Alemayehu G. Mariam
The World Bank lies, Ethiopia dies… from onerous “odious debt”
growth_transformation101422505553I had completely forgotten about the so-called “Growth and Transformation Plan” (GTP) of 2010, until the World Bank reminded me of it last week.
That “Plan” was the late Meles Zenawi’s gimmick about having an economic plan for Ethiopia. In 2010, Meles made the ridiculous claim that as a result of his GTP “Ethiopian economic growth may average 14.9 percent annually over the next five years [2010-15].” His contempt for our intelligence was surpassed only by our contempt for his ignorance. His mantra was, “No one ever went broke underestimating the intelligence of the Ethiopian people.”
Last week, the World Bank issued a “Featured Story” entitled, “Can Ethiopia’s Resource Wealth Contribute to its Growth and Transformation?”. The Bank claimed, “Ethiopia has averaged a 10.7% economic growth rate over the last 10 years, more than double the annual average of countries in Sub-Saharan Africa, which was around 5.2%.” The World Bank’s contempt for our intelligence is exceeded only by Meles’.
The same claptrap was even repeated by President Barack Obama on September 25, 2014 when he declared, “there is no better example of progress in Africa than what has been happening in Ethiopia — one of the fastest-growing economies in the world.” Was Obama merely parroting an obligatory complement?
Last week, I published my commentary, “World Bank-ruptcy in Ethiopia”. Two weeks ago, the World Bank’s Inspection Panel (IP) Report (prepared in November 2014 for limited circulation to the Bank’s top brass) on the impact of the so-called “Protection of Basic Services Project” (PBS III) on the “villagization” of the Anuak People in Western Ethiopia was mysteriously posted on line. The IP Report showed the World Bank has been playing a cruel bureaucratic joke on Ethiopians and engaged in an elaborate game of deception in its implementation of its PBS III. (Incidentally, and possibly coincidentally, the World Bank’s “Featured Story” on “Ethiopia’s Growth and Transformation” was released on the same day I posted my “World Bank-ruptcy” commentary.
Last week, I also read the World Bank’s 189-page report entitled, “Ethiopia Poverty Assessment” released on January 20, 2015. The “Assessment” proclaimed, “Poverty in Ethiopia fell from 44 percent in 2000 to 30 percent in 2011, which translated to a 33 percent reduction in the share of people living in poverty. This decline was underpinned by high and consistent economic growth.” (Presumably, poverty dropped from 30 percent to 0 percent between 2012 and 2015.)
What a colossal waste of time reading such a crock! (I should have used the time to finish reading the learned commentaries of Nubre Ed Ermias Kebede Wolde-Yesus in “Ethiopia: YeAlemu Mefarejia” (“Ethiopia: On Judgment Day” [my translation of the title]).
“Houston, we’ve got a problem,” reported the crew of Apollo 13 to describe the crises in Mission Control.
I say, “Fellow Ethiopians, we’ve got a problem here!” I am making the statement to describe the crisis in truth telling by the World Bank and its ilk about Ethiopia’s real economic growth. What exactly is the truth about Ethiopia economic growth rate and development? Did Ethiopia really average “10.7 percent annual growth over the last 10 years”? What is the proof for such a claim? Is it even remotely possible that Ethiopia could have “averaged 14.9 percent annually” during the 2010-2015 period as Meles claimed? Where does the World Bank get its statistics on Ethiopia’s economic growth anyway?
Why is the World Bank publicizing figures it knows are manifestly highly dubious and outright boldfaced lies? Is it to impress the Ethiopian public by extolling the skillful management of the Ethiopian economy by the Thugtatorship of the Tigrean Peoples Liberation Front (T-TPLF)? Is it intended to be a self-congratulatory pat on the back for the donors and loaners and prove to the world that they played a central and decisive role in lifting out of poverty and transforming a once famine-stricken country into a shining example of loan- and aid-based development (an oxymoronic claim on its face)?
Could it be part of a larger deception games perpetrated on the Ethiopian people? Was President Obama merely repeating what his aides told him when he said “there is no better example of progress in Africa” than Ethiopia? Or does he know as much about the Ethiopian economy as he said he “knows” about Ethiopia’s elections?
If Ethiopia is the shining example of economic growth in Africa as the World Bank and its ilk claim, “why is Ethiopia the second poorest country on the planet? (For the answer, read my June 2014 commentary by the same title.)
Joseph Goebbels, history’s most infamous propagandist, observed, “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.”
When that big lie is repeated by the biggest leader in the world and trumpeted by the mighty World Bank, it has the potential to become a little big truth. But a lie however big could never become even a small truth; wrong does not become right because the high and mighty said so; nor does evil become good even when wrapped in a golden robe. A lie will forever be a lie even if it is accepted as truth by the majority.
To be sure, I will readily admit there has been an 11 percent, even 15 percent, annual growth in mushrooming lies, proliferation of damned lies and procreation and propagation of statislies by the T-TPLF and its toady loaners and donors.
How the World Bank uses lies, damned lies and statistics to lie (“statislying”)
When will the World Bank stop “statislying”?
Benjamin Disraeli is reported to have said, “There are three kinds of lies: lies, damned lies, and statistics.”
I am going to coin a new word (as I have done on many previous occasions) to describe the use of statistics to lie, mislead and hoodwink: “statislying”.
The World Bank “statislied” when it proclaimed to the world in its “Featured Story” that “Ethiopia has averaged a 10.7% economic growth rate over the last 10 years, more than double the annual average of countries in Sub-Saharan Africa, which was around 5.2%.”
Is the World Bank statement in the least bit credible in this statement? Based on the recent Inspection Panel’s Report, is the World Bank in Ethiopia a credible institution capable of presenting accurate, truthful and factual information? Does the World Bank practice premeditated statislies?
Let me present my evidence.
The World Bank in Ethiopia is a window dressing institution. It is a bank that goes through the motions of being a bank. Its officials in that country are groupies and toadies of the T-TPLF. The Bank’s managers and bosses in Ethiopia do not seem to know what they are doing, nor do they care about the professional performance of their responsibilities or diligent exercise of their fiduciary duties. That is not my conclusion! It is the conclusion of the Inspection Panel (IP) of the Bank in its November 21, 2014 report.
The IP Report documented incompetence, indifference and borderline criminal negligence on the part of the World Bank’s managers in Ethiopia. Their professional conduct in the implementation and administration of the PBS III program in Gambella evinced depraved indifference to the welfare of Anuak communities and willful ignorance and nonchalance towards the Bank’s core policies and guidelines. The managers displayed monumental blunders and gross indifference in addressing known and reasonably articulable and predictable risks of harm to the Anuak flowing from the implementation of PBS III.
The Bank’s managers were were so paralyzed by incompetence and depraved indifference in the PBS III program that they were unable to respond or take action to resolve or remediate critical situations during implementation. Their right hand did not know what their left hand was doing. They could not coordinate the Bank’s Community Development Project (which seeks to provide sustainable ways of improving the living conditions of targeted communities by focusing on social and infrastructure development) with PBS III (which seeks to “strengthen the capacity, transparency, accountability and financial management of sub-national governments.) As a result, Anuak communities were “harmed” and their “livelihoods affected.”
The World Bank gave USD$600 million in September 2012 to implement PBS III. Three “Joint Review and Implementation Support” (JRIS) were done by Bank officials in Ethiopia since PBS III was implemented. All three reviews “are silent on the issues” of harm to the impacted communities. The Bank officials in Ethiopia intentionally and deliberately excluded highly relevant and decisive facts which documented harm to the Anuak communities in direct violation of the Bank’s “Investment Lending Policy (OP/BP 10.00) (which provides detailed and elaborate policies, procedures and instructions on Project performance and compliance.) They engaged in cover-up of information and facts that reflected negatively on the Project.
The IP report itself cleverly avoided using the word “corruption” instead chose the phrase “inadequate initial planning to address fiduciary risks” to describe the shameful dereliction of duty of financial accountability by the Bank’s officials in the implementation of PBS III. The only “fiduciary risks” involved in PBS III were corruption, fraud, abuse and waste of the Bank’s money. On those four issues, the three Joint Review and Implementation Support reviews were as silent as the Sphinx.
The IP reported the officials of the World Bank in Ethiopia made no effort to protect the Bank’s money from corruption by agents of the T-TPLF. (Correction: The USD$600 million is money the Bank loaned to the T-TPLF in the name of the People of Ethiopia. Future generations of Ethiopians will be asked to pay it back? Will they be legally obligated to do so!?! Umm! )
Now an institution that cannot competently and professionally plan, implement, monitor its own project or keep a running account of the money it is spending is telling the world that “Ethiopia has averaged a 10.7% economic growth rate over the last 10 years.” An institution that covered up negative information on its own Program implementation and performance in “three Joint Reviews” is now asserting statistical claims for the entire Ethiopian economy for the past ten years!
Can anyone believe or trust any official statement from an organization that runs a certified mickey mouse operationin Ethiopia with the noble and illustrious title, “Protection of Basic Services Project”?
When the World Bank asserts, “Ethiopia has averaged a 10.7% economic growth rate over the last 10 years, more than double the annual average of countries in Sub-Saharan Africa, which was around 5.2%.”, it is statislying. I argue that statement is based on bogus, sham, fraudulent and phony statistics fabricated, manufactured and supplied by none other than the T-TPLF’s “Central Statistical Agency of Ethiopia (CSA).”
Let me present additional evidence.
There is clear and convincing evidence showing that the World Bank is statislying when it claims Ethiopia has averaged a 10.7% economic growth rate over the last 10 years. (I have laid out my personal views on that so-called Plan in my commentaries in June 2011 (“The Fakeonomics of Meles Zenawi”) and May 2011 (“The Voodoo Economics of Meles Zenawi”).
First, the economic growth “statistics” upon which the World Bank and the other donors and loaners rely on and shamelessly trumpet for Ethiopia are NOT based on the Bank’s (or other independent agencies’) independently collected data or analysis. The World Bank’s proclamations about the “Growth and Transformation Plan” are based exclusively (with the exception of a few estimates) on statistics collected, chopped, diced, sautéed, braised, grilled, roasted, stewed and seasoned in the kitchens of the CSA under the direction and supervision of the stealthy Executive Chefs of the T-TPLF.
The statistical data sources on the progress of the so-called GTP are also exclusively T-TPLF bureaucratic sources channeled through the CSA. According to the IMF’s report, “Poverty Reduction Strategy Paper Growth and Transformation Plan 2010/11–2014/15 – Volume II (p.3)”,
for verification of the progress made in GTP implementation, annual reports of sector ministries and surveys conducted by the Central Statistical Agency of Ethiopia [CSA] such as welfare monitoring survey, household income and consumption expenditure survey, demographic and health survey conducted every five years will be used. The monthly price and inflation rateprepared by the CSA and reports of the Ministry of Finance and Economic Development will be useful to monitor macroeconomic developments and poverty reduction. The CSA has developed a National Statistical Development Strategy (NSDS) that has been approved by the national Statistics Council.
What is even more amazing is the fact that the World Bank does not even try to verify on its own the accuracy, validity and reliability of the statistics cooked up in the CSA. (Of course, if it had verified, it would have found out that CSA statistics were entirely unreliable.) Occasionally, the World Bank purports to make its own “estimates” without explaining its own methodologies for making estimates.
As a matter of policy and practice, the World Bank accepts CSA statistics on face value and irresponsibly propagates them to the rest of the world as true, reliable and accurate. The questions to be answered are: 1) How credible are T-TPLF bureaucrats and apparatchiks in reporting accurate and reliable economic data? 2) Does the benighted T-TPLF have the technical and institutional capability to undertake comprehensive, accurate and sustained data collection and analysis of value for policy making? 3) How much political interference is there by the T-TPLF in the preparation of economic and demographic data?
In its January 2015 Report, “Ethiopia Poverty Assessment (p. xxv), the World Bank makes all sorts of fabulous statistical claims and declarations about World Bank-backed victories in the war on poverty in Ethiopia. The Bank claims its study and findings are based on hard, reliable and accurate data:
Ethiopia has a wealth of data and surveys that have been used in this work. The core of the analysis [in the Assessment] uses the series of Household Income and Consumption Expenditure Surveys (HICES) undertaken in 1995/6, 1999/2000, 2004/5 and 2010/11 (henceforth referred to as 1996, 2000, 2005 and 2011). And it is from this series that the official consumption aggregates and monetary poverty estimates are derived.
Who is responsible for the collection of the vaunted “wealth of data and surveys” of the Household Income and Consumption Expenditure Surveys? The Central Statistical Agency! (See “Assessment”, footnotes for Tables 1, 1.2 – 1.13; 2.2, 2.3, 2.4, 3.1- 3.3, 3.8; 4.1-4.3… 5.1,… etc. etc….). It is all GIGO (garbage in, garbage out). You input a wealth of data and survey garbage, you output a wealth of data and survey garbage). That’s why I remarked above that the January 2015 Poverty Assessment report is a waste of time to read and a crock.
The World Bank further claims that Ethiopia has not only registered 10.7 percent growth for a decade but that its growth is “more than double the annual average of countries in Sub-Saharan Africa, which was around 5.2%.” Such hyperbole is simply baseless, silly and disrepsectful of other African countries telling the truth about their economies. The fact of the matter is that the experts who are willing to tell the truth have long known hyperbolic claims of economic growth such as the World Bank’s are bunk. On November 1, 2007, the Economist magazine concluded:
The fact is that for all the aid money and Chinese loans coming in, Ethiopia’s economy is neither growing fast enough nor producing enough jobs. The number of jobs created by flowers is insignificant beside an increase in population of about 2m a year, one of the fastest rates in Africa…. The government claims that the economy has been growing at an impressive 10% a year since 2003-04, but the real figure is probably more like 5-6%, which is little more than the average for sub-Saharan Africa. And even that modestly improved rate, with a small building boom in Addis Ababa, for instance, has led to the overheating of the economy, with inflation moving up to 19% earlier this year before the government took remedial action. The reasons for this economic crawl are not hard to find. Beyond the government-directed state, funded substantially by foreign aid, there is–almost uniquely in Africa–virtually no private-sector business at all.”
The fact of the matter is that just as the World Bank managers in Ethiopia relegated their fiduciary duties in the PBS III program to corrupt woreda (local) officials, they have likewise relegated the task of data collection and analysis to an equally corrupted T-TPLF institution, the CSA. Put simply, so long as the verification of the statistical data on economic growth in Ethiopia is left entirely to the CSA which is under the political thumbs of the T-TPLF, it is useless. The economic growth data verified by the T-TPLF and trumpeted by the World Bank, the IMF, the Development Assistance Group and others are meaningless!!!
Second, there is substantial evidence from informant(s) with firsthand knowledge of CSA operations and functions thatsystemic falsification of economic and other data are encouraged and rewarded by the T-TPLF bosses. CSA personnel are directed to “cook”, manipulate and tweak the statistics to exaggerate economic growth and massage data to produce favorable economic figures. Knowledgeable informant(s) reveal a variety of issues in the CSA. Official statistics are deliberately overstated and squeezed to yield exaggerated numbers on the economy’s growth while understating other factors such as inflation. The CSA simply does not have the institutional capacity or technical and human resources to collect, analyze and disseminate accurate economic statistics. It is said there are serious deficiencies in the way the CSA gathers, measures, and presents its data. For instance, sample surveys to measure the economy are said to be not only incomplete and inadequate but also laughable from the technical standpoint.
The CSA does not follow international standards for statistical data collection and reporting. There is significant political interference in the measurement, presentation and reporting of data. There is sheer lack of information on the performance of the private sector due to poor and incompetent data collection. As a result, it is nearly impossible to distinguish between real and paper investments. Private and even state-owned enterprises seeking to avoid taxes, regulation or other sanctions deliberately underreport revenues, output and expenses. Similarly, local officials and bureaucrats who may not necessarily want to report factually inaccurate data are forced to do so because their own performance evaluation depends on overly favorable figures. They often overstate politically preferred facts and understate politically incorrect facts that reflect negatively on the T-TPLF. The mantra at the CSA is to “make it look good with the numbers”.
The CSA is such a hot mess that the World Bank issued a “Project Appraisal Document” dated May 28, 2014 intending to commit USD$10 million “to enhance the capacity of the Central Statistical Agency (CSA) at the organizational, human, and physical levels in order to produce and disseminate reliable, accessible, and timely statistics.”
On September 4, 2014, “a team of 15 IBM experts presented its recommendations to Ethiopian leaders” on a variety of statistical data collection methodologies and processes including “text-based communications”, “integrated IT system”, “collection and analysis of key labor market data”, “mobile and analytics technologies to gather and analyze data about nutrition, water, sanitation, and hygiene”.
It is not clear how many hundreds of millions of dollars the World Bank “loaned” to Ethiopia will end up in the pockets of IBM to deploy its state of the art data collection, analysis and dissemination information technologies (IT).
Third, the IMF, the World Bank and the so-called Development Assistance Group (affectionately known to me as the “international poverty pimps”) comprising of 27 bilateral and multilateral development agencies providing assistance to Ethiopia have always known about the uselessness of the economic statistics provided by the CSA but have disingenuously continued to use it. For instance, IMF’s July 2008 Country Report (Ethiopia) No. 08/264 stated: “Growth has averaged 11 percent since 2003/04, far exceeding the minimum target of 7 percent in the Program for Accelerated and Sustainable Development (PASDEP), that is estimated to be consistent with keeping the Millennium Development Goals (MDGs) within reach.” On pp. 20-24 of that Report, the origin of the data indicating an 11 percent growth is not some independent data collection and analysis source but the very same emasculated Central Statistics Office. Did Ethiopia really average a 10.7% economic growth rate over the last 10 years?
If current data sets, collection procedures and analysis by the CSA have “significant weaknesses” and “substantial information gaps”, how reliable is the CSA data the World Bank used in its January 2015 “Ethiopia Poverty Assessment” for the years 1995/6, 1999/2000, 2004/5 to declare poverty has been vanquished in Ethiopia in 2015? Did poverty in Ethiopia really fell from 44 percent in 2000 to 30 percent in 2011 as the World Bank claimed?
Fourth, in its October 2013 report, the IMF, for all intents and purposes, declared it has no confidence in the cooked data of the T-TPLF and had stopped using CSA statistics and began using its own estimates. “GDP statistics in Ethiopia are subject to significant weaknesses… Substantial information gaps on the health of the financial sector remain as the mission did not have access to detailed banks’ balance sheet data in order to undertake a banking sector diagnostic. In addition, fiscal and BOP [balance of payments] statistics require improvements. For example, comprehensive public sector data, including on public enterprises, are still lacking and would be desirable for a proper assessment of public sector finances.”
Despite “substantial gaps and significant weakness” in data collection, the World Bank (and the other loaners and donors) in January 2015 shamelessly continues to insist “Ethiopia has averaged a 10.7% economic growth rate over the last 10 years.” That is a statement made with knowledge of the falsity of the statement or in reckless disregard and depraved indifference to the truth or falsity of the statement.
The truth about the so-called “Growth and Transformation Plan” was foretold candidly at the inception by none other than Ken Ohashi, the World Bank’s country director for Ethiopia on June 8, 2011. Ohashi unapologetically stated,
Ethiopia’s dependence on foreign capital to finance budget deficits and a five-year investment plan is unsustainable… I can’t see it’s sustainable short of discovering huge oil reserves, essentially an unexpected windfall… I don’t see how they can sustain such an aggressive investment plan without getting into serious problems… If you’re not as a nation saving enough, you are dependent on foreign capital or other means of financing investment in an unhealthy, unsustainable way… That’s the sort of trap they seem to be falling into… On debt there is a danger… If this public investment-led growth at some point really stumbles or stagnates for a while then all these debt equations could unravel… I do worry that without the private sector expanding much more vigorously then rapid growth is not likely to be sustainable and if that’s the case then all these debt balances could go out of control.”
Thus spoke Ken Ohashi!
I rest my case!!!
Ethiopia and Extractive Industries: “Can Ethiopia’s Resource Wealth Contribute to its Growth and Transformation?”
Let me now turn to the World Bank’s claims about Ethiopia’s extractive industries and the “Growth and Transformation Plan”.
In the “Featured Story” referenced above, the World Bank stated, “In October 2014, the WBG and the Ministry of Mines jointly organized the 2014 Ethiopia Extractive Industries Forum, one of the major recent initiatives.” The purpose of the Forum “was to help raise awareness about opportunities and challenges in the extractive industry, as well as to share good practices for its sustainable management.” The Forum “also provided the opportunity to discuss the findings of the “Strategic Assessment of the Ethiopian Mineral Sector” study, which was jointly published by the Ministry of Mines and other development partners.”
The “Featured Story” claimed, “The WBG is providing technical assistance to the Ethiopian government to support them in translating the recommendations of the report to build a competitive, predictable, and responsible strategy, legislative and institutional framework for the Oil, Natural Gas and Mining industry. This will allow the Ethiopian government to conclude better deals for the extraction on their oil and mineral resources in a way that maximizes the benefits to the country, reducing the risk of costly or politically difficult remediation at later stages.”
I am not new to the mining “debate” in Ethiopia. Many of my readers will recall my extended confrontational “debate” with the Extractive Industries Transparency Initiative (EITI) and that organization’s pugnacious Chairperson Claire Short in 2013 over the “admission of Ethiopia” into the so-called. I wrote several commentaries setting forth my evidence-based opposition to the T-TPLF’s membership in the EITI.
My opposition was principled. I argued that the T-TPLF’s aim in joining the EITI was not to achieve transparency and accountability in the mining sector but to use its EITI membership as smoke and mirrors to hoodwink, swindle and defraud foreign investors by sucking them into their vortex of mining corruption.
(The interested reader may review my February 2014 commentary, “Dignifying Mining Corruption in Ethiopia Through EITI?”; my March 9, 2014 commentary, “Mining Corruption in Ethiopia: A Reply to Clare Short”; and March 23, 2014 commentary “EITI or Clare’s Corruption Club?”)
Here I want to address the World Bank’s claims about mining “resource wealth contribution” to the so-called Growth and Transformation in light of the Bank’s own findings on Ethiopia’s “Mining Sector” reported in its 417-page 2012 report, “Diagnosing Corruption in Ethiopia”. In that report theWorld Bank identified Ethiopia’s mining sector as corruption central.
In my November 2013 commentary “Mining Corruption in Ethiopia”, I summarized the Bank’s findings. There are “seven areas of corruption risk” in the Ethiopian mining sector” including the “three main risk areas” of “license issuing, compliance with license conditions, and mining revenues”. The other critical areas of corruption include fraudulent practices in “compensations and obligations to local inhabitants, contracts with contractors and suppliers to the mining companies, falsification by mining companies of product quality, and theft of mining products and equipment.”
The 2012 Report stated that in the area of “license issuance”, “officials may extort or be offered bribes by mining companies in return for issuing licenses, for issuing licenses more quickly, or for specifying less-onerous license conditions.” A related risk is that “officials may secretly have ownership stakes in companies to which licenses are granted; acquire land for which a license application has been made; demand a share in mining companies or in their profits; and manipulate license registration to give themselves or their associates prior registration.” In “license compliance”, “mining companies may deliberately breach mining conditions (for example, environmental, health, and safety regulations, as well as the extent or area of mining)” with impunity.
In the area of revenue, “mining companies may deliberately understate output and profit and overstate costs to reduce royalties and profit taxes.” The regime has no independent means of verifying the revenues of mining companies. According to the World Bank, “Collection of royalties and income tax apparently depends almost entirely on the mining companies’ self-certification of output and profit because of the lack of resources at the Ethiopian federal, regional, and city licensing authority levels. It would, therefore, be relatively easy for the mining companies to exaggerate their capital and operating costs and understate their output and profit.” When “license operation and mining revenue breaches are discovered, the mining company may also bribe inspectors to overlook the breaches.”
The catalog of corrupt practices in the mining sector documented in “Diagnosing Corruption in Ethiopia” covered the entire spectrum ranging from bribes, falsification of records, shakedowns and take downs of mining companies and stealing compensation designated for local inhabitants to criminal use of insider information and fraudulent shell corporations. The most egregious examples of T-TPLF corruption documented by the World Bank are mindboggling and include the following:
A mining company could be required to pay a large premium in return for a mining license. Senior officials and the mining company could keep this premium secret, and the officials could receive payment in offshore bank accounts.
An official may require the mining company to make a large donation to a charity if it wants the license to be issued more quickly. Although the charity may appear to be genuine, it may in fact be a front for a political party or for the official’s personal or family gain.
A mining company may submit a health and safety plan for a mining license in accordance with good practice, but an official may tell the company that unless it pays a bribe, he or she will impose additional and unnecessarily onerous health and safety conditions.
A mining company may submit an environmental management plan for a mining license that will inadequately control the leaching of poisonous chemicals into the water supply. Proper controls would [be costly]. The mining company may pay the official responsible for approving the license a bribe to approve the deficient conditions.
Officials may demand a share in the profits of a mining company. A mining company may agree to give an official’s relative a free share in the profits of the mining project if it receives a license on beneficial terms.
Officials grant licenses to companies secretly owned by them. Officials secretly acquire land that is subject to a license application.
An official who is aware that mining may take place on an area of land may lease the land in advance of the mine licensing. Once the license is granted, the value of the land may materially increase. The official thereby profits from his or her inside knowledge by selling or licensing his or her rights to the land to the mining company.
Companies illegally on-sell licenses granted to them.
Officials manipulate license registration.
An official in the department that issues mining licenses may hear that a mining company wishes to apply for a license. The official may alert a businessperson with whom he or she has connections, and the businessperson may quickly apply for a license over the same area. The official grants the license to the businessperson. The mining company then has to purchase the license from the businessperson, and the businessperson shares the profit with the official.
A prospector may discover minerals, mark the area, and contact the relevant licensing authority to receive a discovery certificate. A corrupt official may not register the discovery in that person’s name but instead notify a business colleague and register the discovery in the colleague’s name. The corrupt official may then falsely inform the discoverer that someone else had previously discovered the minerals.
Officials collude with mining companies to grant subcontracts to relatives. The licensing authority could, as a condition of the license award or social development plan, require the mining company to undertake a large amount of additional infrastructure works at the mining company’s own cost. For example, the mining company may be obliged to build or refurbish a road, a school, or a hospital. A government official could then require the mining company to award one or more of these infrastructure projects to a contractor secretly owned by a member of the official’s family.
Officials or community leaders may steal compensation that should have gone to local inhabitants. Mining companies may bribe officials to set compensation below a proper rate.
Local inhabitants may falsely claim that they occupy land subject to a license application.
Contractors and suppliers may engage in fraudulent transactions in tendering, submitting claims, and concealing or approval of defective works.
Mining companies may commit fraud by making false declarations about the identity and quality of minerals or by bribing certifiers to approve false declarations. A major, ongoing investigation into corruption of this type is under way in Ethiopia.
The World Bank now says it is “providing technical assistance to the Ethiopian government to build a competitive, predictable, and responsible strategy, legislative and institutional framework for the Oil, Natural Gas and Mining industry.” Really!? The World Bank may be right in believing that we were all born yesterday, but we were not born last night.
The T-TPLF has been playing a magical game of smoke and mirrors with mining revenues for a long time. According to an August 2013 report citing official sources, the Ethiopian “government” earned USD 419 million from the export of minerals supplied by artisanal miners operating in the country in the first 11 months of the current financial year. Export of gold made up the largest proportion of minerals, generating USD 409.1 million in foreign currency, followed by gemstones and tantalum earning USD 9.3 million and USD 1.6 million. This income came from the export of 7878.3 kg of gold, 20,126.3 kg of gemstones and 32.95 tons of tantalum…. MIDROC Gold is the only company that is engaged in large-scale gold mining.” Other reports indicate the “export of minerals has become Ethiopia’s second largest foreign currency earner, contributing over 23 percent of overall export earnings.”
The fact of the matter is that no one, except the T-TPLF bosses who hold the key to the lock box of the mining revenues, knows the actual amount of revenue generated by the mining sector.The T-TPLF claims it has no independent way of verifying mining revenues and must rely on information reported by the companies. How convenient!
The principal beneficiaries of the mining sector revenues are the wealthy oligarchs and the businesses fronting for the oligarchs and other enterprises owned by the T-TPLF. No one knows the depth and breadth of corruption taking place in the sale of mineral licenses and siphoning of mining revenues except the T-TPLF bosses. There is credible anecdotal eyewitness testimony alleging that hundreds of pounds of gold are regularly spirited out of the country without inspection by plane from airstrips close to the gold mines for destinations in Europe.
The World Bank in its “Featured Story” declared, “If well managed and well supported, the Ethiopian mineral sector has the potential to make a difference in the economic development of Ethiopia and to contribute to the poverty reduction agenda.” Indeed, the mining sector will make a huge difference to the bottomless pocket books and off shore accounts of the T-TPLF bosses and their toadies. For the rest of the people, all of the gold, gemstones, tantalum, iron and potash Ethiopia has will not amount to a hill of beans!
The real “economic growth” in Ethiopia
The late Meles Zenawi, in one of his first press conference at the Ethiopian Embassy in Washington, D.C. [nearly a quarter of a century ago], in reply to a question about his goals, declared his Gold Standard for economic growth and development. Meles said he would consider his government a success if Ethiopians were able to eat three meals a day. In 2011, Meles pompously declared, “We have devised a plan [“Growth and Transformation Plan] which will enable us to produce surplus and be able to feed ourselves by 2015 without the need for food aid.”
I now ask the mighty World Bank, the International Monetary Fund and the under- “Development Assistance Group” just three questions: 1) Do most Ethiopians eat three meals a day in 2015? 2) Are most Ethiopians better off economically today than they were five years ago? Is Ethiopia able to feed itself in 2015 “without the need for food aid” as Meles “devised” in his “Growth and Transformation Plan”?
“Three meals a day” in 2015 is pie in the sky for the vast majority of Ethiopians.
The fact of the matter is that Ethiopia today is 123 out of 125 worst-fed countries in the world. According to a new Oxfam food database “while the Netherlands ranks number one in the world for having the most plentiful, nutritious, healthy and affordable diet, Chad is last on 125th, behind Ethiopia and Angola.”
The World Bank is entitled to its own opinion but not its own facts
I want to make one thing absolutely crystal clear! I have no problems with the World Bank expressing its own opinions on the “Growth and Transformation Plan” or any aspect of Ethiopian society or politics.
I also have no problems with the World Bank stating or publishing whatever “facts” it wants provided it provides full disclosure on its data sources and the evidentiary basis for its assertions and conclusions.
I would have absolutely no problems whatsoever if the World Bank were to say that it believes “Ethiopia has averaged a 10.7% economic growth rate over the last 10 years” based exclusively on the data provided to them by the T-TPLF. All I am asking for is plain old intellectual integrity and full disclosure consistent with the Bank’s policies, particularly “Investment Lending Policy (OP/BP 10.00)”.
I do have problems, major problems, when the World Bank knowingly and intentionally issues official statements to the public that are manifestly and demonstrably false, misleading and outright deceptive. I have big problems when the World Bank fails to undertake reasonable diligence to determine whether information it publishes are true or false because of the indolence, incompetence or depraved indifference of its managers in the country. I have BIG problems when the World Bank makes factual statements on Ethiopia with knowledge of the falsity of the statements or in reckless disregard and depraved indifference to the truth or falsity of the statements it publishes. I don’t like being treated like a chump or a boob. After all, I am an avid reader of their GIGO reports.
It is a crime for agencies and institutions under the “jurisdiction” of the United States Government to engage in official publication of materially false, misleading and deceptive statements or information.
18 U.S. Code § 1001 provides, “whoever… in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully— (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned…”
I have heard rumors that the United States Government is the “largest shareholder” in the World Bank Group. I am also informed and believe that the US Agency for International Development (USAID) is an agency of the Government of the United States.
Touch of the peoples’ temper?
In Paradise Lost, John Milton, the English poet with deep personal convictions and an irrepressible passion for freedom of speech and of the press wrote,
… Him [Satan], thus intent Ithuriel with his spear
Touched lightly; for no falsehood can endure
Touch of celestial temper, but returns
Of force to its own likeness.
The World Bank may not know this. Know this! Now! Ethiopia is still a paradise to me and millions of others. It is not lost, not by a long shot. We know we shall regain the Ethiopian paradise when all the political and statistical falsehoods are speared by the truth and THEY are touched by the Peoples’ temper.
I would like to read another “Featured Story” on Ethiopia by the World Bank in the near future. This time I would like to see the TRUTH featured. Can the World Bank handle the TRUTH!?