Deputy Prime Minister Temesgen Tiruneh defiantly told representatives of the private sector this week that peace and stability remain elusive in Ethiopia partly because of private sector support for armed groups in favor of a regime change.
The comments came during the first Public-Private Dialogue session organized in the country since the political shift of 2018. The Dialogue, which was initiated by the US-based Center for International Private Enterprise (CIPE) and its partners a decade ago, features an annual meeting between the Prime Minister and private sector representatives.
Temesgen filled in for PM Abiy Ahmed this time around, and despite the heads of chambers of commerce and other private sector representatives taking the opportunity to press on issues ranging from access to finance and bureaucracy to security hurdles, he chose to address other concerns.
“Instability and security issues have become the biggest problems for the private sector,” said Abebayehu Girma, vice president of the Ethiopian Chamber of Commerce and Sectoral Associations, during the event organized at the headquarters of the Ministry of Trade and Regional Integration.
“Investment, business activities, tourism, and mobility are highly affected by conflict. The security problem is imposing serious psychological pressures on citizens,” said Abebayehu.
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Other attendees criticized the government for its sluggishness in introducing support packages, compensation, and incentives to reinvigorate businesses and investors affected by the armed conflicts in the country.
There was also mention of road blockades by armed groups, kidnapping of employees and staff members, as well as the robbery of private business assets and vehicles.
The central bank’s 14 percent lending cap was another point of contention, particularly for representatives hailing from outside the capital, who argue the cap has left them unable to access the credit they need to recover from the damage and disruptions caused by conflicts.
“Although banks want to give us loans, they can’t because they have already reached the limit. But the private sector in our region is not like in other parts of the country. Tigray hasn’t benefited from loans in the last few years so it’s unreasonable to limit credit. Our businesses have been unable to resume their activities because they can’t access fresh loans,” said Berihun Habtu, a representative from the Tigray Chamber of Commerce.
He said the federal government has not lived up to its promises for reconstruction and recovery efforts in the war-battered region.
“The government has not provided support to Tigray’s private sector. Prime Minister Abiy promised to establish a task force to facilitate support but that has not materialized,” said Berihun.
Other participants called for a revision of the recently introduced property tax law, which they argue is detrimental to manufacturing industries. They want to see these industries exempted.
“This tax proclamation was introduced 50 years ago and the government began implementing it a year and a half ago. It’s a backwards law. Manufacturing industries have been unable to pay the tax since it was enacted and are still arguing for exemption. The unpaid tax is accruing interest and skyrocketing. Unless they sell their factories, manufacturing industries cannot pay it,” said Abebayehu.
He said tax authorities in Addis Ababa had already moved to shutter close to 200 factories for failing to pay their property taxes before the Chamber intervened.
“Closing these industries would expose thousands of workers to joblessness but the government has yet to offer a permanent solution,” said the Vice President.
The flourishing contraband trade and challenges related to bad road conditions on routes to Djibouti were also brought up. Representatives from the Afar region asked if the government had any plans to upgrade the Adama-Galafi-Djibouti route to an expressway, arguing its severely deteriorated condition poses risks to safety and potential losses.
“The government is approving projects without sufficing budgets. Contractors are idle. They aren’t paid because public projects are stalled for lack of financing. Federal road projects are being revised but not considering current inflation rates. Contractors who are not paid by the government are being squeezed by tax authorities. How can the contractors pay tax unless the government pays the contractors?” asked representatives from a lobby group representing contractors.
Deputy PM’s Responses
Temesgen took half an hour to respond to the queries and complaints, however, the Deputy PM did not respond directly to any of the questions asked. He alluded to ongoing economic reforms as a general solution to the private sector’s problems.
“The second Homegrown [Economic Reform] program emphasizes the role of the private sector. The government is withdrawing from the economy except in very limited interventions. We are also reforming the civil service. If the private sector wants to get corruption-free public service, the private sector must stop giving bribes and start demanding public service free of bribery. As long as you pay taxes, you have the right to demand public service free of bribery,” said Temesgen. “The private sector is also generalist, there is no specialization. Soon, the trend of the Mercato-like business culture where receipts are issued only when seeing tax authorities will be no more. We will make every transaction electronic and traceable.”
He spent most of the remainder of his address on security issues.
Temesgen said the private sector is partly to blame for the instability in the country and urged patience.
“The 2018 political reform was a reform. It was not a revolution. Unlike a revolution, a reform is time taking. Reforms drag backwards. They are also tedious and tiresome. Achieving peace and stability remains difficult as several issues linger,” said the Deputy.
He accused the private sector of having a hand in the protracted conflicts that have plagued the country over the last six years.
“The reason we are seeing several continued conflicts since the 2018 reform is because there are those in the private sector who believe this government won’t last and have started financing and supporting armed groups. Even some government officials support armed groups,” said Temesgen. “Following the 2018 reform, many were laughing at this new government. But through time, the reform strengthened, succeeding in every aspect. Compared to the deadly conflicts in Ukraine, Gaza, Sudan and other places, Ethiopia is better in terms of peace and stability.”
He referred to the events leading to the outbreak of the northern conflict in 2020 as “perplexing” and said the federal government had been tolerant.
“Even the latest disagreement in Tigray also should not have happened,” said the Deputy, referring to disagreements with the terms of the TPLF’s legal reinstatement and the ensuing split within the party’s leadership.
Temesgen expressed hopes that the ongoing national dialogue would lead to peace and stability.
“All conflict issues will be addressed through the inclusive national dialogue. All the external and domestic forces who have been working to overthrow this government have lost hope and given up. Several wars have been waged on this government but nothing happened to the government. We continued despite everything,” said Temesgen.
He also claimed the private sector was losing its will to continue its alleged support of armed groups.
“The private sector is getting fed up because it is itself becoming a victim of the armed groups. They are taking your cars and asking for large sums. Kidnapping and ransom are in fashion now. But it will end soon. Both the government and the private sector know who these people are. If the private sector stops supporting the armed groups, kidnappers and criminals and starts exposing them to the government, soon we will achieve peace and stability. Anybody who has a political agenda and intention can form a political party and enter into peaceful politics,” said the Deputy.
He also highlighted that the government’s efforts to gain sea access are based on notions of mutual benefit with neighboring countries and in hopes of realizing development, peace and security in the region.
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