Daniel’s Reflection on Ethiopian Business Review (Part I)

Reader's Reflection on Ethiopian Business Review (EBR) is Daniel's reflection on some of the articles published on the monthly magazine (this in particular is on the Aug 2013 Edition No6 which is not yet posted on EBR's website). In this post I am sharing the summary of few of the articles from the magazine.

Reflection on the article, 'Discovering Oil in Ethiopia: A Curse or A blessing? The Macroeconomics of a commodity Boom' by Alemayehu Geda (PhD)

There are reports of a possible oil discovery in Ethiopia, if it does so happens, it will require a careful macroeconomic management in the short run to minimize the adverse effect it will have. One of the possible challenges is going to be, the traditional export sectors could get neglected, a term known as the “Dutch Disease” the domestic currency the Birr’s value will increase in relation to the foreign currency which encourages the consumption of foreign goods and when the domestic currency’s value increases it also leads to decrease in export. The second challenge of a resource boom could lead to mishandling of the resources (corruption) tag of war amongst political elites and distrust and a sense of marginalization between groups; as well as decline in the culture of savings both the public and the private sector.

The take away point: Oil resource discovery in Ethiopia would be tremendous, in that, it would help the country achieve its pursuit to become a middle-income country in the near future and decrease the number of Ethiopians living under poverty, which stands at ~29% of the population. Dr. Alemayehu provides some insights as to how responsible actors could prepare to reduce the inevitable by sighting best practices and policies followed by other countries. I also hope and suggest leaders and decision makers especially those in the specific sector read a book by Pro. Paul Collier called 'Bottom Billion', and pay close attention to the chapter in the book that talks about the natural resources trap. 

Daniel’s Reflection (DR) on The Rise of The Middle Class in Addis Ababa.

Lets look in to at least two of the possible indicators of a growing middle class in a society, vehicle

ownership and housing. Cars are extremely expensive in Addis. A used car that could be bought for USD 3,000 or less in the USA, with out a doubt is marketed and sold for more than USD 10,000 in Addis Ababa. Data shows that in the past 5 years the number of customers has increased dramatically and when comparing 2008 to 2012, the number of imported cars increased by three fold (an increase more than 162%).  The number of car assembled with in the country has also followed the same positive slope. All of this with out having credit services; yet, it seems there are way way too many cars on the streets of Addis. People say, owning a car is no longer a luxury thing, but rather has become essential for work and to get things done around town.

The trend of housing and urban life style is no different. As Addisu Deresse writes, people are no longer looking only for decent living places and backyards. They are looking for spaces that fit their personality, reflect their status and ambitions. There is a growing market for interior designers to satisfy the taste of the growing middle class. With growing economy comes the specialization of skills and more work hours in order to optimize on one’s competitive advantage and that leads to people outsourcing some aspects of their tasks to others; including families hiring maids or people just simply eating out and eating in less. As a result, restaurants and services are seeing constant increase in their customers and noticeable change in their customer’s demographics. To get a sense of in depth insight on the rise of the middle class in Addis Ababa, read ‘On Sale: The Growing Car Market and the Emerging Middle Class by Berihun Mekonnen and ‘The Metropolitan Way of Life: The Changing Life Style of the Urbintes’ by Addisu Deresse. 

The take away point: Although there are no shortage of restaurants and services in Addis, I believe that the market for high-end restaurants and services, is still untapped. If you stumble on to one of such status, it is usually full to capacity. As pointed out in the article, people are choosing for the high-end goods and services over prices, which I think is an indicator of the growing economy and standard of living.

Check back again, soon I will post few more summaries of articles that I found are good read. I will also try to post the links to the original articles onces they become available.

Cheers,
Daniel

Obama Resists From Taking America to War

I am convinced President Obama does not want to take America to a war on the Syrian crisis. Many are interpreting Obama’s handling of the crisis exhibits weakness and indecisiveness in his leadership and obscurity of his foreign policy. I for one disagree and I am not surprised by the president’s actions or there lack of. He is one of the most calculated, cool tempered presidents who cares about the average constituent and the weight of his decision on ordinary people. Obama is not reactive like other leaders who are more concerned about being perceived as strong leaders and are unwavering on their stance of bravado. He is more focused on making the right decisions and seems to care less about the judgment of those who are quick to react. A US unilateral action against the Syrian government would have unintended consequences with uncertain results; and Obama’s approach to the conflict has been consistent with his character, a president who is cautious and thorough when making decisions whether it be getting involved in wars or proposing domestic agenda.

I believe the President’s repeated warning to the Syrian government against the use of chemical weapons calling it “The Red Line”, to suggest that the US would get involved and take action if that line is crossed was his way of communicating to the world, that he does not intend to drag himself and his country into the conflict. I think his calculation was to give the Syrian government something they should not cross. Hence keep the US out of the conflict at least publicly. One would agree if the US can invade Iraq on the bases of suspected Weapons of Mass Destruction (WMD), logic would suggest that, for the Syrian government to call Obama’s warning bluff and use chemical weapons on their own people is nothing but a suicidal move, a risk not worth taking. So, some could argue, but that didn’t work, the president must have miscalculated the Syrian governments behavior? Perhaps, perhaps not. We don’t really know who used the chemical weapons do we? On my next post I will look into which actor(s) might actually have used the chemical weapons and why.

As Obama weights his options on Syria, I am sure the legacies of President Clinton’s Rwanda and President Bush’s Iraq are on his mind. He knows there is no easy fix but a high probable of lose lose outcome. What ever his political reasons might be, at the very least the Noble Peace Prize winner does not want to be judged for being an aggressor and a warmonger who engages the world in the same manner, as his predecessor would have. After all, in order to regain America’s credibility and win the hearts and minds of others, newly elected Obama did go around the world carrying the message, Americans respect the sovereignty and the ways of others; and that America is neither a hypocrite bully nor is it controlled by those who do believe that, the American expceptionalism equates to the US being bestowed the responsibility to act as the policeman of the world. Because in Obama’s own words, change has come to America, and “…a new dawn of American leadership [was] at hand.”

It is not surprising then that Obama, as Julie Pace reported to the Associated Press, against the advice of his cabinet secretaries, Obama chose not to take action against the Syrian government unless congress approves of his planned action. I believe this is another sign that even though he is asking for it, perhaps he hopes the American public would not endorse it. Perhaps the president himself is skeptic that the Syrian government used the chemical weapons. One way or another he seems to agree with Malcolm Gladwell’s advice, "…in times of crisis, we think what we want from our leaders is the benefit of their expertise; and that is not true. What we want from our leaders is the benefit of their humility”. Obama get’s it; when leaders stick to their stance of bravado their followers will be the one to shoulder the pain.

With the international media reporting more than 100,000 Syrians having lost their lives, 2 million refugees and 4 million internally displaced, the conflict is still raging and many Americans feel, the US have an obligation to help the conflict come to an end because the most powerful countries in the world do have responsibility. Former Deputy Secretary of Defense, Paul Wolfowitz best articulates this belief as he once said, “With so great a capacity to influence events comes a requirement to figure out how best to use that capacity to shape the future…besides, the risk of inaction, although difficult to gauge is likely to outweigh the risks of action.”

On the other side of the spectrum however are those who feel the US is not the policeman of the world and should not get involved, unless backed by a UN resolution. American intellectual and theologian Reinhold Niebuhr, also warned, in fact, “False security to which all men are tempted is the security of power”. Followers of the later view believe, the possible best-case scenario of US involvement in Syria would be a regime change and even that might not necessarily bring an inclusive and Western friendly regime to Syria; and ask why should then leaders of the West ramp up support for the need to get involved and take action? Andrew J. Bacevich an International Relations and History professor at Boston University who previously served in the military for 23 years, strongly agrees with Niebuhr. In his book The Limits of Power: The Endof American Exceptionalism, Bacevich articulates that America’s founding principle have been compromised. Because the US involvement around the world has to do largely to protect America’s ever-expanding consumption appetite, instead of finding ways to live under its means.

This strategy is not sustainable and breeds even more need for military involvement across the globe. Washington, Bacevich warns, has created a vast new permanent security apparatus, such as the Pentagon, the C.I.A. and other intelligence agencies, making it harder for leaders to make independent decision, because each institution has its own interests that are not always aligned with one another. According to the author, the vast bureaucratic tapes prove more hindrance than assistance to decision makers. “Agencies put their interests above the nations; the generals just looked out for themselves and their particular services.”

Keeping those challenges in mind, one should certainly appreciate President Obama’s courage for standing against the Washington institutions and taking the matter of Syria to congress rather than deciding to act on his own as advised by his ‘Security Apparatus’ advisors. When Paces wrote, “The (president’s) decision highlights what has been a source of criticism among Washington’s foreign policy thinkers: a president who has centralized decision-making within the White House and at times marginalized the State Department and Pentagon.” This is a testament to the President that he is making independent decisions as opposed to accepting what is possibly being prescribed to him from those institutions. The president’s critics vindicate what Bacevich long preached; which is the foreign policies of different recent presidents are similar and bound to be similar; unless we elect a president who is willing to fight those prescription memos coming out of those mighty corridors and take the case to the people.

The views expressed in this article are the author's own views.

~Daniel

An Experience of Being in Addis Ababa When the Ethiopians National Soccer Team Wins

Watch this short video  that my coworker and I recorded Ethiopians watching their Walya's in agony as they trail the Wild Beasts of Central African Republic 1:0 the first half; then the city burst into joy as the Walyas came back to win 2:1 and be only two games away from qualifying for the World Cup in Brazil next summer for the first time in Ethiopian History.

Another memorable day in the motherland, such a blessing it is to be in the midst of my people, sharing the joy.

ድል ለዋልያዎቻችን። ሁሌም ይቻላ!

Daniel Ethiopia
September 7, 2013
Addis Ababa, Ethiopia.