Yonas Biru, PhD
Prime Minister Abiy is building a $15 Billion Palace, while negotiating a $67 Billion international aid package. This article is as much about Ethiopia as the epitome of a welfare dependent nation as it is about a failed international welfare system.
The international welfare system is bankrolled primarily by the US and the European Union (EU) taxpayers. Its beneficiaries can be divided into two broad groups: where international aid is seen as an enabling support (mostly in Asia and South America) and where it is regarded as a welfare system (primarily in Africa).
Ethiopia had its first World Bank project in 1950. Nearly three-quarter of a century later, it is the number one US aid recipient. It is also amongst the top five Official Development Assistance recipients through multilateral development agencies such as the International Monetary Fund (IMF) and World Bank (WB).
Unfortunately, the nation has become the punctuation mark of William Easterly’s acclaimed book “The White Man’s Burden.” It is also an affirmation of the book’s subtitle: “Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.”
The Ethiopian government and its intellectuals at home and abroad are a screwed-up bunch. On one hand they hold a #NoMore banner. On the other hand, they panhandle for ምጽዋት with a sense of entitlement, while crapping the crap about being the pride, እሴት ቱርፋት and ገለመሌ of the black race. Truth be told, we have been the shame of Africa for many twilights. Our inability, as a society, to feel ashamed and humiliated has made it difficult for us to realize we have been in decline past what other nations consider rock bottom.
Currently, Ethiopia is in various talks with the International Monetary Fund (IMF), World Bank (WB), European Union (EU) and Paris Club of sovereign creditors of which the US is a part. The talks involve a $67.2 billion aid package. This includes $28.8 billion in grants for the reconstruction of the war-torn country. Another big item is the restructuring of $30 billion international debt obligations to reduce the nation’s financial burdens, including partial debt forgiveness. A humanitarian food aid ($3.5 billion), and concessional loans from the WB ($2.9 billion) and IMF ($2 billion) round out the talks.
In the meantime, Prime Minister Abiy Ahmed is building a palace with an opulent environ at the cost of $15.3 billion (14 percent of the nation/s GDP). Le Monde described the project as “pharaonic taken by delusions of grandeur” glamoured up with a waterfall, three artificial lakes, a zoo, and luxury villas. This signifies our Prime Minister’s inability to feel ashamed. He cannot be blamed he is who we are.
The project is being undertaken without the constitutionally sanctioned oversight authority of the Parliament. The Prime Minister did not mince words telling the Council of Peoples’ Representative they will have no say. No one knows the decision-making process. The contract is given to government-affiliated Chinese companies at the Prime Ministers discretion. We have no way of knowing if there is kick back much less the magnitude of it.
Sadly, this is not the only vanity project under construction. The governor of the Oromo regional state, the nation’s second most powerful political figure, is building the largest city in Ethiopia in his region. When completed it will dwarf the PM’s palace and its ecosystem in terms of magnitude and cost.
Yet another project involves the construction of a state house for the Oromo governor who recently broke ground for a mansion whose cost is kept secret but expected to top $300 million, including the values of business and residential structures the government destroyed to clear space for the state house. Ironically, this came on the heels of an agreement between the WB and the Ethiopian government for a $745 million grant.
No one knows who pays for these vanity projects. Regarding the Palace, the Prime Minister told the Parliament that he will not use public funds. Instead, he said he will raise private funds from domestic and foreign sources. That proved to be false.
As a matter of practice such a huge construction project does not commence before the necessary funds both in local currency and foreign exchange (forex) are secured. To date, neither the amount nor the sources of funds are revealed. He is already using public resources to prepare the foundational work such as building roads and leveling and grading the land.
The paramount question is: How will the country meet the forex required for the project? As IMF report notes, “Aid, being fungible, may ultimately help support unproductive and wasteful government expenditures.” The WB research findings concur.
What is also worrisome is that the Prime Minister’s pet projects are given priority in forex allocations. Consequently, critical public projects are neglected and pushed into the black market, paying as much as 100 percent premium over the official exchange rate. A Harvard study found: The chronic forex shortage was harming manufacturing firms who need imported inputs.
Turning from bad to worse, inflation caused by “loose fiscal policy” coupled with successive money printing foray first to finance the war and now to finance the massive vanity projects is wrecking the economy. There are also severe budget shortages, forcing federal and state governments to cut or scale down economic and social programs. The IMF estimates the budget gap to be “at least $6 billion until 2026.”
The cumulative impact of the civil war, misplaced priorities, bad economic policies is a 25.9% drop in the nation’s GDP.
The social implications are no less detrimental than the economic ones. As the Prime Minister and the Oromo governor go on vanity binge for palaces and mansions, 22 million Ethiopians need international food aid of which 4.6 million are internally displaced living in makeshift camps. More than 2.3 million children are out of school, as they wait for the reconstruction of schools destroyed by the war. Furthermore, three million people have slipped below the absolute poverty line and “women and girls [in the Oromo region] walk up to 10 hours to fetch water.”
The Prime Minister and the Oromo governor show psychopathic lack of empathy and remorse. They govern as though the people’s suffering is the worry of the international community.
Can the IMF and WB turn a blind eye as 120 million people sink into an economic and social abyss? Even more worrisome is that there are ominous threats of state collapse headlined in international media pages. Further, international agencies are raising red flag alert for genocide. The world cannot ignore alarm bells for genocide, especially when high-level Ethiopian government officials echo the alarm, stating: “Today’s Ethiopia is at a juncture similar to that of Rwanda when it found itself at the dawn of genocide.”
There is a growing #SanctionEthiopianGov diaspora-led campaign, demanding fiduciary, and moral accountability. First, it poses a valid question to the IMF and WB. Why are the US and EU taxpayers burdened with a $67 billion aid package for a country that is building a palace at $15.4 billion? Second, what assurance do the IMF and WB have that the fungibility problem will not enable the Prime Minister to carry out his threats against his own people?