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The process of economic liberalization in Ethiopia runs the risk of stopping as the postponement of the elections raises the possibility of a constitutional crisis.
The elections, scheduled for August, were postponed to the end of March due to the coronavirus pandemic.
The constitution “does not appear to have foreseen the possibility of such an emergency during an election year,” says Zemelak Ayele, a constitutional lawyer in Addis Ababa.
No target date for the elections was given.
“The question of how the country will be governed in the interim is a question that needs a clear answer,” says Ayele.
Prime Minister Abiy Ahmed has taken partial steps to liberalize the country’s state-run economy. The reforms include new planned licenses for mobile network operators and the sale of a stake in Ethio Telecom.
The continuation of the current weak government, by definition unstable, is the best hope for the continuation of the reform, says Mehari Taddele Maru, strategic adviser on African affairs in Addis Ababa.
“A strong and stable government means that economic liberalization will stop,” he says.
Once there is a strong government, “liberalization is very likely to slow down or come to a complete stop.”
Parliamentary elections, Originally scheduled for May, it had already been postponed due to the riots. Was it is never feasible to hold elections in August As the rains make movement very difficult, says Ayele.
The pandemic, in that sense, was “a blessing in disguise” since it gave the government and the electoral board an “incontestable” reason for a new postponement.
“There will certainly be a constitutional crisis,” says Maru.
There must be a new government for September or resort to extra-constitutional measures. But it will take at least six to seven months for an election, and COVID-19 could easily extend the term, he says.
- The only constitutional options that Maru sees are a Transitional government, or a united national unity coalition to fight the pandemic.
Great resistance
Ahmed came to power in April 2018.
Under his rule, Maru says a lot of energy has been expended on Eritrea’s diplomacy and peace process, which means a lack of “Practical approach” to economic reform.
He adds that “liberalization was not occurring as a result of strong government leadership.”
Progress to date could easily be reversed at low political cost.
There it remains “Great resistance to liberalization. Political parties will use it to mobilize their constituents, “says Maru.
Potential in Ethiopia
Executives like Coenraad Vrolijk, CEO of Allianz Africa, have identified Ethiopia as a market with great long-term potential. But foreign direct investment in insurance is not yet allowed.
- The reform has not meant “anything tangible yet in most sectors,” says Tobias Hagmann, an associate professor at Roskilde University in Denmark.
- Compared to telecommunications, there are much larger vested interests involved in protecting the country’s banking and insurance industries, he says.
- “The old guard is all leftist, regardless of ethnicity.”
The good news? The country’s statistics on coronavirus may be better than it seems. According to research by Renaissance Capital, Ethiopia’s current ratio of positive tests to daily tests, as of April 28, is less than its cumulative ratio, indicating that the pandemic is under control.
Bottom line: Multinationals planning to enter Africa’s largest unopened market face a long wait.
