Ethiopia - Ethiopian economy is controlled by TPLF and MIDROC
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Ethiopia - Ethiopian economy is controlled by TPLF and MIDROC
Ethiopia - Ethiopian economy is controlled by TPLF and MIDROC
EFFORT and The TPLF Business Empire
Source: Ginbot 7 Special Report
The Ethiopian economy is controlled by two large interlocking conglomerates: The Endowment Fund For The Rehabilitation of Tigrai (EFFORT) and Mohamed International Development Research Organization Companies (MIDROC), the Saudi billionaire, Sheikh Mohamed Al-Amoudi’s vast business enterprise.
However, the focus of this report is on EFFORT, the Tigrai People’s Liberation Front’s (TPLF) economic empire, that has monopolized the private sector of the Ethiopian economy to the extent never seen anywhere in the African continent.
The seeds for the thriving TPLF business empire were planted back in 1978 when the Relief Society of Tigrai (REST), the financial umbrella of the rebel movement in Northern Ethiopia was created as an NGO. Though REST was a relief organization, a TPLF Central Committee member headed it; and it collected donations from the international community and channeled it to the TPLF, playing a key role in the survival and ultimate victory of the TPLF over the Marxist military Derg.
After the TPLF came to power in 1991, REST was formally registered with the Ethiopian government’s Relief & Rehabilitation Commission as an “NGO”. As the financial backbone of the TPLF, REST continued enjoying state protection; and the restructured REST emerged as the richest "NGO" in the African continent. In the summer of 1995, about four years after the rebel group took control of power in Ethiopia, the TPLF established a stronger peer for REST - the Endowment Fund for the Rehabilitation of Tigrai (EFFORT). Business documents suggest that EFFORT started its business venture with a lofty investment volume of about 2.7 billion birr — then just under U.S. $1 billion.
The predominance of party-owned companies, referred to as parastatals, that control the strategic income generating sectors such as agriculture, industry, banking, mining, import-export, transport, construction, insurance, and communications is bitterly resented by private entrepreneurs as well as the general population which views it as a deliberate ethnic based and systemic economic exploitation. Since 1995, the TPLF has been using the parastatals under EFFORT as a “cash cow” to accumulate immense amounts of wealth to pursue its ethnically motivated political and economic domination of Ethiopia.
Although privatization was initiated early on and a competitive policy and trade practice commissions were developed, they did not have a significant impact, since the process was discriminatory and highly politicized -- plagued with nepotism, insider information, and other political considerations. In its most egregious form, for example, the entire process of modernizing and increasing the role of the private sector is delayed to this day until the weak parastatals are able to compete and become major players especially in the lucrative IT and Telecommunications sector.
The World Bank, many internal and external observers, as well as, business people have noted that party-owned enterprises enjoy preferential access to contracts, capital, physical infrastructure and administrative services, tax breaks and other politically motivated and privileged supports.
The business community complains that the system of taxation is aggressive and targets those who do not have political connection, or those who are not linked to party parastatals. Some business people have complained that heavy taxes have been used as a tactic of pressurizing and settling scores on those suspected of supporting the opposition.
For example, the Commercial Bank of Ethiopia (CBE) the dominant market player, faced financial meltdown a few years ago as its level of non-performing loans (NPLs) passed the 50% mark, due to unregulated lending to state-owned companies, parastatals, and to private individuals with political or personal connections with bank officials.
The parastatals also have an adverse impact on the investment climate and the economic well being of a large segment of the society. First of all, they deliberately give privileged and monopolistic economic power to a minority segment of the society to control huge amounts of assets by TPLF- the ruling party. Secondly, they create barriers to new market entrants, especially for those who refuse to enter into some kind of joint venture or cooperative activity with the parastatals. Thirdly, they create an endemic culture of obscene corruption by leveraging state resources and unfair trade practices through granting privileged access to land and information regarding procurement. Moreover, since these parastatals operate across various sectors, some have real strategic influence on other sectors [transport sector] and high demand commodities [fertilizer].
The TPLF has clearly been engaged in massive corruption and unethical business practices by national or international business rules and practices since its rise to power in Ethiopia. As a ruling party, it not only owns strategic sectors of the economy and engages in commercial and trading activities, it also puts competing private sectors in a hopeless no-win situation. This preponderant economic dominance is also used as a political weapon to harass, incarcerate, dominate, weaken and control opposition forces in order to stay in power indefinitely.
Under these untenable circumstances, it is a moral imperative for the Ethiopian people to continue the struggle against the total economic and political domination of the Tigrai ethnic minority regime, that hails from one of the poorest regions of Ethiopia and produces no exportable commodity, yet, parasitically exploits the natural resources of the country for its sole benefit.
The economic hegemony of the TPLF coupled with its gross mismanagement of the nation’s resources and the massive systemic corruption that has infected the body politic of the nation is the ticking time bomb that may very well destroy the fabric of the Ethiopian society
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