HOW GLOBALIZATION UNDERMINES THE POOR

“Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life.” Nelson Mandela

Africa is full of promises. It has immense untapped natural resources and a growing human capital base estimated at one billion three hundred million Africans, mostly young. Its potential is constrained by poor governance, corruption, and massive illicit outflow of capital, tribal conflicts, and terrorism. Conflict ridden and war-torn Ethiopia represents Africa’s promises and pitfalls.

The mayhem of human atrocities and massive economic destruction in Ethiopia stoked by external forces, especially Egypt, shows that Ethiopia’s core institutions: its Constitution and administrative structure need to be overhauled for the country to survive and thrive.

Ethiopia’s dramatic growth in infrastructure was fueled by foreign aid, Foreign Direct Investment (FDI) and remittances. During 27 years of Tigray People’s Liberation Front (TPLF) rule, aid contributed 50 to 60 percent of government budget. Development indices then and now show that Ethiopia is among the most repressed and poorest nations. Fourteen months after the TPLF started its insurgency, more than three million people in the Afar and Amhara regions are displaced. Eight percent of Ethiopia’s GDP is shattered. 

Under TPLF rule, Ethiopia was the largest recipient of Western aid in Sub-Saharan Africa. It received aid because it served Western interests as part of the globalization process.

In the absence of good governance and regulatory framework that is transparent, fair, just, empowering, pro-poor and private sector, increases in aid, FDI and remittances will not solve Ethiopia’s legendary structural poverty. Ethiopia’s priority is therefore to ensure that a) peace and stability are restored; and b) to get its governance problem in order. The world’s obligation is not to grant more aid but to demonstrate unbridled commitment to all-inclusive human safety and security rights, the rule of law, democracy, and the emergence of robust national institutions.

My commentary from a book “Foreign Capital Flows and Economic Development in Africa: the impact of BRICS versus OECD,” 2017, to which I contributed, contests unfair globalization. BRICS is an acronym coined by Jim O’Neall in 2001 for five major emerging economies including Brazil, Russia, India, and South Africa. OECD is the Organization for Economic Cooperation and Development that works to build better policies for better lives. 

Ethiopians, especially those in the Diaspora, are preoccupied with the tragedy inflicted on Ethiopia’s 120 million people. This inexcusable and costly war triggered by the TPLF is a setback for the Ethiopian economy. Imagine the untold human tragedy.

I urge you to reflect on the lessons we must draw from this war. Ethiopian ethnic elites cannot continue with the same model of ethnic politics and expect to develop a transformative economy. There is no scenario I can think of under which Ethiopia can transform the structure of its agriculture-based economy without drastically changing its governance.

The pitfalls of the developmental state led by the TPLF regime created conditions for future ethnic conflicts. The financial, and economic resources which the elite captured, embedded in the developmental model, foretold the explosive nature of conflict-prone governance in Ethiopia. Though the TPLF allegedly on the run or a tactical withdrawal, the policy, institutional and structural hurdles that afflict Ethiopia remain intact.

“David Roth Kopf’s book “Superclass: The Global Power Elite and the World They Are Making”, depicts the deepening gap in income and wealth between the few filthy rich and the vast majority of the world’s poor. He asserts that the current global system is fundamentally unjust. The richest get richer and the overwhelming majority get poorer.

In China, a recent statistic showed that “the wealthiest 1 percent of the Chinese population, of whom were 388 billionaires, held 31 percent of the country’s entire wealth. In the USA, the wealthiest 1 percent of whom were 614 billionaires, owned 32 percent of the entire wealth of the country. In many ways, the Chinese and the Americans share similarities that are rarely discussed and or known in Africa. Is this the model Africa should follow?

I am deeply concerned that Africa is a victim of globalization. I grew up in a world dominated by two superpowers: The United States and the Soviet Union. This changed with the collapse of the Soviet Union. We lived in a mono-super power world dominated by the United States. The world has changed dramatically since, with economic power shifting from West to East and South. The term BRICS became a contemporary vocabulary. The 21st century is increasingly governed by a multi-polar world with diverse economic and political actors. The so-called African Renaissance is taking place in a changing environment.

This new form of globalization compels us to re-write and redefine an uncertain world in which each person is affected, with a few controlling the levers of power; and dictating the rules of engagement. What we know is that they are not governed by democratic and inclusive international governance. In “America is on the wrong side of history”, Joseph Stieglitz, the Nobel laureate, one of the staunchest critics of undemocratic globalization opined, “Investments with high social returns were being starved” through misallocation of capital; and that the U.S. should “get out of the way and let us create an international architecture for a global economy that works for the poor.”

Global hegemony over African countries enables the rich and elites to “get richer; and most of the people remain chronically poor. China’s efforts to establish the Asian Infrastructure Investment Bank is a promising effort to level the playing field. However, giving a free ride to multinational corporations, sovereign and hedge funds and state and party owned enterprises to avoid taxes on profits in African economies is a form of robbery. The new form of exploitation was revealed last year by the International Consortium of Investigative Journalists which released information about Luxembourg’s tax rulings and exposing the scale of tax avoidance and evasion”.