Will IMF Austerity Policies Lead to More Deaths in Africa? The Answer is Obvious.

African nations must have infrastructure to develop industrialized economies .
October 16, 2020

An October 12, 2020, Oxfam International press release, IMF Paves Way for New Era of Austerity Post-Covid-19, exposes the danger of African nations following the dictates of the International Monetary Fund. A major reason that African nations have fragile healthcare systems is the IMF insistence on countries servicing their yearly debt service at the cost of under funding healthcare. Prime Minister, Abiy Ahmed, emphasized the cost service service early this year: “In 2019, 64 countries, nearly half of them in sub-Saharan Africa, spent more on servicing external debt than on health. Ethiopia spends twice as much on paying off external debt as on health. We spend 47 percent of our merchandise export revenue on debt servicing…” Ethiopian PM Abiy Ahmed: Debt Cancellation for the World to Survive. Read my post: IMF Conditionalities Contribute to Shortage of Health Workers: Africa Suffers.

Africa has the highest number of people working in the informal economy. In some countries-over 80% of its people have to live hand to mouth each day to provide for their families. Millions are struggling every day just to survive, with no health and unemployment insurance safety-net. The COVID-19 pandemic has driven more Africans into poverty, and hunger is increasing across the continent. It is criminal and immoral for the IMF to to insist that nations implement austerity, when hundreds of millions are already suffering from lack of income, lack of food, and lack of healthcare. In fact, IMF policies have never helped nations develop their economies. African nations have yet to recover from the infamous IMF dictated “Structural Adjust Program” (SAPs) that destroyed their economies in the 1980s and 1990s. It may be difficult for people to hear, but the truth is; IMF’s Insistence on maintaining debt service and IMF conditionalities are killing Africans. Read my post: Africa Needs Real Economic Growth, Not IMF Accountants

In the history of modern economy, austerity measures have never led to economic growth. All honest economists, and even the IMF and World Bank, know this. The only solution is the creation of a New Bretton Woods system that must include: 1) suspension of debt service, 2) a new financial mechanism to issue credit for economic development 3) upgrading of healthcare infrastructure, 4)  massive investments in hard physical infrastructure of roads, energy, and railroads.

Excerpts from Oxfam:

“84 percent of the International Monetary Fund’s (IMF) COVID-19 loans encourage, and in some cases require, poor countries hard hit by the economic fallout from the pandemic to adopt more tough austerity measures in the aftermath of the health crisis, warned Oxfam today.

New analysis by Oxfam finds that 76 out of the 91 IMF loans negotiated with 81 countries since March 2020 – when the pandemic was declared – push for belt-tightening that could result in deep cuts to public healthcare systems and pension schemes, wage freezes and cuts for public sector workers such as doctors, nurses and teachers, and unemployment benefits, like sick pay.

“The IMF has sounded the alarm about a massive spike in inequality in the wake of the pandemic. Yet it is steering countries to pay for pandemic spending by making austerity cuts that will fuel poverty and inequality. These measures could leave millions of people without access to healthcare or income support while they search for work, and could thwart any hope of sustainable recovery. In taking this approach, the IMF is doing an injustice to its own research. Its head needs to start speaking to its hands,” said Chema Vera, Oxfam International’s Interim Executive Director…

“Nine countries including Angola and Nigeria are likely to introduce or increase the collection of value-added taxes (VAT), which apply to everyday products like food, clothing and households supplies, and fall disproportionately on poor people. Unemployment in Nigeria has surged to 27 percent, the highest in at least a decade…

“The IMF has contributed to these failures by consistently pushing a policy agenda that seeks to balance national budgets through cuts to public services, increases in taxes paid by the poorest, and moves to undermine labor rights and protections..

“The IMF’s austerity drive will hurt the countries it claims to help.” (emphasis added)

IMF Conditionalities Contribute to Shortage of Health Workers: Africa Suffers

Ethiopian PM Abiy Ahmed: Debt Cancellation for the World to Survive

IMF Paves Way for New Era of Austerity Post-Covid-19

Africa Needs Real Economic Growth, Not IMF Accountants

IMF Conditionalities Contribute to Shortage of Health Workers: Africa Suffers

A nurse in Uganda is giving a woman an injection

July 14, 2020

IMF Conditionalities Contribute to Shortage of Health Workers

Lawrence Freeman

As I have told my friends for many years, the International Monetary Fund (IMF) is incapable of helping nations grow their economies. I do not believe the IMF can point to any success story, where its policies led to improving the standard of living of the population. Their macro-monetarist ideology fails to understand the essential driver of real (not monetary) growth. Following IMF prescriptions usually results in more suffering for the victim nation.  For a more in depth analysis read my article from last year: Africa Needs Real Economic Growth, Not IMF Accountants.

The report cited by the ActionAid and Public Service International highlights the failure of the IMF:  IMF Told Countries Facing Critical Health Worker Shortages to Cut Public Sector Wages The statistics are revealing, but should not be shocking to those of us who study physical economics. Throughout its history we have seen the IMF insist on cuts to meet to macro-economic goal at the expense of the population. This report clearly pinpoints the effects of tying loans to cuts back in healthcare. Africa was suffering from an acute shortage of healthcare workers before the COVID-19 pandemic. Sub-Saharan Africa has the fewest physicians per 1,000 population and the lowest number of hospital beds per 1,000 population.

It was pointed out by Ethiopian Prime Minister, Abiy Ahmed, earlier this year, that   payments of debt service equaled or surpassed the amount of money nations spent on healthcare.  He wrote “In 2019, 64 countries, nearly half of them in sub-Saharan Africa, spent more on servicing external debt than on health. Ethiopia spends twice as much on paying off external debt as on health.

African nations, or any country for that matter, should not be subjected to this kind of treatment. Human life is real and precious. Debt is merely a financial accounting mechanism. There is no equivalence.

The COVID-19 pandemic has revealed the failure of the world globalized financial system, which has been become decoupled from the real economy. Genuine economic growth uses credit to promote human life. President Franklin Roosevelt’s Bretton Woods system, in its perverted form, came to an end on August 15, 1971. For the last fifty years, the City of London-Wall Street centered financial system has become more corrupt each decade, serving the interest of a tiny few. Now is the time to launch a New Bretton Woods, dedicated to improve the conditions of life for all people of all nations. I will be writing more on this subject in the future.

Below are excerpts from the cited report:

“New analysis by ActionAid and Public Services International (PSI) reveals how International Monetary Fund (IMF) austerity policies restricted critical public employment in the lead up to the Covid-19 crisis. (emphassis added)

“The analysis, released to mark UN Public Service Day (23 June), shows that every single low income country which received IMF advice to cut or freeze public employment in the past three years had already been identified by the World Health Organisation (WHO) as facing a critical health worker shortage.

“Key findings include:

  • Of the 57 countries last identified by the WHO as facing critical health worker shortages, 24 received advice from the IMF to cut or freeze public sector wages.
  • When countries are told to contain wage bills – it means fewer doctors, nurses and frontline workers in countries already desperately short of medics.
  • All but one of the 18 low-income countries advised by the IMF to cut or freeze public sector employment funding, are currently below the WHO’s recommended nurse-to-population threshold of 30 per 10,000.
  • The WHO predicts that these countries will experience a collective shortage of at least 695,000 nurses by 2030.

“ActionAid’s 2020 report Who Cares for the Future: Finance Gender-responsive Public Services exposed the detrimental IMF loan conditions and austerity measures which have pushed 78% of low-income countries to plan for zero increase in public sector wages.

“When countries are told to contain wage bills it means fewer doctors, nurses and front line health workers in countries already desperately short of medics. This was a dangerous practice even before the Covid-19 pandemic and is unthinkable now.”

Read the full report: IMF Told Countries Facing Critical Health Worker Shortages to Cut Public Sector Wages

Read my earlier posts: 

VIDEO: Africa’s Healthcare Infrastructure Requires a New Bretton Woods

World Needs New Economic Platform to Fight COVID-19

New Economic Order Required to Combat COVID-19 in Africa

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

Ethiopian & Nigerian Leaders Want Debt Cancellation; UNGA President: Infrastructure for Food and Health

Informal economy in Africa (courtesy Grandmother Africa)

May 7, 2020

Human life in Africa is threatened more by the COVID-19 pandemic than any other continent due to the appalling living conditions for the majority of the population.  During lock-down conditions, millions of Africans are faced with the choice of trying to just subsist day by day working in the informal economy to make enough money to feed one’s family or stay home and go hungry.  However, the informal economy itself is part of the problem, since it no health insurance, no unemployment insurance, and income is precarious at best. The very existence of the informal economy is a malignancy that should have been eliminated decades ago, and replaced with an industrialized economy.

The International Labor Organization (ILO), estimates the total world labor force is 3.3 billion people, and about 2 billion of them, or 61% of the total, are working in the informal economy. The vast majority of such informal workers (93%) are to be found in the Third World. In the first month after the pandemic hit their countries, laborers in the informal economy suffered an average 60% drop in their income. Now, 1.6 billion of those 2 billion informal workers—almost 80% of all informal workers—have lost their jobs or are about to. Tragically, Africa has 86% of its labor force working in the informal economy-the highest of all continents.

RFI reports that Nigeria, with over 200 million people, has 40% of its population living in life threatening poverty. According to the country’s National Bureau of Statistics (NBS), from September 2018, to October 2019, 82.9 million Nigerians earned less than 400 Naira-($1) per day. In Sub-Saharan Africa (SSA), which compromises the majority of the continent with almost 1 billion people, 41% live in extreme poverty-$1.90 per day or less. The NBS reports that poverty in Nigeria’s rural areas is more than 50 percent. The economic cruelties of life in Nigeria typify conditions throughout SSA.

Muhammadu Buhari
Muhammadu Buhari Photographer: Drew Angerer/Getty Image

Life is More Precious Than Debt

Prior to COVID-19 pandemic, African nations required a debt moratorium to save the lives of their people. As a result of the COVID-19 pandemic intersecting the existent conditions of poverty, food insecurity and lack of healthcare infrastructure, Africa leaders are demanding debt cancellation, to prioritize addressing the economic and health needs of their nations. Kenya, Senegal, South Africa, Ethiopia and Nigeria are asking for debt relief.

Following Ethiopian Prime Minister Abiy’s op-ed in the April 30 edition of the New York Times, PM Abiy wrote  on May 1, that there is an “urgent need for the Global Health Pledging Conference.” In his essay, “ PM Abiy: A Pledge to Combat COVID-19 in Africa, he  outlines the urgency for debt cancellation.

Up to now, there has been a huge disconnect between the rhetoric of rich-country leaders – that this is an existential, once-in-a-century global crisis – and the support for the world’s poor and developing countries [is more] than they seem willing to contemplate. Indeed, until last week, African countries were spending more on debt payments than on health care.”

“In 34 of Sub-Saharan Africa’s 45 countries, annual per capita health spending is below $200 – and barely reaches $50 in many of these countries. Such low levels of spending make it impossible to fund acute-care hospital beds, ventilators, and the drugs needed to confront diseases like COVID-19. Paying for doctors, nurses, X-ray technicians, and other health professionals, together with their equipment, can seem almost like a luxury.”

Nigerian President Mahammadou Burhari, echoed PM Abiy’s demand for debt cancellation, in a May 4 meeting with heads of state from the Non-Aligned Movement. President Buhari “urged official lenders to help cushion the pandemic fallout with outright debt cancellation,” according Alonso Soto of Bloomberg. The article reports that, “nearly half of Nigeria’s outstanding external debt is with multilateral lenders, led by the World Bank Group with $10.1 billion. Beijing-based Export-Import Bank of China is the second-biggest creditor with loans totaling $3.2 billion, while Eurobonds account for $10.86 billion or 39% of external debt.”

The author with Amb Tijjani Muhammad-Bande at the Nigerian Mission to the UN-August 2019

Tijjani Muhammad-Bande, President of the United Nations General Assembly, discussed how the spread of the coronavirus is a threat to those already suffering from poverty and food insecurity in a May 1, op-ed by published by Food and Agricultural Organization (FAO) of the United Nations. In his statement, Preventing a Pandemic Induced Food Emergency, Ambassador Tijjani Muhammad-Bande, head of the the Nigerian Mission to the UN, wrote: “two billion people did not have regular access to safe, nutritious, and sufficient food prior to the outbreak of the Coronavirus.  Indeed, hunger has been on the rise globally for the past four years

“The COVID-19 pandemic is exacerbating pre-existing inequalities, putting immense strain on tenuous systems; and plunging those in the most precarious contexts deeper into poverty and hunger.

“In many places, travel restrictions aimed at containing COVID-19 has reduced access to markets; and the purchasing power of millions of people has been decimated as a result of an exponential increase in unemployment rates.  Moreover, school closures have disturbed the main source of nutrition for over 370 million children around the world.

“Those suffering from hunger are at greater risk of developing severe COVID-19 symptoms as a result of associated health conditions, such as malnutrition and non-communicable diseases, which compromise the immune system. Compounding this is the fact that those who are hungry are often trapped in poverty and do not have access to health services, water and sanitation facilities, or indeed the space to quarantine or practice social distancing.

“In both our rapid response to the pandemic, and our long-term planning, it is imperative that we link food security to health interventions and investment in infrastructure.” (emphasis added)

 

For more analysis of COVID-19 and Africa, read my previous posts below:

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

Ethiopian PM Abiy Ahmed: Debt Cancellation for the World to Survive

Coronavirus testing supplies being unloaded at the Bole International Airport in Addis Ababa, Ethiopia, in March.
Credit…Tiksa Negeri/Reuters

Lawrence Freeman

May 1, 2020

Ethiopian Prime Minister, Abiy Ahmed, has made an audacious salient call for debt cancellation for low income countries. It was published in the Opinion section of the April 30, New York Times, Why the Global Debt of Poor Nations Must Be Canceled, (printed in full below). PM Abiy is correct, debt cancellation is absolutely necessary to save lives and for developing nations to survive the COVID-19 pandemic. To compel a nation like Ethiopia to spend almost half of its revenue on debt service, while its people are suffering from a perfect storm of Desert Locust swarms, food insufficiency, and a weak healthcare infrastructure, is immoral if not criminal. PM Abiy wrote:

“At the very least, the suspension of debt payments should last not just until the end of 2020 but rather until well after the pandemic is truly over. It should involve not just debt suspension but debt cancellation…

“These steps need to be taken with a sense of urgency. The resources freed up will save lives and livelihoods in the short term, bring back hope and dynamism to low-income economies in the medium term and enable them to continue as the engines of sustainable global prosperity in the long term.

“In 2019, 64 countries, nearly half of them in sub-Saharan Africa, spent more on servicing external debt than on health. Ethiopia spends twice as much on paying off external debt as on health. We spend 47 percent of our merchandise export revenue on debt servicing…

“The dilemma Ethiopia faces is stark: Do we continue to pay toward debt or redirect resources to save lives and livelihoods?”

PM Abiy’s analysis of the urgent need for the cancellation of debt service is relevant to the exacerbating effect of COVID-19 in Africa’s rising food insecurity.

image
Smoked fish produced in Ghana is sold all over the country and in neighboring Togo – as long as transport routes and borders can remain open for the movement of food to markets. Credit Jane Hahn/Oxfam America

COVID-19 Worsens Food Crisis

In the month from March 30 to April 30, COVID-19 cases in Africa rose from 4,760 to 37,296-800% increase, and the total of deaths from 146 to 1,619-1,100% increase.  Experts are legitimately concerned, that millions more may die from hunger and poverty as a result of the needed efforts to reduce the spread of the coronavirus. Closing borders, stay at home orders, loss of income, interruption of supply chains, and disruption of traditional animal migration cycles inauspiciously contribute to amplifying food insecurity.

“If the pandemic worsens, as many as 50 million more people could face a food crisis in the [Sahel} region,” according to Coumba Sow, Food and Agricultural Organization Resilience Coordinator for West Africa in her interview: FAO: COVID19: 50 Million in Sahel Could Face Food Crisis. Coumba Sow reports that across West Africa, 11 million people need immediate food assistance and that this number could rise to 17 million in the period from June to August. She says that it is “crucial to anticipate COVID-19’s impacts on agriculture, food security and the lives of vulnerable women and children. Ensuring that food systems and food supply chains are maintained is one of the most important action to take at national and regional levels.”

The World Food Programme (WFP) projects that the number of people facing acute food insecurity could rise from 135 million to 265 million in 2020 as a result of COVID-19.  According to the WFP, five of the countries that had the worst food crisis in 2019 were located in Africa; Nigeria, Ethiopia, Sudan, South Sudan and the Democratic Republic of the Congo.

Arif Husain, economist for the WFP said: “COVID-19 is potentially catastrophic for millions who are hanging by a thread. It is a hammer blow for millions more who can only eat it they earn a wage. Lockdowns and global economic recession have already decimated their nest eggs. It only takes one more shock—like COVID-19 to push them over the edge.”

Mauritanian herders (Courtesy of UN-FAO)

 A New Financial Architecture Required

While debt cancellation is essential, international and federal mechanisms are required to issue i.e. create new lines of credit to build up nation-wide advanced healthcare infrastructure, which all African nations lack. This endeavor should be part of a much larger undertaking to place African nations on a path to become developed industrialized economies.  I discuss the importance of emerging nations  to generate physical economic wealth in my earlier article: World Needs New Economic Platform to Fight COVID-19. Trillions of dollars of new credit must become accessible for African nations to address the dearth of infrastructure in energy, roads, railroads, and healthcare, that is literally killing Africans, every day. Successful transformation of African nations requires an urgent focus on nurturing combined manufacturing-agricultural processing industries. Speaking at a Johns Hopkins webinar on April 22, Gyude Moore, former Liberian Minster of Public Works (2014-2018) emphasized that creating manufacturing jobs is essential to transitioning to a more developed economy.

What has been glaringly brought to the surface by the combined COVID-19 pandemic and the malnourishment of Africa’s population is; that the global economic-political system of the last five decades has failed. A new financial architecture is compulsory to save lives and put civilization on the trajectory of progress. This new financial architecture should encompass the following essential missions in Africa:

  • Cancellation of debt
  • New credit generation for physical economic growth
  • Massive investment in hard infrastructure
  • Urgent mobilization to establish modern health infrastructure
  • Significant upgrading of manufacturing and agricultural sectors

It is unacceptable in the twenty-first century for every nation not to be equipped with advanced modern healthcare infrastructure.  One of the most egregious defects of globalization is that nations have become dependent on imported food from thousands of miles away because it is somehow construed to be cheaper than producing food at home.

Nations exist to foster the continuation of a human culture moored to the conception that human life is sacred. There is no equivalency between servicing debt and safeguarding human life.  Money really has no intrinsic value. Banks are mere servicing bureaus of an economy.  Governments legitimately create credit to generate future physical wealth to benefit their citizens. When borrowing or lending arrangements fail to benefit society then they should be restructured or cancelled. Such financial reorganizations have been achieved many times throughout history.

PM Abiy has brought to the attention of the world, a profound underlying principle that should govern all national and international policy: the promotion of human life is supreme, monetary instruments are not.

Delaying the repayments to the Group of 20 is not enough.

By rime Minister of Ethiopia. Nobel Peace Prize Laureate, 2019

ADDIS ABABA, Ethiopia — On April 15, Group of 20 countries offered temporary relief to some of the world’s lowest-income countries by suspending debt repayments until the end of the year. It is a step in the right direction and provides an opportunity to redirect financial resources toward dealing with the coronavirus pandemic.

But if the world is to survive the punishing fallout of the pandemic and ensure that the economies of countries like mine bounce back, this initiative needs to be even more ambitious.

At the very least, the suspension of debt payments should last not just until the end of 2020 but rather until well after the pandemic is truly over. It should involve not just debt suspension but debt cancellation. Global creditors need to waive both official bilateral and commercial debt for low-income countries.

These steps need to be taken with a sense of urgency. The resources freed up will save lives and livelihoods in the short term, bring back hope and dynamism to low-income economies in the medium term and enable them to continue as the engines of sustainable global prosperity in the long term.

In 2019, 64 countries, nearly half of them in sub-Saharan Africa, spent more on servicing external debt than on health. Ethiopia spends twice as much on paying off external debt as on health. We spend 47 percent of our merchandise export revenue on debt servicing. The International Monetary Fund described Ethiopia as being at high risk of external debt distress.

The dilemma Ethiopia faces is stark: Do we continue to pay toward debt or redirect resources to save lives and livelihoods? Lives lost during the pandemic cannot be recovered; imperiled livelihoods cost more and take longer to recover.

Immediate and forceful action on debt will prevent a humanitarian disaster today and shore up our economy for tomorrow. We need to immediately divert resources from servicing debt toward responding adequately to the pandemic. We need to impede a temporary health crisis from turning into a chronic financial meltdown that could last for years, even decades.

Ethiopia must spend an extra $3 billion by the end of 2020 to address the consequences of the pandemic, while our balance of payments is set to deteriorate. Increasing health care spending is essential, irrespective of debt levels, but we have less money on hand, and much of it is due to creditors.

A moratorium on bilateral and commercial debt payments for the rest of this year will save Ethiopia $1.7 billion. Extending the moratorium till the end of 2022 would save an additional $3.5 billion.

Low income countries can use the financial resources freed up by cancellation or further deferment of debt repayments to invest in our battle against the pandemic, from providing necessary medical care to our citizens to ameliorating our financial difficulties.

In October, the I.M.F. reported that the five fastest-growing economies in the world were in sub-Saharan Africa, which includes Ethiopia. In early April, the World Bank reported that sub-Saharan Africa would face its first region wide recession in over 25 years and the region’s economy could shrink by as much as 5.1 percent.

This is not a result of bad policies, mismanagement or any other ill typically associated with developing economies. The recession will be the product of the coronavirus outbreak.

Preventing or at least minimizing the recession is critical to maintaining years of hard-won economic gains across the continent. The current moratorium in bilateral debt collection until the end of the year will help, but it won’t be enough, given the gravity of the challenge we face.

The moratorium must be extended until the coronavirus health emergency is over or canceled altogether. The creditors need to do this unconditionally.

Official bilateral creditors are no longer the principal source of external debt financing for many developing countries. Private-sector creditors, including investment banks and sovereign funds, are. They should play their part in the effort to rescue African economies from permanent paralysis with a sense of solidarity and shared responsibility. It would help avoid widespread sovereign defaults and chaos in the market.

And it would be morally indefensible if resources freed up from a moratorium in bilateral debt collections were to be used to pay private creditors instead of saving lives.

Most of our countries managed to borrow funds on the back of solid economic performance and highly promising and evidence-based development programs and trajectories. Nobody foresaw this promise being derailed by a once-in-a-century event such as the coronavirus pandemic.

Under these circumstances, there is no room for traditional arguments such as moral hazard. Low-income countries are seeking relief not because we squandered the money but because we need the resources to save lives and livelihoods.

It is in everybody’s enlightened self-interest that the borrowers be allowed breathing space to get back to relative health. The benefits of rehabilitation of the economies of the hardest-hit countries will be shared by all of us, just as the consequences of neglect will harm all of us.

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

 

 

World Needs New Economic Platform to Fight COVID-19

The World Needs A New Economic Platform to Fight COVID-19

Lawrence Freeman

April 5, 2020

Today April 5, the total cases of COVID-19-(coronavirus) in Africa are 8,536, deaths 360, and recoveries 710. On March 30, one week ago, the total cases were 4760, deaths 146, and recoveries 355. The diagram above shows the increased rate of the spread of COVID-19 across the African continent. In my March 30 article, New Economic Order Required to Combat COVID-19 in Africa, I concluded with a call for a New Just Economic Order, if humankind is going to effectively conquer the current pandemic.

We have come to a moment in the evolution of our civilization that we must acknowledge the failures of the present political-financial system. The Western-advanced sector nations, lacking an in depth and over-supplied health infrastructure have found themselves utterly unprepared to deal with the latest and most deadly zoonotic virus, COVID-19. The G-7 nations with a population of 750 million, and 39% ($34 trillion) of the world’s GDP are grabbling to muster the resources and capacity to defeat the coronavirus, while 90% of the world’s 7.5 billion people live with a frail health infrastructure, or none at all.

We have witnessed an increasing number of new zoonotic viruses (SARS, MERS, Swine Flu, HIV/AIDS) over recent decades. Humanity will only successfully defend itself by launching a global upgrading of healthcare including new scientific research into how human immune systems can become less susceptible to viruses that originate in animals.

Inadequate healthcare and impoverished living conditions in the developing sector cannot continue. It is a crime that has been perpetuated for decades, and the very survival of humanity screams out for a revolution in our thinking and practices. Ethiopian Prime Minister, Abiy Ahmed, stated eloquently the link between Africa and the advanced sector in this current crisis: “Advanced economies are unveiling unprecedented economic stimulus packages. African countries, by contrast, lack the wherewithal to make similarly meaningful interventions. Yet if the virus is not defeated in Africa, it will only bounce back to the rest of the world.”  (emphasis added)  PM Abiy “If Covid-19 is not beaten in Africa it will return to haunt us all” .The virus can only be overcome in Africa, and the rest of the developing sector, if we launch a new economic system, one that values human life above servicing debt and avariciousness.

Perilous Conditions in Africa

Dr. John Nkengasong, head of the Africa Centers for Disease Control and Prevention (CDC), said that COVID-19 “is an existential threat to our continent.” The Africa CDC and the World Health Organization (WHO) do not know the actual number of Africans infected with the virus, due to a lack of ability to test the population. Nor do they have an accurate count of the number of ventilators available in each African nation. Over a month since the appearance of the coronavirus on the continent, experts estimate that Africa is at the early phase of its proliferation.

The United Nations World Food Program warned that “the coronavirus pandemic threatens to cause food shortages for hundreds of millions of people especially in Africa,” according to Naharnet. “For many poor countries, the economic consequences will be more devastating than the disease itself.” Pandemic Threatens Food In Import Reliant States

An article published by Quartz, Africa Has About One Doctor for Every 5000 People cites a report by the (WHO), that Africa in 2013 “had a deficit of estimated 1.8 million healthcare worker that is projected to rise 4.3 million by 2035.”  One reason, according to the article is that: “Currently, there are only 170 medical schools serving the 47 countries of sub-Saharan Africa. Of those countries, 6 have no medical schools, and 20 have only one medical school.”

Statistics for the number of doctors per 1,000 population for African nations are horrifying. Physicians Per 1,000 People. When Compared to the figures for advanced sector nations that are now “hot spots” for COVID-19 to those of Africa, where the incidence of the virus is weeks behind Europe and the United States, Africa’s potential death rate is frightening.

Examine these estimates: U.S. has 2.3 doctors for 1,000 people, Spain 3.2, Italy 4.2, and South Korea 1.8. The average for sub-Saharan Africa (SSA) has an absurdly low 0.21 doctors for 1,000 people. Twenty SSA nations have .08 doctors or less to treat 1,000 of their citizens, with several at levels of 0.03 and 0.02 doctors. Two orders of magnitude less physicians than the nations that today are experiencing the highest mortality rates.

Governor Cuomo of New York, and Mayor de Blasio of New York City beg every day for more healthcare professionals, ventilators and PPEs (Personal Protective Equipment) to deal with the overload of coronavirus cases, Imagine what the potential death rate of Africa’s almost 1.5 billion population could be when one factors in extreme levels of poverty, weakened immune systems, and malnourishment, all prevalent on the African continent.

(Courtesy of SlideShare)

UNCTAD’s $2.5 Trillion Strategy

The March 30, 2020, statement by the United Nations Conference on Trade and DevelopmentUNCTADUN Calls for $2.5 Trillion Coronavirus Crisis Package for Developing Countries  is excerpted below.

“The consequences of a combined health pandemic and a global recession will be catastrophic for many developing countries and halt their progress towards the Sustainable Development Goals.”

UNCTAD’S strategy includes:

  • $1 trillion of debts owed by developing countries should be cancelled this year
  • $500 billion needed to fund a Marshall Plan for health recovery and dispersed as grants

Credit for a New Economic Order

Debt cancellation, and a Marshall Plan to build up health infrastructure for the developing sector nations are crucial for the survival of emerging nations. However, to break from the old political-financial system that has failed us, and to create a new economic platform, we must create credit for physical economic growth.

What is missing from UNCTAD’s proposal, and what is absent from all United Nations strategies, is the understanding of the importance of establishing a mechanism for the creation of credit. Following in the footsteps of President George Washington and his brilliant Secretary of the Treasury, Alexander Hamilton, we should establish a National Credit Bank. Nations Must Study Alexander Hamilton’s Principles of Political Economy. Wisely, the US Constitution provides for the federal government, not the states, to issue public credit to promote the general welfare.

Credit for production and infrastructure, unlike mere money, is the sine qua non for any healthy economy. This is not the same as printing trillions of dollars of money to bail out an over extended monetary system with a bubble of over one quadrillion of dollars in debt and derivatives.

Debts of developing sector nations must be cancelled to clear the decks for the issuance of new credit directed to fostering industrialized economies with healthy agricultural and manufacturing sectors. Extended credit with low interest rates must be issued for long term investments in vital construction of infrastructure. This is a life and death matter for the very survival of African nations.

Every government is obliged to create a national bank for the sole purpose of generating physical economic growth critical for the security and future health of that nation. Instead of relying on the present global financial institutions that dictate loan agreements at unnecessarily high interest rates coupled with arduous conditionalities we should create a new global economic system. One founded on the principles that promote the true shared common good for all nations and all peoples. Under this new system sovereignty is inviolate, and trade and credit agreements are premised on improving the material conditions of life for the people of those nations. All political and economic relationships between nations should be to benefit the general welfare of its citizenry.

Human beings are sacred, financial systems are not. We can and should craft new monetary systems to advance progress, not monetary profits. President Franklin Roosevelt created the Bretton Woods System, with the intention of uplifting the planet from the misery of World War II. He had magnificent ideas for promoting economic growth around the world, including greening the deserts of Africa.  Sadly, after his death, Bretton Woods was perverted, and became the opposite of what he intended.

While we must fight this deadly virus with all the resources that governments can assemble, we need to also think to the future; the creation of a more advanced economic platform. It is up to us create a new architype of relationships among sovereign nation states to transform the world out of the ashes of its present decayed state. Let us call this new paradigm by its proper name–A New Just World Economic Order

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

 

New Economic Order Required to Combat COVID-19 in Africa

COVID-19 will spread in Africa (courtesy theconversation.com)

New Economic Order Required to Combat COVID-19 in Africa

Lawrence Freeman

March 30, 2020

As of March 30, 2020, the Africa CDC reports the total number of COVID-19 cases-4,760, deaths-146, and recoveries-355. The totals for individual nations vary from higher levels:  Algeria 511 cases and 31 deaths; Egypt 609 and 40; Morocco 479 and 26, South Africa 1280 and 1; Nigeria 111 and 1 (cases and deaths respectively); to dozens of nations reporting 10 or less cases and 0 deaths. Africa CDC COVID-19

While these figures for Africa are significantly lower than nations in Europe, Asia, and North America, in some cases orders of magnitude lower, there is reason for great concern for the spread of the Coronavirus throughout the African continent. Many African nations are unable to adequately test their citizens, and one should assume the number of cases is vastly unreported. Also, there unique features of African society that present an impediment to isolation of those infected with COVID-19, and social distancing. African society are centered around crowded mass markets, and culturally Africans are prone to show their friendliness towards others by holding hands.

Factoring in a weak healthcare system, poor nutrition, inadequate housing, lack of electricity and clean water, and already prevalent existing diseases (HIV AIDS, Malaria, TB) in the population, COVID-19 could propagate very rapidly, overwhelming an insufficient number of beds, hospitals and doctors. For Africans, the consequences of the proliferation of COVID-19 could be catastrophic, resulting in higher levels of mortality and morbidity than we have presently experienced.

Debt Restructuring Necessary for Africa’s Health

In response to the COVID-19 pandemic, for the first time in many years, African leaders are demanding a restructuring of the onerous debt, whose payment has diverted nations’ revenues away from investing in vital categories of infrastructure, including healthcare. Payment of debt, mere loans, cannot be, to quote from William Shakespeare’s Merchant of Venice, “the pound of flesh” used to kill people. Tragically, since African nations liberated themselves from European colonialism, debt has been used as a weapon to repress the development of emerging nations.

On March 24, the office of the Ethiopian Prime Minister, Dr Abiy Ahmed, released an incisive three point proposal to the G20 nations outlining necessary actions to be taken to safeguard African nations during this pandemic. He began by dramatically stating the truth, “COVID-19 poses an existential threat to the economies of African countries. Our economies, fragile and vulnerable even in the best of times will face serious shocks.” He than discussed a crucial underlying constraint imposed on African nations, “the heavy debt burden, the servicing of which alone costs many of them [nations] significantly more than their annual health budgets.”

Prime Minister Abiy requested from the G20:

  • $150 billion “Africa Global COVID-19 Emergency Financing Package”
  • “Global Africa Health Emergency Package”
  • “Debt resolution and Restructuring Package.”

Elaborating on debt restructuring, Prime Minister Abiy wrote, “Ethiopia proposes all interest payments to government loans should be written off. We suggest the remaining debt be converted into long term low interest loans with 10 years grace period before payments. All debt payments will be limited to 10% of the value of exports.”

The theme of restructuring Africa’s debt to deal with the present crisis, was also discussed in a virtual conference of African finance ministers on March 19, according to the United Nations Economic Commission for Africa (UNECA).  To battle COVID-19, the ministers said, “Africa needs an immediate emergency economic stimulus to the tune of $100 billion” The UNCEA reports that they are asking that $44 billion, almost fifty percent of the funds requested, would come from halting payments of debt service, and in the most fragile nations to the loan principal as well.  African Finance Ministers Discuss Debt

In an insightful column, published in the March 25th edition of the Financial Times, Prime Minister Abiy again raises the necessity of debt alleviation: “Building on what has been announced by international financial institutions, the G20 must launch a global fund to prevent the collapse of health systems in Africa. The institutions need to establish a facility to provide budgetary support to African countries. The issue of resolving Africa’s debt burden also needs to be put back on the table as a matter of urgency.” (emphasis added)  PM Abiy “If Covid-19 is not beaten in Africa it will return to haunt us all”

 

Crowded Nigerian Market (courtesy buzznigeria.com)

 

Emergency Actions Taken

Nigeria—March 18, with 8 confirmed cases, imposed a travel ban on 13 high-risk COVID-19 infested countries; mandated a ban open worship and other public gatherings; mandated compulsory laboratory tests on all staff and members of the national assembly; mandated that public institutions should be equipped with temperature gauge.  All airports in Nigeria are closed to international commercial flights until 23 April.

Rwanda—March 21, with 17 confirmed cases of COVID-19, suspended all arriving and departing commercial flights for 30 days; shutdown of schools, universities, and places of worship for two weeks; the office of the Prime Minister released a list of nine preventive measures.

Ethiopia—March 23, with 11 confirmed COVID-19 cases, enforced a 14 day mandatory quarantine for all travelers entering the country; closed all schools, and banned all gatherings and sports events for 15 days. March 25, Ethiopian President Sahle-Work Zewde ordered that more than 4,000 prisoners be pardoned.

Senegal–March 23, declared a state of emergency.

Ivory Coast–March 23, declared a state of emergency, imposed a curfew from 9:00 pm to 5:00 am, and shut the country’s borders

South Africa—March 26, with over 900 confirmed cases, began a three-week nationwide lockdown; the lockdown is considered one of the strictest, banning alcohol sales, dog-walking, and jogging in public.

In response to the COVID-19 crisis, China has sent to the African Union, 2,000 test kits to be dispersed across the continent, and is expected to send another 10,000, along with medical supplies. China has also launched a new Health Silk Road. On Sunday, March 22, African Union received 1.1 million test kits, 6 million masks, 60,000 medical protective suits and face shields, donated by Chinese billionaire Jack Ma.

Lessons We Must Learn

We can and should learn the following lessons from this contagious and lethal virus. Decisions made by nations for securing their future can now be informed from the very painful consequences of the global spread of COVID-19. If society, had learned the principles of the science of physical economy, instead of being seduced by the “smell of money,” we might very well have been able to avoid the worst of the tragic effects of COVID-19, which continue to plague our planet.  An unprepared and underfunded national economy gives society little chance to deal with any serious crisis, much less a pandemic.

*Globalization has always been a trojan horse, an Achilles heel for the security of any nation. The idea that a nation should gamble its security on the premise of buying necessary commodities from anywhere in the world at the cheapest price was always insane.  Witness today’s disruption of multi-thousand mile long supply chains as proof.

For example, properly understood, feeding one’s population is a matter of national security. African nations have undermined their security and sovereignty by failing to be food self-sufficient. Procuring food from other continents or at great distances across Africa is not only foolish, but totally unnecessary given the fecundity of African soil.  By conservative estimates, African nations spend $35 billion on imported food. A colossal and senseless waste of foreign exchange, which contributes to a nation’s poverty.  And a poor-hungry population is fertile ground for orchestrated destabilizations. Nations are ordered by institutions like the World Trade Organization to buy their food at the cheapest price regardless of domestic consequences.

The alternative to globalization is obvious; each nation has the sovereign obligation to foster productive agriculture and manufacturing sectors. The current pandemic of the coronavirus has brought to the fore the perilous effects of nations dependent upon importing lifesaving products from other nations.

Africa’s huge infrastructure deficit has always been a killer for Africa; literally!  Many of my friends and critics alike have objected to my insistence that the most critical prerequisite for Africa’s development is infrastructure. The most essential human right, is the right to live, and to live as a dignified human being. That is impossible with pathetically low, in some cases, non-existent levels of infrastructure.

Hospital in South Africa (courtesy borgenproject.com)

*Healthcare infrastructure is a necessity to sustain longevity of life—the essence of a human right. It embodies all components of infrastructure, manufacturing, and agricultural industries.

Examine what is necessary to maintain a hospital. Abundant electricity for lights and machines, access to clean water, roads and rail lines to transport patients, advanced medical equipment, a manufacturing sector to produce all the products consumed by hospital staff, food production to feed patients and staff, colleges, medical schools to train nurses and physicians, clothing for patients and staff, protective gear, and the list goes on. Now ask oneself, how many hospitals are there per 100,000 population in Africa?  How many basic hospital beds exist? How advanced intensive care units? If you look at the chart in the link below, which admittedly is several years old, you can see the huge discrepancy in hospital beds per 1,000 people in Africa compared other parts of the world. Hospital Bed per 1,000 in Africa

In the years 2012-2013, the US had 2.9 beds per 1,000 people, Italy 3.9 and Spain 3. All these nations are now experiencing a shortage of beds and all are considered hot spots in this COVID-19 pandemic. Shockingly, in that same time frame, over 25 African nations were recorded to have 1 bed or less per 1,000.

In 1975 the U.S. had 1.5 million hospital beds, and today has 925,000-over half a million fewer. Today the US has an average of 2.5 beds per 1,000 people, and California, Oregon, and Washington have 2 beds or less per 1,000. By contrast, before the outbreak of COVID-19, Wuhan, China had 4.3 beds per 1000, and they have added 10,000 hospital beds since the outbreak began by building several new hospitals.

Think for a moment would kind of investment in infrastructure, production, and labor that would be required for African nations to even reach the insufficient US level of hospitals and beds. How many hundreds of thousands of megawatts of electricity would have to be generated to supply these new hospitals? How many million gallons of water would be required? Africa has never built up a minimum healthcare infrastructure and is woefully unprepared should the pandemic surge on the continent in the weeks and months ahead.

 As we are witnessing today, the West is suffering greatly from the deliberate slashing its own healthcare infrastructure over recent decades. This has been accomplished through austerity, shortsightedness, and an indecent obeisance to a desire to make fast-money by gambling on Wall Street.

*State government intervention has risen to the fore during this scourge of COVID-19, despite decades maligning the role of the state. It is now clear that contrary to the false claims that the state has no role in the world of neo-liberalism, laissez-faire, and unregulated free-trade, government supervision and government credit-debt to sustain people and the economy have proofed invaluable and lifesaving. Putting aside the multi-trillion dollar bailout to the global gambling casino known as the financial system, governments have issued emergency funds necessary to maintain society. Much more government intervention will be required to save lives in the weeks and months ahead.

Globalization (courtesy thegeopolitics.com)

 A New Just Economic Order       

Prime Minister Abiy’s column in the Financial Times beseeches the need for a coordinated global response to COVID-19:

 “There is a major flaw in the strategy to deal with the coronavirus pandemic. Advanced economies are unveiling unprecedented economic stimulus packages. African countries, by contrast, lack the wherewithal to make similarly meaningful interventions. Yet if the virus is not defeated in Africa, it will only bounce back to the rest of the world. 

That is why the current strategy of uncoordinated country-specific measures, while understandable, is myopic, unsustainable and potentially counter-productive. A virus that ignores borders cannot be tackled successfully like this.

We can defeat this invisible and vicious adversary — but only with global leadership. Without that, Africa may suffer the worst, yet it will not be the last. We are all in this together, and we must work together to the end.”

His comments implore the urgent necessity for an entirely different global approach to be taken by nations. We must absorb the horrible reality of today’s deadly crisis to motivate our passions to create a better future for civilization.

For humanity to survive, we can no longer tolerate living in a world governed a geo-political doctrine that views other countries crudely as either friend or foe, with winners on top and losers underneath.  We can no longer live in a system that values mere money above human life. Look at Sudan, whose people are suffering, while Western institutions led by the International Monetary Fund use Sudan’s $53 billion in (unpayable) debt as weapon to dictate their “reforms.”

Months before COVID-19, the United Nations asked for $135 million to fight the unprecedented Desert Locust threatening the food supply in Kenya, Somalia, and Ethiopia. The fund is still $100 million short of that goal. The UN has called the locust swarm in East Africa “extremely alarming.” Tthe current pandemic is affecting the ability for African nations to obtain the minimal equipment and pesticides required.

We must bring into creation a new model for governing. A new paradigm that values human life above all else. One that acknowledges the universal moral resemblance of all human beings.

The call for a New Just World Economic Order was first articulated in the 1970s and has been echoed for decades by world leaders. All foreign, domestic, economic policy should be formulated upon the recognizable principle that all people share a common aim and destiny. We, the human race, are unified by our endowed unique quality; the power of reason-creative imagination.  To resolve the multiple crises facing humanity, including a meltdown of the global financial system, it is urgent that an international conference be convened to establish a new template for economic and political relations among sovereign nations. The foremost underlying principle for such deliberations is acknowledging that the aspiration of all nations should be the elevation of human creative life. For all peoples.

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

 

Ethiopia’s Medemer Philosophy

 

February 25, 2020

I had the pleasure to attend a fascinating and enlightening discussion on what Medemer means and why Prime Minister Abiy Ahmed has introduced this concept into Ethiopia today. The conversation was led by Ambassador Fitsum Arega, Ethiopian ambassador to the U. S. and included; Lencho Bati and Mamo Mihretu, both in the prime minister’s office in Addis Ababa, and Etana Dinka, Oberlin College.

Prime Minister Abiy has authored a book, Medemer, (Amharic) and simultaneously launched the new nationwide Prosperity Party, which is an application of his Medemer philosophy.

The panelists explained to the overflow audience at the United States Institute for Peace (USIP) in Washington, that the Medemer philosophy should guide both Ethiopia’s domestic and foreign policy. Medemer embodies the concept of national unity and the need for all to work for the common good; for Ethiopia’s prosperity, and its elimination of poverty. Amb. Arega said that Ethiopia cannot change the past, but Ethiopia needs new ideas that go beyond its highly charged ethnic politics. He spoke of the need for forgiveness in Ethiopian society, with no finger pointing, in order for Ethiopia to move forward. The idea of a shared-common humanity, embodied in Medemer, is the underpinning for establishing sound relationships with other nations.

Ethiopia is entering a challenging period, economically, politically, and socially. The nation is attempting to create an appropriate economic policy that will enable millions of educated youth to be absorbed into its workforce. The nation is also coming to terms with the limitations of almost thirty years of a federation of ethnic states. With national elections scheduled for August, Prime Minister Abiy’s non-ethnic based Prosperity Party is provoking a healthy discourse about Ethiopia’s identity.

All of these issues are relevant to the concept of Medemer, that was richly elaborated in the two-hour dialogue at USIP.

Watch: A Changing Ethiopia: Understanding Medemer

Read: Ethiopia’s Prosperity Party: A Revolutionary Necessity

 

Ethiopia’s Prosperity Party: A Revolutionary Necessity

Ethiopia’s Prosperity Party: A Revolutionary Necessity

By Lawrence Freeman

January 8, 2020

Prime Minister Abiy Ahmed has embarked on a bold effort to transform the political terrain of Ethiopia while simultaneously launching new economic reforms. The creation of the new Ethiopian Prosperity Party (PP) replaces the Ethiopian People Revolutionary Democratic Front-(EPRDF), founded in 1988. Dissolving the reigning EPRDF and fashioning a new national party, or what some refer to as a Pan-Ethiopian party, is a courageous and daring move, essential for Ethiopia’s future.  This emerging nation of over 105 million people, already a leader in economic development, is now embarking on a challenging path to create de novo a national party.

The EPRDF, which had governed Ethiopia since May 1991, was composed of four Regional States, plus the cities of Addis Ababa (the capital), and Dire Dawa. The four regional parties are: the Tigray People’s Liberation Front-(TPLF); the Oromo People’s Democratic Organization-(OPDO) (renamed early this year as Oromo Democratic Party-(ODP); the Amhara National Democratic Movement-(ANDM), (renamed early this year as Amhara Democratic Party-(ADP); and the Southern Ethiopian People’s Democratic Movement-(SEPDM), (a coalition of the 56 ethnic groups).

The EPRDF was fashioned to address Ethiopia’s earlier history of dictatorial and monarchical rule. The designers of the governing party believed that acknowledging ethnic identity, which was not recognized for centuries, would solve the tensions of that time. Recent conflicts in Ethiopia have shown this arrangement to be ineffective.

Of the four parties that comprised the EPRDF, only the TPLF has refused to join the new PP.  Already the governing parties representing 5 regions, which were not members of the EPRDF, but were recognized as allies of the EPRDF have joined the PP in preparation for May 2020 elections. They are: 1) Afar National Democratic Party (ANDP); 2) Benishangul-Gumuz Democratic Party (BDP); 3) Somali Democratic Party (SDP); 4) Gambela People’s Democratic Movement (GPDM); and 5) Harari National League (HNL). The PP will be inclusive, intending to represent all communities, inviting Tigrayans, who live in and outside the region to join. The PP program will have Amharic as its working language as per the constitution. However, Afan Oromo, Tigrigna, Somali and Afar will also be the working languages of the new PP.

Prime Minister Abiy’s founding of the PP on December 1, just six months before Ethiopia’s national elections, is fraught with personal risks for the new Prime Minister. However, this endeavor is bursting with the potential to transform politics and social relations in Ethiopian society. Ethiopia has a splendid history thousands of years old, rich with a multiplicity of cultural backgrounds. The PP is intended to harmonize the diversity of the nation with a national non-ethnic based party.

Chair Persons of the eight parties who also represent eight Regions as governing parties worked under the umbrella of the EPRDF coalition signed a document for the establishment of Prosperity Party. Photo Credit OPM

Nationalism: Not Ethnic Nationalism

A sovereign nation-state is not a mosaic of diverse groups competing with each other for control of the government or pursuing administration posts to obtain economic and financial rewards. A sovereign nation should have a national identity and a mission orientation for its people; all its people, regardless of ethnic heritage. Contributing to the distinctive identity of Ethiopia was its military defeat of the Italian Empire in the battle of Adwa on March 1, 1896. Consequently, this victory, uniquely allowed Ethiopia to remain free from colonialism. Although this triumph occurred over one century ago, it is part of the psychological composition of the identity of all Ethiopians; whether they are conscious of its effects or not. Ethiopia’s decades’ long determination to develop from a disadvantaged nation to an aspiring lower middle-income nation with nascent light manufacturing industry is another feature of Ethiopia’s national identity.

Professed ethnonationalism errs in that it attempts to substitute the demands, often for legitimate needs, of one particular group above the interests of all the citizens. A nation-state cannot survive in a Hobbesian war of all against each other to obtain the most goodies for “my people.” Dare we forget the horrors of the ethnically driven tragic Biafran war in Nigeria from 1967-1970, and how geographic-ethnic distinctions have determined every unhealthy aspect of political and social life in Nigeria today?

Recriminations from the past are no excuse for actions today. Decisions concerning the best strategy for securing the future of Ethiopia must be based on how that policy will benefit the well-being of all citizens.

Medemer and Synergy

In his acceptance speech for the 2019 Nobel Peace Prize winner, Prime Minister Abiy spoke of the philosophy of the Medemer.

He said: “Medemer, an Amharic word, signifies synergy, convergence, and teamwork for a common destiny. Medemer is a homegrown idea that is reflected in our political, social, and economic life. I’d like to think of ‘Medemer’ as a social compact for Ethiopians to build a just, egalitarian, democratic, and humane society by pulling together our resources for our collective survival and prosperity…At its core, Medemer is a covenant of peace that seeks unity in our common humanity.”  One could appropriately, add for the “common good” of humankind.

Our “common humanity” exists in all of us. We are all born in the image of the Creator. All human beings are universally related by our endowed powers of creative mentation, more commonly known as reason. What distinguishes all human beings from the animal species is our mental power to discover new scientific and cultural principles embedded in our universe. All of us homo sapiens, regardless of where we were born, or any physical characteristics, are substantially more alike than we are different.  Therefore, our needs, desires, and aspirations in life are similar. All human beings not only share a common interest to enhance our lives, but we also share a desire for a better future for our posterity. There is no class of superior people, who have more rights than others due to privileges of birth, religion, or skin color. Each of us are placed here on earth to contribute to the common good of our common humanity using our individual talents.

If we accept synergy to mean cooperation and collaboration to achieve an enhanced effect, then let us act synergistically to ensure a prosperous Ethiopia that provides for all its citizens.

The Constitution and Sidama

Inherent problems of the 1995 Constitution of the Federal Democratic Republic of Ethiopia are evident in the November 2019 referendum conferring autonomy to Sidama. Ethiopia’s constitution stipulates that with this lawful vote, the people of Sidama, the fifth largest ethnic group, will become the tenth ethnic regional state. Eight of the existing nine regional states are governed by the dominant ethnic group of that geographical region. However, the Sidama people reside in Southern Nations, Nationalities, and People’s Region–(SNNPR), where many other small ethnic groups (around 56) also exist.

The Preamble of Ethiopia’s Constitution properly emphasizes the conception of a united nation with a common purpose and goal for all its people.   It deliberates on “advancing our economic and social development,” “common interest….and the emergence of a common outlook,” and “to live as one economic community.” Article 14 resonates with the US Constitution, stating: “Every person has the inviolable right to life the security of person and liberty.” The same principle is echoed in Article 43 of the Constitution: The Right to Development. “The basic aim of development activities shall be to enhance the capacity of citizens for development and to meet their basic needs.”

The drawback to the Constitution begins in Article 8:Sovereignty of the People, where sovereign powers are divided up between “Nations, Nationalities and Peoples of Ethiopia.” This is an obvious compromise to ethnicity. In truth; there is only one Ethiopian people and only one Ethiopian nation. The divisions in Ethiopian society are made explicit in Article39: “Every Nation, Nationality and People in Ethiopia has an unconditional right to self-determination, including the right of secession……the right to a full measure of self-government…” This separation of Ethiopians into multiple groups, outlined in the Constitution, is the seed for the tensions gripping Ethiopia today.

In the aftermath of the Sidama referendum, Ethiopia potentially faces a conundrum. Will other ethnic minorities now choose to follow the same path as Sidama in calling for autonomy as delineated in the Constitution? It appears so. In addition to Sidama Zone*, which is now claiming to be the 10th state, there are other Zones in the Southern Region that want to follow the same route to statehood. To quote William Shakespeare, “there’s the rub.” Clearly the Ethiopian Constitution, despite the best intentions, has proven to be unsuccessful in governing this multi-ethnic nation.

The Challenging Course Ahead

The emergence of a national party such as the PP can commence the process of uniting the nation by moving away from a society where ethnic interests are placed above the welfare of the nation. Ultimately the problematic features of the Ethiopian Constitution will have to be revisited. Not to address this thorny issue will allow instigators to use ethnicity to disrupt what is most necessary for Ethiopia to move forward; a healthy process of dialogue and debate on the future of Ethiopia.

This discourse should include a discussion by the Ethiopian people on changing the structure of ethnic-based parties. For example, Ghana’s Constitution stipulates that “Every political party shall have a national character, and membership shall not be based on ethnic, religious, regional or other sectional divisions.” That no political party shall be formed “(a) on ethnic, gender, religion regional, professional or other sectional divisions; or (b) which uses words, slogans or symbols which could arouse ethnic, gender, religious, regional professional or other sectional divisions.”

The lack of vibrant Ethiopian nationalism creates a fertile environment for those who want to manipulate misplaced ethnic passions. The danger presents itself during times of social or economic stress, when the population’s frustrations can be channeled along ethnic fault lines, manipulating Ethiopians to act against their true self-interest: progress for the nation of Ethiopia. Opportunistic ringleaders will attempt to misdirect the population against each other via competing ethnicities, instead of uniting society behind a national policy. A policy of economic growth that includes a strategy to generate employment opportunities for the millions of youth preparing to enter the workforce is in the vital interests of all citizens.

Of course, it will take time for people to shed their desire to control policy making through ethnic-based parties. It is an existential moment for Ethiopia, and a national grounded PP is a needed first step.  It should be understood, that a sovereign nation, whose national mission is to promote the general welfare of its people does not require the elimination of historical cultures. On the contrary, the uniqueness and beauty of each ethnic culture can be synergistically woven into an elevated national character that transcends ethnicity.

*Zone is the middle tire next to the regional state in the governing structure that is also formed under ethnic lines the Southern Nations, Nationalities, and People’s Region (SNNPR).

Lawrence Freeman is a Political-Economic Analyst for Africa, who has been involved in the economic development policy of Africa for 30 years. He is the creator of the blog: lawrencefreemanafricaandtheworld.com

 

“Forging A Durable Peace in the Horn of Africa” Ethiopian Prime Minister Abiy Ahmed: Nobel Peace Prize

Image result for nobel peace price abiy ahmed
Ethiopian Prime Minister, Abiy Ahmed Ali receives the the Nobel Peace Price on December 10, 2019. (Courtesy of allthingsethiopia.com)

December 17, 2019

In his acceptance speech of the Nobel Peace Prize of 2019, Prime Minister Abiy Ahmed discusses the importance of the philosophy of the Medemer in achieving peace in the Horn of Africa. Prime Minister Abiy is applying the philosophy of the Medemer in transforming Ethiopia.

“This humanity I speak of, is within all of us. We can cultivate and share it with others if we choose to remove our masks of pride and arrogance. When our love for humanity outgrows our appreciation of human vanity then the world will know peace. Ultimately, peace requires an enduring vision. And my vision of peace is rooted in the philosophy of Medemer.

“Medemer, an Amharic word, signifies synergy, convergence, and teamwork for a common destiny. Medemer is a homegrown idea that is reflected in our political, social, and economic life. I like to think of “Medemer” as a social compact for Ethiopians to build a just, egalitarian, democratic, and humane society by pulling together our resources for our collective survival and prosperity.

“In practice, Medemer is about using the best of our past to build a new society and a new civic culture that thrives on tolerance, understanding, and civility. At its core, Medemer is a covenant of peace that seeks unity in our common humanity.

“It pursues peace by practicing the values of love, forgiveness, reconciliation, and inclusion.”

Read: PM Abiy’s Acceptance Speech of the Nobel Peace Prize

 

 

Ethiopia Launches New Economic Reform Agenda

November 21, 2019

Ethiopia Launches New Initiatives To Expand Its Economy

Lawrence Freeman

In the last decade, Ethiopia, the second most populated nation in Africa with over 100 million people, has become a leader in economic growth. This is the result of the leadership’s commitment to the continuation of the previous government’s developmental state model, which directed public credit to finance vital infrastructure projects. Now, under new leadership, innovative initiatives are being launched to sustain and expand Ethiopia’s progress.

On September 9, 2019, Prime Minister Abiy Ahmed unveiled his nation’s “Homegrown Economic Reform Agenda” (Homegrown Reform) at the United Nations Conference Center in Addis Ababa. Its primary goal is to expand the nation’s economic capabilities, and create employment opportunities for millions of unemployed youth. Addressing the audience, Prime Minister Abiy said: “The Reform Agenda is our pro-job, pro-growth, and pro-inclusivity pathway to prosperity.” To achieve these objectives, this new initiative proposes to entice private investment in the following sectors; agriculture, manufacturing, mining, tourism,  and Information and Communication Technology- (ICT). Key goals of the agenda’s macroeconomic reforms are, curbing inflation that is averaging over 15% in the last four years, increasing foreign currency, improving access to finance, and debt sustainability.

Home Grown Initiative

The Homegrown Reform Agenda is not meant to be a replacement for Ethiopia’s Growth Transformation Plans II (GTP II), which covers the period from 2014-2019.

Ethiopia, aims over the next three years, to attract $6 billion in new soft loans and $4 billion in debt reduction from multilateral and bilateral institutions to alleviate the country’s financial constraints. According Fitsum Arega, Ethiopia’s ambassador to the United States, “many industries are operating below capacity for lack of foreign currency to pay for imports.”

For Ethiopia to advance to the next stage of development certain imbalances and bottlenecks in the economy have to be corrected, which the Homegrown Agenda intends to accomplish through macro and fiscal reforms.  The number one constraint to growth cited by manufacturing firms, is the shortage of foreign exchange. Access to financing, inefficiency in government, and insufficient infrastructure are also leading constraints to doing business in Ethiopia.  In an effort to address these limitations, the Homegrown Reform intends to shift from relying exclusively on public sector investment, which has led to a rise in Ethiopia’s debt, to promoting private sector financing.

Another area of concern for the government is relying on inefficient state-owned firms. A case in point is the military-run industrial conglomerate METEC, which is being investigated for corruption and suspicion of misappropriating public funds.

To complement the new reforms, it is recommended that the government make additional efforts to; discipline public expenditures, attract remittances through legal channels, and end contraband.

Ethiopia On The Road of Progress

The following indicators of economic growth are reported in    A Homegrown Reform Agenda: Pathway to Prosperity power-point. From 2004 to 2015, Ethiopia succeeded in reducing the percentage of people living in poverty-$1.90 per day or less- from 39% to 24%. From 2004 to 2018 per capita income grew from $200 per day to over $800. During that same time frame, child mortality (under age 5) decreased from 123 to 55 per 1000 live births, and life expectancy increased from 56 years to 66.  And from 2005 to 2016 the percentage of the population with access to electricity rose from 14% to 43%–a 300% increase.

Ethiopia aspires to reach the status of a “lower middle income” nation by 2025. This is an ambitious goal that will require; raising yearly per capita income from its levels of $856 to $2,219, reducing poverty from 27.3 % of the population to 13.8%, and increasing access to electricity to 86% of its citizens. For Ethiopia to achieve its objective in the next five years, it needs to mechanize its agriculture sector to be more productive and less labor intensive, and increase manufactured exports five-fold.

Ethiopia’s Job Offensive

Simultaneously, Ethiopia’s leadership is tackling the critical issue of unemployment, especially for the growing number of college educated youth, who are seeking jobs and upward mobility. Ethiopia’s Jobs Creation Commission-(JCC) announced on October 30, a bold plan to create 14 million jobs by 2025, and a total of 20 million new jobs by 2030. This will provide employment opportunities for millions of new entrants into their labor force. The government intends to create 3 million jobs in the budget year that began this July.

In partnership with the JCC, Mastercard Foundation presented its Young Africa Works Initiative–committing $300 million to assist in this job creation program.  Their focus will be generating new employment opportunities in the ICT and Small Medium Enterprises-(SME) sectors. According to the JCC website: “The Young Africa Works in Ethiopia is an initiative that will enable 10 million young people to access dignified and fulfilling work by 2030…It was designed in partnership with the government, the private sector, academic institutions, and young people and; is currently aligned with the Ethiopian government’s plan to create new jobs to spur economic growth.”

Economics and the Nation State

Ethiopia’s economy has been growing at a faster rate than other sub-Saharan nations. However, its prolific university system is graduating more young people than Ethiopia’s economy can employ. Simply put: despite the progress that Ethiopia has accomplished in reducing poverty and building physical infrastructure; the economy is not growing at a level fast enough to accommodate its large and expanding population.

Frustration over the slower than desired rate of development is being expressed by various elements of society. Economic well-being is a substantial motivation that underlies the anger by ethnic movements at those in power. Ethnic groups believe it is necessary to have “their leaders” in charge, in order to ensure a bigger slice of the “economic pie.” People, who judge that they are being economically neglected or marginalized can become desperate, and thus susceptible to being manipulated and aroused to take action against their own government.

To avoid such instigated conflicts, the only real and lasting solution is to create a “bigger economic pie” that equally satisfies the needs of all people regardless of geographical region or ethnicity. It is the unique responsibility, nay obligation, of the nation state to provide for the “general welfare” of its people and their posterity, as beautifully articulated in the preamble to the US Constitution. The nation state transcends (not negates) regionalism, ethnicity, and religion. Its primary concern is the continued existence of a single sovereign Ethiopian nation with one integrated and unified people.

The government is responsible for ensuring that every Ethiopian has the  necessities of food and shelter, and the opportunity for a meaningful life for oneself and one’s progeny. Deliberating on the best pathway to achieve these goals is the responsibility of every citizen. It is in the self interest of all Ethiopians to collaborate in securing a prosperous future for their nation.

Lawrence Freeman is a Political-Economic Analyst for Africa with thirty years of experience in Africa promoting infrastructure development policies.