Impacts of Conflicts on Ethiopia, Africa

In the creation of the modern state, governments in Africa have tended to impose authority on local people. In this, they have been supported by organisations which have, until not too long ago, shared the view that only through central control can sustainable development be achieved. This has resulted in policies that take little account of local needs and interests. Indeed, current discussions and analyses tend towards narrowing governance thought and practice to bureaucracy, ignoring its wide political and social implications. A naive realism, as it were. This is also marked by an inattention to the articulation of the problems, exclusion of institutional perspectives on democratisation, politicised organisations, inadequate room for international agencies and fragmented relations between global and indigenous aspects of democratisation in Africa.

Because of these conceptual divides in governance modalities, this has thrust protagonists to seek alternative routes to achieve their objectives, often leading to conflicts that are compounded by complex emergencies. It has also contributed to natural disasters such as drought and floods, amongst others. Coupled with the way humans are exploiting natural resources, epidemics and nutritional emergencies are on the rise. Nonetheless, the responses in Africa mainly arise from international aid, which is marred by a complex web of conditionalities.

Effects of Conflicts on Ethiopia
Within Ethiopia, insecurity has disrupted economic activity through a number of channels, and the effects can be large and long lasting. Following the useless Eritrea-Ethiopia conflict of 1998, fear resulting from violence and destruction has hindered economic activity directly through an increase in capital flight, business costs and retarding foreign direct investments.

The indirect effects have been the breakdown of political rules and institutions and public services such as health and education, as well as effects that spill over into other countries, such as refugee crises. Insecurity and weak law enforcement can threaten property rights and suppress economic activity. Particularly in contexts of weak institutions, the nation becomes trapped in repeated cycles of violence that prevent economic development. Understanding and quantifying the different ways that conflict can impact the economy is critical to informing more effective conflict prevention strategies and enabling growth.

In 1992/93, the Ethiopian government began its first series of economic reform programmes. The reform programmes aimed at reorienting the economy from a command to market economy, rationalising the role of the state and creating legal institutional and policy environments to enhance private sector investment.

Different sectoral policies, strategies and plans were developed and implemented in the 1990s. This was shelved after the war broke out between Eritrea and Ethiopia in 1998, an inconclusive battle until May 2000, when Ethiopian forces launched a major offensive, securing the disputed territory and driving further into Eritrea. A cease-fire agreement called for a truce, the establishment of a UN-patrolled buffer zone and the demarcation of the border by a neutral commission. An estimated 70,000 to 120,000 Ethiopian and Eritrean soldiers and civilians died in the conflict. The war shattered both economies.

After this a no-war-no-peace period ensued, Ethiopia began the implementation of integrated development plans, the first being the Sustainable Development and Poverty Reduction Program (SDPRP), which covered 2002/03-2004/05. SDPRP focused primarily on economic and social development.

The second developmental plan was the Plan for Accelerated and Sustainable Development to End Poverty (PASDEP). The last and the current development plan named the Growth and Transformation Plan (GTP) and the Homegrown Economic Plans that encompass developing a green economy and eradicating poverty that have propelled GDP growth.

The Financial Times in December 2019, stated, ‘A country that is in the process of ripping up its economic model and has been forced to go cap in hand to the IMF might be expected to be one mired in recession. Yet Ethiopia, which is undergoing a sharp reversal in strategy under Nobel Peace Prize-winning Prime Minister Abiy Ahmed (PhD), has been the world’s fastest-growing economy over the past decade, both in overall and per capita terms.
Since 2009, Ethiopia’s gross domestic product has jumped 146.7Pct, according to data collated by the IMF, while in per capita purchasing power parity terms it has risen 149Pct, enough to put it top of both lists as the decade draws to a close’. With good effort, Ethiopia can wither away the impact of the current law enforcement operation.

According to the International Crisis Group, analysts predicted that Ethiopia’s size and importance means that a lengthy war would reverberate well beyond its borders, because Ethiopia is also vital to stability in the Horn of Africa. If Eritrea had responded to the missile attacks, it would have had internationalised the conflict and could have drawn in different Sudanese constituencies, each of which has reasons to back Addis Ababa, Mequelle or Asmara.

Sustained fighting would have sent tens of thousands of additional refugees into neighbouring countries, and possibly leave a security vacuum in Somalia, where Ethiopian troops are deployed as part of an African Union mission to help the government in Mogadishu defeat the Al-Shabaab insurgency. But this is almost a scenario that could have happened if the conflict became protracted.

Beyond Ethiopia
Frontier Economics has studied the cost of civil war in South Sudan. The costs of conflict to the nation, its neighbours and the international community are likely to increase at an accelerating rate the longer the conflict persists. Key findings for South Sudan are that if the conflict had continued for another one to 5 years, it would have costed South Sudan between USD22.3 billion and USD28 billion. If the conflict’s effects are measured over 20 years to allow for flow-on effects, the loss is even greater: between USD122 billion and USD158 billion.

The human costs of conflict—death, hunger and disease—also have significant longer-term economic impacts. Just taking the effects of hunger on labour productivity could mean a further USD6 billion in lost GDP if the conflict were to last another 5 years. South Sudan’s spending on security could increase by a further USD2.2 billion were the conflict to last another 5 years. The savings in military spending that would result from resolving the conflict within a year from now would allow South Sudan to meet the internationally recommended target of allocating 20Pct of spending to education.

Ethiopia, Kenya, Sudan, Tanzania, and Uganda could between them add billions in trade benefits if the conflict were resolved within one year, rather than allowed to last for 5 years.

Countries in the region, most notably Uganda and Kenya, might have incurred substantial financial costs relating to security needs. Figures reported for Uganda suggest that defense expenditure incurred as a result of the conflict is around double the government’s projected capital investment budget for the health sector for the coming financial year, and close to the capital investment budget for education.

Hence preventing violent conflict and addressing its root causes should be a key priority. The risk of recurrent cycles of violence poses the greatest economic threat to conflict-affected countries. The scale and duration of economic repercussions from conflict tends to be much lower where stable peace can be achieved.

Humanitarian relief can play an important role in supporting post-conflict growth, especially efforts targeted at child development, which can have long-term effects on the economy.

The end of conflict provides a key opportunity to attract foreign investment. Policies that de-escalate conflict and commit the warring parties to peace in the period right after the violence stops can help to attract investment. Inclusive political institutions and policies that encourage refugees to return to their homes also appear to help support investment and economic regeneration.

9th Year • Dec 16 2020 – Jan 15 2021 • No. 93