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Tesfa Piccola, an Ethiopian citizen who currently [May 2003] lives in California, has completed a study of the home country government's economic policies as compared to the MIEPA list of policies as outlined above. The study on Ethiopia is shown below. The ratings herein are based on the following rating scale:
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
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Comparison of Ethiopia's economic policies to MIEPA criteria as prepared by native student of Ethiopia, Tesfa Piccola, studying in the US in May of 2003.
RATING SUMMARY POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE 1 1.0 3.0 15.0 20% 2 1.0 3.0 15.0 20 3 0.0 0.0 15.0 0 4 3.0 9.0 15.0 60 5 3.0 9.0 15.0 60 6 3.0 9.0 15.0 60 7 1.0 3.0 15.0 30 8 1.0 3.0 15.0 20 9 1.0 3.0 15.0 20 10 3.0 9.0 15.0 60 11 3.0 9.0 15.0 60 12 3.0 6.0 10.0 60 13 4.0 8.0 10.0 80 14 2.0 4.0 10.0 40 15 1.0 2.0 10.0 20 16 2.0 4.0 10.0 40 17 2.0 4.0 10.0 40 18 1.0 2.0 10.0 20 19 2.5 5.0 10.0 50 20 1.0 2.0 10.0 20 21 1.0 2.0 10.0 20 22 1.0 2.0 10.0 20 23 1.0 2.0 10.0 20 24 1.0 2.0 10.0 20 25 1.0 2.0 10.0 20 26 3.0 6.0 10.0 60 27 1.0 2.0 10.0 20 28 4.0 8.0 10.0 80 29 2.0 2.0 5.0 40 30 0.5 0.5 5.0 10 31 4.0 4.0 5.0 80 32 2.0 2.0 5.0 40 33 4.0 4.0 5.0 80 34 5.0 5.0 5.0 100 TOTAL 69.0 140.5 375.0 37.4% ===== ====== ===== =====
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1. Freedom from internal control: 1.0
The Ethiopian government is not to tolerate any opposed opinion on its ruling system. There are at least sixteen journalists in prison. In total over the past five years over two hundred editors and reporters from the independent private press have been arrested. Today there are no opposite parties in the EPRDF-dominated federal parliament. Few opposition parties have been officially given registration, but operate under great difficulties. The Ethiopian human rights council (EHRC) and the Ethiopian free journalists association (EFJA) are some of the associations that have been denied registration.
2. Freedom of speech: 1.0
In 1991 the Ethiopian people’s revolutionary democratic front (EPRDF) came in to power promising democracy and protection of human rights; however these have acted as a mousetrap for journalists. The government controls the press and makes restrictions by saying they do not allow “the phrase dangerous to society.” Journalists and university students are usually the victims of this kind of violation. Also Ethiopian government does not allow independence of the judiciary. Ethiopia remains one of the world’s worst violators of the right to freedom of expression.
Source: http://www.pen-usa-west.org/ftw/saidCS.htm and personal
3. Effective, fair police force: 0.0
The Ethiopian government does not use clear restraints on the use of lethal force against civilians. The government does not make restrictions on preventing police force from arbitrarily banning and dispersing non-violent protest demonstration. The police have always used excessive force in dealing with student protesters. Also the police force in Ethiopia is involved with political issues and mostly do not follow court orders.
Source: http://www.hrw.org/africa/index.php and personal
4. Private property: 3.0
The Ethiopian government is committed to ensuring that private capital plays a significant role in the economy. To this end it has eliminated discriminatory tax, credit and foreign trade treatment of the private sector simplified administrative procedures and established a clear and consistent set of rules of regulating business activity. In June 1996 the Ethiopian government issued a revised investment code which inter alias, provides incentives for development related investment, reduces capital entry requirements of joint venture and technical consultancy services, crates inceptive in the education and health sectors, permits the duty free entry of capital (except computers and vehicles), but the capital gains tax, from 40% to 10% and give priority to investors in obtaining land for lease. Also secured interests in private properties such as housing is protected and enforced by the government.
Source: http// www.telecom.net.et/~usemb~wwwhec22.htm
5. Commercial banks: 3.0
Although the commercial bank of Ethiopia is the largest bank of all in the country, it does not give much opportunity to investors. The branch network of commercial bank of Ethiopia has reach 171 branches right now all over Ethiopia including one branch in Djibouti; with total assets of 5 billion birr. The commercial bank of Ethiopia started operating in 1943 it included commercial banking and rudimentary functions of the central bank. In 1994 Ethiopian government allowed the establishment of private banks and as a result many private owned banks opened up. The first private owned bank to be opened was Awash Bank and it started eight years ago. Dashen Bank, The Bank of Abyssinia, and Wegagen Bank, are some of the private owned banks that opened up after Awash bank.
6. Communication systems: 3.0
Even though the cities show a big improvement in the communication system, some rural areas are still left out of the technology. In Ethiopia there are Telephone main lines 231,900 and telephone mobiles (cellular) 17,800 in 2000. General assessment open wire and microwave radio relay system are adequate of government use. Domestic open wire microwave radio relay, radio communication in HF, VHF, and UHF frequencies two domestic satellites provide the national trunk service.
Source: commercial guide for the year 1998 us embassy Addis Ababa, Ethiopia www.state.gov
7. Transportation: 1.0
Land travel is really difficult in Ethiopia due to the formation of the land. The roads are very under developed. There are some 4,100 kilometers of asphalt road with a further 19,000-kilometer of gravel dry weather roads. A 778 kilometer ling rail way line links from Addis Ababa with Djibouti and carries both freight and passengers. Ethiopian airlines have an extensive domestic network fly to 43 airfields and an additional 21 landing strips.
8. Education: 1.0
Since supplies are so rare and education is not available to everyone, children often give up and drop out. Social awareness that education is so important is something that Ethiopia lacks. For 1,500 years church controlled all the education in Ethiopia and it was only for preserved Ethiopia’s ruling urban Amharic minority. However, all of these ended when public education became an option for all citizens in 1950’s. High education is very limited and thus far very few students make it to this point. Experts say that before the educational system in Ethiopia gets better there are many factors that need to be addressed and improved. People need to know the importance of education and children need to be encouraged and required to attend school.
Source: http://www.africa.upenn.edu/eue_web/health.htm and personal.
9. Social mobility: 1.0
The political system in Ethiopia made it impossible for individual to move from one stratum to another in the stratification system. The ethnic difference that had been drown between people by the government, made it impossible for individuals intergenerational mobility.
10. Freedom from outside control: 3.0
Freedom is a mark of distinction of Ethiopians. Freedom and Ethiopia are synonyms or they are different side of the same coin. The Ethiopian people have sacrificed a great deal and have crushed their skulls to maintain their freedom and confront and defeat those who came to subjugate them. One of the greatest dates to be recorded in such annals of Ethiopian history has been the commemoration of the liberation anniversary falling on may 5th of each year. This day is the day that Ethiopia was able to overcome the fascist invading forces and regains her freedom.
Source: http://www.ethiopiancrown .org/Negarit/negarit2-4.htm
11. Foreign Currency Transactions: 3.0
The local currency is Ethiopian birr; made up of 100 cents. Visitors in Ethiopia can import an unlimited amount of foreign currency. People declare their currency on their arrival. Ethiopian government allows foreign currency to be changed only at authorized banks and hotels. Even though the government forbids black markets, people still sell foreign currency on the black market. Visitors can change back any excess Ethiopian birr to foreign currency at the airport before leaving the country.
12. Border Control: 3.0
Almost all of Ethiopian governments did a good job protecting the borders. In 1993 Eritrea got its independence form Ethiopia, and when the relationship between the two countries deteriorated, they started a war over a piece of land that is in between Ethiopia and Eritrea border. Because of the involvement of the United States and the U.N, the war broke out in the year 2000. Though the Ethiopian government put a lot of effort on controlling contraband, still there are some illegal import and exports with the neighbor countries.
13. Currency: 4.0
Ethiopian government does not allow foreign currencies to be used in the country. The Ethiopian currency is the Birr, which is equal to 100 cents. Bank notes in denomination of 1, 5, 10, 50, and 100 Birr notes. And coins of 1, 5, 10, 25, and 50 cents are in circulation. The exchange rate of Ethiopian Birr is linked to the US dollar and remained stable at 2.07 Birr to the dollar for more than decade. However, the Birr was devaluated and made 8.85 to 1USd in early 2002.
14. Cultural, language homogeneity: 2.0
Ethiopia like many other African countries is multi ethnic state. Many distinctions have been blurred by intermarriage over the years, but many also remain. The difference may be observed in the number of languages there are about eighty languages with two hundred different dialects. Sematic, cushitic, omotic and nilo-saharan are some of them. Also English the most widely spoken foreign language in the country. The current government divided all the regions and made them uses their local language so it is impossible to share the same language.
15. Political effectiveness: 1.0
Before Eritrea was separated form Ethiopia, the Ethiopian government spent more than fifty percent of its resources to Eritrea. After the separation the government started spending the same percent of its resource to a region called Tigray. The Ethiopian government makes a significant contribution to Tigray’s region development plans while the other part of the country suffers from many developmental problems. The sources are not distributed fairly.
Source: personal experience
16. Institutional stability: 2.0
Numbers of factors have affected Ethiopian institution stability since the 1974's revolution. The civil war, with Eritrea until the year of 2000, successive droughts, that attacks the country every ten years, natural calamities, the absence of good economic policy, and the political instability are some of the main reasons for instability of institution in Ethiopia.
Source: http://eea.ethiopiaonline.net/econ-foc/ef3-2/teberhanu.html and personal
17. Honest Government: 2.0
Ethiopia’s regulatory regime is considered fair and honest, but not necessarily open to examination. There are instances in which burdensome regulatory or licensing requirements have prevented the local sale of other countries exports particularly personal hygiene and health care products. Much of the economy remains under state control and the evidence suggests that businesses also must contend with political favoritism. Some economic experts say that there are some corruptions in the country, but no one really can do or say anything about it openly.
Source: http://cf.heritage.org/index/country.cfm? ID=47 and personal experience.
18. Common laws: 1.0
In Ethiopia the regional states are not granted their power. The government claim to give power to hand of regional ethnic groups for representing their own group, the truth is that executive and legislative power belongs to the central government. Individuals or states with opposite opinion with the government are discriminated against or even punished.
19. Central bank: 2.5
Right now in Ethiopia all supply of capital, such as, foreign exchange, interest rate and exchange rate are monopolized by the government. The 1974 revolution brought major changes to the banking system prior to emergence of the Marxist government. Ethiopia has several state owned banking institution and private financial institutions. The national bank of Ethiopia, the commercial bank of Ethiopia, the agricultural and industrial development bank, saving and mortgage corporation of Ethiopia and the imperial savings and home ownership public association were the major state owned banks. Major Private commercial institutions many of which were foreign owned including, the banco dinapoli and banco diroma and some more insurance companies.
20. Domestic budget management: 1.0
The slowing down of economic activity and invasion of Eritrea in 1998 had created a big problem on Ethiopia's domestic budget management. The Ethiopian government is spending more than what can be produced. The government relies in considerable inflow of external grants and loans to finance the external current account deficit; this will necessitates efforts to meet donors' documentation and other requirements in order to ensure timely expeditious disbursements.
Source: commercial guide for Ethiopia produced by US state department, www.state.gov;and Ethiopia and IMF Dec 10, 1999 and personal
21. Government debt: 1.0
Ethiopia is one of the world's poorest and most indebted countries in the world, which makes it particularly vulnerable to natural disaster such as drought. This raises the question of how far Ethiopia's debt burden has contributed to the current famine. In 1996 Ethiopia's foreign debt amounted to more than 10,000m, more money was spent on debt service than education and health.
Source: http:// news.bbc.co.uk/l/low/world/Africa/713629.htm
22. Economic statistics: 1.0
Due to the bureaucracy in Ethiopia, the economic statistic is not reliable and up to date. The statistics are not revealed to the people until last minute or sometimes waited until already the decision is made. The collection of statistics in the country steel needs a lot of work to be improved. And the up to date official economic statistic are sometimes manipulated so that they match the government's politics.
23. Protection of public health and safety: 1.0
The main cause of Ethiopians health problem is the relative isolation of large segment of the population from the modern sector additionally wide spread illiteracy prevents the dissemination of information of modern health practices. A shortage of training personnel and in sufficient funding also hampers the equitable distribution of health service. There is a high infant mortality and death rates in Ethiopia due to AIDS and Tuberculosis. Life expectancy at birth years 42.4 boy and 44.3 girl, and probability of death before 5th birth day on both sex is 18%, Western medicine came to Ethiopia during the last quarter of ninth century with arrival of missionary doctors, nurses and midwives but there was little progress on measures to cope with the acute and endemic diseases that debilitated large segment of population until the government established its ministry of public health in 1948.
Source: African history.about.com/gild/dynamic/offsite.html and CIA world fact book.
24. High Wage Policy: 1.0
Prior to the revolution the central personnel agency formulate wage policies at the time of military takeover. There was no minimum wage law, so wages and salaries depended much on demand. Given inflation the salary freeze affected the real income of many workers. For instance a science graduate in 1975 was 600 birr/month in 1984 the real monthly income of science graduate had dropped to 295 birr/month. Data on real wages show that worsening living standard after the revolution.
25. Environmental protection: 1.0
The rural environment in Ethiopia is endowed with farmland, lakes, rivers, livestock, forests, woodlands, grasslands, wildlife, and plenty of open spaces. Approximately 60 percent of Ethiopia's land surface is classified as arid and semi-arid, the remaining 40 percent being sub-humid and humid and thus of high agricultural potential. The urban environment is characterizes by such variables as very high population, high density of housing, crowded market centers and contamination from industrial effluent. Though air pollution has become a fairly serious localize problem in Addis Ababa, water pollution as well as domestic and industrial wastes are some of the problems that have resulted from the process of industrial expansion and social transformation taking place in the country.
26. Strong Army: 3.0
Ethiopian national defense force, has ground force, air force, military and police. In mid 1991 combined strength of Ethiopia armed forces about 438,000 ground forces estimated at 430,000 (including about 200,000 members of Mengistu Regime armed force collapsed and were dismantled by EPRDS in mid 1995 EPRDF had 100, 000 to 120,000 Guarillasunder arms EPLF had between 85, 000 and 100,000 both planed to transform their forces navies into conventional armies and also to reconstitute air forces navies defense budget estimated at us $472 million in 1987-88. National police included paramilitary mobile emergency police forces estimated at 9,000. Paramilitary guards, local law enforcements delegated to civilian paramilitary people protection brigades. By mid 1993 national police force functioning through Ethiopia in place of EPDF soldiers.
Source: CIA world fact book 1999 report by CIA and personal
27. Foreign trade impact: 1.0
Like many nations in Africa and the third world, Ethiopia relies on the trade of primary goods. Ethiopia's largest trade is coffee, which generate 60 percent of its total export earning. Some observers indicated that Ethiopia's annual production of coffee is between 140, 000 and 180, 000 tons annually about 44 percent of coffee produced in Ethiopian is exported to other countries (Italy, united King Dom, Nether land, Djibouti, Germany, Japan, Saudi Arabia, France and United States). In 1993, Ethiopia's total export earns of coffee were 129, 395. Since Ethiopia is making money from the trade of coffee, should be developing in to more advance nation, but this is not the case. Ethiopia is the poorest country in Africa and it is among poorest in the world.
28. Protection of foreign currency earning enterprises: 4.0
Ethiopia's main exports are coffee and leather. The government has taken important policy measures like devaluation of the birr, abolition of all taxes on export with the exception of coffee and the reduction of percentage of exports.
29. Management of foreign currency budget: 2.0
Ethiopia spends much more than its budget. In 1997 and 1998 Ethiopia's budget show negative six billion birr. Which mean the country spends a lot more than it produces. The current government designed a system that is suitable for receiving grants and loans from other countries. The government is depending on these grants and borrowed monies.
Source: www.state.gov/www/about-state/business/com-guide/2000/africa/ethiopia-CCG200 0.pdf;
30. Layers of collective action: 0.5
Ethiopia has nine states and many small cities. The main city is called Addis Ababa. Although every state seems to have its own legislative, executive and judicial power within its geographical areas, the reality is that the power is really controlled by the central government. There is no opportunity for opposite voices, so only the members of ruling party participate in local and regional elections. People with opposite voice and opinion can be put in jail or can even be put to death.
Source: http: www.mkeever.com/Ethiopia.html and personal
31. Pro-Business Climate: 4.0
Business is changing fast in Ethiopia. Just ten years ago there were virtually no private companies in the country. Today foreign investors are embraced a gesture of good will and openness of the current pro-business regime attraction initiative continues to present opportunities to both foreign and local private sector operators. Though the government is open to foreign investment in privatization process, it also requires along term commitment to the development of the country.
Source: world fact book 1999 report by CIA
32. Government Enterprises: 2.0
The current Government embarked on program of economic reform including privatization of enterprises and rationalization of government regulation while the process is still on going, the reforms have begun to attract much needed foreign investment. The Ethiopian privatization agency (EPA) is selling most the government owned enterprises. Believing that privatization help get rid of expensive inefficient government owned enterprises, EPA has sold between 150-200 small firms through 1999.
Source: Ethiopian privatization agency www.telecom.net
33. International security agreements: 4.0
Unique among African countries the ancient Ethiopia monarchy maintained its freedom from colonial rule once exception being the Italian occupation on 1936-41. In 1974 a military jaunt the Derg deposed emperor Haile Selassie who had ruled sine 1930 the established a socialist state. Finally, the toppled by a coalition of rebel forces the Ethiopia people revolutionary democratic from (EPRDF) in 1991. A constitution was adopted in 1994 and Ethiopia's first multiparty elections were hold in 1995. A two and half year border war with Eritrea ended with a peace treaty on 12 December 2000. The OAU or the organization of African unity and the United States and other interested partners had put an enormous effort for keeping peace in Ethiopia.
Source: Ethiopian online http://eea.ethiopiaonline.net
34. Protection of domestic enterprises from government mandated costs: 5.0
The government in Ethiopia guaranteed protection to industrial enterprises by instituting high tariffs and by banning the importation of commodities that might adversely affect product of domestic goods. Protected items included sugar textile furniture and metal. The government also participated through direct investment in enterprise that had high capital costs such as oil refineries and the paper, pulp, glass bottle, tire and cement industries
Source: country study and country guide of Ethiopia http://addistribune.ethiopianonline.net/archieves/ 1998/08/07-08-98/foreign-t.html
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