The concept of a developmental state by itself has no predefined rules and procedures that can guide leaders in making decisions about a country’s economic future. Even so the EPRDF by the blind arrogance of its leaders has decided that a developmental state is the best solution to transform Ethiopia to a middle income country, not because this option was proposed by the country’s respected economists but because its deceased leader said so.
The sad truth is that even when the proposer and sole executioner of this theory Meles was alive, the idea of a developmental state is a challenging proposal to be implemented in Ethiopia, but in his absence the current leaders have decided without completely understanding the concept of a developmental state and how it can be derived to best fit Ethiopia’s situation to follow through with this potentially lethal ideology which is rapidly squeezing the country and its citizens to absolute vacuum.
Ethiopia’s economy is in no position to support a government that sucks all the capital it can from the private sector and borrow more from the national bank in order to fund its so called mega projects that supposedly will transform the it to a middle income country.
First of all, the private sector should be encouraged to support the country’s economy not by imposing excessive taxes that are forcing most to shut down and leave, but by minimizing their taxes that will in turn increase their capital and lead them to invest even further in the country. This is how the private sector should be leading the country’s economy from an agricultural dependence to the industry based economy. Meanwhile the government is doing the exact opposite by collecting the major part of the profits generated by the private sector to invest it in what it believes to be right. It is not up to the government to decide how the country’s economy should behave as long as it claims to be a free market economy.
Secondly, when the government borrows money from the national bank it is not actually borrowing money that exists, rather forcing the bank to print out new money that should not exist. This will substantially decrease the value of money in the market or in other words, the buying power of the country’s currency will decrease. Therefore the items that one could buy with 1 birr today will maybe cost 5birr tomorrow. This is what the economists describe as inflation. And it is more than evident that our country Ethiopia is drowning in the ocean of inflation faster than the Titanic with inflation reaching up to 45% at times. In all this chaos the poor citizens of the country who are mostly dependent on a fixed income are suffering the hardest. They are not able to afford the ever increasing price of living and so are forced to lose their homes, skip meals, stop their children’s education and so on.
Although the government is undertaking major projects that will play a pivotal role in the country’s development, the way this projects are being carried out is essentially wrong because the private sector that this infrastructure is being built for, is rapidly being exploited of its profits, hence discouraged to further invest in the country. Therefore upon completion of this mega projects Ethiopia will have unlimited supply of electricity, long stretching roads, and other attractive infrastructures along with a depleted private sector and an inflation beyond control, immersing or country in an ocean of problems that I fear will prove even harder to overcome.