Rent seeking in Ethiopia is a matter of either/or choice-Part-I

By Habtamu Alebachew

Rent seeking in Ethiopia has a different nature, operation, and manifestation due to the different social structure and the strange policies of the state.

In the developed society of the West, we saw that rent seeking occurs within the unregulated free market, under a limited government, in the guise of democracy and the law, and to the disadvantage of the overall social welfare. In short, rent seeking in the West is a matter of welfare with little or no consequence on the very question of socio-economic development and redistribution.

In Africa where many states lost free hands in the fight to bridge the widest market failure under an on-looker and constrained state, rent seeking is largely a game involving legal, moral, personal or other factors beyond the black and white either/or category of affairs.

In Ethiopia, the opposite is the governing rule of rent seeking versus the fight against it. Let use see the following lists of either/or choices in the Ethiopia’s context of rent seeking.

A. Poverty or Development?
Rent seeking in any of its aspects in Ethiopia finally boils down on becoming a grand matter of either poverty or development. Rent seeking may take advantage of such diverse correct principles like farmers’ willingness, first in the first case above or priority for peoples’ interest in the case of Kara Kore town.

Despite the short-lived dominance of bottom-up resistances, in both cases, the government voted for development while these victims of rent collection and unproductive and less contributing professionals voted for poverty. There is no any third option here whatever the case might be in Ethiopia’s context.

As compared to rent seeking in developed states of the West, ‘development’ is a newly added variable in the study of rent seeking behavior in Ethiopia for three major reasons.

Firstly, the society in the West has concern, if any, largely for a minimum growth where a slight growth means a big rise in income. In Ethiopia, growth with double-digit rate is only an important condition and duty with an equal concern for fair distribution, which constitutes the essence of development;

Secondly, the demand for growth in the West requires GDP increase domestically, and the outflow of business corporations around the world, which siphon newly created wealth and money back to the home country. Otherwise, developed states are payers of foreign aid and assistance and loan providers to developing states.

Ethiopia is a recipient of foreign assets than a provider from diverse sources of monetary power–states, international banks, multilateral organizations, non-government charity organizations, and others.

This state of affairs is an advantage for the rent-free development as much as it is an undesired opportunity for the rent-seeking regime. The law may not restrict the right of an Ethiopian citizen to deposit one’s dollars and other foreign currencies in outside banks where one may take additional benefits of increased interest.

However, if this Ethiopian kept one’s foreign currency in Ethiopia’s banks as a responsible and civic-minded citizen, then, the Ethiopian government would have had more foreign currency for financing the various development projects. While this Ethiopian failed to extend this contribution to the development process, he/she would automatically losses the moral right to claim advantages equal to the failure.

Rent seeking arises when this Ethiopian raises this claim and when the state, for any reasons, agrees to provide him/her, at least, theoretically, the demand at the expense of development and for the benefit of poverty borne by the people.