THE
To learn more about MIEPA, click here Return to MIEPA's Home Page
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:
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.
ETHIOPIA:
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%
===== ====== ===== =====
INDIVIDUAL POLICIES
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.
Source:
http://library.amnesty.it/isdocs/aidoc-everything.nsf/index/AFR250101998
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.
Source: http://www.combanketh.com/cbeprofile.htm.
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.
Source:
http://www.unitedworld_usa.com/reports/ethiopia/transport.asp
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.
Source: personal
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.
Source:
http://www.selamta.net/ethiopia-travel-facts.htm
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.
Source:
http://www.africaonline.com/site/articles/1,3,44232.jsp
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.
Source:
http://www.et.undp.org/ethiopia/currency.htm#currency.
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.
Source://www.selamta.net/cultur.html
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.
Source: personal
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.
Source:
http://www.nbe.gov.et/hostedwebs/englished/pressrelease.html.
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.
Source: http://www.mkeever.com/ethiopia.html
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.
Source: Personal
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.
Source:
http://www.unep.org/dpdl/symposium/documents/country_paper/ethiopia.com
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.
Source: http://www.American.edu/TED/ethcoff.thm
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.
Source: http://www.American.edu/TED/ethcoff.thm
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
DISCLAIMER
All the information and conclusions in each country analysis are solely the responsibility of the individual student and have not been verified, corrected, checked for copyright infringement or evaluated in any way by MIEPA or Mike P. McKeever. You are solely responsible for the results of any use you make of the information and conclusions in these studies. Use them at your own risk as interesting supplemental information only instead of seasoned judgements about the policy factors contained herein. Each student has granted permission for his or her work to be displayed here under his or her own name or wishes to remain anonymous and have either created a pen name or used no name at all; if you wish to contact them for any reason, forward your request to MIEPA and the student will be notified of your interest.To learn more about other countries, click to other files here:
mpmckeever@earthlink.net
Please place the acronym MIEPA in the subject line.