Privatization in Africa: anthropology, neoliberalism and the varieties of capitalism

According to sociologist Paul Starr (Reference Starr, Kamerman and Kahn1989), privatization is a ‘fuzzy concept’ whose theoretical and ideological meanings, and practical processes, are of multiple, overlapping and contested significance. As a technique of governance, privatization is neither singular nor static, but comprised of numerous and evolving processesFootnote ¹⁸ that blur the public/private divide (ibid.: 12). However, for anthropologists, such divisions remain assumed, with recent calls by Lisa Rofel (Reference Rofel2015) to investigate better the multiplicity of meanings privatization might take across cultural contexts, complicating disciplinary understandings of such distinctions within capitalist systems. In the case of the Ethiopian privatization programme, I examine how ‘public’ and ‘private’ spheres are embedded in and inform each other through a constellation of actors, bureaucratic processes and material practices – a site of policymaking that is discursively, interpretively and applicablyFootnote ¹⁹ fashioned (Shore and Wright Reference Shore and Wright1997; Wedel et al. Reference Wedel, Shore, Feldman and Lathrop2005; Shore et al. Reference Shore, Wright and Però2011).

One area of relevance, in which privatization remains an uninterrogated concept, is within robust anthropological debates on the uses and usefulness of neoliberalism as an analytical category for capturing the uneven impacts of global capitalism (Ganti Reference Ganti2014: 99). In developing nations, privatization – along with its sisters ‘deregulation’ and ‘liberalization’ – is a core policy prescription advocated by the IMF and World Bank for economic development (i.e. structural adjustment reforms) – with devasting results – exacerbating global inequality with the collapse of local markets due to a flood of foreign competition and increased sovereign debt (Goldman Reference Goldman2005). Numerous anthropologists, working across different African contexts, have written about the negative effects of such privatization programmes on the everyday lives of people through their admonishment of neoliberal reforms (Comaroff and Comaroff Reference Comaroff and Comaroff2001; Elyachar Reference Elyachar2005; Piot Reference Piot1999; Chalfin Reference Chalfin2010). However, in these descriptions, the shift from public to private is not a site of questioning but accepted as a given, in which privatization is assumed as being a tool of a larger neoliberal project. This is what James Ferguson (Reference Ferguson2010; Reference Ferguson2015) critiques as the tendency to view the techniques of neoliberalism, such as privatization, as always being utilized to serve that ideological project when in fact ‘devices of government that were invented to serve one purpose have often enough ended up, through history’s irony, being harnessed to another’ (Reference Ferguson2010: 174).

Thus, in the Ethiopian case, what does it mean to examine privatization within the distinct intellectual histories, politics and institutions of place rather than through the ideological framework of neoliberalism (Mains Reference Mains2014: 20; Reference Mains2019: 13–14)? Drawing from an extensive literature on the varieties of capitalism (Nölke and Claar Reference Nölke and Claar2013; Nölke et al. Reference Nölke, Brink, May and Claar2019; Alami and Dixon Reference Alami and Dixon2020), I explore how the state, in coordination and in competition with business, promotes economic growth in an emerging economy such as Ethiopia. Specifically, I look at how the country’s privatization programme emerges from this interplay between state and business as Ethiopian leaders generate innovative developmental ideologies for capital accumulation while managing threats of economic imperialism (Cheru Reference Cheru2009; Breckenridge Reference Breckenridge2021). In many developing nations, the privatization process exists within a coordinated market economy, in which the successes and failures of economic growth are shaped by a country’s complex mobilization of resources to meet its goals for development (cf. Hall and Soskice Reference Hall and Soskice2001; Padayachee Reference Padayachee2010; Pitcher Reference Pitcher2002). Within this process, one government strategy is to capitalize on revenue garnered from its SOE privatization programme, organizing the country’s public and private sectors through a development agendaFootnote ²⁰ that balances the state’s goals of gaining economic benefits from foreign investment, while still protecting national sovereignty (Alami and Dixon Reference Alami and Dixon2020: 74, 79–80). In this way, the logics of Ethiopia’s privatization programme must be understood as emerging from such complex processes of state resource management – a system guided by a distinct developmental ideology that addresses the specific political-economic concerns of the country’s ruling elite.

The following pages investigate how politicians, bureaucrats and policymakers in Ethiopia have contended with the problem of privatization in the decades, years and months leading up to PM Abiy’s election and how it might help us envision the future direction of Ethiopia’s privatization programme within his ‘new’ political project of medemer. The first section (‘Privatization in theory’) establishes the ideological foundations for the governing elite’s understanding of privatization, its meaning and uses, within a ‘developmental’ or ‘activist’ state framework rather than a neoliberal one. The following section (‘Privatization in history’) presents an evolving history of Ethiopia’s privatization programme (1995–2018) pieced together through archival work and interviews. Using the ideological framework of the ‘activist’ state established in the previous section, I trace the development of Ethiopia’s privatization programme, which frames privatization as a revenue-generating tool for the state, as well as shifts in how the Ethiopian government conceptualizes the role of the state, in concordance with the private sector, in promoting economic growth. In ‘Privatization in policy’, I explore the country’s privatization programme in practice through interviews with policymakers, asking when privatization becomes a possible and desirable action – detailing how the state extracts revenue from privatized breweries to manage and create value through direct (auction price) and indirect (taxes, export earnings and linkage effects) income reinvested into infrastructural and industrialization projects. ‘Concluding thoughts’ returns to the question of the meaning of privatization within the framework of medemer, calling for a situated analysis that takes seriously African developmental ideologies and institutions as produced through intellectual engagements with global ideas and their rearticulation through local policymaking.

In the anthropological tradition of ‘studying up’ (Nader Reference Nader and Hymes1972), I approach the Ethiopian developmental state from above rather than below, analysing the kinds of ‘epistemological frictions’ (Schwegler Reference Schwegler2008) that emerge from (sometimes tense) miscommunications arising from the interview process. Taking up categories such as ‘privatization’, ‘public/private’ and ‘neoliberalism’ as ethnographic objects, my aim is to demonstrate how government perspectives on the meaning and uses of privatization emerge from circulating ideas and beliefs about the ‘inherent’ role of state and business in the development process. In other words, I examine how privatization operates as a technique of governance appropriated, rearticulated and repurposed to fit the goals of an Ethiopian developmental ideology – as imagined by the country’s political elites – rather than a neoliberal one.

Privatization in theory: the ‘developmental’ or ‘activist’ state in Ethiopia

Several weeks before Abiy Ahmed assumed his role as Ethiopia’s prime minister, I was wrapping up my ethnographic fieldwork with one final interview – a long-anticipated conversation with a member of the Ethiopia People’s Revolutionary Democratic Front (EPRDF). Unlike many of my other semi-structured interviews with bureaucrats and other party members, which took place in formal office settings, this meeting was a relaxed back and forth over a modest lunch of shiro (ground chickpea stew) on a number of things relating to EPRDF’s decades-long rule, including how my informant understood the distinct roles of the state and private sector in fostering Ethiopia’s development project. Sitting outside on patio furniture, I gazed past a grassy lawn at a row of unkept flower beds and shrubbery, listening as the Politician recounted the now well-documented conflicts between the Ethiopian government, IMF and World Bank in the late 1990s and early 2000s over the country’s refusal to accept several structural adjustment programmes (SAPs) – specifically the government’s unwillingness to both privatize and liberalize key sectors such as telecommunications and banking.Footnote ²²

In the remarks quoted above, the Politician describes EPRDF’s opposition to SAPs as an ideological one. First, they clearly state that the Ethiopian government is not engaged in a politics of ‘anti’. They never outright reject any prescription presented to them by the international community as the party has no problem with policies such as ‘privatization’ or ‘liberalization’ in themselves, but rather with the underlying ‘ideological approach’ driving those recommendations. Specifically, in the case of SAPs, they are rejecting the neoliberal ideals of the Washington Consensus as the standard for driving economic development – thus distinguishing the ‘ideological approach’ and ‘policy prescriptions’ of SAPs as two components of its reform programme. With this rejection of neoliberal ideology, my interviewee instead advocates for a type of ‘Ethiopian capitalism’. At one level, this ‘Ethiopian capitalism’ is akin to what anthropologists would call a ‘vernacular capitalism’ of a Polanyian tradition, in which economic processes are always embedded in cultural and social worlds (Yanagisako Reference Yanagisako2002; Tsing Reference Tsing2004; Reference Tsing2015; Ho Reference Ho2009; Rofel and Yanagisako Reference Rofel and Yanagisako2019). Thus, although capitalism is a global phenomenon, the ways in which it plays out in Ethiopia are always culturally, socially and historically situated within the politics of a place. However, more critically, they are making a vague yet implicit reference to an ideological approach to capitalism, in which their party, EPRDF, conceives of the state rather than the private sector as responsible for facilitating the process of capital accumulation needed for economic growth.

In States and Markets: neoliberal limitations and the case for a developmental state, the late PM Meles engages more substantially with these ideas, proclaiming that neoliberalism as a developmental paradigm is dead and unable to bring about an ‘African Renaissance’ (Zenawi Reference Zenawi, Norman, Botchwey, Stein and Stiglitz2001: 141).Footnote ²³ One of his primary critiques of neoliberal theory is its valorization of the ‘nightwatchman state’, which plays a secondary role to the private sector in developing local markets. For PM Meles, it is what he calls the ‘developmental’ or ‘activist’ state, not the private sector, that must assume the lead role in a country’s economic development. He defines this state as being, first and foremost, a ‘hegemonic project in the Gramscian sense’; and, second, a structural set of institutions, policies and technologies that allows for that ideological project to be executed (ibid.: 167). In other words, the activist state is responsible for designing and enacting a development agenda through a process of capital accumulation that is unified discursively (e.g. the idea of an ‘Ethiopian Renaissance’) and technocratically (e.g. five-year plans). In such a developmental paradigm, privatization exists within a political project, in which privatization is not done for its own sake, but to reaffirm the state’s control over the processes of capital accumulation.

Both the Politician and late PM Meles critique the idea of neoliberalism and call for an economic ideology that addresses the unique concerns of the Ethiopian situation. They are not alone, as many African intellectuals have criticized ‘Western’ strategies for development – whether the structural adjustment policies of the 1980s and 1990s (Mkandawire and Olukoshi Reference Mkandawire and Olukoshi1995; Mkandawire and Soludo Reference Mkandawire and Soludo1999; Mkandawire Reference Mkandawire2014) or more recent neoliberal reforms such as New Partnership for Africa’s Development (Nabudere Reference Nabudere, Nyongo’o, Ghirmazion and Lamba2002; Edozie Reference Edozie2004; Adésiná Reference Adésiná2004; Adésiná et al. Reference Adésiná, Graham and Olukoshi2006; Raji Reference Raji2015). Scholars also call for greater economic sovereignty, advocating for a style of developmental policymaking that addresses the distinct experiences of Africans (Mkandawire Reference Mkandawire2001). In this manner, Ethiopian elites, such as the late PM Meles, have spent the last thirty years challenging neoliberal models of economic growth, while grappling with developmental theory in ways that have shaped the country’s political and economic institutions as well as policymaking processes (de Waal Reference de Waal2013; Clapham Reference Clapham2017; Cheru et al. Reference Cheru, Cramer and Oqubay2019). My approach seriously considers how such transnational ideas are taken up, debated and reworked by Ethiopian leaders (Zeleke Reference Zeleke2019). Specifically, I examine how Ethiopia’s privatization programme emerges from a local history of knowledge production and state building, in which the country’s leaders actively engage with foreign ideas (such as neoliberalism and the ‘developmental’ state) – all for the purposes of creating a distinctly ‘Ethiopian capitalism’.

Privatization in history: from the Ethiopian Privatization Agency to the Ministry of Public Enterprises (1995–2018)Footnote ²⁴

Following the demise of the Provisional Military Government of Socialist Ethiopia (Derg), the Ethiopian Privatization Agency, or EPA (1996–2003), was founded under ‘Proclamation no. 87/1994’ to facilitate the country’s transition from a communist to a capitalist economy. Operating under the former Ministry of Trade and Industry,Footnote ²⁵ the EPA was responsible for privatizing a portfolio of state enterprises that the new transitional government of Ethiopia (TGE) inherited from the previous regime. However, in the years to follow, Ethiopia’s privatization process would be a drawn-out and sporadic affair (Berthélemy et al. Reference Berthélemy, Kauffmann, Valfort and Wegner2004: 24–5). According to the EPA’s public relations department, between 1995 and 2000 only 200 SOEs were converted from public to private ownership, with 80 per cent of those sales being smaller assets such as restaurants and grocery and retail shops, while many larger manufacturing and industrial enterprises remained in state hands.Footnote ²⁶ This is dissimilar to the common experience of the former USSR, its Eastern Bloc and allies, whose citizens experienced the ‘shock therapy’ of rapid privatization of SOEs and its unexpected social, cultural, political and economic consequences (Burawoy and Verdery Reference Burawoy and Verdery1999). Initially, Ethiopia’s stalled privatizations were partially due to several structural issues ranging from institutional limitations (e.g. a lack of technical expertise needed to execute the process) to the general condition of the national economy (e.g. a lack of interest from foreign investors as the country was still reeling from years of war and famine).Footnote ²⁷ However, following the dissolution of TGE and the formalization of the Federal Democratic Republic of Ethiopia (FDRE), the country’s privatization programme became more and more defined as a source of financing for the nation’s developmental agenda.

During the mid- to late 1990s, the Ethiopian government began to more clearly define the institutions, processes and objectives guiding the country’s privatization programme.Footnote ²⁸ Through several public proclamations,Footnote ²⁹ the government began fine-tuning its governing infrastructure to better manage privatization and post-privatization processes. In particular, under the ‘Privatization of public enterprises proclamation no. 146/1998’, the country’s ‘objectives of privatization’ become more clearly articulated within its larger developmental agenda. Part One, Article III, states:

Of these three objectives, the first is the clearest: the primary purpose of Ethiopia’s privatization programme is to serve as financing for the state’s developmental agenda. For example, during the 1990s, money received from the sale of SOEs would be deposited in the National Bank of Ethiopia for ‘developing infrastructure’ projects.Footnote ³¹ At first glance, this declaration may seem unremarkable as many governments use privatization as a device for generating income for the state – an alternative to raising taxes and cutting social programmes (Megginson and Netter Reference Megginson and Netter2001: 324). But in emerging nations, privatization is also utilized as a strategy for economic growth through the development of local capital markets (Boutchkova and Megginson Reference Boutchkova and Megginson2000: 31). This is notable because, in Ethiopia, the lack of capital markets requires that the process of capitalization be relegated to the state instead of the private sector – a point that will be discussed at length in the following section. The second and third objectives also signal a similar division of labour, as it relates to economic development, between the state, which plays a leading role, and the private sector, the main supporting actor. Upon initial reading, it might be tempting to interpret the proclamation objectives as the state ceding economic power as it ‘exert[s] more effort on activities requiring its attention’ by ‘encouraging the expansion of the private sector’. However, this is the danger of assuming that a neoliberal framework, rather than a developmental one, is guiding such objectives, especially when trying to infer the meaning of ‘activities’ and ‘attention’ in the second objective. In fact, what is meant by ‘activities’ and ‘attention’ is not clearly defined.

However, one way to indirectly approach the problem of what is meant by ‘activities’ and ‘attention’ is to analyse the instances in which the Ethiopian government has been reluctant or outright refused to privatize its SOEs. During my interviews, it became clear that there was a class of SOEs categorized as belonging to ‘commanding heights’ or ‘common gates’ sectors such as banking, airlines, telecommunications and logistics in which foreign and domestic investments were limited or outright banned.Footnote ³² These sectors have been jealously guarded by the Ethiopian government due to their strategic importance for economic development and national security. Take, for example, Ethio Telecom, an SOE responsible for managing and regulating the country’s telephone, internet and communication services. I was told multiple times that the government’s refusal to privatize the SOE was a matter of preventing the formation of a private sector monopoly (especially a foreign one!) that would undermine its development agenda. Also, there was a sentiment that no business would invest or build telephone lines in rural regions if it were not foreseeably profitable. For the state, the monopolization of communication networks by the private sector would compromise its position as chief economic actor and put the developmental future of Ethiopia in the hands of the private sector. Thus, on one level, what is meant by ‘activities requiring its attention’ most likely refers to sectors that if privatized might threaten the state’s economic supremacy.Footnote ³³

Arguably, since the late 1990s, the Ethiopian state has enacted its privatization programme in a way that continues to augment state power as signalled through the multiple reorganizations of its institutional bodies responsible for privatization. This first began with the establishment of the Privatization and Public Enterprises Supervising Agency (PPESA) under ‘Proclamation no. 412/2004’.Footnote ³⁴ A merger of two former governing bodies (the EPA and the Public Enterprises Supervising AuthorityFootnote ³⁵), the PPESA was tasked with both (1) managing, growing and creating new SOEs and share companies and (2) administrating the nation’s privatization programme, aligning both public and privatizing activities for the purposes of furthering the state’s developmental agenda.Footnote ³⁶ The second shift arose with the disbanding of the PPESA and the formation of the Ministry of Public Enterprises (MoPE) under ‘Proclamation no. 916/2015’,Footnote ³⁷ a charter that redefines the powers and duties of Ethiopia’s executive bodies. Unlike the PPESA, which was overseen by the Ministry of Trade and Industry, the MoPE is governed by the Council of Ministers, affording it greater institutional power to execute its programmes. Under Article 31, the MoPE is given authority not only to manage, but to create, merge, dissolve, restructure and privatize the state’s public enterprises. However, as evident in the disappearance of ‘privatization’ in the governing body’s name, a shift in the new ministry’s priorities places its emphasis on growing the operations of SOEs rather than privatizing them – further subjugating the role of the private sector to the state.

Still, what do we make of the third objective of ‘privatization’, which encourages the ‘expansion of the private sector’? In other words, under what circumstances does the Ethiopian state agree to privatize its SOEs and why? Further, how do such privatizations fit into what I have generally referred to thus far as the country’s ‘developmental agenda’? These are questions explored in the next section, which examines the case of the brewing industry in Ethiopia.

Privatization in policy: beer as an ‘engine’ of growth?

‘The private sector is the engine of growth,’ declared one loquacious Policymaker. I listened as they repeated this cliché talking point that I had heard many times before (within and outside the Ethiopian context), wondering to myself: why so much insistence on using the metaphor of the ‘engine’? Our conversation was one of several in which I spoke with politicians, policymakers and bureaucrats about the relationship between the state and the private sector in an attempt to better contextualize my own ethnographic research on breweries. During the mid-1990s, the majority of Ethiopia’s domestic breweries were state-owned: St George Brewery, Meta Abo Brewery, Harar Brewery and Bedele Brewery.Footnote ³⁸ By the early 2010s, the Ethiopian government had auctioned off the last of its state-owned breweries in a global bidding war that effectively transformed the country’s formal alcohol sector from being predominately government-controlled to fully privatized. This action was lauded by an international community, which interpreted the government’s decision to privatize as a signal that the country was finally warming up to free-market economic policies (Maasho and Blair Reference Maasho and Blair2015).Footnote ³⁹ Today, these breweries are mostly foreign-owned: subsidiaries of multinational corporations (e.g. Heineken and Diageo), partnered up with foreign investment firms (e.g. Duet Group), or a mix of foreign–local investments in newly created share companies (e.g. Habesha).

During my fieldwork, I followed how such changes in ownership impacted the everyday lives of those living under the shadow of the beer industry, observing developments such as the downsizing of the labour force in local breweries; the emergence of multimillion-birr distribution agencies; a new politics of patronage between multinational alcohol companies and local bars, restaurants, grocery shops and hotels; and the shifting symbolic and affective meanings associated with specific beer brands as they relate to the promise of modernity, among other concerns. However, rather than an isolated or chance event, or even a shift towards embracing the free market, the state’s choice to privatize its breweries was an act of developmental policymaking. In such a framing, the ‘private sector’ is not quite an ‘engine of growth’, but a source of income for development, while the state continues to determine the country’s economic agenda by controlling, coordinating and capitalizing on the private sector activities through policy. It is through such policymaking that privatization is wielded as a means of revenue generation, enacted for the purposes of accumulating capital, in accordance with the developmental objectives of the activist state.

In Ethiopia, the state sets the conditions on which industries are available for private investment. Arguably, one of the reasons why the breweries were privatized was that the country’s leaders believed that the private sector was ‘mature’ enough to assume responsibility for such economic activities. When I say ‘mature’, I mean that the governing elites perceived no possibility of an unwanted monopoly emerging,Footnote ⁴⁰ but also that a sector that was previously considered underdeveloped by the state was now seen as developed enough for the private sector to take over. During our interview, the Policymaker was quick to emphasize that the private sector’s role as an ‘engine of growth’ is ‘unreplaceable’ and that the goal of the state was not to ‘push away’, ‘replace’ or even ‘crowd out’ the private sector, but to ‘lead’ it. This was partly due to what they called the country’s many ‘market gaps’ and ‘market failures’:

The Policymaker was adamant that the ultimate goal of the state was not to replace the private sector, but eventually to see the state’s role diminish. Here emerges what appears to be a contradiction to my argument thus far. However, this call for the diminished role of the state exists in an alternative temporality, a fantasy, an anticipated and imagined future, in which Ethiopia finally reaches the status of ‘developed’ nation (whatever that might look like).Footnote ⁴¹ As for the present, the Policymaker admitted that the state is engaged in a ‘developmental endeavour’ in which it must readily identify and address these market gaps, developing sectors before yielding control to private actors. As another informant noted – and as I paraphrase – the state will first build a light-rail train then hand it over to the private sector when it is ready to build a high-speed rail line. Thus, the government’s role is to map out the direction of the country’s economic growth for the foreseeable future by giving attention to industries it seeks to kickstart, while the private sector takes up activities the state bequeaths as appropriate (such as the alcohol industry) given the country’s developmental needs.

Like other SOEs, breweries were also privatized in order to generate much-needed revenue for the country’s development projects. But this is not a straightforward process, as revealed in a slightly tense exchange between the Policymaker and myself about the ‘rents’ the government receives from its industrial parks projects:

The Policymaker became visibly irritated with my questions regarding revenue for a number of reasons. To begin with, I was being a bit brazen by asking someone in their position about the institution’s finances. But, more notably, their reaction was triggered to some degree by the use of the word ‘rent’ in my question. I was referring to ‘rent’ in a narrow sense – as the actual income received from payments made by businesses leasing out a shed space in an industrial park. However, the Policymaker heard my question about ‘rent’ as a veiled accusation of neopatrimonialism. A common charge levelled at the EPRDF government when describing the activities of its developmental state, Ethiopian leaders have rejected this categorization (de Waal Reference de Waal2015: 164, note 30). To some extent, my question may have been taken as an attack on the integrity of the sitting party and its development agenda (or even a propagandist reply deflecting my original question). But I understood their annoyance to be a reaction to my failure to appreciate (or even recognize) the particularity of the state’s policymaking approach, or what Arkebe Oqubay describes as a ‘policy independence’ – an economic agenda that takes a uniquely Ethiopian approach (the ‘activist’ state) to development despite international pressures to do otherwise (Reference Oqubay2015: 286–7; Cheru et al. Reference Cheru, Cramer and Oqubay2019).Footnote ⁴³

Specifically, the Policymaker was vexed about what they understood to be my preposterous and somewhat myopic view that the state would seek ‘rent’ from industrial sheds as a source of income. That is, I was ignoring the particularity of the state’s policymaking approach, which places its emphasis on incalculable long-term benefits of public investment by the state rather than short-term revenue garnered from private companies.Footnote ⁴⁴ Instead, they pointed out a more complicated process by which the state captures revenue from privatization and the private sector through taxation, export earnings and linkage effects – all of which is achieved through policymaking. For example, over the last decade, the activities of the Ethiopian government have been guided by two national plans: the Growth and Transformation Plan I (GTP I) and the Growth and Transformation Plan II (GTP II). Written by the National Planning Commission and administrated through the Ministry of Finance and Economic Cooperation, the GTP I (2010/11–14/15) and GTP II (2015/16–19/20) are national poverty-reduction programmes that coordinate the activities of the public and private sectors for the purposes of promoting economic growth. Under these plans, Ethiopia’s fiscal policy has focused on growing sources of domestic revenue by mobilizing external financial resources for the purposes of financing government-led investment projects (GTP I 2010: 32). These include infrastructural (roads, railways, airports, shipping lines, telephone lines, internet, hydroelectric dams) and industrial (agro-processing facilities, leather, sugar, cement, textiles and garments) development projects selected for their revenue-generating potential (GTP I 2010: 40–4). Under these frameworks, investment in infrastructural and industrial sectors is characterized not only as a means to economic growth and poverty reduction but also as necessary for ‘accelerat[ing] capital accumulation’ (GTP II 2016: 111).

Today, the alcohol industry has become a major source of tax revenue for the Ethiopian government. Under the GTP I and GTP II, the state has grown its tax revenue by better coordinating the activities of public and private industries through its privatization programme. Along with reforming the country’s tax codes and regulatory bodies, Ethiopian leaders placed a special emphasis on creating more private enterprises that they could tax (GTP II 2016: 107–8). In a country in which the majority of the national budget is comprised of foreign assistance (e.g. grants, aid, loans, foreign direct investment), the generation of new tax revenue streams is important for securing the country’s developmental goals (Goodfellow Reference Goodfellow2017). According to the World Bank, over the last several years, Ethiopia has seen a steady decline in its tax revenue as a percentage of nominal GDP from 9.38 per cent in 2013 to 7.51 per cent in 2018. However, the country’s overall tax revenue has increased substantially over the same period from Br75.98 billion to Br165.44 billion; further, a substantial portion of that revenue growth comes from increased gains on taxes on goods and services, which more than tripled from Br19.24 billion to Br68.12 billion. Thus, despite issues arising from tax evasion and other corporate tax incentives, the privatization of state-owned companies plays an important part in generating such revenue (GTP I 2010: 33). With regard to alcohol, the ‘Excise tax proclamation no. 307/2002’ taxes non-alcoholic soft drinks at 40 per cent, beer and stouts, wine and whiskies at 50 per cent, and other liquors at 100 per cent.Footnote ⁴⁵ With an increase in production capacities and alcohol consumption following the auctioning off of state assets to multinational companies, the government saw an increase of revenue from alcohol production and sales. As a representative at the Food, Beverage and Pharmaceutical Industry Development Institute declared, the Ethiopian government has an ‘untold share in the beer industry’ through taxation, but this also creates room for the government to expand its own activities in other areas needing more attention while optimizing revenue gained from beer through the private sector.

However, brewery privatizations have also created revenue challenges due to the industry’s demand for foreign currency. The Ethiopian government organizes private–public enterprises to increase state revenue through export earnings. The foreign currency gained from export economies is essential for purchasing the raw materials, technology, equipment and expertise needed to fund infrastructure projects (GTP I 2010: 61). Over the past several years, the Ethiopian government has focused its energies on investing in industries such as cut flowers, textiles, sugar and other export industries that generate this necessary income (Oqubay Reference Oqubay2015). This is especially critical as the country has been experiencing foreign currency shortages with a widening trade imbalance between export earnings and import expenditures (GTP II 2016: ix). A ‘heavy consumer’ of foreign currency, the alcohol industry requires a great deal of raw materials (e.g. malt barley, hops, sugar, labels, bottles, caps) and other technical support and equipment necessary for brewery operations to continue – creating a headache for government officials despite revenues gained from excise taxes. One way in which the state seeks to alleviate this problem is by privatizing industries that would create not only export earnings but local substitutions for foreign imports. For example, in November 2017, the Ethiopian government announced that it would be privatizing Assela Malt – a state-owned malt barley processing facility meeting only 40 per cent of the country’s domestic malt barley demand, resulting in breweries importing a significant amount from overseas (Ahmed Reference Ahmed2019). I first heard about the impending privatization while attending a municipal-organized field day event for barley farmers in the West Arsi zone. I listened as state agricultural extension workers prepared local smallholder farmers for the eventual auction, alerting the citizens of the possible entry of a multinational such as Soufflet into the region, while passing around loaves of bread and crates of the soft drinks Mirinda and Pepsi.Footnote ⁴⁶ The hope, as I was told by policymakers, was that a privatized Assela Malt might not only generate enough malt barley to meet the domestic demand but produce enough surplus to be exported to other breweries across the continent – a strategy for increasing national export earnings.

Finally, the privatization of breweries generates revenue through its ‘linkage effects’. This refers to the way in which economic activity related to brewing can catalyse the growth of other market activities within and adjacent to the beer supply chain. With linkage effects, it is the role of the state to foster structural change or ‘catch-up’ by coordinating private sector activities through industrial policy (Oqubay Reference Oqubay2015: 18). The state has paid particular attention to development backward linkages (production inputs) under the federal government’s Agricultural Development Led-Industrialization (ADLI) directive – a policy framework that emphasizes development through investment in agriculture-centred, labour-intensive manufacturing industries (Ferede and File Reference Ferede, File, Cheru, Cramer and Oqubay2020). If we return to the case of malt barley production, the Ethiopian government, in collaboration with multinationals and other non-governmental agencies, has been engaged in a project to develop the country’s malt barley supply chain from crop yield to the malting process to storage and delivery. This is not a case of twentieth-century high modernist engineering of a domestic economy (Scott Reference Scott1998). Instead, it is a somewhat experimental process in which the government directs the activities of the public and private sector around one economic activity (e.g. cut flower exports) to stimulate economic growth in related activities (e.g. packing and shipping industries needed for exports to occur). In this way, the privatization of breweries becomes a jumping off point for other kinds of economic activity the government is seeking to stimulate through public–private coordination – a style of capitalization in which the state makes gains (or even losses)Footnote ⁴⁷ for its development agenda by opening up one part of the economy with the goal of fostering the growth of another.

Concluding thoughts: medemer and privatization in perspective

In late 2019, PM Abiy Ahmed, in line with his medemer reforms, brought an end to Ethiopia’s longstanding ‘revolutionary democracy’ by inviting ethnic coalition members of EPRDF to join a single Prosperity Party (PP) – a move that led to a break with the once dominant TPLF and the escalation of an armed conflict nearly a year later. However, does this seemingly sharp break from the past with regard to politics translate into PM Abiy’s attitudes towards the economy – specifically privatization policy?

One way to address this question is to look at a 2019 pre-circulated draft from the president’s office entitled ‘A proclamation to provide for the privatization of public enterprises’, which has reframed the country’s ‘objectives of privatization’ as follows:

There are two noticeable changes from the earlier objectives outlined in the ‘Privatization of public enterprises proclamation no. 146/1998’. First, the central aim for privatization has shifted from revenue generation to being a means for improving the ‘efficiency’ of SOEs through capital investments and technical expertise. Second, the role of the state in economic development is further reinforced by outlining a privatization plan focused on strengthening the state’s position through private–public partnerships. These principles can be observed in the recent calls for Ethio Telecom bids with the government offering a 40 per cent share in the company with no rights to offer mobile finance services or the ability to build telecommunication infrastructure outside the state (Pilling Reference Pilling2020). Thus, the Ethiopian government has invited foreign investors to participate in bids, but the privatization process is enacted to the extent to which it is useful for the state’s purposes.Footnote ⁴⁹ In this way, it appears that medemer is by no means a rupture from the policies of EPRDF in its articulation of the role that the state and private sector play in development. If anything, it is a continuation of the ‘developmental state’ framework albeit with a greater emphasis on finding more ways to capitalize on the private sector through private–public partnerships.

Thus, when conceptualizing the meaning and uses of privatization, one must do so within a situated analysis, paying attention to the distinct intellectual tradition and institutional history of place in practice. In the Ethiopian case, the government’s decision to privatize SOEs does not necessarily signal the embrace of a neoliberal ideology, and a decision not to privatize is not a rejection of privatization as a policy tool altogether. Instead, privatization must be understood as a process in which local developmental policies are being made and remade through the state’s engagement with global ideas – thus taking seriously the ideological underpinnings of this African state capitalist system.