Born on October 23, 1950 in Debre Markos in the State of Amhara, Berhane Mewa was educated in his hometown until joining Bahir Dar University’s Polytechnique Institute for his diploma in industrial chemistry. Then, after attaining a BSc. in Chemistry from Addis Ababa University, he founded Processing of Poly Industrial Chemicals (PPIC) in 1978. Berhane is known for his role at the Ethiopian Industrialists Association and Ethiopia Chamber of Commerce. Others also recognize him as a diaspora member involved in the Coalition for Unity and Democracy—the famous political movement and party during and after the 2005 national election. He recently returned to Ethiopia as part of the diaspora homecoming with plans to invest along with other colleagues in the pharmaceuticals industry. EBR’s Addisu Deresse had an audience with Berhane on the potential of the diaspora to play a greater role in Ethiopia’s economy as well as on the challenges of the private sector.
As someone who has always taken an interest in the private sector, how do you evaluate its progress as a community over the years?
During Emperor Haile Selassie’s regime, the business community’s chambers were established with direct support of the government. They were considered partners and their opinions mattered, too.
During the Derg’s regime, the chamber had 11 board members of which 10 were government representatives, making it more of a public platform. For the regime, it was nothing but an extra arm to control the business community. They used it whenever they wanted to raise finance for their own causes. The government required membership in the chamber during licensing, which strengthened it. However, there was little contribution other than being the voice of the government itself.
When the EPRDF government took power, they had little knowledge about free-market economy. They just used to adopt whatever policy they thought was good. So, under the framework of the Ethiopian Private Industrialists Association, we used to reflect on the adopted policies within the context of the private manufacturing sector’s interest. But, the association was just a collective of manufacturers and didn’t represent the entire business community. We then started working on strengthening the chamber and invited other associations.
During the process of bolstering the Addis Ababa Chamber of Commerce through the support of various associations, I joined as a vice president, supporting Woubishet Workalemaw. On the next round, Kebour Ghenna ran for president and served for two terms. EPRDF always hoped to have full control of the chamber. During Kebour’s presidency, that was quite a challenge. There was also this mistrust between the Addis Ababa and Ethiopian chambers—which posed a challenge of its own.
Moving forward, I got a chance to serve both chambers as President. That gave me the opportunity to ease the relationship between the two. The Addis chamber also gave training and capacity-building support to other city chambers. Until I left the country, we were highly engaged in challenging and supporting the government by evaluating policies against the interest of the private sector.
Now, we get the sense that the government has no interest in controlling chambers. But, we cannot say that they are considered partners. It seems as if there is more interest on the part of the government to partner with individual businesspeople than with the chamber as a community.
Do you think the diaspora can play a greater role in Ethiopia’s economy beyond remittances?
First, we need to understand the profile of the community. Part of the diaspora includes those that ran away as they were being hunted down by the government. Others went abroad via diversity visa (DV) lotteries. Some went abroad for education and never came back. As there are various groups within the community, they also have various financial backgrounds. There are those that live pay-cheque to pay-cheque. Others work hard—16 to 20 hours a day—and are able to support themselves and families. Then you have the well-paid which keep savings. So, there is no doubt that there is potential but not all diaspora will invest, obviously.
But, to tap into that potential, the government needs a sustainable strategy having various components. One such element should be the identification of projects. Which business ideas are feasible for the diaspora to invest in? This must be well compiled and presented to the community. The next thing to consider are ways of resource mobilization. A clear path is required of how to finance an investment in the local economy. Some might want to invest individually or in a group of two, three, four, or even 20. There could be heavy investors or those that want to invest in small and medium businesses. How do we mobilize the resource required to engage in the type of investment they want?
I remember this experience from South Korea where the government allowed 35Pct interest payments for diaspora savings. That scheme mobilized significant resources.
Another facet of the strategy must be education. Not many in the diaspora community are aware of the path of investment in Ethiopia. They don’t have detailed information on the laws, regulations, and challenges in the practices themselves. Continuous awareness creation channels must be open. Knowledge must be available about everything and be easily accessible. There is a misunderstanding that the diaspora—just because they reside abroad—somehow know everything. Not even the most educated have that level of detailed information beyond common chattering that passes around.
The strategy should also consider ways of assuring investors of the safety of their assets against changing political dynamics. This, of course, is not just for the diaspora but for all investors. Assurance is required. What is the guarantee of an investor from one region to invest in another? We hear of investors changing their location because of insecurity. The political atmosphere must be one that assures investors against any possible damage to their assets.
There is potential, and opportunity. You have seen how people came together for the No More cause. That has shown us that people have no problem mobilizing for a common goal. But they need a common goal and recently, Ethiopia was just that. We have seen how strong the mobilization gets when Ethiopia is the objective. You must give that Ethiopian sense to the investment goals, too. An Oromo person must be able to invest in Tigray. You have to give it that level of assurance. If and when that happens, many will have more interest for further engagement in local economic activities.
So, yes, there is potential. Ethiopians in the diaspora are not foreigners; they don’t abandon their country whenever there is a diplomatic standoff with the West. You have probably heard of that American company that stopped operations following the diplomatic rift with the US government. The diaspora can be a reliable investment potential. Again, it requires a comprehensive strategy.
Tell us about your new investment.
This is a group of professionals in pharmaceuticals who came together to invest in Ethiopia. They are not beginners, but a group of professionals with about 100 patents that pulled their resources, expertise, and purpose to make this huge investment in Ethiopia. There are two parts to the investment process. The legal proceeding that must have been finalized in the US has already been done. And then there is also this company we needed to establish in Ethiopia. That is also finalized. So these two companies are in the process of securing an investment license in the form of a joint venture, which is undergoing.
I was involved in the feasibility study and am also serving as CEO. Once operational, the pharmaceutical plant will manufacture a billion pieces of medicine in the form of tablets, capsules, and syrups.
What do you think will keep challenging private businesses in the future?
I know a lot of people at the chambers and I have got the chance to know more. We held discussions on this issue. One thing that is certain is the challenge of the political structure. Like I said earlier, the politics of it will remain a challenge. Another thing is the shortage of foreign exchange. Local industries also need more attention to compete globally. They have so many challenges that need policy-level resolutions. Further on, there are sector-based challenges.
By the way, almost all sectors have studies of their respective challenges. The government needs to consider those studies in drafting policies. Associations and businesses also need to be taken seriously. The government needs to take them as partners. I think these factors will keep challenging the private sector as we move forward.
The diaspora’s involvement in the Ethiopian economy is usually related to the political atmosphere. Do you anticipate an enabling political environment going forward?
Like I said earlier, it is important first to understand the composition of the community. The diaspora is composed of people from various backgrounds. The cause of their departure in the first place varies across the community. So, one should not expect them to have similar attitudes towards local politics. There will always be a group of people who engage actively by taking advantage of the changes and reforms. At the same time, there will also those who are highly ideological and want to see their opinions being taken seriously for them to involve further in the economy.
Of course, the coming to power of Prime Minster Abiy (PhD) has changed attitudes in a positive way. The community usually responds to political developments within the country. The diaspora does not have political demands and are usually responsive to political and security challenges in the country. So, as long as the local political dynamics keep changing over time, they will keep responding.
As far as the economy is concerned, what challenges and opportunities do you see going forward?
Investment, and the economy, in general, is a delicate matter. If you destroy an investment that the investor launched hoping to make profits in 20 and 30 years, it will not be possible to get another chance. I see ethnic politics as a challenge. If your ethnic background is what helps or deters you from getting support from the government, it will remain difficult to attract any investment. The other challenge is within the bureaucracy. All appointees are there because of their political affiliation, not because they are capable of solving technical challenges. The trick here is that even when they are not efficient at a particular office, they just transfer them to another one. There is no administrative consequence for inefficiency. The forex shortage, of course, will remain a challenge. But I believe it will ease as the economy expands.
The mobilization of the diaspora is an opportunity. People might take it for granted, but we have to understand that the mobilized diaspora has literally overcome a neo-imperialist movement against this nation. Now the question is how to transform this mobilized community into one that helps the economy. This is a great opportunity and there is potential in that. If you approach the opportunity with a comprehensive approach like I said earlier, it will bring great things.
EBR 10th Year • Feb 2022 • No. 104