Ethiopia: The Economy is struggling, not a rising lion as previously forecasted!

For as long as I can remember there gone stories of the amazing rise of the Ethiopian economy, the financial markets and the outputs out of this world. Where the money would grow ten-folds within minutes of its arrival. Like a mirage the number’s must have appeared in front of our eyes and stories that, we are told over the recent years. The Ethiopian powerhouse and the serious contender with Nigeria and South Africa. With their railways, banks and development projects, the powerful dam and all the others. It must have been a ride for the Ethiopian People’s Revolutionary Democratic Front (EPRDF), Prime Minister Hailemariam Desalgn, must be so proud of his achievement.

Why I say that, because a booming economy does not do this:

“Ethiopia and World Bank have signed a 1.3 billion dollar grant and loan agreement to enhance equitable services and reduce food insecurity. The agreement was signed by Abraham Tekeste (PhD), minister of Finance & Economic Cooperation (MoFEC) and Carolyn Turk, World Bank’s country director for Ethiopia, Sudan, and South Sudan” (All Africa, 2017).

So when a booming economy, that has such magnificent rates and growth prospects should not and no need for extensive borrowings from the World and subsidiaries, to say they need so is a lie. The debt and the international support for projects and food security is not a sign of a sound and strong economy. More of the latter if I beg to differ. On that, alas the recent weeks has proven this. World Bank was ushered in the end of September, but it is now cash-crunch time.

Not the jolly Captain Crunch, but the credit is due.

“Ethiopia will devalue its currency to attract foreign investment and close the gap in foreign trade, President Mulatu Teshome said at the opening of the bicameral parliament on Monday. He said his government is faced with a serious shortage of hard currency and export trade has dwindled in last three years. Mulatu said major projects like the construction of railway and universities will not be carried out this budget year due to a serious shortage of finances” (ESAT, 2017).

The seriousness is there and it is bleak, when the President Teshome shows up and spread enlightenment to the world. That the economy is fragile and not at its peak, is clear when all the prestige and the giant projects are now put on hold until further notice. Clearly, the financial strains have hit the economy, as well as their exports has given them less hard currency.

It does not go well, when just days ago, when this hit the fan as well:

Double-digit inflation keeps threatening the macroeconomic conditions of the country as the headline inflation rate hit 10.8pc last month, according to the Central Statistical Agency (CSA)- the highest since October 2015. It is in contrary with the target of the government in the second edition of Growth & Transformation Plan (GTP II) to keep inflation in a single digit. The hike in the price of cereals such as teff, maize, wheat, barley, beans and sorghum coupled with holiday-driven price upsurge is the primary reason for the inflationary pressure last month, keeping the food inflation stagnant around 13pc.“As September is a time of multiple holidays, it is believed to influence the increase in the inflation rate,” the report of CSA reads” (Berhane, 2017).

That the cash crunch and the double-digit inflation hits the Republic is not a good look. The proof of the currency value falling, lack of hard currency and new Multi-National loans proves that the Financial Sector and Financial Institutions are strained. There is nothing more to give, it is just bones and not meat. It is just a matter of time before the boiling bones gives no taste to stew as well!

In addition, you the economy is bonkers when their agency spread out this sort of tales, at the time the devalued currency is told to the public on other platforms.

This is from the Ethiopian News Agency:

“The diplomats, who observed the government’s direction at the joint session of the parliaments, whom ENA has talked to also forecasted the country`s economic growth to be amplified in better manner referring the current stability of the nation. Ambassador of Bangladesh to Ethiopia Monirul Islam said the growth that Ethiopia’s economy has witnessed was ‘wonderful’ despite the drought and other problems. “It was 10.9 percent and this year I hope it will be more than that because there is a good rain, everything is good, the state of emergency has been lifted and everything is normal”. “So I think the economy should perform better especially in the agriculture sector as well as in the industry sector”, he pointed out” (ENA, 2017).

I do not know if Ambassador Islam lives in alternative reality or trying to sugarcoat the situation of the dire economic state that the Republic is facing, but it makes good propaganda for the ones who still want the fantastic picture spread around the globe. That the Ethiopian economy is sound and still growing. However, it is hard to grow when you lack currency, you have growing inflation and you are borrowing more funds. I do not know, which economy or financial system that it works splendid in. Certainly not this one.

In addition, the news of the financial rising tiger or lion of Ethiopia has been a mirage, a fraud and play for the world to see. At this stage and in time, it is far from it. The Ethiopian economy is plummeting and at amp speed. If you eat up the crap the ENA serves you, it must certainly serve your kind, but it is not reality. The President even said so, the reports are striking and the added loans proves the dire state.

The ones who is the most hurt. It is the citizens who needs the hard currency to buy food and live, they are punished for the reckless care of the financial system. They are the ones who suffers, because of how the state decided to conduct their affairs. They are the ones who feels the inflation, the rising prices and still has to get by. It is not right, but that is how it is. The Ethiopian government should subsidize and make sure the people get enough. However, do not expect that. This is from the same government that sent Agazi squad to Amhara and Oromia to kill and destroy. They do not care, unless they have too or if it keep them in power. Peace.

Reference:

All Africa – ‘Ethiopia: World Bank Assents U.S.$1.3 Billion Finance to Ethiopia’ (30.09.2017) link: http://allafrica.com/stories/201710090243.html?utm_campaign=allafrica%3Aeditor&utm_medium=social&utm_source=twitter&utm_content=promote%3Aaans%3Aabljpw

Berhane, Samson – ‘Gov’t Sees Double Digit Inflation, Again’ (08.10.2017) link: https://addisfortune.net/articles/govt-sees-double-digit-inflation-again/

ESAT – ‘Ethiopia President Says Country is Broke’ (09.10.2017) link: https://www.tesfanews.net/ethiopias-president-says-country-financial-crisis/

ENA – ‘Diplomats Laud Economic Performance of Ethiopia’ (10.10.2017) link: http://www.ena.gov.et/en/index.php/economy/item/3814-diplomats-laud-economic-performance-of-ethiopia

 

USA: “Puerto Rico governor sends letter to Congress asking for additional financial assistance following “unprecedented catastrophe” (07.10.2017)

Opinion: There is only dark days ahead, unless something changes rapidly!

I wish I could be more hopeful, have more swagger and be jubilant, but I can’t not in these days and times. There isn’t a dim light of better prospects, unless the winds decides to turn or the forces of good actually moves at light speed. At this moment, this very moment, its dark as night. The night is upon us and the sun is dwelling far beyond the clouds.

The light and hope is dimming down, not that I wish for this, but the energy and the fatigue is there. The prospects of pure civil disobedience isn’t there. Like the lack of care, because the state and the authorities seems to overpower with the Special Forces Command, Uganda People’s Defense Force and even M23. The Police Force is busy taking the leaders and scheming the next charges against innocent leaders, who only try to defend the citizens. While the citizens are listening to radio and TV. Hope that change will fall in their lap. I hate to break it too you, I won’t unless you fight for it.

Museveni and his clan will not give it up, Mobutu would not give it up and Kabila has no plan either. Museveni has stayed longer than Kabila, so just imagine his will to stay. The change of Age Limit in the Constitution at this point, is formalities, which is why he is travelling speaking on land issues. Museveni see this as solved and soon proper fixed. So that the state is properly screwed. No way back, only Musevenism, Militarism and Oppression ahead!

That is why the light isn’t only dim, the only one giving little bit of hope is the dozens of stars that shines lightly on the road ahead. The eternal light that hits the sand-corns and reflects so we don’t walk into the abyss. The NRM has the power, they have the army and the police. They have the state reserves and the resources to crack down on mobilization and demonstrations, but if it is done at a scale and with the people’s power. That could overturn it. Then the people need to show will, show character and organize in a manner that makes civil obedience the only way out.

You can’t be half gangster, you are either a crook or you’re a citizen. The same manner is about standing up to a government. You can’t be half-way demonstrating the oppression and harassment, the belittlement of rights and justice, rule of law for every single citizen. It has to be done with style and fineness. The arrests, detaining and the humiliation of the opposition should be warning, but it seems like society has gotten accustomed with their fate. There isn’t even shock and awe, when Civil-Society Organization are raided and blamed for political interference in internal-matters. It’s just another Monday or Tuesday. No worry, it wouldn’t happen to us.

Neither is the blocking of roads, barricades of the Parliament, soldiers interfering in clearing the Plenary Session. The silence and the misrepresentation inside the National Assembly, shows that the President using guns to sway opinion into the midst of the highest legal assembly. There isn’t anything he will not touch with force and fear. That is the darkness, the bitter fruit of oppression.

This should be the last part of the narrative, it should be last step of harassment and intimidation, but its not, grenades at MPs houses and charges of treason. On-going cases for years upon end, like the Walk-To-Work Cases pending in Kabale for Lukwago and Besigye, that still isn’t settled in court.

Therefore, the darkest hour is here, the only left isn’t detaining MPs or charging the MPs. The end of this is political assassinations! Is that the way it has to go before the light bulbs shatter and so that the people see how dark it really it is outside?

If there will be hope for another morning of glory, another cup of coffee or chai. It is time to wake up and organize, not accept the turn of events. Time to step and bring courage around your people and around your clan. Not accept that the village are taken for granted, that the cash crop are sold on the market in Kampala. That your assets are easily up for grabs and your voice is silenced by the state. Because that benefits Museveni and he knows it!

The light feels very far, the prospects are dim, but if the people start to renegade, resist and show civil disobedience, then there is hope. However, right now, the darkest hour. There are very little, but a few renegades, the rest are in submission. They are wandering and letting it go. But you never know when you are the victim. Innocent citizens has died because of this oppressive regime, Sam Mugumya is lingering in jail in Democratic Republic of Congo. For being a voice against the NRM. The next one could be one of us, who knows, but if we are silent.

If we are silent and let the oppressor continue, we are at fault for the darkness for letting the forces of oppression rule and indefinite take total control of our lives. That should be unacceptable, but it cost to fight totalitarian dictatorship. It cost, Francis Mwjikye has spent countless nights in prison before becoming MP. Dr. Kizze Besigye has spent his time in the prisons as well for the cause of liberation. There might be more, but there need men and woman. Who don’t accept being taken for granted and letting the NRM do as they like.

That meaning, serving Museveni and cater to him for life. Uganda isn’t only for MUSEVENI. It is all for UGANDANS. That should be mandatory, but the NRM MPs thinks otherwise. Peace.

Opinion: It’s ironic that President Museveni is talking about disciplining the government!

The three arms of government and their sub-branches must have discipline. For example I have been involved in disciplining the army. We should do the same for other sub-branches of government. If the Judiciary is also disciplined in fighting corruption, citizens will lead a good life. – Yoweri Kaguta Museveni on the 1st October 2017, State House Entebbe.

Its just one of these days that hearing the news and seeing the tweets of the President, makes me laugh and wonder if he listen to himself. He knows his system and has made his garden. The way the government steers and govern is because of his policies, his regulations and his support. It is not like there been other ruling for last 30 years in Uganda. The Republic has been under the control of Museveni and his National Resistance Movement (NRM).

The NRM has suffocated all other free-will and control. Therefore, Ministers, Members of Parliament and others seek guidance and funds directly at the State House in Entebbe. Even foreign investors meet there to make agreements. Everything is nearly sanctioned out there. The Discipline now is more on the narrow-minded government that is run from there. The institutions and the procedures are not so important. Since most things happening is with the words from “above”, meaning the President and his close advisers.

It is not rocket science to know where the benefactor or the reason for lacking structures. That is because government waits for their go sign by the State House, they are waiting for funding of the projects and institutions from the State House. The projects and the works of the State House and under the Prime Ministers Offices are the key organizations within this government. They might say all of the massive cabinet has part to play, but that is the facade.

Therefore, it is ironic for a man so controlling and so disorganized that it gives sometimes way to the unthinkable. Just like the Presidential Handshake, that was sanctioned by the State House, but taken form the wrong account. That was the problem for the President, not that the corrupt behavior was occurring on his watch. Its like he talks against himself. Because he has no problem speaking anti-corruption, but if corruption benefit his cronies – its fine and dandy!

I am not surprised by him at this point of time, its fit his narrative. He says what he expects and wants out of others, but the next day he finds a way to benefit or use the loyalty of his cronies. Not like he would have excepted the UCC not to listen and stop the suspended MPs to hit the airways and be broadcast on TV. He rather being himself on radio and in the spotlight, but will accept anyone else sharing the same space.

President Museveni is the proof of someone saying something noble, but doing opposite. He might say something insane, but act rational. Therefore, you never know where you have him. I will never believe him actually disciplining the government, if doing so. It means they are all blindfolded and following his guidelines. It does not mean building proper governance and protocol, neither is institutionalize the departments and ministries, it is all about his will and his stature.

When it comes to Museveni, discipline is about following him. Not building transparent and proper government institutions. Peace.

Zimbabwe: Hyper-inflation hit the republic yet again, this time it’s the fault of launching the Bond-Notes!

(We have got the Judas Iscariots amongst us); they are manipulating the currency so that they trigger inflation” – President Robert Mugabe on Thursday this week (Chibamu, 2017).

When they launched the Bond-Notes in 2016, the borrowed money from China to launch a new currency. Like that sounds like fresh and sound financial policy. Not like Zimbabwean African National Union – Patriotic Front (ZANU-PF) and President Robert Mugabe unleashed this for the supposed benefit of the citizens. Since the former currency we’re put into death-bed and was total worthless by 2009.

So now that its gone some time, the reports of a black-market with currency exchange, the lack of petrol and others springing bad news. It is international ones that are also looking at the signs. Even if the ZANU-PF Ministers and loyalists to Mugabe, is saying it is only smoke, but no fire. Clearly, there are more into it, than they want to admit. Because, we all who followed the launch and the misuse of funds from the cronies close to Mugabe, knew that a uncontrolled inflation might hit the republic again. Mugabe will blame anyone, like he didn’t create this issue himself. If not his wife who spends fortunes in South Africa, buy luxurious cars like Rolls Royce and the sons of family spends time on lavish hotels there. They are acting like Zimbabwean Royal Family, the perks of diving into the state reserves.

Well, the Zimbabweans are in long lines getting petrol, while the Bond Notes values are getting to level, that they are worthless. That the Bond Notes are far from being One to One exchange with United States Dollars. That ship has sailed and the unfortunate citizens of Zimbabwe, who has to again see the Bond Notes, second crypto-currency in a decade fall to pieces. The destruction of the economy is evident. The statistics of the inflation should worry anyone. Just take a look!

This hard budget constraint became too onerous for the free spending government to abide by. In consequence, Zimbabwe’s government has employed Harry Houdini’s magic and circumvented the hard budget constraint imposed by dollarization. It has done so by creating a new fake dollar, which is referred to as the “New Zim Dollar.” Not surprisingly, this new Houdini creation is rapidly becoming worthless. This makes the methodology that I employed to measure inflation during Zimbabwe’s hyperinflation episode relevant again. Since Old Mutual’s price on the Zimbabwe Stock Exchange is denominated in “New Zim Dollars” and Old Mutual’s price on the London Stock Exchange is denominated in British pound sterling, we can create a “New Zim Dollar”/sterling implied exchange rate. This exchange rate can be transformed using PPP to accurately measure Zimbabwe’s inflation. At present (09/29/17), Zimbabwe’s annual inflation rate has soared to 242.72%” (Hanke, 2017).

More ominously, from the perspective of Zanu-PF, is that, as coffers dry up once again, Robert Mugabe’s government will struggle to pay some of the institutions so crucial to it remaining in power, such as the civil service, the military and the police. Bond notes were the government’s short-term answer to its long-term economic problems. But instead of providing the solution, they are proving to be an expensive mistake” (Allison, 2017).

RM: Do you foresee Zimbabwe sliding into the 2008 inflationary trap? What is your comment on this? Chris Mugaga: We might not necessarily slide into a hyper-inflationary trap, but we need to guard against it. The money changers have started causing havoc and the informal market players have been creating artificial shortages. All that must stop and this will assist in managing the inflationary threat. Last, but not least, fiscal spending also has to be managed as funding a fiscal deficit can lead to inflation” (Muzavazi, 2017).

Markoni, who once served as an economic adviser in the regional block, SADC, said Mugabe’s decision to introduce bond notes – a surrogate currency meant to alleviate the cash crisis – set in motion trial of events that led to the total collapse of the country’s financial services sector. “Bond Notes are not the solution and we have always said this. The price increases are just symptoms reflecting the situation on the ground and Mugabe can order the Zambezei River to flow back to Angola but it just won’t because of the forces of nature” said the former Finance minister. “Such forces of nature also apply to the value of currencies and that is why you see that the bond notes have not mitigated the cash crisis and collapsing economy, it has worsened it instead”. He added”(Tarenyika, 2017).

If you thought this would be sunshine story, your wrong. The reality is that the plan for the Bond Notes was flawed from the outset. I am far from surprised by the output of the currency. The whole borrowing to print the currency was made for a disaster. It was just a matter of time, when the state and cronies would print to much and make sure their we’re lacking amounts of cash in the system. As well as the foreign exchanges lacking funds to change between the United States Dollars and the Zimbabwean Bond Notes. There are enough profound evidence of trouble that could occur and which did.

The economy and financial policy was not made for the benefit of the citizen, but a short term gain for the ZANU-PF. But you can wonder who really earned on it before the inflation hit this time. As the usual suspects would be able to comply, but won’t since they will stay silent since they earned on the scheme. The crones like Mugaga will make it seem like normal and under control, while it is not. Because they know that the numbers are terrible and a doctor in the United States publishing it in Forbes, wouldn’t all of sudden find the numbers on a random spread-sheet. Therefore, the reality should hit the fan. Even if Mugabe never will take the blame. There will be someone falling on the sword, neither will be Rolls Royce driving Grace Mugabe, neither Bob, but someone who is easily gotten rid of in the cabinet. Peace.

Reference:

Allison, Simon – ‘Can Zanu-PF afford another currency crash?’ (29.09.2017) link: https://mg.co.za/article/2017-09-29-00-can-zanu-pf-afford-another-currency-crash

Chibamu, Anna – ‘Zimbabwe: President Mugabe Stays Put, Scorns ‘Judas Iscariots’ (29.09.2017) link: http://allafrica.com/stories/201709290092.html

Hanke, Steve – ‘Zimbabwe Inflates… Again’ (30.09.2017) link: https://www.forbes.com/sites/stevehanke/2017/09/30/zimbabwe-inflates-again/#221257d10d68

Muzavazi, Runyararo – ‘Let’s guard against the hyper-inflationary trap’ (30.09.2017) link: http://www.herald.co.zw/lets-guard-against-the-hyper-inflationary-trap/

Tafirenyika, Mugove – ‘Former Finance Ministers speak on the economic rot’ (29.09.2017) link: https://www.dailynews.co.zw/articles/2017/10/01/former-finance-ministers-speak-on-economic-rot

Philippines: Ombudsman Conchita Carpio Morales statement: “If the President has nothing to hide, he has nothing to fear.” (29.09.2017)

U.S. Representative Ted Lieu draft bill: “Swamp Flyers Act” (28.09.2017)

The Republican’s plan of fixing the tax-code is by bailing out corporations and the wealthy!

Just like the leaflet dropped in April 2017 as a serious Tax Plan, which was one-page long. Clearly, the people in charge of the economy and financial state of the United States. Are more preoccupied with taking private jets and eating while in office than actually working. I can question that after months after the leaflet, there was a tiny amendment on the newly proposed tax-plan. Since it is just small expanded text. Now instead of one single page, its gone up to 9 pages. Not like a handbook into the codes, neither economic implications of the taxes. Like which groups gets benefits, who will pay more and what sort of “damage” will the tax-cuts made by Republican Party do.

This released Tax plan: “Unified Framework for Fixing Our Broken Tax Code”, that was released today. You should expect better work, especially from former businessmen and bankers who are running the Commerce Secretary Wilbur Ross and Treasury Secretary Steve Mnuchin. Both of them has been bankers, but they still has no stats or proof of how these tax codes really affects society. It’s like selling house on only the paperwork and have no official showing of the house. When you get there it either be just a big lie or it be a shiny palace.

That the United States Government and Republican Party are delivering this sort ploy to trigger their wishes is insane. What is striking is words like these: “An additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers” (Republican Tax, 2017). This is like saying we will take away and make it simpler for the highest earners to pay less, while this will not burden the ones who earn less than us. So that the progressive though is that the highest earner will get a tax-cut and we promise it will not bother anyone.

But the framework are really showing its love for corporation and giving them tax-holidays from the last quarter of 2017: “The framework allows businesses to immediately write off (or “expense”) the cost of new investments in depreciable assets other than structures made after September 27, 2017, for at least five years. This policy represents an unprecedented level of expensing with respect to the duration and scope of eligible assets. The committees may continue to work to enhance unprecedented expensing for business investments, especially to provide relief for small businesses” (Republican Tax, 2017). So they can easily just tap lots of investments without showing them to the Internal Revenue Service, this means the investments would be easily invested and written-off, without considering the tax-record in general. This will be quickly profitable for big corporations and real-estate businesses. Who can easily invest and get profits within months. As they sell in the next year, as they are investing in 2017 and writing it off. While in 2018 selling it. Then they didn’t need to pay the tax for the investment done in 2017. This is double profit for the bigger businesses. It’s a match made in heaven for the multi-national corporations in the United States. The state will earn less and just make sure the investment will be even more short-term and be more buy-in and takeovers. Since they can earn lot’s on the investments, before dropping it or selling it the next year after writing it off.

The framework limits the maximum tax rate applied to the business income of small and family owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%. The framework contemplates that the committees will adopt measures to prevent the recharacterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate” (Republican Party, 2017). Again, the proposed Tax is made to secure the wealthy, so they will get tax-cuts, this is not for the betterment of the state. It is to secure the wealthy and make sure their tax-rate is cut. Clearly, the treasury and commerce secretary are trying to help their friends and family on Wall Street and in the big business with a fancy tale of tax codes and cuts.

If you thought President Trump cared about Middle-America or even about the Working-Class, they we’re needed props and needed ballots for the election. But now that he got you in his pockets. He can get a payday, cut his taxes and make sure his friend on Wall Street gets their payday too! Peace.

Reference:

Republican Tax Plan – ‘UNIFIED FRAMEWORK FOR FIXING OUR BROKEN TAX CODE’ (September 2017)

#ThisFlag: Pastor Evan Mawarire has been released after being detained for 48 hours!

After holding him for over 48 Hours, the #ThisFlag founder and Civil Activist Pastor Evan Mawarire has been released. Magistrate: “The 48 hour window has expired, therefore the accused is entitled to immediate release” (Doug Coltart, 26.09.2017). This because the time of arrest started on Sunday and the legislation together with the hearing should have already started. That is why they could release him.

Clearly, every time the Mawarire speaks out his mind and drops his knowledge of the fragile economy, lacking petrol and the failing Bond Notes. There will be issues as the Zimbabwean African National Union – Patriotic Front (ZANU-PF) government trying to subscribe to their leader and his vision, if that is only to print more cash for his lavish lifestyle and his Zanu-PF elite. Therefore, this is not the last a Civil Activist, someone who is saying “Mugabe Must Go” will be in court.

Mawarire is the leader and the man who stands on his principles and is the one who has the voice. This today was a bail-hearing and he was free after the trial. But expect that he might be back to court on Thursday. Still, that one changed as his hearing happen today and got released. Clearly, the Constitutional Rights of bail-hearing and trial before 48 hours happen today. The release happen at the High Court and Row 6 as the judge actually freed him. He followed the code, even as the Pastor was arrested at his Church, that was on the 24th September 2017.

This might easily happen again. That the Police of Zimbabwe will arrest and detain the Pastor on forged charges, on bat-shit crazy charges that doesn’t belong anywhere, except for in B-Movies. Not in reality, but in a poorly written fiction. Still, the ZANU-PF will continue to strangle and humiliate the activists, the ones who wants a peaceful change for the better. As the economy and the rights of people is stripped away. Nothing is right about this situation. Peace.