Saturday, July 13, 2024

‘So yes I am against privatization if privatization is not based primarily on pragmatic analyses’


Capital sat down with Kebour Ghenna, former President of the Ethiopian and Addis Ababa Chambers of Commerce and current Executive Director of the Pan African Chamber of Commerce and Industry to discuss about his views on the current situation of the country. Excerpts:


Capital: What can you tell us about the future of democracy in Ethiopia, and the rise of ethnic nationalism?
Kebour Ghenna: The race to nationalism seems to make headways. The problem however, is that Oromo nationalism or Amhara, or Tigray nationalism is not going to solve our unemployment problem, or the climate change crisis, or the housing shortages and we can add many other problems. To the contrary these problems are better addressed by working together. I repeat working together. And the federation system, if well structured, with democratically constructed agenda through a series of discussions and procedures, can bring us prosperity. I am against those who preach ethnic nationalism as a solution to our current economic, social and political problems that’s not going to take us anywhere. It’s not by putting ethnic barriers that we can become a great nation. In fact if not careful, we may end up breaking the country into pieces and remain poor and powerless for generation.

Capital: Can this government, can Abiy Ahmed’s government, fight and win against ethnic nationalism?
Kebour: We all know Meles and his colleagues were the ones who introduced such territorially based autonomous regions, typically a community of language as ‘Regional Administration’, which are now conducting themselves as republics. Despite many voices of concern then, this ideology under the guise of history and pragmatism, was vigorously pursued. Abiy Ahmed is a member of this same party that legitimized this system, the party is still functioning, he very much relies on it for its day to day activities. Now we understand that he is taking the party in a different path; can he really convince his coalition members to change or transform his party’s orientations on this matter? I don’t know. But I worry that ethnic nationalism, which is becoming increasingly real in the past years in Ethiopia, may turn truly toxic, especially in these times of economic and financial turbulence within which Ethiopia’s highly indebted, unevenly developed autonomous regions find themselves.

(Photo: Anteneh Aklilu)

Capital: You mentioned that we are going through difficult economic times in Ethiopia today, can you elaborate more on the economic situation.
Kebour: We need first to understand that PM Abiy or his advisors and ministers do not really have much power when it comes to making the economy perform, that is, creating employment, generating foreign currency, create profitable firms, or controlling real wages or prices or even equalizing incomes or helping the poor very much. What is more interesting today is that people of power are under huge pressure to deliver prosperity to people who want instant gratification and are impatient for change. The young men and women like the ‘Kero’s and Fano’s’ of our time see politics as irrelevant to achieving the ideals that matter to them. How to reconcile this contradiction which on the one side is constrained by the limitation of power of political leaders with the impatience of the people is the biggest challenge. And we see it in the challenges our leaders experience in re-launching the economy. Yes the economy is in difficulty, it’s not creating employment, it’s not creating growth, not attracting enough investment and so on. But I have faith in the new generation; the PM has brought many of those young men and women into his team. He is also crisscrossing the country and the world and talking to professionals in search of ideas for turning the crisis into an opportunity for a ‘rebirth’ of the country. I salute the effort. But I also worry that such actions may not be sufficient or effectively conducted. I think there should be more discussions with regional leaders to promote a strong and cooperative region-federal relationship, encourage regional leaders to develop their own revenue systems, strengthen their economies, in short let them lead their economies. One small detail while I am on it, I think the federal government should consider the establishment of an association of regional presidents to share best practices and speak with a collective voice on national policy.

Capital: How do you explain the absence of an economic road map from the government and will there be a backlash as a result?
Kebour: I don’t know why this administration chose not to put up a road map for the economy or for its program in general. But I understand there are bits and pieces of this roadmap here and there. This is an issue that seems to bother many people, notably the elites and I suppose many business people. Somehow this administration’s response on this issue remains rather vague. Frankly, I am not sure if Ethiopians want a program, even less an ambitious program. I don’t see people eagerly awaiting the specifics of Abiy Ahmed’s EPRDF policies. Today such policies or programs are almost beside the point. Most voters will cast their vote for leaders representing their identity. The traditional ideological divides of Left and Right have collapsed. The tendencies toward ethnic politics we’ve witnessed in these past years will very well intensify.

Capital: Are you optimistic about the future of Ethiopia?
Kebour: Let me first say that I, as an ordinary citizen, am engaged in civic activities, recognizing of course that my individual contribution can only be quite modest. Still I see myself as a player, I don’t want to sit around, as a spectator, and say I am an optimist or pessimist. I am, and want to be engaged, I want to be an active citizen and help make the community a better place. I want ultimately to see a prosperous and fair Ethiopia. I think as a player you can’t be an optimist or pessimist, you just play to succeed.

Capital: What about the opposition parties, are you expecting them to form a reasonably broad alliance ahead of the next election?
Kebour: Despite the number of opposition parties, almost 120 in the country and growing, I argue that our democracy is being crippled by a lack of true ideology. We have been paralyzed by having too few constructive policy arguments. Not only there is very little exchange of ideas in recent years, but we have also seen on a whole host of critical issues that the government is being run by a party largely interested in money and power. This has been the root cause of our governmental dysfunction in recent years. In fact opposition parties in Ethiopia have hardly presented their ideology, hardly shared a picture of the shape and content of the ideal society they advocate for Ethiopia. For me, the ‘ideology’ we seek should outline the strategies and tactics that will be used by the party to achieve the envisioned society. The ideology should describe the sort of people who will do the work – the party organization – that will take the larger society to the ultimate ideal. Today we have to be careful not to mistake the clamors of interested and factious men as ideology or some kind of patriotism, most are in fact meaningless noise. Citizens should begin demanding substantive policy debates that will ultimately drive our government’s decisions.

Capital: Many say that you are against privatization, can you tell us why?
Kebour: May be you should ask me if privatization serve the public interest or not? For me, the issue is not simply whether ownership is private or public. Rather, the key question is under what conditions will companies or managers be more likely to act in the public’s interest. The debate over privatization needs to be viewed in a larger context. Privatization involves the displacement of one set of managers entrusted by the shareholders – the citizens – with another set of managers who may answer to a very different set of shareholders. By the way private ownership does not necessarily translate into improved efficiency. More importantly, private sector managers may have no guilt about adopting profit-making strategies or corporate practices that make essential services unaffordable or unavailable to large segments of the population. A profit-seeking operation may not, for example, choose to provide Internet services if it’s not profitable.

(Photo: Anteneh Aklilu)

Capital: So you are against privatization if I understand you well?
Kebour: Let me take this question away from the ideological ground of private versus public to the more pragmatic ground of managerial behavior and accountability. Viewed in that context, the pros and cons of privatization can be measured against the standards of good management – regardless of ownership. Why? Because, first, neither public nor private managers will always act in the best interests of their shareholders. Privatization will be effective only if private managers have incentives to act in the public interest, which includes, but is not limited to, efficiency. Second, profits and the public interest overlap best when the privatized service or asset is in a competitive market in other words in a liberalized environment. It takes competition from other companies to discipline managerial behavior. If these conditions are not met, continued governmental involvement will be better. The simple transfer of ownership from public to private hands will not necessarily reduce the cost or enhance the quality of services. So yes I am against privatization if privatization decisions are not based primarily on pragmatic analyses of whether agreed-on ends can best be met by public or private providers. As I said the ends need not be limited to efficiency; they need only be clearly specified in advance.
One last point, private corporations are very good at writing contracts that shift all risk to citizens (the taxpayers) and keep any rewards for the company. Once a public service is outsourced or asset is privatized, taxpayers have little recourse if a contract was drawn up poorly or the drafters failed to anticipate all contingencies. Because some contracts are written for extended periods, the public can be locked into bad deals for generations

Capital: Regarding the overall economic direction, many say we are heading towards a crisis, what is your view?
Kebour: As regards the economy, we may already be in crisis depending on whether you believe we’ve reached the tipping point. Let’s first recognize that the problem is not simple, and so the answer is not going to be simple either. The political picture remains muddy, it’s not clear that the federal government is strong enough to protect and maintain the rule of law. It’s not even clear to me that it can impose taxes or regulate commerce across the country. One fundamental question is whether our divided house remains one nation? How about the impact of climate change in our life and the economy? We have to tackle all these problems at the same time, they are interrelated, they require the participation of all of us: government, business, civil societies, faith organizations, academia and others. Regarding the economy the government has taken some steps here and there, and I don’t see any problem of reforming in bits and pieces, but then these bits and pieces should come one after the other in an ongoing effort to address the deep economic crisis the country is experiencing. I say, start by unchaining business growth, make sure business believes in the best future, find the right balance between liberalization and state-led development, encourage new entrants, new entrepreneurs unconnected with the state to reinvigorate the moribund economy, consider making Ethiopia not just a diplomatic city, but a commercial city with a very open economy, the easiest place in the world to register, and operate a company; abolish the Ministry of Trade’s business registration department, ensure the independence of the national bank (the one institution that is not ready to reform but is choking the economy), introduce a flat tax to ensure people pay proportionately more in income tax. Anyway, there is much to do in this area.

Capital: If you had one simple recommendation to the government – what will that be?
Kebour: You mean in addition to what I just said earlier, I would say – and I have been saying this for quite some time – and it relates to the privatization of public assets, in particular the privatization of Ethiopian airlines; I want to say to the PM, to just drop the idea of selling the airlines! I want to say to the PM to just look south, look at Kenya Airways; it was privatized in 1995 with IFC as chief advisor, where is this airline today? Not everything is good with privatization, don’t destroy the Pride of Africa.

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