debt.
The fact that millions of jobs have been moved offshore is the reason why the most expansionary monetary and fiscal policies in the United States history have had no success in reducing the unemployment rate. In post-World War II 20th century recessions, laid-off workers were called back to work as expansionary monetary and fiscal policies stimulated consumer demand. However, 21st century unemployment is different. The jobs have been moved abroad and no longer exist. Therefore, workers cannot be called back to factories and to professional service jobs that have been moved abroad.
Economists have failed to recognize the threat that jobs offshoring poses to economies and to economic theory itself, because economists confuse offshoring with free trade, which they believe is mutually beneficial. Dr. John Dalton of Leeds University stated that offshoring is the antithesis of free trade and that the doctrine of free trade itself is found to be incorrect by the latest work in trade theory. Indeed, as we reach toward a new economics, cherished assumptions and comforting theoretical conclusions will be shown to be erroneous.

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