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Ethiopia should seek indigenous solutions to the economic problems of COVID-19

Ethiopia should seek indigenous solutions to the economic problems of COVID-19

Professor Dr. Fisseha-Tsion Mengestu is a pioneer advisor and scholar in the fields of finance, investment, aid and development. He had been a public policy, legal and tax Advisor to the Ministry of Finance during the regime of Emperor Haile Sellassie, and still serving his country after 46 years. Lucy Kassa of Detail Ethiopia has sat for interview with him to talk in relation to the recent statement of the government that states it has managed to control the greater damages COVID-19 could have cause in the country’s economy.

Detail Ethiopia: Lately Government has stated that it has managed to control the greater damage COVID-19 could have been pose in the economy. Do you think that is the case or do you believe we have managed to control the pandemic so far? If so what could have been the greater damage it could have cause?

Professor Dr. Fisseha: There is no doubt government is doing what it could under the circumstances to minimize the spread of Corona Virus among the population notwithstanding that it may lack the type of medical equipments, medicine and special facilities that are needed to  trace, to  treat, and to control the deadly virus. Certainly, nearly all government leaders would like to convince their citizens that they are doing what they can to minimize the damage. But, it is difficult to pin point with certainty and hard evidence what factors might have contributed to decrease the rate of infections and deaths simply because there are no accurate and verifiable data.

I must confess, I do not believe that the damages are less only due to the actions of government. It is perhaps due to the capacity of the internal biological or internal immunity system to withstand such virus that might have helped to minimize the deaths and other damages. In principle, given the lack of resources, medicines and other facilities in countries like Ethiopia, the rate of infections and death  should have been much more astronomical than what we have observed in the United States and other developed countries.

At any rate, unless the actual risks of infection rate is reduced by divine intervention, or unless miraculously a quick vaccine or effective medicine is developed, one cannot rule out that the rate of infection and deaths in Ethiopia would not increase.  

There is no doubt that government quickly acknowledged the seriousness of the virus and tried to raise awareness on the threat of the virus. In short, to a large extent the government has tried to do what it can although a lot remains to be done.

How do you evaluate the impact of COVID-19 on the economy so far? What in your opinion are sectors of the economy much affected by the pandemic?

Professor Dr. Fisseha; The economic impact of COVID-19 requires a much deeper and independent research and study. From what I observe, business has slowed down almost in every sector of the economy except in very few sectors. In short, I do not believe that there is a sector that has not been affected from the pandemic.

Among some of the sectors and economic activities that have been severely affected include air and land transport, hotels, restaurants, touring companies, the construction and educational sectors. Some clinics and even hospitals have also been closed in connection of the Corona Virus. Even government services have been reduced due to small number of civil servants who come to Office. It is also important to note that import and export business has also declined because of lack of transport difficulties.

What do you think are the mechanisms and best ways to lessen the negative impacts of COVID-19 in the economic scenario of Ethiopia?

Professor Dr. Fisseha: The best ways to lessen the negative impacts of COVID-19 in the Ethiopian economy is not easy, simply because there are no easy solutions to very complex problems. However, more testing and more contact tracing and more isolation and distance keeping and a much more stricter monitoring could help to improve. I tend to argue that there should have been a much quicker and more effective and stricter control of people coming to Ethiopia by air, and land. This implies that the Ethiopian Embassies should have been stricter in requiring tasting results before they issue Visas to enter Ethiopia.

Which sectors of the economy do you think should be given much attention and support by government in order to reduce the damage of COVID-19 in the economy?

Professor Dr. Fisseha: Among the sectors of the economy that I think should be given much attention and support by the government in order to reduce the damage of COVID-19 in the economy are the ones I stated above. However, as to what type of fiscal and non fiscal, monetary, financial and other forms of support and stimulus or subsidies the Government should give requires a much deeper study and research.

There are ways of information to know as to what type of help and support many countries have given to stimulate and revise their respective economies. In my view, I do I believe in one jacket fits all principle. The type of support and stimulus that Ethiopia should offer must be based on its   particular and concrete socio-economic problems hard hit by the impacts of COVID-19 and not based on copy and paste mentality.

At any rate, among some of the many types of support might include delay on payment of loans, tax break, fiscal stimulus, subsidizing fuel and food price and strict control of prices of basic commodities, promoting well-organized distribution system, mobile food delivery, distribution systems and effective price controls by the Government which has not been effective till now but which needs a very serious attention. It might also be necessary to delay the implementation of some construction projects except the Renaissance dam and other strategic and top priority projects.

Whose country’s experience and example Ethiopia should take to save its economy from the damages of the pandemic?

Professor Dr. Fisseha: Frankly the Ethiopian Government should seek indigenous solutions to its socio-economic problems and how to control the pandemic. The experiences of the United States and other countries where everything can be taken for granted, for example, may not be the right thing to do in countries of scarcity where even access to basic needs and survival requirements are very limited.  Hence, Ethiopia should learn from the mistakes of the Trump administration and other leaders and learn from the experiences of some other countries that have successfully managed to control the pandemic.

Due to the pandemic most banks are currently facing a liquidity problem and the government is taking various measures. What is your expertise recommendation for the solving of this liquidity problem? 

Professor Dr. Fisseha: Trying to solve the liquidity problem of banks is not as easy as it may look, particularly in poor countries like Ethiopia. But the need for creative and innovative mechanisms for trying to solve the liquidity of banks is very crucial. The need to engage in a constructive dialogue with the bank community, trying to learn what their problems are, and how they wish to solve their liquidity problems is important. However, since they cannot get what they want, there is a dire need to make a serious, independent and in depth study to identify their problems and how to solve them or otherwise mitigate their liquidity problems.

What is your prediction about the impact of COVID-19 in the country’s economy in the coming few months? Do you think it will leave much danger from now on?

Professor Dr. Fisseha: It is very difficult to predict the prognosis of the virus at the time when we do not have the true facts when it will end and at the time when we do not have an effective vaccine or medicine. However, with the growing scientific knowledge about the virus and how it is transmitted and its evolution, more effective treatment and vaccine might emerge in the coming few months. With that, it may be possible to increasingly control the threat of the disease and the damage it has been causing on Ethiopia and other countries.

Otherwise, the long term socio-economic, cultural social and political consequences of COVID -19 on the Ethiopian economy might be felt for some time to come.  Whether the damage caused by COVID-19 will be felt only in the coming few months or in few years very much depends on whether there are new breakthroughs and new developments that may effectively find a cure to the pandemic.

I like to stress that the various medical, biological and other health related research institutions based and located in Ethiopia should be required to find concrete solutions to Ethiopia’s health related problems. There is also a dire need to use local knowledge and traditional medicine to be part of the solution too. In short, there is a dire need to overhaul, stream line, restructure and  even merge a great deal of our local research institutions in order to make their researches more relevant and more effective solutions to  Ethiopia’s public health, disease control and other problems.