The Political Risk of Investing in Ethiopia
By Aesop 05/25/2021
Today, the world commemorated the cruel murder of George Floyd in the United States. The cold-blooded murder of one individual (a minority) moved the entire population of the United States to action. This pushed the government to prosecute and punish the murderer. However, the massacre of tens of thousands of innocent Tigreans did not stir Ethiopians to action. This pushed the junta in Addis Ababa to a frenzy of selling state-owned enterprises to sponsor its genocidal war project. But this scheme, thankfully, is also bound to falter.
The genocidaires of Addis are in dire need of hard currency. They need it to quench their addiction to innocent blood of young women and children. They need dollars to purchase ammunitions (including banned incendiary bombs) from the merchants of death in China and the former Soviet Union nations. This bloodthirsty junta believes multinational companies (MNCs) do not calculate the political risk in Ethiopia. It hopes to “convince and confuse” into Ponzi scheme as it did its domestic victims. It never asks why no MNCs never considers investing in Eritrea despite the stability and strategic location there for they are as dumb as a rock. These companies never consider Eritrea because it poses a huge political risk.
MNCs, at least the seriously managed, employ experts who forecast the political risk of nations where these companies consider investing their stakeholder capital. These experts, composed of experienced of highly paid intelligence, economics, diplomatic, and legal professionals, carefully weigh the market potential, political stability, economic prospect, geopolitical environment, and the ease of doing business (efficiency, technology, educated workforce, corruption, and legal hurdles) in those countries.
Most of these experts are professionals who accumulated significant number of years in the revolving doors of politics, business, intelligence, and other relevant institutions in advanced countries. Some of them, like Kissinger Inc., form their own consultancy firms where they lend expertise to big companies on a particular project for a limited time. Now, these experts/consultants/companies have their own yardstick they employ in whether multinational companies (MNCs) should invest in other countries or not.
For example, Secretary Condoleezza Rice and Amy Zegart formulated a framework of political risk. This framework has two dimensions that identifies five actors and ten factors that MNCs should consider before deciding to spend the shareholder money in a foreign land. The five factors in contemporary political environment are:
1. Individuals: twitter users, documentary makers, activists, consumer advocates, celebrities, ordinary citizens and bystanders.
· So, what are individuals talking about Ethiopia today. Or, what is trending in social media, in the news, among advocacy groups on Ethiopia these days? It is the Tigrai genocide!
2. Local Organizations: neighborhoods, associations, political groups, and local governments.
· In what state are local organizations in Ethiopia today? Neighborhoods are decimated, factories destroyed, political parties banned, and local government officials killed and imprisoned in that country.
3. National government and their institutions: executive, legislative, and judiciary branches.
· The so-called “government” has effectively lost control. Eritrean and Sudanese troops control swaths, the electoral board has declared it can’t supervise elections, people don’t want to vote. This highly corrupt and fledgling executive misuses the legislative and judiciary branches to persecute its political opponents.
4. Transnational: Groups NGOs, Criminal Syndicates, Terrorists, Hackers, Militias, Ethnic or Religious communities
· Ethiopia has abandoned the calls of regional/continental African organizations for peace. Most of its neighbors are its enemies. Transnational advocates of human rights, humanitarian organizations, global media, and religious communities have labelled the Ethiopian government as a perpetrator of war crimes, crime against humanities. Religious and ethnic extremism are on the rise, making the country a safe haven for terror to flourish. The government’s utilization of internet services to crush political dissent continues to obstruct business.
5. Supranational and International Institutions, and the UN
· All of these institutions are busy either accounting the atrocities committed by the Ethiopian government, expressing concern over them, or, nowadays, progressively taking actions like aid restrictions and other sanctions.
In short, the major actors of this contemporary world have turned against the dictatorial regime on Addis Ababa. It is in this context that one must assess the remaining ten risks that Rice and Zegart outlined. I will not be so naïve as to explain what the five major actors testified along the ten dimensions on the foreign currency seeking genocidaires putting out state-owned enterprises for sale in the failed state of Ethiopia today. I’ll simply list them to satisfy curiosity.
1. Geopolitics: interstate wars, great power shifts, multilateral economic sanctions and intervention
2. Internal conflict: social unrest, ethnic conflict, migration, nationalism, separation, federalism, civil wars, coups, and revolution.
3. Laws, regulations, and policies: change in foreign ownership roles, taxation, environmental regulation, and national laws.
4. Breaches of contract: expropriation, politically motivated credit defauls
5. Corruption: discriminatory taxation and systemic bribery
6. Extraterritorial reach: unilateral sanctions, criminal investigations, and prosecutions
7. Natural resource manipulations: political motivated changes in supply of energy and rare earth materials
8. Social activism: events and opinions that go viral facilitating collective action
9. Terrorism: politically motivated threats and use of violence against persons or property
10. Cyber threats: theft or destruction of political property, espionage, extortion and massive disruption of industries, governments, and societies.
Global business intelligence experts MNCs employ will have no difficulty in utilizing the abundant and reliable open-source data on Ethiopia out there and giving Ethiopia a perfect score on political risk. To be honest, ordinary laymen (including those who support the regime), will not invest their hard-earned money on a failed state like Ethiopia- unless they are irrational actors (people driven by instinct than reason).
All in all, the Ethiopian regime desperate frenzy to finance its genocidal war by selling state-owned enterprise is bound to falter. Astute MNCs will avoid touching Ethiopian enterprises amidst growing sanctions because the risk of losing their money is sky high. Foolish MNCs throwing their capital into the burning pit of Ethiopia will collect ashes (not profits) and file for bankruptcy (if they are lucky). The genocidaires may want sweet money but what they will ultimately get is sour justice!
For further Reading:
Rice, Condoleezza and Amy B. Zegart (2018). Political Risk: How Businesses and Organizations Can Anticipate Global Insecurity. Twelve Hachette Book Group. New York.
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