Aaron Maasho AND Maggie Fick -
Local business leaders at a banquet in Ethiopia’s capital last week were hoping the new Prime Minister Abiy Ahmed would tell them he planned to loosen the state’s grip on the economy.
He took power on April 2 promising a “new political beginning”. But four people who heard his dinner speech said he signalled he would stick with policies to keep the government’s hand in sectors such as infrastructure, banking and telecoms.
Ethiopia has let foreign companies such as fashion chain H&M set up factories in a decade-long push to change the economic focus from agriculture exports, such as coffee, to manufacturing.
Other sectors are also open to investors.
Analysts say the government must free up the economy further to sustain annual growth rates it estimates averaged nearly 10 per cent in the past decade and to create jobs.
Anger over high unemployment fuelled violence over ethnic tensions that led to the resignation of Abiy’s predecessor Hailemariam Desalegn in February. But those at the speech said Abiy did not outline plans to open up new sectors, a move which could also ease a shortage of foreign exchange. He said state spending on infrastructure, which has crowded out local companies, would continue.
“Point blank, Abiy said that demanding the state be out of the business sector is not feasible,” said a hotel owner who was at the dinner.
He said Abiy was responding to the business leaders’ requests.
“The state will remain in the business sector.”
Abiy named 10 new ministers to his cabinet last Thursday to clear a path for political reform.
He told the new ministers to tackle graft and streamline bureaucracy.
But he retained the rest of Hailemariam’s 34-strong cabinet, including the finance minister.
That is consistent with remaining a “developmental state”, the term the four businessmen said Abiy used at the banquet. His office did not respond to requests from Reuters for comment on his policies.
Economists describe a “developmental state” as one where the government is deeply involved in the economy.
The philosophy was embraced by rebel-turned-statesman Meles Zenawi, who died in power in 2012.
It continued under Hailemariam. “It’s frustrating to see that for all Abiy’s intentions to bring about changes in politics, that is not translating into the economic sector,” said Tsedale Lemma, the editor of the Addis Standard news website. — Reuters
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