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Beyond Mamo Mihretu’s Appointment as Governor of the National Bank of Ethiopia

January 24, 2023

Yonas Biru, PhD


Two days ago, I wrote an article objecting Mamo Mihretu’s appointment as the governor of the Central Bank of Ethiopia (CBE) under the title “Why the Parliament Must Reject Mamo Mihretu’s Appointment as the Governor of the CBE.” I have since learned that his appointment is not subject to confirmation by the parliament. Evidently, it is the Prime Minister’s prerogative to appoint anyone at his discretion.


This follow-up is triggered by a spirited cacophonic mix of dust and gas that critics of my article raised in the twitter and other social media stratosphere. The purpose of this follow up is to shade more light on where my concern emanates from. It is also to provide some pointers on the way forward.


As my previous article noted, Mamo has an impressive background. By any standard he is an accomplished professional. In the interest of full disclosure, I had a relatively close contact with him by phone and email in 2019 and 2020. My impression is that he is amongst the most promising leaders of the next generation.


My concerns were three – all related to the PM’s modus operandi in appointing senior officials in his administration. First, Mamo is in the close circle of the PM’s management team. He is a member of the Parliament, representing the governing party. The governor of the central bank should be independent. This is critical for the wellbeing of the economy.


Second, I believe it is unfair to Mamo to be appointed in such a position when his service is needed in other equally critical positions that best fit his educational and experience pedigrees. Best fit needs to be the primary appointment criteria, not “he is very smart and a quick learn” and therefore he will do fine and maybe even perform phenomenally. Fine is not good enough and “maybe even phenomenally” is not a sure bet when he can be better situated to do a phenomenal job in his area of expertise.


Third, less than a year ago, Mamo was appointed to serve as the head of the nation’s sovereign wealth fund. This was a humongous new institution for the nation and Mamo was relatively new to the area. He and his team were going through a steep learning curve to build such an institution from the ground up. It made absolutely no sense to remove him at the institution’s early stage of formation, considering his educational and professional pedigrees do not make him a best fit for the CBE position that the PM tapped him for.


Now, since he is the governor and the decision is outside of the purview and oversight of the Parliament, I can only hope the best for him. I hope that he will see the wisdom in establishing an


advisory board, consisting of subject matter experts in macroeconomics, banking, and finance. The following people fit the bill for such a high-level advisory panel.


  • Lemma Wolde Senbet– The William E. Mayer Chair Professor of Finance at the University of Maryland (diaspora).


  • Alemayehu Geda– Research Professor at Addis Abeba University; University of London, SOAS (UK) with expertise in macroeconomics and international economics (local).
  • Abraham Mulugetta– Charles A. Dana Professor of Finance and International Business at Ithaca College (diaspora).
  • Abu Girma Moges Associate Professor of Economics at University of Tsukuba. University of TsukubaUniversity of Tsukuba, Japan (diaspora).
  • Tamrat Gashaw– Lecturer at Columbia University, where he teaches financial economics. His research focuses on international trade and finance, monetary economics, and applied econometrics (diaspora).


  • Menilik Geremew– Assistant Professor of Money & Banking at Kalamazoo College and a Visiting Scholar at the Federal Reserve Bank of Chicago (diaspora).
  • Dawit Senbet– Professor of Economics at University of Northern Colorado. His area of expertise are Macro and Monetary Economics (diaspora).
  • Helaway Tadesse– Director of Research and Analytics, Cepheus Growth Capital Partners (local).



I have not consulted any of these experts if they have time and/or interest to serve in an advisory capacity. I am naming them to show the kind of expertise the country can benefit from.


Beyond Mamos Appointment


I believe it is wrong to look at Mamo’s appointment in isolation. His ability as individual and his impressive educational and professional pedigree will undermine the legitimate case for concern in his appointment. The purpose of my earlier article was not that.

The Ethiopian economy is in shambles and the time needs a concerted effort of professionals. See my article titled “The Accidental Rise and Foreseeable Fall of Abiy Ahmed in the World of Two Shenes.” My bleak overview of the economy in the article was not too far from what the immediate past governor of CBE reported to the national parliament, as published in the Ethiopian Insider.


የብሔራዊ ባንክ ገዢው በሪፖርታቸውም ሆነ በማብራሪያቸው፤ “በኢትዮጵያ ኢኮኖሚ ላይ ጫና እያሳደሩ” ስላሉ ጉዳዮች አጽንኦት ሰጥተው ሲናገሩ ተደምጠዋል። ኢትዮጵያ እየከፈለች የምትገኘው የውጭ ዕዳ ስለመጨመሩ፣ የሀገሪቱ የንግድ ሚዛን (trade balance) በከፍተኛ ሁኔታ እየሰፋ ስለመምጣቱ፣ ከዚህ ቀደም በወጪ ንግድ ጥሩ አፈጻጸም ይታይባቸው የነበሩት እንደ ወርቅ አይነት ምርቶች በ“ከፍተኛ መጠን” ስለ መቀነሳቸው ለፓርላማ አባላቱ ተናግረዋል። የኢትዮጵያ መንግስት የዋጋ ግሽበትን ወደ ነጠላ አሃዝ የማውረድ ዕቅድ ቢይዝም፤ እስከሚቀጥለው ሰኔ ድረስ ባለው ስድስት ወራት ጊዜ ውስጥ ግን “ይህን ማድረግ ይቻላል” የሚል እምነት እንደሌላቸውም በወቅቱ አስታውቀዋል።


ይህ በመንግስት ኃላፊዎች ዘንድ እምብዛም ያልተለመደው ዕቅድ እና ነባራዊ ሁኔታን በሀቀኝነት የማነጻጸር አካሄድ፤ በዶ/ር ይናገር ሌላ ገለጻ ወቅትም በጉልህ ተስተውሎ ነበር። የብሔራዊ ባንክ ገዢው “በሀገር ውስጥ እና በውጭ በተፈጠሩት አንዳንድ ሁኔታዎች፤ በእኛም በኩል፣ በገንዘብ ሚኒስቴር እና በእኛ፣ ጥብቅ የሆነ የfisical እና የmonetary ፖሊሲ መከተል አዳጋች ሆኖብናል። የሀገሪቱ ነባራዊ ሁኔታ ያንን ማድረግ የሚያስችል ሆኖ አላገኘነውም። ስለዚህ ወደፊት ምን ማድረግ እንዳለብን ትኩረት ሰጥተን እየተነጋገርን ነው ያለነው” ሲሉ በወቅቱ ለቋሚ ኮሚቴ አባላቱ ተናግረዋል።


The calamitous state of the economy is attributable to three factors: (1) the war, (2) poor economic policy and even poorer implementation plan, and (3) a significant drop in international aid.

There are many reasons behind the first two factors. First is a nearly 30 years of polarized tribal politics fueled by an elite class that has taken refuge in tribal deity and vowed not to be governed by reason or law.


There is also an utter poor management of the reform process. The bureaucracy particularly in the ministers of finance and economic commission are filled with people who lack the requisite experience and skills necessary to lead the country during a time of crisis.

The breakdown of the bureaucracy is manifested at every level. An organized corruption within the dysfunctional bureaucracy has resulted in driving the nation’s exportable products into the black market. The 59 percent drop in the nation’s gold export without any accountability in the ministry of mining screams for an emergency action and course correction.


The drop in the volume of gold export is measurable and corrective action can be taken. What is dangerous is what is not measurable that is eroding the bureaucratic culture and trust in the leadership. Such an erosion has long-term consequences of a calamitous proportion.

The crisis is further exacerbated by poor international public diplomacy that has led to a significant drop in international aid. The culture of the PM’s administration is characterized by constantly accusing everyone in sight and out of sight, rather than taking corrective actions. The PM has become a maestro of a complaint symphony. He often accuses his own appointees of blatant corruption and yet takes no accountability or corrective action. He has also made a hobby out of using the international community as the source of all evils afflicting Ethiopia and yet still relies on them to bailout his failing economy.


The Prime Minster is best advised to take responsibility for his failed policy and act to alleviate the nation’s economic and political ills. This must start with appointing the right people for the right position. For example, he cannot expect positive results after appointing an excellent water engineer as an ambassador to the most important diplomatic post and giving the top national engineering post to a lifelong ambassador. But this is exactly what he is doing. Mamo’s appointment as the governor of CBE becomes worrying only when we see it from this incomprehensible, if not outright reckless, modus operandi.


Ethiopia is a resource poor nation. The nation’s economic woes are beyond its natural resource endowments. One extractable resource that the nation has is its educated and experienced taskforce both at home and in the diaspora. Using its intellectual and expert base to its best and fullest potential is a critical first step. This requires reining in the Prime Ministers I know-it-all and can-do-it-alone governance style.


The second most critical step is to mobilize international resources. There are three scenarios for this, considering Ethiopia’s strategic importance in the world’s geo-political landscape.


One scenario is what we are experiencing currently. The international community is funding Ethiopia just enough to avoid economic catastrophe, holding back further aid as a leverage to influence the peace process.


The second scenario is the level of support Ethiopia enjoyed between 2018 and 2020, when the international community provided it with unprecedented level of financial aid. In December 2019, Ethiopia received a $9 billion injection of financial aid from Western donors. Four months later the US Development Finance Corporation (DFC) committed a $5 billion investment plan for Ethiopia. On top of this, between 2018 and 2020, Ethiopia received $3.13 billion in foreign aid from the US alone. During the three years period Ethiopia was the highest US aid recipient in Africa and the second in the world, next to Afghanistan.


As unprecedented as this level of aid may have been, it was not enough to pull Ethiopia out of the economic abyss it is stuck in. The most it can do is filling prevailing gaps and sustaining the economy at its level. See my article in Addis Fortune titled “Nine Billion: Generous but Woefully Inadequate.”


The third scenario is Ethiopia’s unrealized international opportunity. With the right set of strategy and policy international aid could be a low hanging fruit. International aid is guided as much by perception as it is by reality. One determining factor that donor nations use in allocating aid is the recipient nation’s absorptive capacity. The question they often ask is: Are the leaders and the nation’s bureaucratic base capable of absorbing and administering large international aid packages.


To pull itself out of the protracted underdevelopment curse and perpetual poverty, Ethiopia needs in the order of $40 billion to $50 billion influx of international investment annually both in the form of aid and foreign direct investment (FDI).


This is not an insurmountable amount, considering the nation’s strategic importance in the world’s geopolitical and geo-economic landscape. If any country in Africa can make the case for a Marshall Plan, Ethiopia would be top on the list. See “Marshall Plan for Africa – the Strategic Imperative for the West” and “US should adopt a Marshall Plan for Ethiopia.”


The question is: Has the PM won the trust and confidence of the international community? Is his senior management team up to task to absorb and manage tens of billions of dollars in the form of international aid per annum?


Given the bureaucratic dysfunction and unprecedented corruption, the answer is a resounding “NO.”


Ethiopia must follow the path of Korea, Hong Kong, Taiwan, and Singapore to use its strategic importance in geopolitical and geo-economic landscapes to spur its development. The Prime Minister still has an opportunity to act. This requires bold economic agenda and a robust geopolitical strategy that is commensurate with the nation’s geostrategic importance.


The lack of a robust geopolitical strategy and bold economic vision reflects lack of capacity in the Prime Minister’s administration. In this regard, it is hard to overstate the fact that the Prime Minister’s finance, economics, and foreign affairs teams leave much to be desired. Just to bring the point home, let us see the profiles of numerous ministers of finance from Africa.


Nigeria: When Nigeria was in financial and economic crisis, its president searched for the best Nigerian economist in the world that met two criteria: knowledge and global reputation. Global reputation was critical to win the confidence of the international community. They found Negozi Okonjo-Iweala. A Harvard PhD in economics, a high-level official at the World Bank. She is currently the Head of World Trade Organization. Before that she was a runner up for the World Bank President position.


Ghana: Ken Ofori-Atta brings to the Ministry over 30 years’ experience in Ghanaian and international financial sector. Prior to joining the government, he was an investment banker at Morgan Stanley and Salomon Brothers on Wall Street in New York. He was the first African to be honored as a Donaldson Fellow at Yale University and a John Jay Fellow at Columbia University. He holds a BA in Economics from Columbia University in New York and an MBA from the Yale School of Management. Both are international coveted US Ivy League universities.


Zimbabwe: Mthuli Ncube was chief economist and Vice President of the African Development Bank. He holds a PhD in Mathematical Finance from Cambridge University. Before joining the African Development Bank, he was dean and professor of finance at Wits Business School and then dean of the faculty of Commerce, Law and Management at the University of the Witwatersrand (Wits) as well as a lecturer in finance at the London School of Economics.


Sudan: Ibrahim Elbadawi was the Minister of Finance during the transition period. Before he assumed his post as Minister of Finance, he was Director at the Economic Policy & Research Center, the Dubai Economic Council, Lead Economist at the World Bank, and Director of the African Economic Research Consortium. He has edited 13 books and special editions of referred journal


and published about 90 articles on macroeconomics, growth, and development policy. He holds a PhD in economics from North Carolina State and Northwestern universities in the USA.


One can also look at central bank governors of other African nations. Let us take just one example


  • the current governor of the Kenyan Central Bank. Patrick Ngugi Njoroge holds a PhD in economics from Yale University. Following his PhD studies, he worked as an economist at the Kenyan Ministry of Finance. He later joined the IMF where he started as an economist and grew through the ranks to mission chief for Dominica and deputy division chief of the IMF Finance Department, and finally as an advisor to the deputy managing director of the IMF. It is with such a record he was appointed as the governor of the Central Bank.


We can also compare Ethiopia’s 30 years old Commissioner of the Ethiopian Investment Commission (EIC) with her African counter parts. She is a civil engineer with no background in investment or international relations when the PM appointed her as a commissioner. One can rattle many more examples ad infinitum.


It is difficult to avoid the conclusion that the PM has downgraded and dumbed down the bureaucracy by appointing the wrong people for the wrong positions in critical areas.


My article about Mamo’s appointment must be seen from this perspective. If he is appointed for the right position he can easily become among the best in Africa in his area of expertise. By appointing him where his skills are not best fit for the position it is not only the nation that is harmed, but also the appointee who is short-changed as a professional.


The problem is that this is not an exception, but the prevailing rule in the Prime Minister’s governance. Someone of Mamo’s caliber may still be able to rise to the occasion with time. But not every official has his caliber. Therefore, on balance the bureaucracy is in a downward trajectory. Aside from the calamitous economic situation, the nation’s disastrous record in foreign affairs is directly liked to this problem. The time to take corrective action is short. Every day that passes without taking corrective action is getting the nation closer to the D-day.


The melodious “ሸብ እረብ አለች ምድር አብይ ኢትዮጵያን ሲድር” twitter community should take a breath and try to see the big picture rather than performing የምንጃር አስክስታ and clouding the twitter stratosphere with ነጭ አቧራ and yellowish ጥቁር gas. Ethiopia does not need cheerleaders of a ሸብ እረብ genre as she progressively slips into an economic abyss and political crisis.

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