How did Abiy Ahmed behave as prime minister?
Now everyone is looking to him to fix Ethiopia in the aftermath of Covid-19, a civil war and a partially boycotted election. Here are three categories by which we will classify the Prime Minister.
Privatization (and partnerships)
Two bidders have submitted bids for the Ethiopia telecommunications license. The country’s leaders have accepted the offer of the consortium made up of Kenyan Safaricom and South African Vodacom, subscribed with funding from the British group CDC, the Japanese company Sumitomo and the American development finance company (DFC).
As part of its offer, the consortium has pledged to spend $ 8 billion on operations in the country over the next ten years. Despite the economic sanctions against the country, the DFC appears ready to release the initial funding of $ 500 million.
The losing bid came from MTN backed by China’s Silk Road Fund. Financial support from the United States and the United Kingdom is likely to prevent this consortium from using Huawei or ZTE technology and equipment.
These two realities Some observers see the result as a rejection from China, especially as Ethiopia originally sought to award two licenses, but later decided to issue only one.
How to rate Abiy?
First, let’s see what the strategy is with China and the United States: Ethiopia’s leaders continue to choose (rightly) when to engage either country.
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Second, what will happen to the 40% of Ethiopia Telecom who is now on sale? Some Chinese donors will sniff out this opportunity.
Third, how will the country privatize other industries in the future and to attract foreign investment?
The telecommunications license ceremony did not necessarily look like a true act of privatization if Kenyan President Uhuru Kenyatta was the guest of honor at a signing ceremony – typically this type of event involves two CEOs (or more ) in their private sector signing capacities. contract and make a joint press announcement (but we will ignore this point for this discussion).
Finally, Covid-19 (and to be honest a civil war), surprised many foreign investors, and the return of these investors depends on news from Ethiopia over the next two months regarding elections and peace (hence the second category of assessment).
The Covid-19 pandemic twice delayed the general elections, initially scheduled for August 2020. Then a civil war erupted in the Tigray region in November, with the Abiy government declaring the Popular Front for the Liberation of Tigray a terrorist group .
Ethiopia and Eritrea sent forces in the region to fight the Tigray forces with charges of human rights violations and rape against the two armies. The fighting has displaced more than 1.7 million people from their homes and left more than five million people in need of food assistance, according to the UN.
Last week’s election was a surprise for some locals who assumed there might be another delay. On the other hand, the lack of delay and the boycotts of the main opposition parties, including the Oromo Federalist Congress, paved the way for victory for Abiy.
But what will Abiy do next?
The 2019 Nobel Peace Prize laureate now has to answer questions about the future of Ethiopia’s democracy and how he can keep the country united.
The peace agreement with Eritrea cannot be taken off the record or overdone given the border war that has separated families for decades.
Yet the legacy of Abiy will depend heavily on the peace made in the country AND the region. This is a sizeable challenge for any leader, let alone the Nobel Peace Prize laureate and almost designated “savior” in some Ethiopian circles.
Former US President Barack Obama knows something about winning a Nobel Peace Prize and then having partially unattainable expectations afterwards, especially for conflicts (i.e. Libya, Afghanistan, etc.) that are too complex and too dynamic for a country (or leader) to resolve.
Prosperity, in this context, is economic but depends very much on a post-electoral peace for several reasons. First, war and violence cost the country lives and money.
Second, the US sanctions and the blocking access to new loans from multilateral development banks compromises the country’s ability to carry out normal activities. Rumors continue to circulate that the IMF and the World Bank could be drawn further into the battle for sanctions.
Third, the country’s debt restructuring process under the G20 Common Framework (GCF) remains blurred by violence and elections. The restructuring process was going to be slow anyway – look at the processes in Chad and Zambia for examples.
the Moody’s downgrade in May did not help the situation. Moody’s highlighted the country’s tight finances and the growing risk in the private sector credit market. The country currently only serves some private creditors and China.
Some skeptics believe that the choice of a telecommunications offering funded by the US and UK was also the result of Chinese lack of flexibility with Ethiopia on debt repayment in the current market.
How does Abiy achieve prosperity?
The main objective is to grow real GDP.
Along with economic growth, there is an urgent need for financing to tackle the growing social and economic challenges on the ground among Ethiopia’s most vulnerable. Success on both fronts is key – anything less will be unacceptable.