Realist, not conformist analysis of the latest financial, business and political news

Congratulations To Ethiopia – Getting Richer By Going Neoliberal

Ethiopia didn’t have a good economic time of it in the recent past. That leap from Haile Selassie’s monarchical feudalism to Mengistu’s Red Terror didn’t work well. As every communist theoretician prior to Lenin insisted of course, it was necessary for there to be an urban proletariat before the urban proletariat took power. Lenin changing his mind because he saw the opportunity for power in a country that didn’t really have that prior requirement but he sure wanted the power.

In more recent years Ethiopia has had pretty much the best growth rate in Africa. Partly by the useful trick of starting at the level of the Stone Age but more than that, by adopting even vaguely sensible development policies. Like, perhaps, not trying to have government do everything, leaving great gobs of economic activity to the only method that produces any, some simulacrum of free market capitalism.

They’re continuing to do this by having public private partnerships to build the necessary infrastructure:

Ethiopian office of the Public-Private Partnership (PPP) announced three new roads and 14 power supply projects at a cost of 7 billion USD, according to FBC report.

The three road projects announced are a 125km highway connecting Adama and Awash, a 72km highway connecting Awash-Mieso, and a160km highway connecting Mieso and Dire Dawa.

According to FBC, the power projects under plan are a-469MW Genale Daw 5, 100MW Genale 6, 280MW Chemoga 1&2, 424MW Halele Werabe, 798MW Dabus, 125MW Gad, 125MW Dichato, 100MW Mekelle, 100MW Humera, 150MW Wolenchiti, 150MW Weranso, 125MW Metema, and 125MW Hurso.

The projects will be launched this fiscal year after necessary tendering procedures are completed, according to Dr Teshome Tafese, director general of the office.

Transport and power, yes, they’re part of development. The only question is – well, should be – which system produces those things and the development?

Ethiopia’s ruling coalition has been adhering to what it calls revolutionary-democracy ideology almost all its life. Reforms that Prime Minister Abiy Ahmed’s government introduced in the last seven months have clearly demonstrated that the ruling coalition has essentially dropped the ideology.

Fana Broadcasting Corporation (FBE) news today about US $7 billion private-public partnership project in the areas of power generation and transport seems to confirm that the transition from revolutionary democracy to neoliberal governance principles is happening in full force.

Ethiopian government has already approved seventeen private-public partnership projects, according to the source.

Hey, if neoliberalism produces the infrastructure which allows the growth then why wouldn’t you adopt neoliberalism? The only complaint you might validly have being that neoliberalism works. Not normally thought of as a great criticism of a socio-economic policy, that it gets the job done.

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