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Prime Minister Abiy Ahmed’s Uphill Battle for Socioeconomic Reform in a Divided Ethiopia

Since Prime Minister Abiy Ahmed took office this April, his approval ratings have soared, making him one of the most well-liked post-communism politicians in Ethiopia. In recent months, Ahmed has enacted ambitious and revolutionary economic reform plans for the country, which is currently in a state of economic instability. From setting the groundwork for the Ethiopian Stock Exchange—a moment of paramount importance for what is currently the largest economy in the world without a stock exchange—to a recent US tour, Abiy Ahmed has started his term ambitiously, enacting dozens of new policies in just a few months. However, his office coincides with a peak in ethnic segregation within Ethiopia, Africa’s second most populated country. Ethnic conflicts have driven more than one million people away from their homes this year alone. Ahmed’s aims to reconstruct Ethiopia’s economy through ambitious socioeconomic policies may instead exacerbate prevailing ethnic divides, subsequently hindering Ethiopia’s future development.

Ethnic tensions are in fact what brought Ahmed to Office. Over 500 civilians were killed, with over 1600 more detained, during and after the 2016 anti-government protests in the nation’s capital of Addis Ababa. Ahmed’s predecessor, Hailemariam Desalegn Boshe, resigned under pressure from these ethnically Oromo-led protests and Abiy Ahmed, himself an Oromo, ascended to the office in his wake. Compared to his predecessors, Ahmed appears to be enacting far more policy changes, ostensibly for the better of the country. However, the benefits of these policies have yet to reach the most underserved communities, thereby promoting wealth disparity. For instance, the Ethiopian Stock Exchange, a high risk and high cost investment that may well be a feat for Ethiopia’s economy, remains inaccessible to the majority of underrepresented ethnic communities and only furthers the ethnic socioeconomic gap that continues to spur conflict across the country. The Ethiopian Stock Exchange may expect a similar outcome to the Ethiopian Commodity Exchange, a similar concept introduced before Ahmed’s inauguration observed to be “high-tech, low impact”. Outside the capital, poorer, rural populations have less means of investing in stock and participating in the type of economic transactions and activity that many of Ahmed’s policies are intended to develop. By focusing on industry and economic development in urban areas, Ahmed effectively promotes a proliferation in rural-urban migration. This migration influences the distribution of the Ethiopian workforce, with younger people moving to urban areas in search of higher paid jobs and opportunity, and in turn creates a socioeconomic divide based on the urbanization and age distribution of different regions. Nevertheless, studies show that investment in urban agglomerations in Africa hold long-term benefits and provide a more permanent pathway for development, thereby enabling a structural transformation; urban investment solidifies long term infrastructural development and encourages long-term industry growth. Still, the immediate ethnic crisis continues to accompany the process of urbanization and may remain an obstacle to this development and growth. While agrarian and rural development initiatives remain short-term solutions, Ahmed must prioritize them as a path to mitigate ethnic conflicts before they reach a critical level and thereby allow Ethiopia to focus on urbanization in the future. The ensuing socioeconomic crises that will likely result from a lack of prioritizing rural development may undo the benefits of Ahmed focusing on urban development.

The fact that many of Ahmed’s economic projects favor urban areas must not be overlooked. While a recent 1.3 billion USD loan from the World Bank intends to develop a rural safety net and promote poverty and food insecurity relief, much of Ahmed’s reform policies seem to be centered on the urbanization and development of key urban regions like the Addis Ababa metropolitan area. These inherent biases towards urban development in turn may augment economic and political marginalization in rural populations, as while Ahmed has enacted poverty relief plans, his plans do not account for infrastructural and industry development in poverty-stricken areas of ethnic tension. By centering development to urban areas like Addis Ababa, Dire Dawa, and other urban areas that are home to only 16 percent of Ethiopia’s 105 million citizens combined, Ahmed will perpetuate existing ethnically-salient issues such as unequal wealth distribution and favor those who reside in areas inclusive of economic development, such as Ahmed’s own Oromo people.

"The Prime Minister’s recent policies, many of which are high risk and high cost, including the establishment of a stock exchange, heavy state investment in the recently semi-privatized Ethiopian Airlines, and the push for the Ethiopian Grand Renaissance Dam, may benefit urban and more politically influential ethnic groups more than rural, less-represented groups, furthering ethnic socioeconomic divides and jeopardizing Ethiopia’s long-term social and political stability."

In addition, Ahmed has continued to sanction government land seizure in his predecessor’s footsteps. This issue is particularly tense in the Tigray region where recent development projects, some of which contracted with Chinese firms and US development groups, resulted in the displacement of thousands people from their native land and the deaths of 140 people in ensuing protests. The issue of government land seizures is also prevalent in the Addis Ababa metropolitan area, where the city of four million people is growing at a rate of up to 8 percent per year and represents a hub for industry. While Ahmed’s economic development policies may benefit the growth of Addis Ababa, the expansion of the city into neighboring tribal land may spur a proliferation in government sanctioned land seizures, which in turn feed the foundation for ethnic conflict: the seizure of ancestral land by a government led by a specific ethnic group does not bode well for ethnic relations.

In addition, Ahmed has vocalized strong support for the Ethiopian Grand Renaissance Dam, a “mega-dam” under construction on the Blue Nile, which has raised much controversy with countries downriver, namely Sudan and Egypt. Ahmed’s interest in the dam may in turn lead to budgetary issues, and while the investment may indeed benefit the nation’s economy, whether these benefits will reach the most underprivileged of ethnic groups remains questionable. Ahmed’s support of the dam sparks further concerns, the most important of which over the people who may be displaced as the dam pools a reservoir. Projections from International Rivers estimate that the dam could displace up to 20,000 people and flood 1,680 square kilometers of arable land, posing a serious threat to the state of Benishangul-Gumuz, one of Ethiopia’s border states neighboring Sudan which remains highly dependent on agriculture. The local backlash behind forced relocation and the flooding of such a vast area of land may also exacerbate ethnic tensions as the central government seizes tribal and ancestral land. Some, however, have argued that the economic benefits of improved access to electricity and water and the profits from the sale of surplus energy to neighboring countries like Sudan and Kenya outweigh loss of land. But regardless of whether the profits made from the dam will reach the people whose land has been lost, the benefits themselves may be grossly over exaggerated. In addition, while the dam will increase Ethiopia’s power grid capacity, more than half of Ethiopians still lack the electrical infrastructure to access electricity, illustrating how supposed direct benefits may fail to reach the most underprivileged. Prime Minister Abiy Ahmed should reconsider the impacts of scale and placement of the dam, as well as the government’s policy of land seizure and the potential for calculated compensation for land, to resolve the crises arising from the Grand Renaissance Dam.

Ahmed’s support of Ethiopia’s ethnic federalism and its segregatory policy additionally promotes a national culture of ethnic division, despite his public encouragement of a unified Ethiopia. The concept of ethnic federalism, which defines Ethiopia’s eight states by their dominant ethnic group, has led some to claim that “Ethiopia has gone further than any other country in using ethnicity as the fundamental organizing principle of a federal system of government”. Ethnic federalist policies may act to portray Ethiopia as a volatile region, even though it remains one of the more stable countries and economies of Sub-Saharan Africa. An adverse global image of ethnic division and instability places Ethiopia in a position where the potential for crucial factors for economic development, such as foreign direct investment, may be greatly diminished. Prime Minister Abiy Ahmed must revise Ethiopia’s ethnic federalism policies to achieve an Ethiopia of a unified people, rather than a state of constant rivalry between its many different ethnic groups.

In summary, Ahmed faces many challenges in his mission for socioeconomic reform in Ethiopia. The Prime Minister’s recent policies, many of which are high risk and high cost, including the establishment of a stock exchange, heavy state investment in the recently semi-privatized Ethiopian Airlines, and the push for the Ethiopian Grand Renaissance Dam, may benefit urban and more politically influential ethnic groups more than rural, less-represented groups, furthering ethnic socioeconomic divides and jeopardizing Ethiopia’s long-term social and political stability. To best ensure Ethiopia’s upward development, Abiy Ahmed may want to consider focusing on revising Ethiopia’s ethnic federalism policies and diverting more money to social and economic equality projects—to invest in industry in rural Ethiopia.

Photo: Ethiopia Flag

About the Author

Winston Otero '22 is a Staff Writer for the World Section of the Brown Political Review.

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