By Keffyalew Gebremedhin, The Ethiopia Observatory (TEO)
The era of industrial park projects
When Part I of this article was conceived, its intention was to subject to examination the thesis behind Ethiopia’s industrial parks projects under construction in Hawassa, Dire Dawa, Kombolcha and Addis Abeba.
This article looks into what lies behind the much-vaunted projects into which much borrowed money is being pumped and the huge debt burden the nation is saddled with. It would also try to see if at all the right conditions exist – program/project soundness and accountability – for the undertaking and if the objectives can be realized under TPLF’s controversial and repressive leadership.
To start with, if bids and pieces of information coming out of the nine-month report on the Second Growth and Transformation Plan (GTP II, 2016-2020) are used as indicators, especially in the industrial sector, they have been found shockingly trending along experiences of the failed GTP I, i.e.,missing their targets. For instance, the manufacturing sector was targeted to bring in $477 million at this point; what it brought in is only $289 million, a pathetic 61 percent.
For a moment, nonetheless, I would like to think that the regime’s imagination about these parks is spurred by the possibility of turning Ethiopia into the “next manufacturing hub“, a plank Arekbe Oqubay has been obsessed with and keeps on throwing again and again and everywhere.
Perhaps underlying that, and most fundamental, is the fact that the hearts of TPLF officials are engrossed by the huge quantities of dollars – billions of dollars, not birr – they anticipate to scoop in the coming five years on the lands they have illegally seized by force from ordinary Ethiopians and aim to rechristine as industrial parks.
Not only that. Agro-industrial parks – 400 of them in the first phase – according to The Reporter – have become the latest additions, resembling somewhat an afterthought in governmental planning and operations. Let me only hope that the TPLF regime could possibly use the industrial parks corporation for the combined policy needs, management and administration purposes for both the industrial parks and the agro-processing parks, since usually such staff and operational costs make or break projects.
Which way Ethiopia, the Chinese or Korean path?
While the TPLF has incubated such dream, persuaded by the advice of a Chinese economist Justin Yifu Lin – an advocate of state-led national economic growth – there are evidences that suggest the Chinese model after all is not suited to multi-ethnic, repressive and lawless Ethiopia under the TPLF.
Certainly, another compunction is that China is also equally authoritarian under the tight control of the Communist Party, where the 56 minority ethnic groups in that country only glaringly compare with the majority Han, making up 93 percent of China’s 1.3 billion population – excluding Hong Kong and Taiwan – and corrupt at that.
Equally noticeable has also been that both Ethiopian academics and ruling party officials often show affinity to the transformative experiences of South Korea, not that of the Chinese. The marriage then may be that the TPLF likes the Chinese for the easy loans, which the IMF, the World Bank or any other country nation is hardly willing to advance to it. Similarly, the capital market is not only unthinkable for its crushing debt burden, and also Ethiopia being a low-income country, it is unbankable due to the exorbitant costs of capital to poor countries such as Ethiopia.
We learned in September 2015 the second round a billion dollars bond request was unplugged, already after a French bank was given the go ahead. Rumor has it that there was little appetite in major international banks, the other two rating agencies – the American-owned Moody’s and Standard and Poor’s – also were not enthusiastic and, to whatever worth their discomfort, Ethiopian experts also campaigned against it.
On the other hand, of course, South Korea’s leap to its fantastic pinnacle of progress is breathtaking; indeed it is attractive for any outsider, and its appeal to Ethiopians incontestable.
Having pointed out that, Ethiopians need to be constantly reminded that South Korea improved its handling of the affairs of the nation, after overcoming the suffocating authoritarian developmental state policy of favoritism toward the big corporations to the irrelevance of small and medium level businesses, even though the policy in those days was never known to be not as harsh as Ethiopia’s under the TPLF today.
In Korea, the people used even operas to criticize the Park regime’s heavy-handedness; and yet, unlike in Ethiopia today, the leaders and the system was known to have worked for the betterment of the nation, which crowned South Korea with its advancement using the chaebol system – the womb of Korea’s manufacturing and industrialization. And yet, South Korea subdued poverty and underdevelopment mostly through the instrumentality of higher and quality education and equal opportunity employment laws.
In addition, Ethiopians need to bear in mind three things: Firstly, some form of transparency had been there in Korea from the start, which has facilitated their advancement. Secondly, as I discussed in my January 4, 2010 article: Politics hampers progress on poverty eradication, balanced growth, fairness, democracy and Justice ( Part III – under the pen-name Genet Mersha), the chaebol model of growth and development, borrowed from Japanese keirestu — a family business without capital but allied to the government — was systematically replicated in Ethiopia through the ruling party businesses, a den of corruption and favoritism, ethnic war against the nation and political shenanigan.
The similarity of preferential treatment with the chaebol, politics has proffered on the TPLF party businesses amount to large bank credits, foreign exchanges even in lean periods, information and legal support — an opportunity denied of the private sector and individual entrepreneurs. As I stated at the time, this has proved severe impediment to Ethiopia’s “progress on poverty eradication, balanced growth, fairness, democracy and justice”.
Thirdly, TPLF’s secrecy and corruption in state power has become an enormous obstacle to our country’s development; its apathy toward Ethiopian private sector has thus far forced it to sit on the fence, unable to fully involve itself in national development. The TPLF also knows it that it cannot jump as high across this high fence of distrust to reach out, because of which so many of its current undertakings such as the industrial parks and agroindustrial parks are likely not to deliver the manna that has whetted its appetite.
I agree fully that South Korea’s experience is more appealing as a path of development. Unfortunately, the TPLF’s approach even to emulation of experiences is extremely cross-eyed and selective in non-beneficial ways. It cannot also be lost on Ethiopians that Koreans are more homogenous with 99.98 percent of their population, Korean as the are by race and commonly-shared faith.
It must be emphasized that the current depth and speed of Ethiopia’s ‘industrialization drive’, as preached by the TPLF leaders, is rather emotional and unreal. This makes it extremely impractical to become a sustainable source of development for Ethiopia. Recall that Ethiopians have seen since the late 1990s that the TPLF was engrossed in its shoddy efforts to expand education. Sadly their focus was simply on numbers of school buildings and enrollment its targets, but never the quality of education.
That not having gone right, today the problem has proved to be our nation’s nightmare as it finds itself in a race to the bottom in every sense of the phrase; that is except for the TPLF that still is drunk with its own propaganda, the political side filled with bravado, and the material side packed with false numbers.
More developmental parks rolled out
Since our last discussion, I fear, the instruction from the man in the Ethiopian prime minister’s office has made it clear that “Planning ambitiously is mandatory”. Therefore, it is inevitable that everything needs to be packed up with empty numbers, for the results of which the TPLF cannot be held accountable.
Therefore, the manufacturing drive is, as hinted above, increasingly facing the same dilemma and fate just like the TPLF-induced failure of the Ethiopian education system. The problem is TPLF’s senseless zeal to enjoy attention and admiration of the outside world to extend its hand, while they are laughing behind its back, knowing how it loves to dance everyday with Miss Pretension.
We see now that, without even properly testing the possible gains and the unanticipated dangers of sterility in the already few industrial parks, for instance, such as Hawassa, Addis Ababa, Dire Dawa and Kombolcha, the regime has chosen to ride its high noon horse, merely hatching out numbers, more and more of the parks to cover all the regions; I am not sure if this reliably leads to harvesting the manna they seem to see in the sky.
Accordingly, since our last conversation in Part I of this article, not only it has now added two more industrial parks – Adama and Mekelle – as confirmed in a May 2, 2016 statement by Industrial Parks Corporation Board Chairman Arkebe Oqubay. But also it has given priority over all others, possibly because of the inclusion of Mekelle, TPLF’s home and the need to bring along all TPLFites on board.
Moreover, only last Wednesday the regime also announced plan to establish four major agro-industry parks at a cost of $1.5 billion. Of the total amount, $870 million is to be spent on infrastructural and processing plants development. The regions selected for the purpose are Amhara, Oromia, SSNNP, Afar, Somali regional states and Tigray, while in the first phase 154 hectares of land has been allotted in Amhara, Oromia, Tigray and Southern regional states.
The parallel that comes to mind about this adventurism is the TPLF opening univestities at every dingy corner, with no teachers, books, labs, running water, etc., not even provisions for salaries and allocation of resources for program implementation. This, the regime did in the case of education as a bribe to appease those that make noises about not being treated as equal citizens. The TPLF did not care whether it was right, when it squandered the nation’s resources on projects that were found dead on arrival.
In reading the 2015 report of the Auditor-General Gemetchu Dubiso to parliament, I said to myself the TPLF is being given back what it deserved. For instance, few universities observe the financial regulations of the nation.
Researchers are constantly sent to field, claiming good per diem, possibly that is as long as 30 – 40 days at a time. But the researcher may or may not go anywhere and no one cares. The per diem and/or overtime payment is internally understood among the staff and is considered compensation toward what is not covered by monthly salaries or unearmarked program costs.
For a different reason, key to realize here is that this TPLF excitement about industrialization is hardly shared by everyone in Ethiopia. The public has been informed by its experiences to distrust the TPLF regime that has been in power for the past quarter century. During these times, it has been demolishing homes and robbing their lands. The TPLF has now placed the industrial parks on lands no longer needed, after the most expensive homes and businesses the Front’s civilian and military leaders have built.
Therefore, in the eyes of the nation the industrial parks cannot be considered friends of the nation or beneficial to its citizens. People harbor ill-will toward the regime’s efforts, which can also possibly visit investors’ resources or plants at any point, as seen in the destructions in Oromia in early 2016. Still, while the regime claims to have pacified Oromia, we know that it remains a bed of insurrection, as is Gambella and South Omo Valley.
Interestingly, the speed they move in this expensive undertaking is such Arkebe indicated that$250 million contracts were initialed on May 5, 2016 with China’s Civil Engineering Works Co (CCAC) and China’s Communications Co (CCCC). This is for the installation of the Mekelle and Kombolcah parks. It is clear that no non-Chinese source seem to be willing to contribute toward the cost, because of which Ethiopia has to rely on loans from the Exim Bank of China; the investors are Chinese companies, financing advanced to them by Beijing with cheapest rates of exchange to become the main actors in Ethiopia’s economy, as elsewhere in Africa.
As far as the TPLF is concerned, their major preoccupation they have and have made known to Chinese companies, it is understood, is to speed up the work toward realization of these two parks projects, especially with the construction work and installation of electricity sources and distribution as well as communication.
The industrial parks are important for the regime, given the anticipated earnings from export of manufactured goods an annual billion dollars from a single park. Therefore, there is every reason for the cash-and-foreign-exchange-strapped regime to do everything within its means to ensure the parks’ completion within the current year.
Investors’ christmas in Ethiopia?
Mostly foreign investors are being hounded with promises of 90 percent non-collateralized credits for investors entering Hawassa Park. Arkebe also added that the TPLF regime was ready to avail non-collateralized credit facilities at a credit to equity ratio of 75/25 and 85/15 depending on the projects capital requirement and whether the investors were willing and capable of leasing in the Hawassa Industrial Park, according to The Reporter.
Interestingly, another TPLF official joined Arkebe in also promising that those investors who could not pay in cash their equity finance, “there is a room for those who can bring well-kept machineries or equipment… the proportion can go as high as 90/10…net exporters will have a reduced railway tariff exclusively reserved for manufacturers at the park once the railway route passing through is up and running.” In many respects, these promises the regime would find hard to honor.
In Ethiopia, officials at the Ministry of Industry are being accused of telling lies openly, planning ambitiously and losing their targets consistently. The minister was given last week adress down in parliament, among others, for refusing to be governed by the financial regulations of the nation. There is a news report that the minister has taken his case to the prime minister, who currently is in Germany for cosmetic surgery, possibly with public funds.
In Seoul, South Korea at the beginning of May, Arkebe Oqubay told South Korean investors they would get ten-year-tax holiday if they invested in Ethiopia now, the “next manufacturing hub.”
As part of the campaign specially tailored to South Koreans, Arkebe observed, “Now, the country [Ethiopia] has put the manufacturing as an immediate priority, which is export-oriented and similar to South Korea in the 1960s,” describing the growth plan as a “challenging yet possible” initiative, according to Yonhap News Agency.
There are several adverse factors stacked against the TPLF ambitions. Firstly, the fact of its manufacturing undertaking becoming a successful economic undertaking is an open question; its foundation is illegal and thus weak, the public not being behind it since the parks projects are founded on lands the TPLF seized from helpless citizens.
In the case of the South Koreans of the late 1960s and 1970s, their success is not based on solitary dependence of the Park regime on illegality. In fact, Gen Park made sure that Koreans received the best education at home and abroad. The opportunities were spread fairly and transparently.
Secondly, Korea made sure that every applicant to a job took examination to get a job and the results were posted for the public to peruse to show that no one – even the children of the president and ministers received any favorable treatment at all.
In the case of the TPLF, nepotism is in its blood and it even uses national laws and the institutions of the state to do preferential treatments discriminating other Ethiopians, including in education, scholarships, promotions and in landing on good jobs to ensure that its members thrived with ill-gained privileges and wealths.
Ethiopia’s misfortune is that, the TPLF robbed not only land belonging to the people, individual citizens and communities. It has also robbed the human dignity of our people with its abusiveness, deceits, and tortures in prison, especially those questioning why they are being treated as their motherland’s stepchildren.
Surely, the economic zones and the industrial parks the TPLF has now been eager to run as means toward its own prosperity have been acquired with unlawful means. And, therefore, there is public anger that would again burst from place to place, as already happened in Oromia. If not to take revenge, at least, these are likely to make sure the oppressive regime is not getting its way.
In addition to the oublic’s distrust of the regime, political problems it has been facing are also getting further compounded in Oromia, Afar, Amhara, Gambella and SNNPR, because of the TPLF’s greed and its failed developne tal state policues and fake approaches to national governance.
Moreover, there is also the problem of inadequacy of the wherewithal to run these expensive projects in the most economic and effective manner to be able to attain ambitious targets and tbe products thereron, earn the planned financial goals, especially from manufacturing and linkages between agriculture and industry as the necessar level of employment is generated.
The industrial parks projects around the country, strictly run by an all-TPLF aging fighters, masquerading with hair colors to defeat the bias of age against them, as Arkebe Oqubay, Tadesse Haile, Abay Tsehaye, etc, are doing, it apoears to me that success is not on their side, the main reaon for this being characteristically these projects not belonging to the nation to benefit all citizens.
When was the last time in history the world ever witneesed a mafia organization, known for waging a war for economic and political power, was ever credited for contributing to the development of a country and benefitting an entire nation?
While Ethiopians would more and more resent the land thievery, the regime is also prepared to coutner this with every mean of violence in its hands. Sureky, its objective is dual: botb to get rich and legitimize itself through the industrial parks. The TPLF sweetener to the nation is appealing to popular sentiments, such as ‘national economic development’.
However, the nation knows that in reality the fruits and benefits are first reaped by the fist sons and daughters. After all, TPLF’s governance is predicated on the Front being
first bebeficiary, those organizationally associated with it and then its ethnic cohorts.
This is the mother of all inequality, not the promised broad-based growth and development that treats all Ethiopians as equal beneficiaries!
Not known for being delusional so far or believer in ethnic politics, I must frankky state here that I am extremely saddened and angered by what is happening in Ethiopia today.
That is why I am certain that the industrial parks and economic zones projects are the worst rackets in Ethiopia, criminal enterprises that are being built at the expense of hundreds of thousands of citizens, both rural and urban that through the years have been arrigantly abd lawlessly pushed off from their lands and villages into the streets and eventually a life of poverty.
By way of advice to the TPLF members, let me say that they should make their peace with the Ethiopian people, knowing that this can only be done wuthin the the available time.
The clock is chiming, the train is already preparing to get into motion!
*Updated, with added materials.