Can Ethiopia became an African Economic Miracle?

Posted by dula | | 

Eric Schmidt, Google Chairman’s travel to North Korea to prod the regime about the importance of Internet access and technology is commendable; however Ethiopia, a U.S. ally has avoided such criticism and scrutiny despite subjecting its citizens to similar situation.

Ethiopia’s Internet access like North Korea’s is limited, strictly regulated, and allowed only with government approval. The Ethiopian government controls major resources, including land, banking, telecommunication, and keeps a record number of journalist, human rights activists, and opposition leaders in prison.

Both Ethiopia and North Korea suffer perennial famine and remain one of the poorest nations in their respective continents. Ethiopia’s per capita according to 2011 World Bank data is $374, while North Korea is $1200. Recently, the blocking of Skype by the Ethiopian government created uproar by the International community, but fizzled out without causing any major changes in government policy. Blocking access to technology puts Nations like Ethiopia and North Korea at Risk.

In 1996 at the dawn of the Internet, the U.S. government gave a grant through the Mickey Leland Foundation to wire all Ethiopian universities and high schools with broadband Internet services. The grant was in an effort to leapfrog Ethiopia’s access to technology in order to bring about economic growth at rates enjoyed by East Asian countries and help end its food dependency and perennial famine. The late congressman Mickey Leland died in Ethiopia in 1989 as he was trying to stave off hunger and famine in western Ethiopia. This grant was seen as the best chance to end Ethiopia’s perennial famine and backwardness and to transform it into an economically viable nation similar to other countries that improved their economy by leveraging technology

Prime Minister Meles Zenawi blocked the grant because it stipulated open access and competitive bidding for the installation of the network. The regime was afraid that the citizens of Ethiopia would use the power of the Internet to organize against the status quo that has been highly detested by the majority of Ethiopians primarily for the lack of democracy and government control on land and other resources.

During the 1996 project, Mr. David Shinn, the former U.S. Ambassador to Ethiopia, did everything he could to convince Meles to accept the grant and allow broadband access in order to end Ethiopia’s economic backwardness and perennial famine. Similar efforts by many other groups were aborted because of the regime’s fear of technology as well as lack of interest in leveraging technology for development in most parts of Ethiopia except in the province of Tigre, where Meles was from. In Tigre, the establishment of the Mekele Institute of Technology (MIT) was a break through. Unfortunately, the graduates from MIT are primarily deployed in cyber spying, blocking websites, and filtering email and phone conversations against the opposition.

According to the International Telecommunication Union (ITU), Ethiopia ranks at the bottom of nations in accessing and leveraging technology (see graph below). Even war torn Somalia has better Internet and mobile services than Ethiopia.

Many countries have been able to propel their economy and living standards by leveraging technology. Five years ago, an initiative to upgrade information technology was undertaken in the southwestern Shoa province in Ethiopia. This initiative was led by Ethiopian expatriates, David Levine and Phillip LeBel, two former Peace Corps volunteer teachers who had taught in Ethiopia in the 1960s, and Appropriate Technology Group where I served as director. The project focused on creating a technology corridor to make Ethiopia the outsourcing center of Africa in 10-20 years and to give alternative development to this highly densely populated and poor region stretching from Gibe River to Awassa.

The plan was to start by equipping 15 high schools in the area with computers and Internet access as part of a technology corridor with the elite of the students going to planned post-secondary institutions to form a core of technological innovation center that could help transform the region into a high-technology hub. The initial shipment was sent on July, 2009 to Djibouti with brand new servers, hubs, and various educational software on a container ship. However, when it reached Djibouti, the Ethiopian government refused to grant a permit to move the equipment into Ethiopia. They demanded an exorbitant tariff, though the organization had an approval from the Ethiopian Embassy and other concerned agencies in Ethiopia to donate the equipment to the schools through a nonprofit agency in Ethiopia. . The group was forced to abandon the project after several months of delays and failed negotiations inspite of U.
S. support for the initiative. .

Technology has become an important tool in increasing GDP and standard of living for many nations including China, India, and others. In Ethiopia, out of 85 million people, less than 700,000 or less than 1% of the population have limited Internet access. Besides deliberately limiting access, the cost to use the Internet is exorbitant. Most Internet access is extremely slow. Instead of broadband access, the country uses primarily dialup internet connection that costs more than high speed service. In addition, to establish a traditional dialup service often takes over six months. Part of the delay is due to a rigorous application process and in an effort to use censorship that is supervised by the national security agency. The agency keep records, blocks websites, radios, TVs, and maintains a total monopoly on all forms of information technology in use in the country.

Denial of access to technology to people and economy can cause incalculable harm. Meles took over Ethiopia in 1991 and a year later the Internet was born. Marc Andreesen from the University of Illinois, my alma Mater, unveiled the Internet browser- Mosaic in 1992 and Netscape in 1994. Since then companies like Amazon, Yahoo, AOL, eBay, Google, Facebook and more, were created and their total revenue alone is over a trillion dollars compared to Ethiopia’s $5.7 billion annual budget for 2011. Out of Ethiopia’s $5.7 billion, 42% or $2.4 billion comes from foreign aids and loans. Incidentally, the city of Houston, with a population 2.2 million has a budget of approximately $4.3 billion vs. $3.3 billion for Ethiopia with 85 million people.

Again according to the Word Bank, Ethiopians survive on a dollar a day as measured by their per capita income of $374 compared to $48,000 per capita income for the U.S.A. Ethiopia is also miserably poor compared with other African countries.
Despite these shocking poverty statistics, the Ethiopian regime like North Korea denies private ownership of Land, Telephone, Internet and other major industries, as well as makes it difficult to obtain education or government jobs unless one is a card carrying members of the ruling party.

One might ask why focus on access to technology or information technology. The answer is that many countries have been able to improve their economy and living standard by leveraging technology as witnessed by many successful economies such as those in East Asia. Overall, Information technology reduces transactions costs and it brings major increase in productivity and enables countries leveraging technology to better compete in the global economy. Despite these factual evidences, Ethiopians have been denied the opportunity to take advantages of this important tool for their economic development.

Many economists believe that there are two main factors that enable a country to enjoy rapid economic growth: discovery of natural resources  or leveraging technology or both. Ethiopia, despite its prime location, so far has not discovered any gas or oil, but it failed to take advantage of one factor that was readily available, leveraging technology, despite many opportunities to do so.

In its continuing effort to impose censorship by limiting access to Internet and technology, the regime is condemning entire generations of Ethiopians to ongoing poverty that could have been redressed by more open and forward-looking choices.

Like North Korea, Ethiopia has a new ruler, Hailemariam Desalegn. Can Eric Schmidt or President Obama pay a visit to Ethiopia to prod this Luddite regime to finally grant unfettered Internet and technology access to create a sustained and rapid economic growth in Ethiopia similar to the Asian Miracle.

Dula Abdu, is a former banker and professor of economics and has been promoting Internet access in the USA and in Africa. He can be reached at dula06@gmail.com.