Government officials, businessmen, ministers lining pockets with sudden influx
While Ethiopia is currently enjoying economic growth, the Horn of Africa nation remains mired in poverty and neglect due to corruption. Many government officials continue to skim the "cream off the top," which hinders foreign investors seeking stable, long-term partnerships in developing countries.
LOS ANGELES, CA (Catholic Online) - "Bankers, miners and developers presenting projects to investment committees in countries that fare badly in corruption rankings frequently struggle to get investment. Corruption raises red flags because it makes local markets uncompetitive, unpredictable and therefore largely hostile to these long-term players," Ed Hobey, the East Africa analyst at the political risk firm Africa Risk Consulting says.
In the biggest crackdown on corruption in Ethiopia in the last 10 years, authorities arrested more than 50 high profile people including government officials, businessmen and a minister last month.
Among those arrested were Melaku Fanta, the director general of the Revenue and Customs Authority, which is the equivalent rank of a minister, his deputy, Gebrewahid Woldegiorgis, and other officials were apprehended on suspicion of tax evasion. Arrests have raised questions about the endemic corruption at the heart of the country's political elite.
"Corruption is a serious problem we are facing. We now see that corruption is occurring in higher places than we had previously expected," Berhanu Assefa of the Federal Ethics and Anti-corruption Commission of Ethiopia says. "Areas vulnerable to corruption are land administration, tax and revenue, the justice system, telecommunications, land procurement, licensing areas and the finance sector," he said.
Ethiopia ranks 113 out of 176 countries on the Corruption Perceptions Index of Transparency International. Ethiopia has also lost close to $12 billion since 2000 to illicit financial outflows, according to Global Financial Integrity.
Professor of Economics at Harper College in the United States, Dr. Getachew Begashaw, says that there was a fear that the recent high profile arrests are just political theatre designed to placate major donors such as the World Bank and the IMF, and to give credibility to the new regime's fight against corruption.
Prime Minister Hailemariam Desalegn has led Ethiopia after Prime Minister Meles Zenawi died in August 2012.
"They are using this as a PR stunt to appease not only the donors, but to also dupe the Ethiopian people. Because many non-party affiliated Ethiopians in the business community are complaining, and this complaint is trickling down to the average people on the streets," he said.
Illicit financial flows as a result of corruption are a major hindrance to a country's development, undermining institutions, economies and societies. According to the Africa Progress Panel's Africa Progress Report 2013, the continent is losing more through illicit financial outflows than it receives in aid and foreign direct investment.