Although the experiences of Central and Eastern Europe show that the private sector tends to be more productive than state-owned enterprises, governments around the world continue to experiment with varying degrees of state involvement in the economy.
Driving this involvement is often a distrust in the ability of markets and private firms to deliver results to all levels of society and provide basic safety nets for their citizens. Furthermore, as it has happened in Central and Eastern Europe, even if governments do recognize the positive role of the private sector, they fear swift changes in economic policy that could expose vulnerable segments of the society and weak public services.
The government of Ethiopia, which for a long time has espoused command-economy policies, is at a crossroads. The government is increasingly realizing that it alone cannot deliver all the economic growth the country needs to drastically reduce poverty, yet, at the same time, it is struggling with its own changing role if private sector led growth is to become a reality.
In Ethiopia, the government still maintains all land ownership and controls major economic sectors, such as telecommunications, banking, and finance. Although Ethiopia has provided access to land for larger international firms and there has been growth in small commercial farming, small individual farmers (85% of the country’s population is employed in agriculture) still dominate the agriculture-driven economy.
As it is looking to diversify the country’s growth capacities, the government is seeking better ways to engage the private sector in economic reform efforts. Starting this Fall, the government is launching an official public-private dialogue platform, which will provide the private sector opportunities to approach the government on both the national and regional levels while providing input to the economic policy process.
Although the national plan for reform is just beginning to take shape, CIPE has already been engaging Ethiopian business associations and chambers of commerce in providing input to policy formulation and ensuring that the government sufficiently and appropriately addresses activity in the private sector.
In the video below, Henok Assefa provides a firsthand account of how businesses in Ethiopia are shaping policies that directly affect their activities. In the first story, Assefa details a workshop in which a local chamber of commerce engaged government officials in a discussion of tax policy and collection reforms. In the second story, Assefa describes another session in which a private agriculture association met with trade and agriculture administrators to negotiate the removal of an export ban that was hurting many farmers’ livelihoods.
These stories show that Ethiopian business associations, in partnership with the government, are in a position to help the Ethiopian economy reach its full potential. Much work remains, however, to build the capacity of associations in order to ensure that they prepare concrete and substantiated policy recommendations, as they did in Assefa’s example, rather than just generate complaints.
Published Date: August 23, 2010