Black Gold

The Movie.  We rented Black Gold last week. An interesting documentary, worth watching especially if you have a heart for Ethiopia and a love of coffee, it  falls short of explaining the "why" of coffee farming challenges and the broader economic conditions in Ethiopia.  For example, farm subsidies in developed nations are cited as one reason Ethiopian farmers are unable to competitively market other commodities.  The challenges in fact run much deeper, and are (I think!) primarily domestic in origin. 

Economic Overview.

• The Ethiopian economy [began] to prosper in the 1960s and early 1970s, thanks to a vigorous capitalist agriculture. The growth caused considerable social unrest as peasant farmers were thrown off their land or forced to sell out . . . to create plantations or large truck farms. The military regime regarded that consolidation as inequitable and exploitative, and its land reform brought economic development to an abrupt halt. Moreover, the government assumed broad responsibility for the economy and, through a variety of parastatal organizations, sought also to become purchasing agent, jobber, wholesaler, and transporter. These activities devastated the Ethiopian economy, leading to underdevelopment. If recent history teaches anything, it is that the government must abandon the command economy, liberate the peasants to work out their own destinies, and facilitate the market. Marcus, Harold. A History of Ethiopia. Berkeley: University of California Press, 2002.

Marxist Economic Policies. In the late 1970’s, the new government nationalized most industries, subsequently mismanaging them. Farming in particular suffered: “The government was so doctrinaire that it squandered its limited resources on propping up inefficient state farms and in sponsoring forms of collective agriculture.” (Marcus) With socialism came a lack of incentive to invest, a fear of investment by foreigners, and a lack of incentive to innovate. Farming methods in Ethiopia remained archaic and inefficient, floundering while their Western counterparts evolved and thrived. Exacerbating these problems, socialist land redistribution led to smaller plots, overfarming, land degradation, land insecurity, and declining productivity.

Statism - Productivity Spiral. The economic pressures on one side and the ideological commitment to socialism on the other created a downward spiral. As statism increased, production declined, and statism increased further. The state began to regulate domestic food trade by region, resulting in a fragmented national economy, further reducing production incentives, and contributing to the devastating famines of the 1980s, even while the country’s disconnected leadership was planning lavish celebrations of the purported success of its policies. Ethiopia’s ideological allies, such as the Soviet Union, were facing their own food shortages for similar reasons, while Europe and the U.S. held the surplus. When the government finally acknowledged the crisis, Westerners were quick to send aid across the ideological chasm.

Resettlement and Villagization. A forced resettlement followed on the heels of the 1984 famine. In a society that values and relies on family relationships, 600,000 displaced Ethiopians were at a particular disadvantage. Resettlement was followed by villagization -- the conversion of the highland’s scattered hamlets, located near water and fields, into more densely populated, infrastructure-challenged villages located according to communication lines rather than resources.  Another government orchestrated social planning scheme, another failure.

From Socialism to Capitalism. In 1990, the government announced (some would say acknowledged) the end of socialism, and the Workers’ party was replaced with the Ethiopian Democratic Unity party. Many “villaged” people returned to their old homesteads, and farming collectives were dismantled. The economy is now in transition between socialism and capitalism. What was lost seemingly overnight, however, will take decades to rebuild.

Ethiopia continues to suffer from the loss of its wealthy and intellectual population, who were purged or fled in the 1970s, typical when communism becomes the dominant structure.

Another impediment to economic growth is the lack of private property. Notwithstanding the pronounced end to socialism, land continues to be owned by the state, which continues to stifle productivity and encourage overuse. While land may be leased for up to 40 years, most farms are operated by individual or family farmers (“smallholders”) who cannot afford long-term leases, and foreign investors are understandably cautious. 

Agriculture accounts for 85% of all employment and 85% of exports (U.S. Embassy Guide on How to Do Business in Ethiopia, http://ethiopia.usembassy.gov/doing_business_in_ethiopia.html); coffee accounts for over 55% of all exports (U.S. Embassy Guide). Smallholders produce 90% of Ethiopia’s coffee (Coffee Growing in Ethiopia on the Horn of Africa, http://www.africa-ata.org/coffee.htm). Despite their critical role in Ethiopia’s economy, most smallholders (76%) are uncertain whether their land will belong to them in five years (Project IDEELS North-South Conference: Building Partnerships for Sustainable Development, 2009, citing study by Ethiopian Economic Association, 2002, http://www.ideels.uni-bremen.de/land.html). With that in mind, consider that it generally takes four years for coffee plants to reach full production. Predictably, struggling smallholders are tempted to replace their coffee crop with khat, a narcotic that reaches full production yield quickly and is more profitable than coffee. Yet it is coffee, not khat, that offers Ethiopia a sustainable economic future and a healthy, productive population. 

Key industries, too, continue to be state-owned, which also has wide-spread repercussions. The state continues to have a monopoly on telecommunications, internet service (which remains costly and inadequate, in use by only 1% of the population), shipping companies, electrical power, and in-country air travel (Ethiopian Airlines), and owns many banks. (Howard, Sarah. Culture Smart. London: Bravo Ltd., 2010.) While the current government with one hand offers capitalism, with the other hand it continues its statist stranglehold on infrastructure components key to economic growth.

Conclusion. I am overwhelmed by the magnitude of the problems facing Ethiopia, heartbroken by the human consequences, and encouraged by the spirit and resilience of Ethiopians. They have a wonderful and rich history and will, God willing, overcome the challenges compounded over the past forty years, not because of any transient foreign aid, but because of their engrained domestic values, commitment, and resources. “It may take several generations before the logic of geography and history works to recreate the larger political and economic sphere necessary for a better future. In the end, Ethiopia will rise again.” (Marcus)

The director of our agency’s transition home in Addis Ababa is a beautiful, educated woman who, after living in Boston for a number of years, returned to Ethiopia to serve her country’s most vulnerable children. In her wisdom, she shares a couple of insights that weigh on my mind in particular. First, she reminds travel groups that while she appreciates adoptive families, she works for the children, and their wellbeing is always her primary motivation and concern. Second, her parting words to adoptive parents are reportedly this: You can’t save Ethiopia, but you can go home and be your child’s parent.

It is our privilege to be Isabella’s parents, and we pray for the future of the country that is entrusting her to us.