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Visualising Ethiopia’s Economic Leadership (and Challenges) in the Horn of Africa

image: Wikimedia Commons

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The Horn of Africa has historically been one of the world’s most unstable regions, with internal strife, secessionism, interstate war, terrorism and piracy dominating the region for the latter half of the twentieth century, and the early years of the twenty-first. Things have changed in more recent times, however. But in recent years, the pattern which perhaps best defines the region today is uneven economic growth, and thus cause for cautious optimism.

This is demonstrated by the five charts below, tracing the GDPs, GDP growths, unemployment rates, different levels of mobile phone access, and estimated GDP growth for 2020 (in the wake of COVID-19) of the four countries in the region; Djibouti, Eritrea, Ethiopia, and Somalia. Particularly noticeable is not only Ethiopia’s size but also the rate of its growth when compared to its neighbours, though the country has several points of vulnerability.

Economic Size

The first chart shows the enormous gap between Ethiopia and the other three countries that neighbour it. Leveraging on its population (of more than 108 million people), its physical size and relative stability since the 1990s, the country has been able to grow despite its landlocked status, history of civil war, famines, ethnic tensions, and significant lack of mineral resources. Successfully diverting its exports to the port of Djibouti after the war with Eritrea in 1998, the country’s total GDP is about eight times the other countries in the region combined. Somalia, the state with the second-largest GDP, has a GDP 18 times smaller than Ethiopia’s. This gap is only set to expand, given the differences in GDP growth visualised in the second chart.

GDP Growth

In terms of GDP growth, the whole region has registered considerable amounts, with three of the fastest-growing countries (Ethiopia, Eritrea, and Djibouti) registering more than 7% in GDP growth per annum. Ethiopia is present here as well, being the fastest-growing economy in 2019. Moreover, growing from a comparatively higher base ($91.1 billion compared to Djibouti’s $2.9billion, Eritrea’s $2.6billion and Somalia’s $4.7billion), the country’s growth is unparalleled in real comparative terms.

Employment

Ethiopia also observes the lowest unemployment rate in the region, with less than 2% of its workforce out of employment. The principal sources of employment are agriculture (72.7%), followed by services (19.9%) and industry (7.4%). The country has been on an industrialising spree, with industrial parks as the principal strategy of attracting foreign direct investment geared towards light manufacturing of textiles, automobiles, and metals processing. Like most countries in the early stages of economic development, however, the country’s wages are still quite low. Nevertheless, if the trajectory of similar countries (most notably China) is anything to go by (and all other things being equal), this is set to transform over the next number of decades as the country ascends to middle-income status. Moreover, the low-wage factor has been one of the country’s major points of FDI attraction.

Connectivity

Mobile phone access in Ethiopia is also the strongest in the region, with more than 56% of its population having at least one mobile phone. The country’s telecommunication industry is dominated by Ethio Telecom, the government-operated monopoly.

Post-COVID-19 Economies

The effects of COVID-19 are unclear, but they will short-circuit many developing countries’ economies. IMF revised estimates place the region’s prospects quite favourably nonetheless, with Eritrea estimated to grow by 7.9%, followed by Ethiopia and Somalia at 3.2%, and 1.3%.

For all its strengths, however, Ethiopia is also marked by some vulnerabilities from outside as well as within. Firstly, the country’s GDP per capita of $953 is dwarfed by Djibouti’s $2,787, although it still outranks Eritrea ($332) and Somalia ($348).Secondly, most of its trade is not with its neighbours. While most of its exports are through Djibouti, the country has almost no interdependence with Eritrea and Somalia. This means most of its growth and the growths of its neighbours are not intertwined, despite the impetus for regional integration. Indeed, the country has previously gone to war with two of its neighbours – Somalia and Eritrea – over disputed territory. With talks over the disputed Badme region came the prospect of the port of Massawa, however. These leaves open the prospect that the country’s channels of export will be further enhanced, especially its noticeable industrial base in its north. However, reports of local communities on preventing soldiers from retreating (and thus re-opening the border) indicate that the path to interdependence will require trust-building and may perhaps not be easily divorced from domestic politics of either side. Ethiopia’s goal of energy self-sufficiency in electrification through the waters of the Blue Nile (which commences in Ethiopia’s Lake Tana) are also cause for tense relations with Egypt, with the timeframe of the filling-up of the dam being a particular bone of contention. Given these tensions, it is sensible that most of the work with which the regional body, IGAD, is preoccupied with peacebuilding in Somalia more than with economic issues.

COVID-19 has also put on hold one of the most anticipated elections in recent Ethiopian political history. The country’s Prime Minister, Abiy Ahmed, who took over an uncompleted term of his predecessor Hailemariam Desalegn, is seeking to obtain a fresh mandate of his own. Not only does the election mark the first electoral run of the newly formed Prosperity Party, formed after the consolidation of the previous coalition of ethnic-based parties (Ethiopian People’s Revolutionary Democratic Front), but also some economic policies. Importantly, however, the northern-based Tigray People’s Liberation Front has not taken part in the merger. The next election will, therefore, be an implicative one for Ethiopia’s future growth and future role in the region.

Bhaso Ndzendze is the Research Director at the University of Johannesburg-Nanjing Tech University Centre for Africa-China Studies (CACS). His research interests include international economics, security studies, and International Relations methodology and he has taught and written on Africa-China relations, the politics of the Middle East, soft power, and the war on terror among other topics at the University of the Witwatersrand. His work has appeared in numerous journals and in the popular press including Business Day, Mail and Guardian, The Sunday Independent and The Mercury among others. His most recent publication is the Beginner’s Dictionary of Contemporary International Relations.

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Africa

The Transitioning Democracy of Sudan

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Sudan has been the focus of conflict for much of its six decades as an independent nation. Despite being an anomaly in a region crippled with totalitarian populism and escalating violence, the country hasn’t witnessed much economic or political stability in years. While the civic-military coalition, leading a democratic transition towards elections, has managed to subside the fragments of civil war, growing hostility in the peripheries has begun threatening the modest reforms made in the past two years. The recent coup attempt is a befitting example of the plans that are budding within the echelons of the Sudanese military to drag the country back into the closet. And while the attempt got thwarted, it is not a success to boast. But it is a warning that the transition would not be as smooth a ride as one might have hoped.

The problems today are only a reflection of Sudan’s issues in the past: especially which led to the revolution. The civil unrest began in Sudan back in December 2018. Sudan’s long-serving ruler, Omer al-Bashir, had turned Sudan into an international outcast during his 30-year rule of tyranny and economic isolation. Naturally, Sudan perished as an economic pariah: especially after the independence of South Sudan. With the loss of oil revenues and almost 95% of its exports, Sudan inched on the brink of collapse. In response, Bashir’s regime resorted to impose draconian austerity measures instead of reforming the economy and inviting investment. The cuts in domestic subsidies over fuel and food items led to steep price hikes: eventually sparking protests across the east and spreading like wildfire to the capital, Khartoum.

In April 2019, after months of persistent protests, the army ousted Bashir’s government; established a council of generals, also known as the ‘Transitional Military Council.’ The power-sharing agreement between the civilian and military forces established an interim government for a period of 39 months. Subsequently, the pro-democracy movement nominated Mr. Abdalla Hamdok as the Prime Minister: responsible for orchestrating the general elections at the end of the transitional period. The agreement coalesced the civilian and military powers to expunge rebellious factions from society and establish a stable economy for the successive government. However, the aspirations overlooked ground realities.

Sudan currently stands in the third year of the transitional arrangement that hailed as a victory. However, the regime is now most vulnerable when the defiance is stronger than ever. Despite achieving respite through peace agreements with the rebels in Sudan, the proliferation of arms and artillery never abated. In reality, the armed attacks have spiraled over the past two years after a brief hiatus achieved by the peace accords. The conflict stems from the share of resources between different societal fractions around Darfur, Kordofan, and the Blue Nile. According to UN estimates, the surging violence has displaced more than 410,000 people across Sub-Saharan Africa in 2021. The expulsion is six times the rate of displacement recorded last year. According to the retreating UN peacekeeping mission, the authorities have all but failed to calm the rampant banditry and violence: partially manifested by the coup attempt that managed to breach the government’s order.

The regional instability is only half the story. Since the displacement of Bashir’s regime, Sudan has rarely witnessed stability, let alone surplus dividends to celebrate. Despite thawing relations with Israel and joining the IMF program, Sudan has felt little relief in return. The sharp price hikes and gripping unemployment which triggered the coup back in 2019 never receded: galloped instead. Currently, inflation runs rampant above 400%, while the Sudanese Pound has massively devalued under conditions dictated by the IMF. And despite bagging some success in negotiating International debt relief, the Hamdok regime has struggled to invite foreign investment and create jobs: majorly due to endemic conflicts that still run skin-deep in the fabric of the Sudanese society.

While the coup attempt failed, it is still not a sigh of relief for the fragile government. The deep-rooted analysis of the coup attempt reveals a stark reality: the military factions – at least some – are no longer sated in being equal-footed with a civilian regime. Moreover, the perpetrators tried to leverage the widening disquiet within the country by blocking roads and attempting to sabotage state-run media: hoping to gain public support. The population is indeed frustrated by the economic desperation; the failure of the coup attempt means that people have still not given up hope in a democratic government and a free-and-fair election. Nonetheless, it is not the first tranche of the army to rebel, and it certainly won’t be the last. The only way to salvage democracy is to stabilize Sudan’s economy and resolve inter-communal violence before leading the county towards elections. Otherwise, it is apparent that Bashir’s political apparatus is so deeply entrenched in Sudan’s ruling network that even if the transitional government survives multiple coups, an elected government would ultimately wither.

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Money seized from Equatorial Guinea VP Goes into Vaccine

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As a classic precedence, the Justice Department of the United States has decided that $26.6m (£20m) seized from Equatorial Guinea’s Vice-President Teodorin Nguema Obiang Mangue be used on purchasing COVID-19 vaccines and other essential medical programmes in Equitorial Guinea, located on the west coast of central Africa.

“Wherever possible, kleptocrats will not be allowed to retain the benefits of corruption,” an official said in a statement, and reported by British Broadcasting Corporation.

Obiang was forced to sell a mansion in Malibu, California, a Ferrari and various Michael Jackson memorabilia as part of a settlement he reached with the US authorities in 2014 after being accused of corruption and money-laundering. He denied the charges.

The agreement stated that $10.3m of the money from the sale would be forfeited to the US and the rest would be distributed to a charity or other organisation for the benefit of the people of Equatorial Guinea, the Justice Department said.

The UN is to receive $19.25m to purchase and administer COVID-19 vaccines to at least 600,000 people in Equatorial Guinea, while a US-based charity is to get $6.35m for other medical programmes in Equatorial Guinea.

Teodorin Nguema has been working in position as Vice-President since 2012, before that he held numerous government positions, including Minister of Agriculture and Forestry. Known for his unquestionable lavish lifestyle, he has been the subject of a number of international criminal charges and sanctions for alleged embezzlement and corruption. He has a fleet of branded cars and a number of houses, and two houses alone in South Africa,

Teodorin Nguema has often drawn criticisms in the international media for lavish spending, while majority of the estimated 1.5 million population wallows in abject poverty. Subsistence farming predominates, with shabby infrastructure in the country. Equatorial Guinea consists of two parts, an insular and a mainland region. Equatorial Guinea is the third-largest oil producer in sub-Saharan Africa.

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African Union’s Inaction on Ethiopia Deplorable – Open Letter

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The crisis in northern Ethiopia has resulted in millions of people in need of emergency assistance and protection. © UNICEF/Christine Nesbitt

A group of African intellectuals says in an open letter that it is appalled and dismayed by the steadily deteriorating situation in Ethiopia. The letter, signed by 58 people, says the African Union’s lack of effective engagement in the crisis is deplorable. The letter calls on regional bloc IGAD and the AU to “proactively take up their mandates with respect to providing mediation for the protagonists to this conflict”.

The letter also asks for “all possible political support” for the AU’s Special Envoy for the Horn of Africa, Olusegun Obasanjo, whose appointment was announced on August 26, 2021. A United Nations Security Council meeting on the same day welcomed the former Nigerian president’s appointment.

Earlier in August 2021, UN  chief Antonio Guterres appealed for a ceasefire, unrestricted aid access and an Ethiopian-led political dialogue. He told the council these steps were essential to preserve Ethiopia’s unity and the stability of the region and to ease the humanitarian crisis. He said that he had been in close contact with Ethiopian Prime Minister Abiy Ahmed and had received a letter from the leader of the Tigray region in response to his appeal. “The UN is ready to work together with the African Union and other key partners to support such a dialogue,” he said.

August 26, 2021 was only the second time during the conflict that the council held a public meeting to discuss the situation. Britain, Estonia, France, Ireland, Norway and the United States requested the session.

Fighting between the national government and the Tigray People’s Liberation Front broke out in November 2020, leaving millions facing emergency or crisis levels of food insecurity, according to the United Nations. Both sides have been accused of atrocities.

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