Letter From Ethiopia

Ethiopia
Ethiopia. Image via LA Times
“This began as a letter written by my colleague and friend, Melissa Cook, Founder of African Sunrise Partners. She wrote to her family, explaining why she had been in a cone of silence for several days during the Addis Ababa portion of a two-week Africa trip.”Teresa H. Clarke, Africa.com

Always the Most Interesting Country—This Time, for the Wrong Reasons

A regular business trip to Ethiopia—for the purpose of selling locomotives, meeting with business contacts, and speaking to policymakers—turned more eventful than usual starting on Saturday, June 22. Ethiopia is always one of the most interesting places in which I do business—during my September 2018 trip, the Prime Minister opened the border with Eritrea and released hundreds of political prisoners. The streets of Addis were filled with people, most of whom were celebrating. This time, things were a bit more difficult.

A Dinner Party Provides Insight—And Insightful Conversations

I arrived in Addis from Johannesburg on Friday afternoon and checked in to my usual hotel, the Radisson Blu. On Saturday evening, the internet went out and I did not know why.

On Sunday evening, my local business partner Taye invited me to join him with one of his business partners, the owner of a large pan-African civil engineering firm, for drinks and dinner. We had a relaxing evening in the executive’s beautiful home with a very diverse and interesting group of people.

Guests included a Canadian/Ethiopian healthcare and energy policy expert, a politician, a Sudanese intellectual working to organize support for civilian governance in his country, a leading Kenyan businessman, and an American entrepreneur seeking to disrupt the highly competitive Ethiopian beverage sector. Needless to say, the conversations were interesting and thought-provoking on many levels.

Tragic Politically-Motivated Killings

During the gathering I learned why the internet had gone out. On Saturday night the president of the northern Amhara state (the second most populous state, and the root of the country’s Amharic language) was assassinated along with two other officials and a bodyguard.

News sources including Reuters report that the killers had been released under the PM’s recent amnesty program for political prisoners. These sources also report that the group of assassins were trying to mount a coup in the state, and they went on to attack the police station and political headquarters, reportedly killing dozens of people.

Later the same night, the bodyguard to the military chief of staff murdered him and another general in central Addis.

To give Americans a sense of the magnitude of the shock, imagine that someone went into the governor of California’s office and shot him and his staff and then shot the chairman of the Joint Chiefs of Staff in Washington in an effort to destabilize the president’s agenda.

Communications: Back to the 1980s

After the killings, the authorities immediately shut down the internet—even SMS texts would not go through. Everyone in Ethiopia (and across Africa) uses social media to communicate. Mass communications on Facebook, YouTube or WhatsApp can quickly escalate isolated incidents into a full-blown crisis (or, can turn small protests into a mass political movement). Life without the internet can be very challenging!

Fortunately, I had my 2G “feature phone”, a local SIM and lots of airtime. I successfully firmed up my meeting schedule using regular old direct phone calls. Just like in the 1980’s.

Buying a plane ticket from Addis to Nairobi was an interesting exercise at the Ethiopian Airlines ticket office inside the Hilton Hotel. Travelers arrived with backpacks filled with bricks of cash., and receipts were printed on dot-matrix printers. Fortunately, the Ethiopian Airlines servers were still working.

Given the gravity of the national security threat this time, no one in Addis criticized the shutdown. Everyone just adapted their business practices and work went on.

Ethiopia’s History is Complex—And We’re in an Era of Major Change

Ethiopia is a tribal society, and loyalties run very deep. After 1,000 years as a feudal state under an empire, the country went through decades of harsh Communist/Marxist rule under the military Derg government. Much of the Derg economic philosophy has remained; the current Prime Minister’s political and economic reforms are designed to change that for the people of Ethiopia. The concept of capitalism and free markets will take a generation to develop here. It is difficult for any outsider to fully understand the highly nuanced political and historical backdrop here.

Addis Ababa, the capital city, is at over 7,700 feet elevation. The country has vast mountain ranges, huge rivers and much diversity of land and people. Ethiopia has over 100 million people in a country three times the size of Texas. Half of the population is under the age of 18 and poverty is highly visible.

Drought, war, and famine have affected nearly every Ethiopian, either directly or through family. This reality shades philosophies, policies, and priorities throughout the country.

Prime Minister’s Reforms: Unleashing Long-Buried Passions and Conflicts

The current prime minister, Abiy Ahmed, is 43 years old and came to power in April 2018. He is a reformer and very progressive. Half of his new cabinet and the President of Ethiopia are women. He is shifting the economy toward a more market-driven, open approach. He is privatizing state-owned firms including Ethiopian Airlines, ethio telecom, the shipping and logistics company, sugar plantations, and more. Foreign investors are being allowed in to key sectors for the first time. But slowly. Retailing and banking remain closed to foreign investors.

Prime Minister Ahmed is opening up the political dialogue. This is always a risky proposition. In Ethiopia, the impact is magnified by the fact that until the election of the new PM, leaders from the minority Tigray ethnic group dominated political power for decades. Prime Minister Ahmed is from Oromia, the largest state in Ethiopia. Oromia has historically been under-represented in Ethiopia’s government, and its people have long sought more political self-determination. The Rio 2016 Olympic marathon winner who went through the finish line with his forearms crossed above his head represented this group.

The state has historically maintained tight control of the economy, national security, the media, and political discourse—but now, things are changing. This explains the bubbling up of long-suppressed disputes and grievances.

National Mourning

On Tuesday evening during dinner I watched the continuous Ethiopian TV coverage of the funerals which took place that day, and the commentary on the lives of the men who were killed (programming was in Amharic, but the visuals were easy to comprehend). All senior members of government attended the very emotional ceremony.

Postscript

The internet in Ethiopia was turned back on at about midnight on Thursday, but responsiveness has been spotty. News has been trickling out, and it’s clear that the danger was greater than the calm in Addis led us to believe. 

Despite the ever-changing situation, I remain bullish on Ethiopia. The unpredictability of this and other markets is just part of the cost of doing business in Africa, in my opinion, and it does not shake my long-term confidence in the continent’s potential for growth and prosperity.

Melissa T. Cook, CFA
Founder and Managing Director, African Sunrise Partners, LLC
www.afrsun.com
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