Ethiopian government is conducting investigation of corrupt government officials, who are suspected of being engaged in elicit financial outflows and stashing stolen money of the country in offshore banks and investments.
This is indicated by the new Prime Minister Dr. Abiy Ahmed on Tuesday in Addis Ababa, speaking to his cabinet ministers and government officials at the Office of the Prime Minister, according to the state broadcaster – ETV. He warned government officials to stop frequent and unnecessary travel abroad, which he said is being used for taking out the stolen money from the country and hide it abroad.
Rumors have already been spreading about many of out of the blue millionaires as running corrupt government officials businesses in return for their facilitation roles, which includes ordering state bank managers to provide loans without collateral, among others.
Ethiopian economy, which has been mentioned as one of the fast growing economies for the last decade, has been running out of cash over the past few years. The shortage of cash and hard currency is often associated with the political uncertainties the country was in following youth protests against the regime, which has been on power since 1991.
The protests in the two big regions of the country, the Oromia and the Amhara that are home for close to two third of Ethiopia’s 105 million total population, have forced the regime to declared state of emergency two times over the last two years. While the first state of emergency has lasted for around nine months, currently the country is also under the second round of state of emergency declared a month ago.
The dozens of youth protests across the country has claimed lives of hundreds of people while thousands have ended up in jails. As a result of ethnic conflicts in some areas such as, Somalia Region of Ethiopia and Benishangul Gumz Region, among others, hundreds of thousands of people are forced to become interlay displaced.
As a result of this instability, investment has begun to decline while it has become common to see stuck building construction across the capital, Addis Ababa, which at few years ago was named one of the fastest growing city.
The gap between the official exchange rate and the parallel / black-market has been widening over the last few months. This has followed the decision of the government to d=devaluate Ethiopian Birr by about 20% a few month ago. Currently one United States dollar is equivalent to 27.5 birr in official market, while a dollar is now being sold for close to 35 birr in the black market.
In his first meeting with the business community representatives a month ago, the Prime Minister Abiy has also told the business community to help the economy improve by not engaging in the black market business and hiding abroad money the country.
The incentives Ethiopian government is providing for the companies who promised to manufacture products locally, export their goods and generates foreign currency to the country, has been growing each year with tens of millions of dollars.
On the contrary the export earning of the country has been declining. Currently the country earns less than $3 billion dollars per year while importing worth $17 billion worth products ranging from toothpicks, simple soap, cooking oil, spaghetti and cookies to wheat, medicines, chemicals, capital goods and industrial inputs as well as fertilizers and fuel.
When we look back to the companies, which used to be top exporters of manufacturing gods or agricultural commodities some years ago, are now more focusing on import of machineries and consumers goods, which makes them a lot of profits as compared to export.
Many of these companies are not focusing on manufacturing of export commodities; they export some amount of semi or fully processed products or raw agriculture commodities just for the sake of getting access to hard currency they need for their more profiting side business – importing anything and make over 100% profit.
It has become common to observe investors who got loans without collateral from government banks for manufacturing business or agriculture related projects have been channeling the money to less productive sectors such as,construction of buildings and importing merchandises as well as flying the money to another country through import of worn-out machineries for their fake manufacturing with high cost.
In addition those who promised to export processed meat or other agro-processed commodities, such as leather and shoes manufacturing, have also completely shifted to local markets where they exploit the society by selling their products as high as twice the price they used to get from export.
Such fraudulent companies have now posed threat to the balance sheet of Ethiopian government banks, which frequently announce auctions of manufacturing plants abandoned by these opportunistic doggy manufacturers and exporters.
Reports show that in the years between 2000 to 2009 Ethiopia has lost over one billion dollars per annum through illicit financial outflows. It is estimated that current political turmoil have doubled the outflows.