Ethiopia students return to school with Holt’s support

Ethiopia students return to school with Holt’s support

allAfrica.com: Africa: Facebook Reaches a Landmark 100-Million Users in Africa Through Mobile

allAfrica.com: Africa: Facebook Reaches a Landmark 100-Million Users in Africa Through Mobile

Can a Robot Be Your Boss?

http://knowledge.wharton.upenn.edu/article/can-robot-boss/

Jazz and Poetry night in Addis Ababa

The Nile Conundrum: Ethiopia, Sudan and Egypt Getting to the bottom of the ‘Historical Water Rights’ Impasse & Crafting a win-win Diplomacy

The Nile is a river shared by ten riparian States that are among the ten poorest in the world and that necessitate the development of the Nile Water resources by all riparian States. The 1929 agreement was signed between Great Britain (albeit representing its colony, Egypt) and Great Britain, which also represented at the time Uganda, Kenya, Tanganyika (now Tanzania) and Sudan. The document gave Cairo (under colonial administration by London) the right to veto projects higher up the Nile that would affect its water share. The treaty for the full utilization of the Nile, concluded between Egypt and the Sudan in 1959, divides the entire flow of the Nile between the two countries. Other riparian countries, notably Ethiopia - a country with a population of 90 million today and which contributes about 86% of the annual discharge of the Nile - to date use only less than 1% of it.

Ethiopia, a nation known as the water tower of North-East Africa is the epicenter of famines. Surface water resources in Ethiopia flow in 12 major river basins. It is estimated that an average of 122.19 billion cubic meters of water is annually discharged from the Abay (Nile), Tekeze, Shebelle, Baro and Omo-Gibe river basins with an estimated 3.5 million ha of irrigable land. Hence, the long-term objective is to establish once and for all a nation that can ensure its citizenry human development and human security.

In 1984, a famine began to strike Ethiopia with apocalyptic force. Westerners watched in horror as the images of death filled their TV screens: the rows of fly-haunted corpses, the skeletal orphans crouched in pain, the villagers desperately scrambling for bags of grain dropped from the sky. What started out as a trickle of aid turned into a billion-dollar flood. (Serrill, MS, TIME –CNN, 1987) For more than two decades, nearly half of Ethiopians have experienced some degree of food insecurity and malnutrition. Approximately five million are chronically food insecure, i.e., unable at some time in any year to secure an adequate supply of food for survival.

Ethiopia could not develop its water resources to feed its needy population, mainly because of policies of international financial institutions (IFIs), augured on British colonial dictat, which have made it difficult for upper riparian countries to secure finance without the consent of Egypt. Foreign direct investments for the development of the Nile waters have been almost out of the question. The downstream riparian States, therefore, have maintained the right to veto the development endeavors of the upstream States. The Nile status quo was such that Ethiopia, whose name has almost become synonymous with drought and famine, is condemned, while two downstream States have almost utilized the entire water flow. Moreover, Sudan and Egypt introduce new mega-irrigation projects even further. As a result, upper riparian countries are naturally left with very little choice other than to resort to a reciprocal measure of unilateralism even if as feared by many that it may trigger conflict, it becomes a better drive for collaboration (Milas, 2013)

 For more than five decades Egypt’s political leaders have claimed ‘historic rights’ to control of the Nile waters, punctuated by threats of war against any upstream country that might attempt to build dams or water infrastructure on the river. This became a prominent feature of Egypt’s Nile policy after the construction of the Aswan High Dam by the Soviet Union. The late President Anwar Sadat realigned his country with the West, made peace with Israel and announced that the only thing that could bring Egypt into war again would be if any country threatened Egypt’s control of the Nile waters. Egypt’s peace agreement with Israel opened Cairo’s way to aid agreements with the United States and to Egyptian access to strategic positions in the World Bank and other IFIs, which they could influence against lending for water infrastructure in upstream states without the agreement of downstream states. To build it, they would need loans from the IFIs, which were unlikely to be available without Egypt’s agreement, especially in view of propaganda that such loans might possibly lead to war. Now however, there are many other sources of funding, like China. (Ibid)

Now that Ethiopia is building The Renaissance Dam expected to produce around 6000 megawatts of electricity in the Blue Nile Gorge near the border with Sudan, Cairo is nervous that the waters of the Nile might be in jeopardy. While Egyptian President Mohamed Morsi has tried to dampen down embarrassing suggestions that Egypt might use military power over disagreements concerning the Nile waters, the hard-talk from the Egyptian side. This is despite the fact that the report of an independent panel of experts from Egypt, Ethiopia and Sudan had concluded that the hydropower dam would not significantly reduce the flow of water reaching Sudan and Egypt, as the water merely has to pass through the dam’s turbines and come out the downstream side to produce hydroelectricity.

President Museveni has sternly stressed that the biggest threat to the Nile is continued under-development in the tropics i.e. lack of electricity and lack of industrialization. On account of these two, peasants cut the bio-mass for fuel and invade the forests to expand primitive agriculture. Here in Uganda, the peasants destroy 40 billion cubic metres of wood per annum for firewood. They also invade the wetlands to grow rice, he noted. This interferes with the transpiration that is crucial for rain formation. Our experts have told me that 40 percent of our rain comes from local moisture - meaning from our lakes and wetlands. Ironically, said Museveni, the Egyptians wanted to drain the wetlands in South Sudan through the Jonglei canal. It was one of the causes for the people of South Sudan to wage war against Khartoum, which was collaborating with Egypt’s misguided and dangerous policies of that time (Allafrica.com, 2013)

http://issuu.com/costantinos/docs/the_nile_conundrum__ethiopia_and_eg,

A Human Security Strategic Framework for the Greater Horn of Africa Sub-Regional Peace and Security Strategy

The post WWII human community had the firm belief that a global collective security system capable of limiting the misery of people living under conflicts and complex emergencies would have emerged. Fifty years on, notwithstanding an array of declarations, communiqués and action programmes, the humanitarian crisis continues unabated, while rapid political developments continue to make new demands on individuals and communities already at the brink of collapse. It seems there is too much readiness for uncoordinated and unilateral action within the GHA community of leaders without meaningful and adequate understanding, let alone agreement, on critical issues with their political organisations and constituencies. Addressing these requires an agenda promoting good governance and economic development ensuring freedom from want -- the basic idea that violence, poverty, inequality, diseases, and environmental degradation are inseparable concepts in addressing the root causes of human insecurity -- and freedom from fear -- that seeks to limit the practice of human security to protecting individuals from violent conflicts. The purpose and the contents of the Human Security component of the GHA strategy designed to develop capacity to mobilise nations and civil societies to direct policies and programmes to address the compelling and evolving implications of human insecurity; so that it does not further reverse human and social capital development in the sub-Region. Applied data collection focused on affordable and useful techniques where documents at all levels were consulted for stakeholders views, experience and inputs in the identification of lessons learned and formulation of recommendations for the human security framework.

Key words: Human Security, freedom from want, freedom from fear, human capital, social capital

http://issuu.com/costantinos/docs/a_human_security_framework_for_the_

Devaluation, Trade Balance & Livelihood Sustainability in Ethiopia

 Devaluation, Trade Balance & Livelihood Sustainability in Ethiopia

Costantinos, Aug 2014

        Governance is a conscious management of regimes with the aim of enhancing the effectiveness of political authority. It can be thought of as the applied realm of politics, in which political actors seek mechanisms to convert political partiality into managing society and the economy. Economic governance involves improvements in the technical competence and efficiency under a more accountable, transparent and predictable public policy domain. The missing links in economic governance and participation in the global arena point to the dismal policy performance of states that can be attributed to poor economic governance policies and fragility of states. The importance of the missing link in such a convergence of the economic, social, and political schema reflects an emerging consensus on the mutually reinforcing role of these arenas that emphasize the political context of development. 

            The economic & developmental agenda focuses on rehabilitating the role of the State in its core regulatory functions and link sustainable development to political liberalization. Such paradigmatic bonds notwithstanding, the definition of good governance is mired in the dilemma of an Africa that is growing rapidly, but the gloomy pace of translating such growth into sustainable livelihoods can be attributed to state dominance of the commanding heights.

      On 25 Sept. 2010, the Ethiopian Management Professionals Association held a Symposium on Management Priorities of the newly re-elected Ethiopian Government - Ethiopia: Public Management Priorities 2010 – 2015 at the AAU CBE campus. At that time, Ciuriak &  Previlleit (2010) on whose submission this article is based, asserted that as the government faces the usual panoply of challenges endemic in developing countries. Against a background of too few instruments and too few resources, it had to grapple with the perennial problem of managing development: sequencing of policy reforms, all subject to the political constraints of containing the disruptive impacts of policy reforms to acceptable levels. Given the very narrow margins for manoeuvre imposed by fiscal and external deficits, subsistence levels of household income for much of the population and a complex ethnic/regional weave in its social fabric; this is a particularly important problem for Ethiopia. Getting the priorities right was the central agenda of the Symposium.

This write up is inspired by the talk of massive devaluation recommended by the World Bank recently. The surprise 22% devaluation of the Birr on Aug 31, 2010, designed to boost export performance, represents an important recognition by the government that its policy setting had been a factor in inhibiting Ethiopia’s external performance. However, by itself, this move fell short of addressing the problem, which reflected numerous complex factors.  In the first instance, given the role that the exchange rate peg had played in promoting domestic price stability, the series of devaluations leave open the question whether the strategy will maintain macroeconomic stability while it seeks to boost export performance.   Moreover, it is not out of question that the devaluation alone might prove to be disappointing in terms of its impact on trade performance. In the very short term due to a “J-curve” response whereby the trade balance initially deteriorates as import costs are driven up while the export response is slow to take effect.

       This article argues that Ethiopia’s trade performance has been held back by a combination of factors that are amenable to policy treatment: very high trade costs, onerous red tape and a confusing macroeconomic framework and policy mix that seem with reach only elude, seems tractable only to resist realization. Similarly, it argues that targeted infrastructure and regional cooperation developments, in conjunction with a trade-friendly macroeconomic policy and domestic administrative reforms would, if properly sequenced, enable Ethiopia to use its abundant factor of production: natural resources and cheap labor. 

      The concerns that stand out in the latter are, first, the Marshall-Lerner condition states that the trade balance will correct if the sum of the import and export demand elasticities is greater than one. In the context of a developing country which is importing goods for which there are no domestic substitutes, and is exporting commodities for which demand tends to be price inelastic, the sum of the trade elasticities may indeed be less than unity. In a developing country with a highly skewed income distribution, imports are likely to fall into two broad categories: basic necessities and/or production inputs which would naturally have low price elasticities and luxury goods, for whom the devaluation would constitute a relatively minor deterrent.  For both reasons, overall import demand may be quite price inelastic.

           As Prof. Hassan (2014) asserts, “to see the paradoxical and non-market driven nature of the Ethiopian situation, one can look into, for example, the long-time co-existence of high inflation rates and low interest rates. There is a difference between nominal and real exchange rates. The nominal exchange rate is the price of birr in terms of a foreign currency. This is indicated by the birr-U.S. dollar exchange rate, which was $1 = 19.7720 birr as of July 30. 2014. Just before 31 August 2010, the birr/dollar exchange rate was 13.6284. On 1 Sept. 2010, the birr was quoted by the NBE at a weighted average of 16.3514 birr against the U.S. dollar. Given the current rate of 19.7720, the reader can easily observe that the birr was continuously and quietly devalued by about 21% since Sept. 2010. At the same time, annual inflation rates in Ethiopia from 2005 to 2013, respectively, were 9.95%, 12.20%, 17.25%, 43.80%, 10.57%, 8.12%, 33.00%, 23.33% and 8.07%. The reader can observe from this that the exchange rate has not been coping with the country’s inflation rates”.

      Further, market structure may work to dampen the impact of the devaluation. Commodities produced by developing countries are often sold into commodity markets dominated by a few major international buyers whose market power enables them to appropriate the rents; because of this market structure, it is quite possible for the devaluation to boost the profits of multinational buyers with little of the benefit trickling down to the Ethiopian producers. By the same token, this would limit the supply response and thus the extent of correction in the external balance. At the same time, given high margins in Ethiopia’s distribution system, import price changes due to the devaluation may not be fully passed on by importing wholesalers to final buyers (e.g., if importers seek to maintain volumes on those import items that are price elastic), which would also work to reduce the overall correction in the trade balance. Finally, it is important to take into account the impact of the devaluation on the cost of some of the commodities that are part of the value chain for domestic production and exports. 
           Ethiopia’s main imports are petroleum products, fertilizer, edible oil, wheat, clothing and machinery and industrial goods for the massive infrastructure development taking place. None is a luxury good that can be curtailed by a devalued Birr. On the flip side, one can ask what rationale can revolutionize the monetary value of raw coffee and sesame in a devalued Birr. National economic management is complex. Powerful manifestation of this dictum is the fact that getting this process to work undoubtedly reflects the fact that economic development does not evolve out of a wish list. It is systemic in that it involves the generation of a complex ecology of different types of firms interacting with a host of trade partners and building infrastructure and institutions that in the end, the economy’s output transforms the jobs and knowledge base of its workers.

         Accordingly, a more comprehensive policy response of adjusting the monetary policy mix, expanding Ethiopia’s industrial supply capacity and reducing trade costs, policy commitment to enhance the role of the global private sector and confidence building in its citizenry, sustained over the long-term, is required to redress a situation generated by decades of policy settings inimical to good export performance.