The Ominous Clouds of Woyanne/EPRDF’s Business Empire

September 1st, 1999

EPRDF-Owned Companies Raise Abuse of Public Office to a New Height

It has been all too familiar in post-colonial Africa that new rulers have resorted to a system of patronage whereby the loyalty of followers is purchased with public assets and appointments to high offices. Appointees with modest conomic means and expected short tenure in office have the incentive to amass personal wealth through bribes, theft, cronyism and nepotism. This privatization of public office has proved a stumbling block to the emergence of good governance in Africa.

Ethiopia has not been altogether immune to this trend. In fact, it has recently fallen victim to a rather virulent form of abuse of office. The Ethiopian bureaucracy has been known for its professionalism and competence under the monarchy, petty corruption notwithstanding. The nationalization of private property by the Derg rendered the state an even more attractive economic prize. It opened the way for widespread corruption for the first time. The warlords that replaced the Derg have upped the ante by coming up with an ingenious and shamelessly devious formula for converting political power into “private” economic power. Erstwhile sandal-clad socialist guerrillas now sit at the helm of multi-million dollar conglomerates!

They did have some prior experience and seed money, for sure. The necessity to finance the guerilla armies had impelled them to establish a network of small commercial ventures in the territories under their reach, including the cross-border trade with Sudan and in the Diaspora. This was supplemented by the occasional looting of banks, and extortion of money and tax from defenseless citizens. Party affiliated NGOs such as the Relief Society of Tigray were also used as fund raising decoys. The result is a brand new model of Party-led mafia-type capitalism in the Horn of Africa. The model combines underground and above-ground activities in the forms of theft of state property, export and currency scams, insider privatization, and crony capitalism.

EPRDF’s Emerging Conglomerates are Large, Networked and Savvy

The extent of the ruling party’s instantly sprouted business empire is hard to ascertain exactly because of the shadowy nature of these ventures. But the facts are slowly becoming alarmingly clear. These corporations, most of which are owned by the TPLF, are now among the largest enterprises in the country. They reportedly boast between 1 billion birr (US$130 million) and 3 billion birr (US$380 million) in paid-up capital.

One notable fact about this financial-industrial oligarchy is that it is organized under two holding companies fronting as NGOs: EFFORT (for TPLF) and ENDEAVOR (for ANDM). EFFORT, for example, has five major divisions each of which is headed by a senior party cadre: Industry by Abadi Zemo, Mining by Tedros Hagos, Finance and Trade by Sebhat Nega, Construction and Transport by Arkebe Uqbay, and Agriculture by Tsegaye Taiyallew.

Among the largest TPLF companies are Wegagen Bank, Guna Trading, Almedia Textiles and Garment, Africa Insurance, Beruh Chemical, Express Transit, Hiwot Agricultural, Mega-Net, Mesebo Building, Sheba Tannery, Meskerem Investment, Mesfin Industrial, Sur Construction, and Trans-Ethiopia. ENDEAVOR, as a junior partner, has more modest holdings which include Dashen Brewery, Zeleke Agricultural, and Blue Nile transport. The other EPRDF member fronts are in the early stages of mastering the get-rich-quick scheme.

The second fact about these conglomerates is that their network spans the entire Ethiopian economy. Moreover, their financial activities and cross-holdings are coordinated by member banks. Their assets are protected, and their underhanded contracts enforced, by the party militia.

Another of their notable characteristics is that they employ an aggressive, multi-pronged strategy of expansion. These include favored access to government and foreign aid contracts, blackmailing private firms with profitable niches, and forming joint ventures with domestic and foreign investors. They are said to have strategic alliances with the other business empire of Midroc Ethiopia (controlled by the Saudi-linked Al-Amoudi) which, for example, contributed 1.6 billion of the 2.5 billion birr of privatization proceeds to date.

Finally, these companies generate a substantial economic base for the ruling party. Senior cadres and their cohorts have become instant millionaires. The party has amassed substantial commercial assets to add to the mountain of war materiel already under its control. With these resources, its all-consuming vision of industrializing TPLF’s home province of Tigray may have come closer to fruition. In sum, the EPRDF’s politico-economic apparatus aspires to nothing less than “a government within a government.”

Party-owned Businesses are an Ominous Danger to Ethiopian Renewal

The very existence, let alone predominance, of these entities is a cancer on a body politic that is struggling to recover from three decades of foreign-inspired destabilization. To begin with, the wealth being amassed by them is nothing more than the ill-gotten property of the Ethiopian people. It completes the erosion of the people’s already tenuous faith in government. Even worse, it sends the disquieting message to the young that organized violence is the quickest (and now legitimized) way from rags to riches. The systemic nature of this corruption sets a more pernicious precedent than the misappropriation of public funds by individuals like Mengistu Haile Mariam and Tamrat Layne.

This practice also stifles the emergence of a competitive market economy, not to mention the unfair disparity in the distribution of wealth. In effect, this practice undermines the rule of law by encouraging extra-legal methods of conducting business. The only competition it is likely to foster is the one among the laggard members of EPRDF (notably ANDM, OPDO and SEPDC) as they seek to emulate TPLF in the project of giving an economic backbone to the official ideology political tribalism.

Finally, the existence of well-endowed parties constitutes an insurmountable barrier for newcomers into the political arena. In the absence of a level playing field, even the cleanest and fairest of elections is bound to produce a predictably unfair outcome. It is to avoid such results that political parties in democratic countries are banned from owning profit-seeking businesses.

Sustained Campaigns of Exposure, Economic Boycott and Legal Action are Essential

The Ethiopian Democratic Action League (EDAL) calls on concerned Ethiopians, and civic and political organizations to resist the economic and political strangulation of Ethiopia. Among the most effective methods of peaceful struggle, we recommend the following:

1. A methodical campaign of exposure of the relevant facts concerning EPRDF’s business empire.
2. A relentless campaign of economic boycott against key products of these companies that are widely sold at home and abroad.
3. Using the existing Ethiopian law that bans ownership of for-profit companies by registered political organizations, legal action to expose this bare-faced mockery of the rule of law.
4. Appeals to donor countries and international agencies to end their indifference to and participation in the widespread practice of inequitable allocation of aid programs across regions, and the issuance of rigged contracts to party-connected businesses or partisan NGOs.

No dictatorship in Ethiopia shall henceforth thrive unchallenged or go unpunished.