Why Play with Fire

This is a very thoughtful and a balanced article on the issue of privatization of key public assets in Ethiopia. It cautions the citizens as well as government officials not to rush in to conclusions based on simplistic ideas. I have always been concerned with people who say that the market will solve everything.

Mekonen Haddis, Professor

 

Why Play with Fire
By Kebour Ghenna

I don’t care if I sound an old fart for saying that privatization of Ethio-Telecom is not a necessary and indispensable for the broader economic liberalization reforms that’s taking place in Ethiopia today. Indeed, privatization of Ethio-Telecom goes against the interest of the nation.

Watch out, Dear Reader, unless you question, confront, and civilly resist this bad deal, we will all lose, and lose big!
In a recent press release of the Ministry of Finance of Ethiopia you will read the following simplistic statement to justify the privatization of Ethio-Telecom:

<<<“Partial privatization of Ethio-Telecom and private investment in the expanded telecommunications market will also contribute to attracting foreign direct investment, support the country’s effort to improve ease of doing business and its wider economic reform agenda. Furthermore, it will generate revenues through license fees, taxes and dividends that will contribute to overall economic restructuring.”>>>

I don’t know about you, but me I don’t see Mr. Market attracting foreign direct investment because of Ethio-Telecom partial privatization. I don’t see how this privatization will improve business or enhance reforms, or even bring more revenue than the state owned Ethio-Telecom. In any case if the above are the most compelling argument the Ministry can come up with for justifying the partial divestiture of Ethio-Telecom, then we’re in trouble. Really heartbreaking that this government failed to put together the official rationale for the privatization policy, and chose instead to favor privatization in a vacuum.

Anyway me, I stick with my initial advice. I say, don’t sell 20%, 30% or 49% of Ethio-Telecom. Don’t sell Ethio-Telecom, until the government builds its capacity to manage markets and move beyond the direct government monopoly of the past. In other words I argue for a government that invests in bringing speed, flexibility, and responsibility in its public enterprises but also in engaging citizens in the public service delivery process. This balance between markets and deliberation recognizes citizens are more than consumers, and government is more than a market player. Indeed, in the political space Ethiopia finds itself today, it’s critical for the government to create the space for collective deliberation to occur and through this process a sense of the social is built.

So for now, I repeat don’t sell Ethio-Telecom.

Because the privatization of Ethio-Telecom at this stage is a capital-killing move.

And yet today Ethiopia needs real capital – and Ethio-Telecom is that cash cow that can help the state with ready money. But the geniuses at the Ministry of Finance want to sell the cow and buy its milk, instead of making Ethio-Telecom efficient and get more money to work with, to build upon, or to create more output (this is hard work), they (the geniuses) choose to get rid of its major asset in return for crumbs (easy work). Sad!

Yes, the role of government is not simply to just make money, but also to serve citizens. Governments must have the capacity to help citizens come together to identify problems and to debate choices. Learning to solve collective problems, to engage the citizens and to practice deliberation – these are the foundations for a democratic society. This is what Ethiopia needs.

Remember the private sector would only be interested to acquire profitable or potentially profitable enterprises and activities, leaving loss-making SOEs in public hands, thus exacerbating the public sector’s fiscal burden. So I say to our leaders, don’t accept privatization as a condition for support from the World Bank. To the contrary, remain actively engaged as a market player directly providing services and contracting out certain activities, when necessary, to ensure competition, efficiency, service quality, ownership and broader public objectives.

I repeat again, selling Ethio-Telecom would be very bad for Ethiopia’s future.
So, okay, yes, Ethio-Telecom needs to do more to improve its services, so why not fix this problem now? Why is this government afraid to turn bold, and start rebuilding its internal service delivery capacity. Why is it too apprehensive to adopt a new approach that transforms state owned enterprises into efficiently run companies, as has been demonstrated by, say, our own Ethiopian Airlines. Why doesn’t it realize, privatized companies will not guarantee that the public interest will effectively be served? It would have been laudable if this government concentrated in streamlining business procedures, encouraged operational transparency, increased competition, and developed efficient tax and customs processes to attract investors. In fact, the key question here is whether the ostensible efficiency and welfare gains from partial privatization could have been achieved without such recourse. For example, could such gains have been achieved through other means of ensuring greater autonomy, flexibility or managerial reform, such as through corporatization and commercialization?

Today governments across the world are moving beyond the dichotomy of markets or planning, and instead embrace a mixed position which complements the advantages of markets with the benefits of public engagement. We are increasingly seeing such shifts away from competitive tendering among the early privatizers: the UK, Australia, New Zealand, and the US.

Let’s be perfectly clear, the World Bank and IMF’s ‘neo-liberal’ policy prescriptions involving liberalization, deregulation and privatization have not, and will not bring prosperity to Ethiopia. And privatizing Ethio-Telecom will neither contribute to the development of the telecom and related sectors nor reduce the government’s debt obligations. I don’t know the amount of money the government expects from the partial sale of Ethio-Telecom, but whatever that figure (which will hover around USD 300-400 million), this privatization may only postpone a fiscal crisis by temporarily reducing the government’s fiscal deficits, but it would certainly not resolve the underlying problem because the government would in the end lose income, and would be stuck with financing requirements.

By the way, once the government signs over part or all of Ethio-Telecom to a private company, withdrawing from the agreement borders on the impossible.

So why play with fire?

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The Retainer Solution: the European Union, Libya and Irregular Migration

A wonderful article on the international refugee crisis, the shaky international refugee policy, and the dire situation in Libya.

Mekonen Haddis (Professor)

The Retainer Solution: the European Union, Libya and Irregular Migration

There is a venom in international refugee policy that refuses to go away: officials charged with their tasks, passing on their labours to those who might see the UN Refugee Convention as empty wording, rather than strict injunction carved upon stone. They have all become manifest in the policy of deferral: humanitarian problems are for others to solve. We will simply supply monetary assistance, the machinery, the means; the recipients, like time honoured servants, will do the rest.

The European Union, and some of its members, have their own idea of a glorified servant minding their business in North Africa. The EU Emergency Trust Fund for Africa is the pot of gold; the recipient is Libya, an important “transit country for migrants heading to Europe.” Such a status makes Libya the main point of outsourced obligations associated with human traffic. Using Libya supposedly achieves the objectives of the Joint Communication ‘Managing flows, saving lives’ (never pass up the chance to use weasel words) and the Malta Declaration.

In responding to the regional refugee crisis, the EU mires itself in the wording of bureaucracy, machine language meant to be inoffensive. The first phase of the “Support to Integrated border and migration management in Libya” sounds like an allocation of mild tasks, a simple case of proper filing. In summary, it “aims to strengthen the capacity of relevant Libyan authorities in the areas of border and migration management, including border control and surveillance, addressing smuggling and trafficking of human beings, search and rescue at sea and in the desert.” A casual takeaway from this is that the EU is not merely being responsible but caring, assisting a country to, in turn assist migrants and refugees from making rash decisions, saving them when needed, and protecting them when required.

According to its unconvincing brief, “the EUTF for Africa pays particular attention to protection and assistance to migrants and their host communities in the country in order to increase their resilience.” In arid language, there is lip-service paid to “support a migrant management and asylum in Libya that is consistent with the main international standards and human rights.”

Such documents conceal the appallingly dire situation of Libya as the sponsored defender of Europe against irregular arrivals. Money sent is not necessarily money well spent. Detention centres have become concentrations of corrupted desperation, its residents exploited, tormented and kidnapped.

Accounts of torture in such camps have made their way to Human Rights Watch and Amnesty International. In July 2018, Human Rights Watch paid a visit to four detention centres in Tripoli, Misrata and Zuwara. The organisation found “inhumane conditions that included severe overcrowding, unsanitary conditions, poor quality food and water that has led to malnutrition, lack of adequate healthcare, and disturbing accounts of violence by guards, including beatings, whippings, and the use of electric shocks.”

The EUTF for Africa lacks human context; dull, bloodless policy accounts make little mention of cutthroat militias jousting for authority and the absence of coherent, stable governance. In May, the UN High Commissioner for Refugees spokesperson Charlie Yaxley claimed that the UNHCR was “in a race against time to urgently move refugees and migrants out of detention centres to safety, and we urge the international community to come forward with offers of evacuation.”

Such races have tended to be lost, and rather badly at that. The militias are on the move, and one war lord eager to make an impression is Khalifa Haftar. On July 3, some fifty people perished in an airstrike when two missiles hit a detention centre in Tripoli hosting 610 individuals. The finger pointing, even as the centre continued to burn, was quick, with blame duly allocated: Italy’s interior minister Matteo Salvini, and Libya’s UN-recognised and misnamed Government of National Accord (GNA) saw the hand of Haftar’s Libyan National Army. The intended target, according to LNP general Khaled el-Mahjoub, had been the militia camp located in the Tajoura neighbourhood.

Salvini, for good measure, also saw another culprit in the undergrowth of responsibility. While the rest of the EU could not shy away from this “criminal attack”, France would prove an exception, given their “economic and commercial reasons” for supporting “an attack on civilian targets.” Salvini is right, up to a point: France has an interest in supporting Haftar, given its interest in the eastern Libyan oilfields which he controls. The EU continues to speak in harshly different voices, none of them particularly humanitarian.

The UN special envoy for Libya, Ghassan Salamé suggested that the strike “clearly could constitute a war crime” having killed people “whose dire conditions forced them to be in that shelter.” The envoy’s formulation was striking: it was not the fault of GNA authorities who had detained migrants near a military depot; nor did the EU harbour any responsibility for having ensured the conditions of “managed” traffic flow that had led to the creation of detention centres.

The debate that followed was all a matter of logistical semantics; the camps proved to be, yet again, areas of mortal danger and hardly up to the modest standards of the EU’s refugee policy. To add to the prospects of future butchery, 95 more people have been added to the Tajoura centre. The cruel business has resumed.

BINOY KAMPMARK

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