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BAD SPIRIT

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Now 86, US citizen Berhane Gebremedhin was once the owner of the National Alcohol and Liquor Factory (NALF) in 1969. However when the Derg came to power they took over the company. When the regime was defeated, the father of seven returned to Ethiopia. This started another 20 year chapter in his life in which he has been struggling to get the factory back even as it is in the process of being auctioned off.

Capital: The first owner of the company was a Greek native, Elias Passions, how did you possess the National Alcohol?

Berhane G.Medhin: I bought the company from him. Then I invested a lot.  The factory was named after him, Elias Papassinos. I named the company National and established the Sebeta and Akaki factories.

Capital: How did you define the performance of your company back in those days and now?

Berhane G.Medhin: We were the only Pure Alcohol suppliers for three companies, Balezaf, Mola-Maru, and Merkebgna. The market was booming and also was expanding. I also started to construct a winery around Akaki Kaliti area to diversify the supply. We had distribution centers in Dire-Dawa, Adama, and Shashemene. But after the government took the company it suffered and this was aggravated for the past 20 years. In 2008 the crisis was severed and the Ministry of Public Enterprise (MoPE) State Minister said the company couldn’t even cover the capital city’s demand. The daily demand is 200,000 bottles and they said they would do an expansion project which would not add more than 45,000 bottles a year. If you see the market share of the NALF now it is exceeded by other companies especially with Balezaf which controls the market more than 60%.

Capital: After you went back to Ethiopia from the US what did you do you to retrieve the company?

Berhane G.Medhin: I returned to Ethiopia after 16 years in the US. After the current government came there were proclamations and other legal frameworks which regulated the way to the return confiscated properties. After the Ethiopian Privatization Agency (EPA) did a survey on the company it gave two options. One was for me to pay the 26.4 million birr to the government and take back my company or for me to get compensation payment. I took the first offer and responded to the EPA, later renamed MoPE that I would pay the money and take over the NALF. Until the final week of my stay in Addis Ababa about 28,000 Eritreans were deported. Due to the Ethio- Eretria border conflict, many were taken away as a threat to the national security.

photo: Anteneh Aklilu
photo: Anteneh Aklilu

There were only three days left for the handing over of the company when I and my family were taken away. The Board’s decision was not officially canceled then but pending.

Capital: When you started to recover again how was your being an Eritrean handled? You were deported by the government being considered as a national threat.

Berhane G. Medhin: The Ministry of Foreign Affairs (MoFA) wrote a letter to the Ministry of Public Enterprise in 2009. The letter referred to the Council of Ministers Regulation for the legality of its approval of my entry into the country. The letter in a clear manner stated that I was not a threat to the national security and that it would not oppose it if my questions were held legally. So the issues of citizenship were never an issue during the entire process.

Capital: Why could the MoPE board execute EPA’s decision?

Berhane G.Medhin: The board says that the government invested a lot of money and returning back the company will be uneconomical. It is not a legitimate argument as I was primarily ready to pay what the government has invested. I am sure the entire sabotage is created by corrupted individuals in the MoPE. Also, the government returns back the winery for me. It is clear that there is a double standard and individuals are interested to have my company at their hands.

Capital: The US government intervened in the process and after a few months congressman Dana Rohrabacher wrote a letter to Prime Minister Abiy Ahmed seeking his intervention in the process. Walk us through the application.

Berhane G.Medhin: Not only the latest letter but the US government even advising its investors not to invest In Ethiopia because the government was denying me my property. According to the letter written by Sufian Ahmed to the industry minister, the US government officials raised the NALF issue multiple times. He ordered the Ministry to look for a legal way to resolve the issue as it is affecting the FDI. So the US government was helping me to get justice.

Capital: Do you believe the Prime Minister will solve the issue?

Berhane G.Medhin: First of all I am happy that I can see such a leader of Ethiopia while I am alive. I am satisfied with his performance. I thank God for giving us such a wise leader. I know he is busy with more critical problems now and he might not get time to see the application soon. But I believe justice will be served.

Capital: You and the US congressman in his letter to the Prime Minter mentioned that the problem was created by corrupt government officials in the MoPE. As the current Minister, Ambassador Teshome Toga, was appointed by him did you approach him and try to explain the matter?

Berhane G.Medhin: I went to his office when I heard the news. But he refered me back to the legal department director to explain my complaint as he was new to the post. I told the legal advisor, which already knows the case. But after that moment the legal director didn’t respond to my calls or bring me back any answers from the Minister. When I went back to Teshome’s office later he rejected my applications to an appointment which made me frustrated.

Capital: What was the experience of other companies whose cases were being handled like yours? Did they get their company back?

Berhane G.Medhin: There were other five companies which had similar cases to me. The government returned back all of them except mine.

Capital: You managed to cause the injunction of four procurements announced to sell NALF. However now the latest bid has received a multibillion birr offer. Do you think the time has come to end this controversy?

Berhane G.Medhin: The companies which are trying to buy a NALF while knowing the risks are risking their investment. If the justice in the country failed to keep my rights I will go to the next stage which is to the international bodies. I have all the documents; all I need is a neutral body who can read them. The companies are buying a liability, not a fortune. I am seeking justice politely and wasted many decades in the injustice. If the government returns the company I will work happily.

photo: Anteneh Aklilu
photo: Anteneh Aklilu

Capital: What were your best memories when NALF was yours?

Berhane G.Medhin: Our Company got a reward, a diploma, from Emperor Haileselassie at a symposium at Asmera for being best company next to Meloti Beer Company. I want to take my company back and make it successful again. I forgot many things. The Derg regime took all of my properties and I couldn’t retrieve them back again. Now I live with my children’s support. I rent an apartment in Addis Ababa and I thank God for all I have and don’t complain. But the issue of my company is like no other. I spent two decades of my life fighting for it and I will not give up, I am trusting God will give me justice.

 

It is big. It is real. And it’s coming to eat Ethiopia’s economy

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What a year 2010 has been for Ethiopia. I’ve never seen anything like it! With twists and turns and lots of surprises… My guess is the road to a new Ethiopia has already commenced.
Happy New Year to all of you peace lovers!!
Debt is our subject today.
Four or five years back I argued that the country has big debts that will eventually become harder and harder to pay. The big wigs then argued that borrowing is no problem when dollars are cheap, that low interest rates mean the cost of servicing that debt is low.
The government is smart, they said, it will plant canes and produce sugar to repay its debt and bring prosperity to the nation.
Results to date? A big fat zero!
Debt worsens of course when interest rates go up and the dollar strengthens, and that’s what happened in the past three years. The more the dollar rose, the more Ethiopia’s Birr fell. In such cases dollar-denominated debt become too expensive to repay or service as the dollar rises. Before long default becomes the only viable option.
Obviously we have a major crisis at our doorstep!
Speaking of crisis…
Last week I read an article that said the PM Office ordered government ministries to stop driving their V8 Toyotas, effective immediately. I applaud this decision to purge the rottenness out of the system. But then again, I hope the PM will not let these cars sit for more than 3 months in parking lots. They will start rotting!
Careful not to repel one blunder by another! Beside wouldn’t be best to establish an independent Government Waste Commission to cut wasteful spending and duplication across the government system?
Anyway, back to our subject:  How bad is Ethiopia’s debt problem?
The answer is: Serious!
By the way those who argue Ethiopia’s debt to GDP is under 34%, and therefore little to worry about, are dreaming! Small or large, debt to GDP (Debt being foreign in our case) for countries like Ethiopia that owe far more than they can pay things can get really sh*tty. It can lead to devaluation of domestic currency. After all, we’ve all been there, right? Mr. Government has tried to put the brakes twice in the last eight years – with the devaluation of 2017 and of 2010.
Today, we’re a much poorer nation than we thought we were ten years ago. We collectively owe about fifty times or so as much as we did 30 years ago.
How did we get there?
The basic plot was simple: the government spent, wasted and defrauded too much money it didn’t have.
Last week an interesting comment came from overseas.
It argues the government is wasting its time worrying about its debt… that it should forget about it…not bother making a fuss about it. The World Bank will eventually show up to cancel it all.
I suspect the writer is right about one thing: Many governments don’t care about debts. Our government just agreed to add USD 1 billion of debt from the World Bank, bringing the total debt to close to $30 billion. By the way the USD 1 billion did not come free, it came with interest (of course) and World Bank conditionalities.
You’d expect there would be some growl and cry from citizens at least from those over rated PhDs. Nothing! No outrage!
In a way our commentator has judged the political climate correctly. The public and its leaders are of one mind – not bothered.
What our reader is surely wrong about, though, is that the resulting debt will not add to wealth; it subtracts from it. As far as we know, no debt has ever disappeared, vanished, or left home leaving no forwarding address. As my next door plumber says, debt and gravity can be ignored temporarily but will never go away.
Yes, dear readers, debt does not go away. It needs to be fed. If you lend a Dollar, you still have the Dollar as a credit. The other party has it as a debt. You may ignore your debt, but at a cost; notably, by tossing out your credit away. Debt is never a fiction or a fantasy. It’s real. It is what you were counting on to build your infrastructure…your investment on agriculture and manufacturing…or hospitals. Ignore it, so goes away your infrastructure, farms and industries, or the hospitals.
And so are the jobs that depend on these things…and the incomes that depend on those jobs…and the spending that depend on those incomes. What makes this especially lethal is that most people have no idea it will ultimately come to haunt them.
What to do?
If we are serious about tackling our debt and strengthening our economy here are some short term ideas to consider:
First agree on how to put in place a social contract for unifying Ethiopia.
Cut taxes and reduce government spending by some 20% across the board (excepting education and health) over the next four years.
Eliminate all excessive regulations and introduce targeted incentives to create new jobs.
Speed up privatization of commercial enterprises that provide no essential services to the public and have no perceived security or strategic importance.
Contribute assets to local businesses entering a joint venture agreement with foreign concerns.
Relax restrictions on non-agricultural trade finance, including ICT, artistic endeavors, education, food processing, health services, residential construction, and public transportation;.
Reinforce the right of private land ownership.
Encourage new models of initiatives, such as social entrepreneurship.
Move towards the elimination the state’s monopoly on land ownership, formation of a market for land, as well as the privatization and effective redistribution of agricultural land.
Pursue aggressively foreign investment interest from China (where investment capital and commitment remains strong).
Embark on real fight against corruption.
Not one of these suggestions requires a loan to implement!

IMPROVING ON HDI

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After the demise of the bipolar world, certain individuals (following the lead of critical scholarship) working for intergovernmental institutions started to question some of the establishment’s discourses. Amongst these dialogues, the GDP (Gross Domestic Product) index was one. Critiques surmised, this highly influential index was an outdated contraption that had to be changed or at the least, completely overhauled. The idea of GDP was developed after WWI when manufacturing was considered the preeminent indicator of development. In those bygone days, industrialization signified wealth and social progress (of a country). Consequently, the GDP index’s was highly biased towards tradable material production!
GDP excluded, all household works and chores, including the critical task of upbringing future generations! Many other non-tradable activities of enlightened humanity also didn’t make it to the world of GDP! At the same time, useless and destructive rituals were easily incorporated in it. For example, if we dig a hole (say for months) and then reverse the whole process by filling the same excavated soil back into the dug hole, our revered GDP measures and counts this lunatic activity as productive ‘work’! It is such obvious inadequacies that led critics to undermine the usefulness of the index, particularly when dealing with wholesome human development. Mahbub Ul Haq of the UNDP insisted on implementing a new index to address the shortcomings of the GDP. Obviously, measuring only cranked out stuff and connoting it with general human development was a bit of a stretch to many a thinker.
Dominant interests of the modern world system still favor the GDP, as this index bluntly favors capital, which continues to undermines efforts that try to implement genuinely sustainable economic projects the world over. For instance, the production of arsenals used for the purpose of killing human beings, like WMD, etc., are very much incorporated in the GDP, while life nourishing activities don’t make it to the calculus. What a perverted index! Finally HDI (Human Development Index) came to the fore, without displacing the establishment’s favored index of the GDP. The HDI was recognized as an alternative measurement of ‘development’ in 1990. Today HDI itself is encountering serious conceptual difficulties. As the planet’s ecosystem is stretched to the limits, the widely shared assumption that there will be enough resource to go around, thereby raising the HDI for all and sundry is becoming increasingly unsound, to say the least.
If truth be told, there isn’t much resources left on our planet to indulge in wasteful practices. For example, to have a lifestyle of an average American (for all humanity) will require six to seven planet earths! The rational behind the HDI was the ‘wretched of the earth’ could improve their lot by consuming more: mostly by way of increasing their reach to health services, education, employment, etc. etc.! Here the perceptive can recognize the fallacious assumption still operating behind the development index, i.e., HDI saliently imported the irrational notion of ‘infinite growth on a finite planet’! This stupid dogma has now come to haunt HDI. Moreover, just because people have a high HDI ratio doesn’t mean they are actually content, let alone happy.
Other indices are being developed to address these and other problematic issues that are confronting collective humanity. The World Happiness Report is one. This index ranks countries on the basis of pooled results, hardly a scientific approach. Even here, the implied emphasis on increased and hence unsustainable consumption is still recognizable. If truth be told, what the world urgently needs is a solid sustainability index. See Hickel’s article next column and Boik’s on page 41. All countries need to agree on a realistic methodology that will dynamically measure sustainability. Trying to appease entrenched interests and their destructive model of development is not going to be a tenable proposition. Unless humanity collectively and sincerely addresses issues that are detrimental to life and life support systems, its sojourn on the blue planet will be very brief. “Idolatrous respect for GDP, which measures advertising and jails, but does not capture the beauty of our poetry or the strength of our marriages is unhealthy”. Robert Kennedy (1968). Good Day!

The 33th Extra-ordinary session

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The IGAD Heads of State and Government held its 33th Extra-ordinary session at the UNECA in Addis Ababa on Wednesday, September 12.
During the session South Sudan’s President Salva Kiir signed a peace deal with the main rebel leader Riek Machar, formally ending a five-year war that has killed tens of thousands.
The deal mediated by Sudan and signed in Addis Ababa, reinstated Machar in his former role as vice president and comes two weeks after a peace deal was officially agreed upon between the government and rebel groups.
“The eyes of the world are upon us as the South Sudan leaders commit to press for reconciliation and lasting peace in their country,” Prime Minister Abiy Ahmed said ahead of the signing.
Prime Minister Abiy who is the Chairperson of IGAD also said it had been convened after Ethiopia and Eritrea, Eritrea and Djibouti, and Sudan and Eritrea had been reconciled and started the processes of normalization and rapprochement.
The IGAD Heads of State and Government also restored Eritrea’s IGAD membership that was suspended since 2007.

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