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To catch a glimpse of Abiy Ahmed, Ethiopia’s prime minister, visitors could book a table at a swanky new restaurant in Addis Ababa, the capital. Marcus Addis, the eponymous joint by Marcus Samuelsson—an Ethiopia-born, Sweden-raised, America-based celebrity chef—has proved a favourite. From the 47th floor of east Africa’s tallest building diners gaze out at the shiny infrastructure being built across the city under Abiy’s rule. The eatery symbolises the country he would like Ethiopia to be: modern, glitzy and rich.
The reality at ground level is less glamorous. Two years of war in Tigray killed hundreds of thousands and destroyed the region’s economy. Those close to Abiy argue that he can finish what he started when he took office in 2018, vowing to reform a dirigiste economy. An IMF loan to support this could be signed by the end of March. But financial instability and violence in other regions are causing huge problems for one of Africa’s most influential—if controversial—politicians. A country often seen as a model for the rest of the continent may instead be a warning.
From 2004 to 2017 vast public investment helped Ethiopia’s GDP grow by more than 10% a year on average, outpacing every country save Qatar. But the state-led model accrued flaws: double-digit inflation, mounting public debt and the hogging of credit and hard currency by state firms. Repressive rule by the governing coalition, the EPRDF, provoked a backlash that aided Abiy’s accession in 2018.
Abiy’s “Homegrown Economic Reform Plan” aimed to build on the strengths of the previous 20 years, especially in infrastructure and education, while fixing the weaknesses by liberalising the economy. Officials claim several successes. Lending to the private sector increased, and the government has chipped away at the monopoly of state-run Ethio Telecom by selling a mobile-phone licence to Safaricom. Competition from the Kenyan firm has accelerated the growth of digital payments.
Then came the war in 2020. “There is little in the way of an economy here,” says Getachew Reda, who runs Tigray’s regional administration. In Mekelle young people plot how to escape the country. Outside the Tigrayan capital things are even worse.
It has been more than three years since soldiers from Eritrea, the neighbouring state that allied with Ethiopia during the war, destroyed the Semayata Dimensional Stones Factory in Wukro, eastern Tigray. But it looks like it could have happened yesterday. Machines that cut granite lie in ruins of twisted metal. The roof is punctured by shrapnel. The only sign of passing time is the layer of bird droppings on the floor, softening the crunch of broken glass. Before the war the factory had 500 workers. Its stone was used in many of the buildings in Addis Ababa; among its unfulfilled orders is one from the national cyber-security agency. “Every machine was destroyed, everything was looted,” says Hadush Hailu, the finance manager.
And there are effects of the war beyond Tigray. At Antex Textile in Adama, in the Oromia region, the staccato of sewing machines echoes around the factory. It might be the noise of manufacturing at the global frontier: Antex is a Chinese firm making garments for Western shoppers. A decade or so ago, economists saw Ethiopia as Africa’s best hope of replicating the export-led growth of Asian states like Vietnam or Bangladesh. Ethiopia had duty-free access to America under AGOA, a preferential trade policy. It also has low labour costs: an Ethiopian garment worker earns half of a Bangladeshi’s wage and a fifth of a Kenyan’s.
But Azim Mohamed, the Bangladeshi factory manager, sounds despondent. In 2021 America, home to 60-70% of Antex’s customers, booted Ethiopia out of AGOA because of human-rights abuses in Tigray. A government order to make military uniforms has not completely filled the gap. Asked if Ethiopia might still be the next Bangladesh, Mr Mohamed pauses. “It’s supposed to be. But now I cannot say.”
A survey by the UN Development Programme (UNDP) found that almost 450 manufacturing firms (out of nearly 5,000) stopped production last year. More than 70% of executives said that the business environment had worsened in the past few years. Ethiopia attracted 11 foreign-direct-investment (FDI) projects in 2021 and 2022 combined, about a third of the total in 2019, reckons EY, a consultancy.
The war has also exacerbated some macroeconomic problems. Borrowing rose and official military spending increased by 88% in 2022 alone, squeezing money for welfare. Fewer exports, as well as less FDI and overseas aid have led to a lack of foreign exchange. That has put pressure on the local currency, the birr, which is worth half its official value on the parallel market. The IMF reckons consumer prices will rise by more than 20% this year.
The results can be seen in the number of half-finished buildings across Addis. Property is seen as a hedge against inflation and the official devaluation of the birr that developers assume will be part of any IMF agreement. But they are struggling to get dollars to import the materials needed to finish their buildings.
Abiy’s allies argue that they will succeed in pushing reform despite the macroeconomic problems and what they see as opposition from vested interests. In November the government reached a deal to reschedule payments due to official creditors including China. It hopes to cut a similar one with commercial creditors over a $1bn loan due in December. Officials hope that dollars from the IMF will give them the space to continue reforms.
Abiy, meanwhile, is busy promoting the industries he sees as crucial to Ethiopia’s future. On social media he touts his initiatives to make the country an exporter of wheat and to double tea production. (Diplomats are sceptical of his claims of success in the former.) He posts slick videos of new state-built tourist lodges.
image: The Economist
But insecurity is making it hard for farmers and will put off holidaymakers. Latent conflicts in the regions of Oromia and Amhara have escalated (see map). Kidnappers are terrorising businesses; last year dozens of workers at a cement factory owned by the Nigerian magnate, Aliko Dangote, were taken. Exporters say it is becoming harder to shift goods.
Like many African leaders, Abiy is more of a dealmaker than a policymaker. In January he infuriated neighbouring Somalia by suggesting he would recognise the sovereignty of Somaliland, a breakaway part of that country, in exchange for leasing land on the coast, a long-held aim of landlocked Ethiopia. A huge dam on the Blue Nile, known as the GERD, is filling up, angering Egypt. But bold—or, say critics, reckless—moves like these are not the same as the more prosaic work of reforming the economy while mollifying political elites and quelling popular anger.
Ever since Abiy came to power many have seen what they want to see in him: a liberal reformer, a free-marketeer, a peacemaker. In truth, much like the food served at Marcus Addis, he is a fusion of influences. An ally compares Abiy to Deng Xiaoping, the Chinese reformer. One businessman says he is motivated by Pentecostalism’s “power of positive thinking”. Another likens him to Mohamed bin Zayed (MBZ), the leader of the United Arab Emirates (UAE), in his mix of mega-projects and brazen diplomacy. But, he cautions, “Abiy is not MBZ and Ethiopia is not the UAE.” No matter how glittering, the view from the 47th floor cannot obscure that. ■
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.
Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.
The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.
“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.
“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”
Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.
The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.
The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.
Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.
More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.
Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.
“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.
Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.
“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.
Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.
Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.
Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”
“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.
This report by The Canadian Press was first published Sept. 18, 2024.
