Uncertainty of Ethiopia’s stability rooted in poli & econ corruption: Nepotism & rising ethnic tensions now compelling it to buy ATI policy, Africa’s political risk insurance

8 Jul

By Keffyalew Gebremedhin, The Ethiopia Observatory (TEO)

Ethiopia is to join the African Trade Insurance Agency (ATI) before the end of the current year. The process has been underway now for sometime, definitely for less than a year now, including membership fee loan arrangements payable to the insurer, already in September 2015.

ATI was established in 2001 with the financial and technical support of the World Bank and seven African countries – Burundi, Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia – six of them members of the East African Community (EAC).

Ethiopia would pay subscription fee of $7.5 million to join ATI, which the African Development Bank (AfDB) has agreed to advance as soft loan. On the matter, the AfDB explained its rationale in approving the loan, as follows:

“The rationale for the project is based on the recognition that both the three RMCs [Regional Member Countries, Benin and Ivory Coast included] lack the necessary capacity and financial resources to effectively navigate the myriad of issues impacting on the successful implementation of trade finance and investment risks underwriting. In this regard, they require timely support on a coordinated basis to ensure that they as individual countries and collectively, accelerate the implementation of the ATI mandate. The programme will provide the necessary resources to allow Benin, Ethiopia and Cote d’Ivoire subscribe and ascend to ATI membership.”

ATI’s business is insuring investors against political risk, the specifics of which include political violence, trade embargoes, payment default due to disturbances or institutional inefficiency.

All of the above need insurance coverage in Ethiopia, on account of the rising public anger against the TPLF regime, more particularly the failure of its ethnic policy and corruption that have made far more common political disturbances of a civil uprising nature. Cases in point are the ongoing protests against ethnic discrimination, land grab in Oromia, Gambella, Afar, SNNPR (Omo Valley), Amhara (Wolkayt) and the denial of ethnic identity in the case of Qimant.

Remains of a Dutch Flower Farm in Oromia, whose picture the TPLF wanted to use for its propaganda on Tigrai On Line (TOL picture)

Remains of a Dutch Flower Farm in Oromia, whose picture the TPLF wanted to use for its propaganda on Tigrai On Line (TOL picture)

The likelihood of Ethiopia heading in the direction of increased political risks and civil disturbances must have caught ATI’s attention. In today’s world, country risk assessments are no different from potatoes in the marketplace, the information readily available conducted by reputable companies and institutes.

That can be assumed to be the reason why ATI experts were in Addis Abeba, their expressed objective in one-day workshop on November 2015 being ‘to raise awareness’ about the Agency’s services’, certainly to government and the business community.

ATI’s interest in Ethiopia must have come from prolonged observation of the election-related disturbances and government killings, as happened in 2005, in which nearly 200 were killed. There is also the May 2014 massacre by the TPLF Agazi assassination squad of Oromo students throughout Oromia, flared as protests did within days before and after the official visits to Ethiopia of Secretary of State John Kerry and Chinese Prime Minister Li Keqiang.

Not only the May 2015 also witnessed scaled-down political disturbances in a number of Ethiopia’s regions, with killings, destruction of properties, homes burnt by ruling party cadres and supporters. But also an estimated over four hundred high school and university students and farmers in Oromia region have been gruesomely killed, according to international civil society organizations.

In addition, political disturbances continue in Ethiopia to this day, more intensified in Oromia. The TPLF has adopted Nazi-like scorched-earth strategies, gruesome killings taking place, at times with students badly beaten and hanged on a tree. Why the ATI insurance is a must is because in Ethiopia today the protests have shifted their issues from land grab to demanding respect by the regime of fundamental human rights, their right to free expression of opinion and democracy. These demands find support because of the continued imprisonment of Oromos, young and old man and woman. Because of that, the number of Oromo political prisoners has hugely increased from under 15,000 a few years ago to over 40 thousand today, the majority of whom since the onset of crisis in November 2015. To this day, most of the prisoners have not seen lawyers, religious persons, or their cases brought to court of law, nor did the sick got doctors’ visit, denied as they such a right.

In the interest of the TPLF leaders, this insurance policy is a must for two reasons. Firstly, the policy would reassure foreign investors and as a risk-taking group they would continue to invest in Ethiopia. In that regard, ATI says it provides specialist insurance that mitigates problems of “currency inconvertibility and exchange transfer, currency inconvertibility and exchange transfer, expropriation, trade embargoes, non-honouring of contracts and payment default among others.”

ATI has two constituencies: member states and member banks (commercial banks). The Agency believes it is in a position now than before
“to pave the way for foreign lenders to comfortably invest in Africa.”

In terms of its own performance, ATI claims it has helped its member countries attract over $18 billion worth of trade an investments into their economies.

Secondly, ATI has become profitable and Ethiopia as a member would receive dividends from its subscription. More importantly, since the TPLF is aiming to enrich itself by becoming a manufacturing giant through its companies, it would get protection in the event of non-payment by their international and regional buyers for its agricultural and textile exports.

The trouble in the case of Ethiopia is the TPLF regime’s crookedness. More so, when one thinks of the crimes committed by the Front against citizens, the nation’s resources, this is more so especially the billions that are being lost to its corruption and nepotism.

Of course, it cannot be lost on anyone that the TPLF sought the ATI insurance policy to encourage investors to come and remain in Ethiopia! It’s, however, unlikely this anymore is its decision alone in Ethiopia!

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