Ethiopia: Forex Crunch Issue of Policy, Not Policing
There have never been shortcuts to economic growth short of leaders’ determinations to embrace hard-hitting reforms. The great test of the new administration will be its preparedness to improve the state’s relationship with the business community.
OPINION – Addis Fortune (Addis Ababa)
Abiy Ahmed’s meeting with leaders and members of the private sector earlier last week showed where his priorities lay. The fourth public appearance since parliament confirmed him as a Prime Minister, his dinner at the Sheraton with no less than 300 businesswomen and men demonstrated his commitment to fixing what ails the national economy.
It was a commendable move on his part, setting the agenda that addressing unemployment and generating forex to the economy are areas where the private and public sectors can see each other eye to eye. Yet, so much can be deducted from both his scripted and unscripted talks, but hard to discern where his core conviction lays.
Not many businesspeople attending the dinner were as impressed by his eloquence as the nation was captivated by his inaugural speech three weeks ago. No less were members of the private sector unimpressive in their issues raised before the newly elected Prime Minister. They were bogged down on micro and company-specific matters. Abiy could have avoided the trap of being transactional in his approach as he could have demonstrated his grasp of macroeconomic policy issues.
Alas; he chose to let an opportunity pass to set the tone that could define his administration. Such debut with members of the private sector could have been used to steer clear of whether he will be a leader to take the path of continuity or stand up to be counted as a reformer. One crucial area that has been hammered by businesses at the dinner was the painful and disabling crunch in forex. Granted, this is an area where significant policy reforms are needed.
The Prime Minister was seen navigating high in acknowledging the structural nature and the near permanence of the problem. Nonetheless, the thoughts he reflected in some of his responses were transactional. Not that many businesspeople were made to feel that he may, after all, have a regulatory mindset that is detrimental for businesses to thrive.
Abiy appears to believe the thriving of the parallel currency market would be one source of the problem, if not the many businesspeople who have allegedly stashed their cash with banks in Dubai. He implored on them to repatriate their money without ever giving adequate credence to why indeed they prefer to keep their money overseas.