Ethiopian Reporter Exclusive Interview with PM Hailemariam Desalegn

On Thursday 26 November 2015, Ethiopian Prime Minster Hailemariam Dessalegn held his first exclusive interview with a private Ethiopian newspaper when he sat down with Asrat Seyoum and Zekarias Sintayehu of The Reporter.

The Prime Minister addresses a wide range of issues in this interview held at his office off Lorenzo Taezaz Street and lasted for an hour and half. From the current drought situation to good governance problems and from the economy to foreign relation matters, Hailemariam articulated the efforts of his administration which he served at the helm for a little over three years. Excerpts:

The Reporter: Victims of the drought that hit hard as a result of the El Niño effect in different parts of Ethiopia are estimated to have reached 8.2 million by governments accounts. According to international donors, this number can rise up to 15 million in the coming months. Either way, the response from the international community is not as expected. If this condition persists, how is your government going to deal with the crisis? In connection to that, the victims on the ground are complaining that they are not receiving the food assistance properly and that there is lack of coordination?

Prime Minister Hailemariam Dessalegn: The El Niño phenomenon as you may well know is not something that Ethiopia as a country is able to control. The problem has its roots from the irresponsible emission of the so-called greenhouse gas by the world’s most advanced economies for many years and its impact is felt in the form of disruption of the climatic conditions around the globe. This disruption in the climatic condition in turn causes temperature levels to rise in oceans resulting in the disruption of the usual rainfall cycles that originate from these water bodies. So, what we can do from our end is use our capacity to prevent this drought from turning into famine and prevent the damages inflicted on the vulnerable members of the society like women and children. We believe that the Government of Ethiopia is first entity that is directly accountable to any hardship that befalls its people. So, we waited for no one to start our response to this phenomenon. Since our main focus was to prevent death, I can say that we have done and are still doing a good job. Also, one should keep in mind that this is by far the most severe El Niño impact to hit the country in its long history. Hence, it is self evident that the government’s efforts to respond to the drought by availing food assistance to the affected people has paid off.

The situation is quite precarious to say the least from the perspective of the affected; and if our assistance was not coordinated and was not reaching the people then we would have heard reports of loss of life. Also, we are not that much concerned about the actual number of the affected. It can be 15 million as indicated within a short period of time. Rather, we are highly concerned about the conditions of each and every household in the large swath of drought affected areas. In terms, of monitoring the actual condition of households, now, we have developed the capacity, through our health and agricultural extension workers, to screen almost each and every household in the affected areas and know their conditions. Based on our screening so far the number what we are sure about is 8.2 million. However, in connection to the meher harvest season we have done another screening and the results will be posted soon.

Here, again, it will not concern the government so much if this number goes higher as long as we can alleviate the problem and provide the assistance needed. I know that some in the international community are anticipating that Ethiopia would try to hide or understate the number and magnitude; but that is not our headache at all. By the way, we will not be the only one making the assessment; there is a multi-agency assessment group as well to verify the figures. This being the case, we at the beginning, tried to forecast even for the worst case scenario and what would be needed to address the crisis. So, we are prepared in that sense too. For instance, in the beginning, we imported 250,000 metric tons of food from abroad but most recently we learned that this might not be enough and have ordered an additional 650,000 tons. So, if our friends extend their helping hands we will gladly accept but as government we will do what is necessary to avert this crisis without a single loss of life.

In your earlier explanation regarding the drought you have indicated that some state-sponsored projects can be folded to avail more resources towards this crisis. Which projects are going to be folded? Also, last year the outgoing parliament approved a contingency budget of only one billion birr, but your government is saying that so far it has spent close to six billion. Where did you get the extra five billion birr from?

For the record, we do know that what we have set aside as contingency budget will not be adequate to deal with this crisis. But, we went ahead to have the one billion approved since we have a customary practice of presenting another (supplementary) budget bill to correct such mismatches if there are any. At time of the ratification of the budget we knew that we will have some finances coming our way from different sources but did not and could not declare it since it was not fully secured at the time. This helps us to use our resources and develop more projects in time than setting aside a hefty sum for contingency. We also knew that we will have the required sum for the contingency budget.

On the other hand, when we say that we might go as far as folding some projects we were not referring to the mega projects that we are currently investing in. In fact, most of our mega projects are financed not out of the government budget but out of loans solicited both from foreign and local creditors; they don’t need resources out of the government budget at all. However, if we look at some projects like roads they rely on the budget and we might decide to fold some of them looking at the conditions. According to our forecast, both from our tax revenue and revenue from remittance and state-owned enterprises, we expect six to nine billon birr which will be earmarked as contingency budget. But, even if we have to fold projects, we will do that since we will not let our people go hungry. But that is not going to happen.

Recently, the Amhara National Democratic Movement (ANDM), member party of ruling Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF), celebrated its 35th year anniversary. And later, your government is set to celebrate the Nations and Nationalities Day (NND) in a big way. This has drawn criticism from different corners on grounds of not being morally responsible when so many people are affected by drought in the country. In fact, some go as far as drawing parallels with lavish celebration of Emperor Haileselassie’s birthday and Derg’s 10the year anniversary of the revolution, which happened to coincide with two severe droughts in Ethiopia. What is your response to that?

First of all, we believe our commemorations are not occasions of jubilations and celebrations. It is part of our day-to-day life that is shaping and molding a common identity and mindset. I think the greatest wealth this country could ever have is this shared consensus and mindset. We believe, if we can harness this shared mindset and vision, we can move mountains. Apart from that, our commemorations are not celebrations of birthdays as it was the case in the past regimes. Those were individual celebrations; ours is a celebration of the people which is geared towards strengthen our unity and our shared vision for development. It is a serious work in a way. So, I value it no less than any of our mega projects. What our country lacks today is this national consensus. This would also mean by extension that what you (the media) are doing in shaping public opinion is also not a serious job; I think such perception is basically flawed.

On the other hand, I don’t see how our celebrations are taken to be extravagant since what we basically do is gather and may be drink water and take about our issues and go home. We are not popping champagne or pour whiskey; we are simply holding an event where the public gathers to talk about the country’s issues. To the contrary, members of the EPRDF have made contributions to help the drought affected communities. In this regard, members of ANDM have donated 30 million birr pooled from members’ contribution towards this effort to combat the drought. If you see the Nations and Nationalities Day (NND) celebration as well, we use it basically to improve various infrastructures in the developing regional states. While preparing for this event, these regional states would benefit from permanent improvement in their infrastructure and facilities. For instance, if you take Gambella, one of the developing regions in Ethiopia, we have used NND as an excuse to build permanent water facilities and asphalt roads for the community; also renovated the stadium. So, those sentiments you have expressed don’t seem to carry any weight.

Recently, a high level government meeting that was chaired by you has underscored the urgency of addressing deficiencies in good governance. The sentiment and the heated and frank discussions reverberated among the public. Nevertheless, what the public observed to be business as usual in the aftermath of the discussion have led many to dub the meeting a “staged drama” of the highest order. What do say to that? And what should the public expect in the near future in this regard. On a related note, some also accuse the Federal Ethics and Anti-corruption Commission (FEACC) of focusing on petty corruption rather than deal with grand corruption matters. Does your government have a detailed plan to tackle corruption in the coming years?

To start with, if there is anyone who thinks that deficit in good governance would be addressed in a matter of one month or just because we expressed our determination in that meeting, I would say that the person is very naïve. In the first place, it is an issue which can only be addressed through a process which definitely takes time. On the other hand, good governance is not something that trickles from top to the bottom; it is not something that is given by the politicians but improved with active involvement of the public. What I said in that meeting was exactly this: there cannot be an improvement in governance without the determination of the political leadership and the involvement of the public at large. So, what we said in that meeting was that we were reaffirming our determination as political leaders.

Now, that cannot be construed to be a drama or false promise. We were criticized in the past (including by the media) for not being transparent when it comes to such issues. So, what we did was to become transparent and show the public that we are determined to address governance problem. We chose to be honest and straightforward in admitting the existence and the magnitude of the problem. We then tried to understand and locate the source of the problem and decided on what the remedy would be. So, this would defiantly be a process; not a problem that would be addressed in a month or a week. If you think, corrupt groups would change their ways just because we went on TV to speak about the problem, you are naïve. During that platform, we deliberated on the problems based on a detailed study. For me, that forum was a platform where we understood the nature and the extent of good governance problem in Ethiopia.

For me, it is 50 percent of the work right there. On the other hand, we went deeper and tried to identify the source of the problem in every sector and aspect of governance. By the way, I don’t believe this problem can be addressed in a general discussion; details are very important. After that, the government has put down what it thinks is a solution to bad governance. But, surely, this cannot be a full-fledged solution since the public has to contribute to this solution; which it did. Now, it has evolved to an annual plan and this plan will be evaluated every three months or so. Once we reach that point, we can be evaluated for what we have achieved in that plan. This said, it is also important to note the nature the problem of good governance.

For me, it is like climbing a chain of mountains where we are able to see only the one mountain that is in front of us. But, once we get to the top, there will definitely be another one to climb. The other aspect is the need to see a shift in the overall mindset of the public in general. For instance, we can’t expect good governance to improve in a society, which espouses a mentality of benefiting from quick gains and shortcuts. Every bit of the governance problem is also a societal problem. One thing that should be understood is that the political leadership is also the product and reflection of the society. If the public is complaisant when it comes to lack of good governance and corruption, then the leadership would also nurture such attitudes.

This is why we call it a political economy problem. That is why discussing with the public is important; it helps to shape the mindset in hope of nurturing a society that believes in competition not by quick gains and shaving zero-tolerance to misgivings in governance and corruption. With regards to corruption, there are independent studies like the one that was done by the World Bank confirming that it is petty-corruption that is rampant in Ethiopia; not grand corruption. It is not to say that grand corruption is totally non-existent in Ethiopia, but it is the petty corruption and bribery, say for example in the government service giving sector, that is frustrating the public.

At one time the late Prime Minister Meles Zenawi said that the people gave their votes to the EPRDF on the principle of the lesser evil. This year, the EPRDF and its affiliates secured 100 percent of parliamentary seats despite your government openly admitting a serious good governance issue. Do you think people will continue to give their votes to EPRDF in such circumstances?

First of all, we must make a distinction on good governance problems in urban and rural areas. In our discussions, we have identified urban land system as our main area of focus. Now, we know there are some minor issues in rural land system, but it is not a fundamental problem for the rural community. However, the urban land system is the main thriving ground for rent-seekers. That is why we are introducing reforms in the urban land system. But I do not think EPRDF is the lesser evil. People know what EPRDF’s weaknesses and strengths are. So, when they deny us their votes it is because they know our weaknesses. The same way, those who gave us their votes did so because of our strengths. We have had successive meetings with the public. The fact that there is good governance problem does not mean the EPRDF has not done anything good. There are huge achievements the world testifies to. So, the criticisms should be fairly assessed. For example, I believe we have done a remarkable job in expanding education. But within that we have admitted that we need to do more in terms of ensuring quality. Similarly, we have done a good job in the health sector both in rural and urban areas. We have done an exemplary job for the rest of Africa. There is no need to dismiss all these achievements. These achievements will serve as moral boosts in our effort to address good governance issues. I personally believe that although the EPRDF has lots of successes, our focus should be in addressing its limitations. If we crave for too much praises for our achievements, we might run the risk of undermining the challenges we are facing. These challenges could grow bigger and become irreversible and that would be detrimental. That is why we are determined to address good governance problems. But, ultimately it is up to the public to decide who to give their votes for in the future. Our focus is moving the country forward. In the next five years, poverty must continue to decline and the standard of living of our people must improve.

There does not seem to be a clear image with regards to the overall evaluation of Growth and Transformation Plan (GTP I). While some government officials claim a glaring success others took it to be a learning curve. Where do you stand?

We have properly evaluated the GTP I performance by sector as well as at macro level. So, if there is no clarity it might be down to an individual’s level of awareness. One of the indicators at macro level is the growth rate. During the period the average growth rate was 10.1 percent. There is no country in the world that has achieved that. This is attested by international institutions like the International Monetary Fund (IMF) and the World Bank, although their growth rate figures are lower. However, the growth of the agriculture sector stood at 6.6 percent, lower than the target eight percent. The failure is not in crop productivity where we have attained the baseline target. Where we failed to meet the targets are in livestock, fruits and vegetables, spices and coffee. So, our evaluations are this detailed.

At a macro level the baseline target growth rate of 11 percent would have been attained had we succeeded in say meeting the agricultural targets. The other failure is in the industry sector. Indeed, the industry sector has grown 20 percent on average. However, the growth is not balanced. If you look at the mining sector, it is below zero percent. On the other hand, the manufacturing sector grew by 13 percent while the target was 18 percent. Although huge manufacturing plants were popping up, the growth of small and micro enterprises was not satisfactory. In contrast, the construction sector was the main driver in the growth of the industry sector. The growth of the construction sector exceeded the target.

The other issue at the macro level is inflation. Inflation was very high during the first two years of the GTP. But we have managed to keep it in single digit until the end of 2014/15 budget year. It is now showing a rise and so we must do macroeconomic stabilization to curb it. Export, which ensures a stable foreign exchange market, is where our biggest failure was during the GTP. We have failed to meet the targets of one billion USD earning from textile and half a million USD from export. We have carefully evaluated our performance in the export sector and have identified the problems. Overall, we have met some of the targets and missed some. We have more or less met our growth target but we have not fully succeeded in transformation aspects at sector levels. That said, the economy has doubled since the start of the GTP period. In 2010, the country’s GDP was around 600 billion birr now it has exceeded a trillion birr. This is a huge success.

Knowing some of the goals set within the GTP were unattainable during the course of the period, for instance in the industry sector, why was the target not revised?

We have made some revisions during our mid-term review during EPRDF’s [ninth] convention. For example, the plan envisaged saving to be 15 percent of the GDP. By the time we did the mid-term review, savings has reached some 16 percent of the GDP. Therefore, the target was revised and set at 20 percent. The export earning target was at first set at ten billion USD which was later revised and set at five billion USD but we have not even achieved that. So there were revisions.

Some say the GTP was a plan drafted by the government, executed by the government and evaluated by the government. It has not given much role to the private sector. What do you say to that? What different approaches does GTP II will take in this regard?

During the drafting process of GTP I private sector actors representing the various sectors were consulted. Representatives of chamber and sectoral associations were involved in those discussions. We also have solicited inputs from major private sector players separately. During the course of the GTP period, I, myself, have held five consultations with the private sector. So, the private sector was also involved in the performance evaluations. On top of that, private sectors were also invited to our [EPRDF’s] conventions. So, I do not believe there was an issue in terms of private sector engagement.

The question is, whether the private sector has become the major actor in the country’s economy. Our private sector is only 15 years old. Desire alone is not enough for the private sector to grow. It takes time and capacity. Our private sector is still at infancy. Some 99 percent of them are engaged in trade and service. One of the reasons for that is the current rent-seeking political economy, for example, in provision of land. So, the private sector by conspiring with government officials resort to shortcut means to acquire land. A reform in this sector will ensure fair competition in acquisition of land instead of a system for the connected few. Then, eventually, the private sector should move into more sophisticated and lasting businesses.

The other is the construction sector. Addis Ababa now looks like a big construction site. Buildings are popping up here and there. On one hand, that has helped our economy with the growth of the sector. On the other hand, it has limited the growth of the manufacturing sector. Not many would move into the manufacturing sector when one can earn quick returns by renting out buildings. So, our policy orientation should be geared towards providing incentives for those who join the manufacturing sector. So far the incentives have not been attractive enough to attract many to joining the sector. The plan was to see labor intensive sectors like textile, leather, pharmaceuticals, agro-processing industries, cement, sugar and chemical industries. Few brave local private sector actors have joined the manufacturing industry. We want to see local private sector actors to join this sector in big numbers. We should not fully rely on foreign investment. So, the problem is not consultation or engagement but a problem in the transformation of the current political economy.

A recent UN monitoring group report indicates that Saudi Arabia and the United Arab Emirates (UAE) have leased the Assab Port for 30 years from the Eritrean government in their coalition to fight the Houthis in Yemen. Satellite images have confirmed that warships from these countries docked at the Assab port. Is this not an imminent danger for Ethiopia, in light of the state of no peace no war between Ethiopia and Eritrea and a UN sanction against the latter? We understand you have held talks in Saudi Arabia in your visit to the country recently.

First of all, it is clear that Ethiopia has always been trying to normalize relations with Eritrea and we continue to do so. But there are no improvements due to the stubborn nature of the regime in Asmara. We are aware that the regime in Asmara is bent on the agenda of destabilizing Ethiopia. It has been supporting Al Shabaab for which we appealed to the international community that led to a UN sanction. The sanction is still in place and following the monitoring group report you cited the UN Security Council has extended the sanction. As long as the regime continues with its destabilizing agenda, we said we would respond proportionately and we have been doing so several times in the past. We cannot go further than that because we abide by international law.

And recently, we are aware that Saudi Arabia and, especially, UAE, due to their strategic interest in Yemen, are using the port of Assab to launch aerial operations in Yemen. We have held talks with them. Their objective is not to support the Eritrean regime but their operation in Yemen. The main issue is the threat it poses to the peace and security of Ethiopia. We have had frank discussions with both countries. They have assured us that they would not be engaged in activities that would endanger the peace, security, unity, growth and development of Ethiopia. They have said this is only a choice of tactical convenience to their operation in Yemen and that they would evacuate the area as soon as the mission is completed. We have also stressed that they will bear the consequences of our response if their operation in the area supports the Eritrean regime’s destabilization agenda against Ethiopia. Although we understand their objective, we were not consulted before the countries reached to this agreement. We have a right to protect the sovereignty of our country. And this might depend on the actions of the Eritrean regime. We have told them that Ethiopia absolves itself of any responsibility in case of disruptions to their operation in the area due to our proportionate response to any provocations by the Eritrean regime.

How about the report that they have leased the port of Assab for 30 years?

We have heard about it but we do not have adequate evidence to substantiate that. But they said they do not have such lease agreements. So, I cannot say anything on that on the basis of hearsay without having the necessary evidence.

Where is Andargachew Tsige and in what state is he in?

He is in prison. He is in the same state as any other prisoner.

He was expected to appear before court as a witness but he did not.

Well, it is up to the court to ask the prison administration.

Regarding government housing programs, winners of the tenth round condominium lotto are yet to receive their houses. One of the factors for this is poor coordination between the housing agency and organs engaged in infrastructures works. What do you say to that? In addition, some express concern that funds obtained from housing saving schemes are being utilized for other purposes.

The condominium housing project is designed to benefit the low and middle income earners by providing affordable housing units. It also aims to create massive jobs and build capacity in construction and consultancy. By those indicators, the program is a success. Thousands of contractors and hundreds of consultants have been created. In addition, many small and micro enterprises are engaged in manufacturing works such as bricks, door frames and other construction inputs. People are also getting a share of the country’s wealth. They are acquiring property without having by paying just the cost of construction of the housing unit and no land lease fee. So the success of the program is not measured in terms of delivering the housing units only.

The capacity of our contractors determine the time of delivery of these housing units. We have capacity limitations in many sectors and this sector is no different. That is why we were not able to deliver on time. For instance, providing electric power infrastructure relates to the capacity in the city’s grid system. In one condominium site there may be some 30 thousand households. In each household if there may be five people on average. That means a population of 150 thousand. That is as big as major regional towns. What we are now building is 190 thousand. That requires six substations in every site. Local currency may not be a problem. But construction of power substations requires foreign currency which means either we have to borrow from international sources or our foreign currency earning should strong.

I have said earlier the challenges we had in our foreign currency earning. So, that has delayed our works in providing electric power. This is down to capacity limitations rather than lack of determination. We have discussed how to go about it in the future and one option is to mount solar panels on the rooftops on each blocks. Half the electric demand can be supplied through solar as well as bio mass. But this concerns future housing units. The other is, power being generated from our hydropower plants has significantly declined due to the drought season. For example, Koka Dam at Awash River is at a very critical stage. The flow of the river is about to dry out. The same with Melka Wakena. Tekeze also is now generating not more than ten megawatts. So, we decided not to supply power to condominium sites where people are yet to move into. There are already interruptions in other parts of the city as well.

With regards to funds from savings being transferred to other projects, in fact there is a huge gap between our annual expenditure [for housing projects] and what is saved in the schemes. For instance last year, our expenditure was ten billion birr. We have also earmarked the same amount for this year. What is saved in not more than 12 billion. We would be spending 20 billion while the saving is less than 12 billion. So it would rather be appropriate to say funds are allocated for this project from other sources. Besides, in bank transactions cash flow is normal.

Will there be policy changes in housing development projects to involve private actors both local and international?

There is no law that bars either local or international private companies from engaging in housing development projects. You can take, for instance, Tsehay Real Estate a foreign company engaged in a housing project at Ayat. The issue is, a foreign company uses local currency to do the construction and remit their profits in foreign currency. Since we do not have surplus foreign currency accumulation, we do not simply invite foreign companies to engage in this sector. That would crowd out the foreign currency reserve we would rather allocate to the manufacturing sector. But there are many local companies engaged in the sector. But they are not building houses for the low and middle income earners. Their target are those at the high income end. If any company comes forward to build houses for the low income bracket, our door is open.

The country’s foreign currency reserve has impacted various sectors. Those in the banking sector are trading birr for dollar to avail foreign currency. Is this not a challenge for the country in its drive to attract FDI?

Every nation whose economies were in transition faces foreign currency crunches. China and Korea has gone through the same path. It is not unique to Ethiopia. It will be challenging for the time being but it will improve. That said, the current problem is, as ever, a result of low export performance during the first quarter of the budget year. That improves from the second quarter of the budget year as our export performance, remittances and investment revenues improve. Already, there is no shortage of foreign currency. That is confirmed by the bank as well.

The Addis Ababa and Oromia Special Zones Integrated Masterplan has caused a huge friction between the government and the public. The experts have finished their work and what remains is a political decision. What is its current state?

Although the masterplan have not entered implementation phase there are complaints. I would understand if complaints come from people who are affected by the plan during implementation. But the masterplan has not been approved yet. A masterplan, by its nature, needs the participation of the people. The people should participate at every level. That is why there have been public deliberations. The plan would, inevitably, be implemented in Addis Ababa. When the plan was prepared it is believed that the surrounding Oromia Special Zones would stand to benefit from the growth of the city.

For example, if a rail network stops within the bounds of Addis Ababa, people in the special zone will not get to benefit from that. The same with water pipelines as well as electric lines. The connectivity would spur economic, infrastructural and people to people ties between communities in Oromia and Addis Ababa. That is why the plan was integrated but the special zones remain under the administration of Oromia region and Addis Ababa will be administered by the city administration. It must be underlined that there are no political implications from this. Now, there are erroneous deductions from this with some groups misleading the public by claiming that the special zones will be swallowed up by Addis Ababa because of the masterplan. That is impossible. Addis Ababa has its own defined territory. It will not expand an inch into the special zones.

Some say, the problems in Addis Ababa are further compounded because those in the administrative positions are not well versed with the psyche of the urban community. What do you say to that?

Our young leaders at position of power at Wereda level in Addis Ababa are mainly the ones who directly deal with the public. They number around four thousand. Except few, most are from the city and educated in Addis Ababa. They are residents of Addis Ababa. There are also many in Sub Cities. For instance, I am not from Addis Ababa. Does that mean I am not allowed to be an administrator in Addis Ababa? I do not think that is the issue. I would agree if there are question marks on their administration capacity in urban settings. What matters is their capacity in urban administration. In the past, there was a problem assigning rural administrators to urban offices. Now, in Addis Ababa the minimum educational qualification to be appointed in an administrative position is a bachelor’s degree. Those below that educational qualification are sent to school.

Despite the growth of the agriculture sector, its contribution to the country’s tax base remains very low. This is also a farming community where the EPRDF draws its social base. Would the current tax reform include expanding the tax base to include the mass small holder farmers?

There is no such plan for the coming five years. It will continue as it is.


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