Over the past 25 years, the economy grew at an annual average rate of 8.0 %, with a sustained double digit growth for the past 12 consecutive years (an annual average rate of 10.8%). To sustain the promising progress and ensure its renaissance, the government has also been designing various incentive packages to attract more productive domestic and foreign investors into the manufacturing sector such as tax incentives in some predetermined development priorities – structural economic transformation being at the heart of its development endeavor. It is furthermore aspiring to become a leading industrial hub in Africa in the years to come, especially in that of light manufacturing industry.
The EPRDF laid down the basic foundational economy that could enable Ethiopia to make a transition from a predominantly agricultural economy to an industrial manufacturing sector. In the last two decades the Government has built numerous roads and bridges that connected all Ethiopian regions; clinics, schools, and electricity that have now reinforced rural development; colleges and universities that have now quadrupled in number compared to the Derg period; there are now 33 universities throughout Ethiopia and evenly distributed in all the regional states and this a remarkable stride in educational development although quality education remains a major challenge. On top of the above mentioned development-related initiatives, major projects that could also boost the Ethiopian economy are the Djibouti-Addis Ababa railway; the Addis Ababa City light rail, and other railroads that are under construction; one major dam, Gilgel Gibe III that is complete and the Millennium or Renaissance Dam that is in full swing and almost near completion. Moreover, industrial parks like that of Hawassa and Kombelcha are also significant in terms of employment and mass production capacity that will enable Ethiopia to play a major role in export and trade at least at regional and continental levels.
Recently, however, the public has come to call out loudly about corruption and rent-seeking, or more generally, lack of “good governance”. But, as I can see, also drawn from several literatures, lack of “good governance” is largely an outcome of inappropriate institutional pillars, in which they would usually require a continual updating or re-installing. More importantly, unless it is about the issue of whether the public, the ruling party, and/or the government of an economy are awakens too early, too late, and somewhere in between, such event is not too strange — it usually happens in both emerging and developed economies right after an economy has achieved some good economic progress2. Hence such event does not necessarily indicate an erosion of longer term potential, but it does call for urgent corrective action. In light of this, though arguably it is lately initiated, and its management is to be seen in the years ahead, such as the upcoming institutional pillars or systems that the government would put in place, both the public, the party, and the government are in a promising stage – they have at least started to pin point the potential causes for the observed lack of good governance through nationwide public forums.
Historically, Ethiopia has a reputation for low tolerance for corruption. However, recent assessments, including Transparency International‘s Corruption Perception Index and the Ibrahim Index, point to graft as a growing challenge. In 2009, the Ibrahim index ranked Ethiopia 30 out of 51 African countries, compared to 24 in 2008. Fighting corruption is a central plank in GoE‘s good governance agenda. To this end, the Federal Ethics and Anti-Corruption Commission has embarked on vigorous sensitization campaigns. The Commission is conducting value for money audits and integrity reviews in key sectors (including construction) and plans to publish annual corruption surveys.
Furthermore, GoE introduced money laundering and anti-terrorism legislation in 2009 and established a Financial Intelligence Unit in NBE. In addition, Ethiopia is in the process of joining the Extractive Industries Transparency Initiative.
The implementation of Public Financial Management (PFM) reform at both national and regional level in the past decade has led to improvements in Ethiopia‘s PFM system. For instance, the 2010 Public Expenditure and Financial Accountability (PEFA) indicated improvements in 13 out of 14 indicators. Only the indicator for variance between the budget and actual outturn showed a lower score than in 2007. The 2010 PEFA noted that Ethiopia‘s PFM system is strong with respect to revenue outturns, arrears monitoring, budget classification, transparency of inter-governmental relations, policy based budgeting and payroll controls.
While Ethiopia‘s PFM system is generally sound, there is need for further improvement in certain areas to ensure effectiveness in the fiduciary safeguards. For instance, the Office of the Federal Auditor General audits only about 50% of total expenditures. Moreover, the follow-up on audit queries is generally weak. Other challenges include internal audit effectiveness, external audits, legislative scrutiny of the budget law, and donor practices. More broadly, there is need to strengthen institutions and staffing, particularly at decentralized levels of government.
Corruption is a negative aspect of devolved federalism in Ethiopia, particularly given the nascent stage of its regional and sub-regional bureaucracy. As in the past, the EPRDF regime promotes the use of gim-gima (self-criticism) sessions for bureaucrats as a way of addressing charges of corruption. However, in recent years this method has proven to be grossly inadequate to address the problem of official corruption.
An additional anti-corruption measure was the introduction in spring of 200 l, the Federal Ethics and Anti-corruption Commission (FEACC). As 2001 drew to a close, several high profile politicians and businessmen were being investigated and tried for corruption. In a general sense, what is clear is that the lack of an ethic of good governance at various levels of Ethiopia’s government bureaucracies will continue to undercut any efforts to tackle serious problems of poverty, inequality and discrimination Such an ethic will no doubt have to be institutionalized, and forged through practice.
This problem is particularly acute in the poorest regions. The record shows that while popular participation at the regional level might have improved, allowing citizens to have more to say about how public funds are spent and what services are given priority, there has not been a consequent improvement in the efficiency of administration. The shortage of administrative capacity, particularly in the poorest regions.” There is a significant regional difference in the availability of skilled administrative and technical staff, and this is a major constraint on their autonomous development This is a natural consequence of attempting to implement a federalist system under conditions of abject poverty and underdevelopment.
In general, the kind of government and society ruled solely by self-interested individuals will be a ‘rent-collecting state or predatory government or in other words a government by thieves. Government theft’, for example, does manifest itself not only in abusing public authority for the fulfillment of ‘individual self-interest’ but also in undermining the spirits of non-self-interested individuals, coalitions and officials in the name of law, free media, democracy and so on–cynicism. While non-self-interestedness, the rule of self by the individual from within—intrinsic control, self-interestedness is a rule by extrinsic appetites like material temptations. .
The remaining task, therefore, for the new generation of government officials across the entire public sector, the ranks of the ruling party, and even opposition parties is to check where they stand on this and take much needed corrections.