All Self-Proclaimed Pan-Africanists are Yielding to the Will of Western Financial Institutions: My Take on Ethiopia Changing Course to Float Its Currency Against the Dollar
By- Gatkek Kuajien Chuol
From Ghana to Kenya to Ethiopia, no African country seems spared from the influence of Western financial institutions, which pressure them to align with their interests. Who could forget the pointed remark made by a Ghanaian Parliamentarian about the “economic Maguire” — a reference to those claiming to be economic and financial experts and leaders, yet endorsing policies that work against the best interests of locals?
Abiy Ahmed, the Prime Minister of Ethiopia, recently floated the Ethiopian Birr against the dollar. In defending his decision, he likened borrowing from the World Bank and IMF to borrowing from one’s mother, implying a level of sympathy and leniency in repayment. However, the reality is far from comforting. Repaying an IMF loan involves significant challenges beyond mere repayment.
Last year, when rising living costs prompted public concern, the Prime Minister suggested that people could substitute meat with bread and bananas — both of which are often unaffordable or unavailable. This suggestion was seen as out of touch with the daily struggles faced by Ethiopians. The decision to float the Birr led to an immediate devaluation of savings by nearly 40%. This loss is exacerbated in a country heavily reliant on imported goods, where prices have already begun to rise, further straining the cost of living.
The government’s focus on modernizing Addis Ababa with parks and LED lights starkly contrasts with the harsh realities many Ethiopians face, including those languishing in IDP camps or suffering from famine. The priority seems misaligned, focusing on aesthetics rather than addressing fundamental needs.
Before this financial policy shift, Ethiopian civil servants struggled to make ends meet, and with the devaluation of their salaries and no corresponding increase, their situation has only worsened. Similarly, Kenya’s recent attempt to legislate a $2.7 billion debt repayment led to public outrage and protests, underscoring the contentious nature of these financial decisions.
If I were to respond to Abiy Ahmed’s analogy of the IMF to a mother, I would question what kind of mother threatens her children with starvation. The backlash in Kenya highlights the volatility and public discontent that can accompany such policies.
Ethiopia’s economy, once one of the fastest-growing in the 21st century, has been compromised by recent decisions that prioritize external financial aid over sustainable economic strategies. The abrupt devaluation of the Birr and the subsequent financial instability have deterred both foreign investors and the Ethiopian diaspora from investing in the country. This instability, coupled with ongoing conflicts and insecurity, paints a grim picture of Ethiopia’s economic future.
Abiy Ahmed’s previous decisions, such as winning a Nobel Peace Prize for a peace deal with a dictator, have been controversial yet somehow fortuitous for him. However, the consequences of this latest financial decision may test the limits of his luck and leadership.
Ethiopia’s diverse population, often divided along ethnic lines, may find common ground in the face of shared economic hardship. Addis Ababa, already unaffordable for many, may become even less accessible, potentially driving out those who cannot keep up with rising costs.
Gatkek Kuajien Chuol, a human rights lawyer and writer, frequently contributes to Addis Insight and YourTango.com, with articles also published on Medium and Substack. His upcoming book, “Ethiopia, Gambella and Ethnic Federalism: A Tragedy for the Minority Ethnics,” explores these themes further.
