Outlook on Ethiopia after Meles Zenawi

Ethiopia’s prime minister, Meles Zenawi passed away on August 20.

Here is our perspective:

Legacy

Zenawi came to the forefront as a leader of a guerrilla insurgency against dictator Haile Mengistu Mariam in 1991 and cemented power in the ensuing decades.

Meles Zenawi

During the 2 decades of government, Zenawi transformed Ethiopia into one of Africa’s fastest-growing economies with GDP more than tripling over the period.  Some of the feathers in Zenawi’s hat include establishing the headquarters of the African Union in Addis Ababa, attracting significant amounts of FDI from trading partners such as China, Turkey and India and vast improvements in the countries education infrastructure and women’s rights. In 2008, the IMF highlighted that Ethiopia’s economy grew faster than any other non-oil exporting country in sub-Saharan Africa.

No contemporary African leader was considered more impressive by his African Union peers than Meles.  He hailed from a generation of revolutionaries fighting against Ethiopia’s previous dictator and the communist military regime he lived under in 1970s and 1980s. He was profoundly driven by a desire for change and for a better Ethiopia.

Some have called him ‘’austere’’ and ‘’hard working’’.  He had a self tauight discipline forged from years in the guerrilla movement.  All considered him an intellectual leader, strategised and well thought out. He pushed for peace and security in the horn of Africa, and the emergence of Ethiopia as regional leader through diplomacy.

On the flip-side, Zenawi was also regarded as an authoritarian strongman whose critics have accused his rule of violating human rights and heavily censoring freedom of speech.

We expect considerable attention to go to Ethiopia’s succession as it is a strong political force that has played a role of leadership in the horn of Africa. In addition, with nearly 90 million inhabitants, Ethiopia is also one of Africa’s most populous countries, the population is expected to double in the next 2 decades so this is a country that is very difficult to ignore.

Constitutional Continuity

The constitution calls for the party in power to elect a new leader to replace the prime minister until new parliamentary elections are held.

We will probably read much about the concerns about a difficult transition but but from our perspective, it seems that the succession is more likely to run smoothly and result in a continuation of policy.

Haile Mariam Deslegn

Haile Mariam Desalegn, acting Prime Minister and former deputy PM, has already been running the government for the past months and will continue to do so. It is known that Desalgen was hand-picked and groomed by Zenawi and enjoys broad party support. The cabinet remains intact until the new leader decides to make changes to his executive team.

It is our understanding is that he is not of the generation of the liberators that fought against the previous regime and he is part of the younger politicians bread for succession. Desalegn is currently 46 years old. While it can’t be entirely ruled out that there may be some internal party power struggles that yield a different candidate, the broad vision and strategy of the party should remain intact regardless.

The ruling party, the Ethiopian People’s Revolutionary Democratic Front, controls parliament with an absolute majority which they won in the general election in 2010.  There is a very small likely hood that they do not win the next elections given broad popular support.

Economic Continuity

The Economic vision of the country comprises the following key objectives:

  • achieving Millennium Development Goals (MDGs) targets by 2015
  • attracting large volumes of FDI
  • doubling the agricultural output
  • Infrastructure development
  • achieving middle income country status by 2023
  • industrial development through prioritisation of strategic sectors

These objectives and the policies that have been implemented towards achieving them are the product of a broad consensus within the party and beyond thus we are confident  that these goals will stay at the top of Ethiopia’s agenda.

Risks

Regional foreign policy needs to be watched closely. Zenawi has been a strong man in regional and African affairs he has played a role in conflict resolution, political mediation and stabilisation in neighbouring countries such as Eritrea, Sudan and Somalia.

We believe that much of his clout derived from his position as Prime Minister of the regional power house but primarily because of his exceptional  political skills.  Therefore there may be possible regional implications but at this stage even the most informed of observers cannot provide exact answers on this issue.

On the Ground

As investors, we spend much time in Ethiopia. We have a wide network in the country and from our conversations during the past couple days we have observed there is a general feeling of grief and loss but we also detect confidence that things will continue down the path that has been charted towards progress.

We will keep you updated