Undoing resource paradox
By Abdurezak Mohammed
Prof. Fissehatsion Mengistu served as Public Policy, Legal and Tax
Advisor to the Ministry of Finance during the last years of the reign of
Emperor Haileselassie I.
His professional life also included Vice Presidency for Planning,
Development & External Relations with the Ethiopian Civil Service
University. He was also International Business, Global Enterprises and
Global Marketing professor at the International Leadership Institute
(ILI) of the University. He as well worked at the same university’s
Institute of Tax and Customs Administration as professor of National and
International Investment, Taxation, Procurement & Finance. He is
currently President and CEO of a newly formed Afro-Global Consultancy
Services (AGS). (AGCS)
The Ethiopian Herald: Thank you very much for dedicating your time.
Prof. Fissehatsion: It’s my pleasure.
Q: How do you see the tax revenue collection in Ethiopia?
Prof. Fissehatsion: There has been important
progress in this regard. The new Ministry of Revenue (MoR) have started
to mobilize the public towards this end. The public mobilization
campaign was launched by Prime Minister Dr. Abiy Ahmed himself.
These are important initiatives. But it is very important to
understand that the campaign cannot be a silver bullet to tackle the
challenges in tax revenue collection. We have to first ask why the tax
to GDP ratio is lower than many countries of south of the Sahara? What
factors have contributed to this?
One has to understand whether Ethiopian business community is paying
taxes to the desired level. I say this because there exist traders that
opts for concealing their transaction. Government usually indicates that
most businessmen are unwilling to pay taxes. This should be
corroborated with facts through rigorous researches.
This fiscal year’s budget for instance has marked a 70-billion Birr
deficit. Overall, there have been declines in the collection of tax
revenue over the last years. We should undertake a series of
research/multi-disciplinary research to come up with the right cure.
Q: In addition to the research, what practical steps ought to be taken?
Prof. Fissehatsion: Let me answer this question in a
simple term. Modernization and automation of work process go without
saying. But what matters most is the formation of patriotic work force,
tax collectors and administrators, who abhor corruption. This is a task
that should be put top on the agenda.
Particularly, the leadership’s hands ought to be clean. If the people
understand that the leadership is corrupt, it is likely for them to
develop unfavorable mentality to tax compliance.
Q: Do you think that we can take lesson from other African countries?
Prof. Fissehatsion: Ethiopia has quite a different
history. We have never been colonized. And for me what I always say at
various events is that business experiences of, Kenya, Nigeria or South
Africa, is not necessarily good for us.
I’m saying that we should customize their experiences if need arises
in this respect. In so doing, we need to appraise the socio-economic
benefits of the experiences.
Q: Let’s resort to aspirations of economic integration in the Horn region. Do you think Ethiopia can benefit out of it?
Prof. Fissehatsion: Let me speak with examples. If
we allow the free flow of goods and services to Ethiopia, with our
current manufacturing potentials, I don’t think we can benefit much out
of it. We will be flooded with foreign products. It will usher us in a
permanent state of dependency. So, I am for regional economic
integration in the debate in this regard but series of researches has to
be made as to its impacts.
Q: So, what is it needed to attain this?
Prof. Fissehatsion: Regional economic integration is
possible but we have a lot of works ahead as I rightly mentioned it
above. It needs committed and selfless leaders with a vision. As far as I
concern the trust and confidence between the government and the people
is crucial. After all we need leaders who want to lead a legacy of their
own people. We want leaders that are accountable and responsible to
their own people. And we want leaders absolutely loyal to their people
and to the next generation. This is absolutely crucial.
There are a number of preconditions that would make us to be a great
country. We have a lot of potential. If we don’t use it, we will become
poor. Look the rest of Africa, there is tremendous minerals, oils and
resources. There are lots of rivers, land and very good climate but very
poor society.
So, what I want to say is promoting our national interest while not
living in isolation. We cannot live in isolation but integration has to
go in a step by step fashion. It should be research based. We have to be
very careful in the actions that we take.
Q: What kind of investment usher us in the trajectory of success?
Prof. Fissehatsion: Kenya produces similar type of
agricultural products as we do. Sudan has mineral oils and resources. In
my view people have comparative advantages. If you look, Kenya is much
more industrialized than us. If you go to supermarkets in Addis, for
example, over eighty to eighty five percent of products are imported
goods. We are not manufacturing at all. We are not producing at all. So,
we need to expand our manufacturing base first.
We have built industrial parks in many areas for instance. And the
parks are attracting investors from across the world like China, India
or Turkey targeting export trade. But this doesn’t mean that it is in
the last interest of our country. So, we need to use local knowledge as
well to build our industrial infrastructure. The knowledge that we get
from Merkato is very huge. The knowledge of Ethiopians is high. In my
opinion sustainable industrialization is ensured by using the indigenous
knowledge.
Foreign investment only trickles technology down. With foreign
technology, it is tough to champion an inbuilt knowledge. For instance,
if a person has car assembly plant, then after five years, he/she fix
cars. Not more than that. This person is less likely to produce engine.
We are not producing the core aspects of technology. If we don’t produce
these, we are in the permanent state of dependence.
So, we need to have heavy industries which are extremely important to
the region. Another one, we need to give attention to our agriculture.
It is very crucial. First, we need to feed our people. If we cannot feed
our people, there is not dignity at all.
Also, good governance is important. Good governance does mean
speaking on TV for hours. It is practically living up to public
expectations.
Q: There is increasing militarization in Horn region, what do you think is its impact in the region?
Prof. Fissehatsion: This is politically sensitive
matter. But the thing is to strike a balance between promoting our own
national interest and that of others. What is their interest in the
Horn? Have there been a lot of studies on this matter?… So, we need to
be very series. I mean the Red Sea is strategic position for many
things. The Ethiopian history must be taken to account and its
relationship with Arab world and Israel, America, Russia and China and
others.
Q: The region where Ethiopia belongs to is poor, what are alternative sources to finance infrastructural facilities?
Prof. Fissehatsion: The most important thing is to
build economy first, generate revenue and use it properly and wisely for
building infrastructure. If you look at the government’s policy, it is
to mobilize resources domestically”. It is good idea. The other thing is
we should prioritize investment. We have to make an intelligent
decision. Why our leaders buy expensive vehicles when a lot of our
peoples are begging? The leaders should be role model to the society.
We have a good climate. Still, we are importing agricultural products
like juice and others. We have ample forest resources. Still, we import
furniture from different countries suffering outflow of hard-won
currency. Our agricultural policy must be reshaped. There are many
policy issues that we need to revise in order to promote our national
interest.
The Ethiopian herald February 15/2019
