Corruption in Ethiopia: Causes, Manifestations, and Ramifications
Introduction
Corruption is considered the major barrier to development. Recent empirical studies have identified a strong, positive linkage between higher perceived corruption and lower economic growth (Mauro, 1995). African countries have long been hindered by corruption and Ethiopia is not an exception.
The objective of this paper is to discuss the causes, manifestations, and ramifications of corruption in Ethiopia in order to better understand the country’s trajectory. Relevant assessment will be mainly based on the land sector of Ethiopia. The goal is to provide a better grasp on the topic, compared to scanning over the entire country in a limited length.
The next section will focus on the causes and forms of corruption in Ethiopia from an angle of property rights. The third section will discuss the consequences of corruption and possible remedies.
Causes and Manifestations of Corruption
Property rights are crucial in explaining corruption. They are the essential institution to mitigate economic scarcity (Demsetz, 2008). On the other hand, corruption is the informal institution for corrupting individuals to obtain property and defy relative legally defined balance under scarcity. (Williamson, 1979). Rose-Ackermann pointed out that corruption is always associated with the interaction between public and private agents (Rose-Ackermann, 1997). The significance of public involvement is considerably contributed by the close involvement of property rights in corruption since they usually require government definition and enforcement. The private parties will then react to the current situation. When enforcement is not sufficiently compelling, some may find the opportunity cost of corruptive activities to be less than their associated benefit (Williamson, 1979). Also, public definition or enforcement can be in poor shape, leading to unavoidable corruption efforts to obtain necessary rights and protection.
Land is one of the most important properties for all economies, especially to developing ones such as Ethiopia. However, three kinds of corruption in the land sector are prevailing. First of all, the elite class and senior officials are capturing land assets in a disproportionate manner (Plummer, 2012). A highlighted instance is a broad corruption in 2005, when post-election power void in Addis Ababa resulted in substantial land allocation according to political allegiance (Plummer, 2012). Secondly, implementation of land policies and laws is subject to corruption as well. For example, informal fees are, to a great extent, institutionalized as FEACC, an Ethiopian anti-corruption commission, has reported that it is “nearly impossible to get a plot of land without bribing city administration officials” in Addis Ababa (Plummer 2012). Other than that, officials are much inclined to take advantage of bribery or nepotism to ignore roughly all well-defined limitations and obligations. This has seriously compromised the enforcement of lease contracts, land use plans, construction codes, etc. in urban areas (Plummer 2012). Lastly, forged land documents are rampant. Ethiopian land record system loses its impartiality and ironically became the robust support for fraud and bribery (Plummer 2012).
Matching theoretical rationale and practical observations, we do find a failing distribution system of property rights in Ethiopia, either due to inherent imbalance or following distortion, is crucial to emergence and spread of corruption in the country. Minimum attempt has been made to formalize the extralegal property system in Ethiopia. Though this is not to assert that informal structure is deemed to be ineffective, informal land governance in Ethiopia indeed fails to correct existing ill-distribution and resolve inefficient settlement of property rights. The flawed system causes a persistent divergence between utilization and ownership of properties. Upper classes, who claim the properties, can rapidly accumulate capital while the lower classes are struggling to sustain themselves.
Over time, lasting disparity leads to concentration of resources and power in a few hands. This enormous capacity provides the possibilities and incentives for elites to “legalize” unlawful trespass to property rights of others through public entities or tools, including state corporation, expropriation, and so on (Plummer 2012). Corruption is playing a key role for such private control over public properties to form and stay. Allegiance-based plunder in 2005 is the best example of its kind. On the other hand, the majority in Ethiopia have no choice but to expense extra costs, through corruption, in exchange for the minute amount of property rights and protection that are supposed to be fully available for free. Clearly, this type of informal, abnormal fees has been so prevailing in Ethiopia that they have almost become the formal/normal.
Ramifications and Remedies of Corruption
All economic activities are constituted by transfers of property rights. The exchanging mechanism can only function as desired when property rights are defined with unambiguous, publicly accepted rules and enforced by an irrefutable, impartial government. The problem with corruption is that it imposes a threat to the foundation for these basic mechanisms as mutual trust, and fair settlement is jeopardized (Mance and Pecaric, 2016). Corruption, as an informal institution, induces “social cost” in the form of “moral hazard” that is incommensurate with the formal structure, impairing mutual trust and expectations about transactions (Mance and Pecaric, 2016). The social cost incurred by corruption will have to be internalized by the system as a whole (Mance and Pecaric, 2016). Among all, people who did not participate in the particular corruptive activity will need to absorb the majority of its negative impact without being compensated. Whereas participants find foreseeable short-term benefit greater than cost (Mance and Pecaric, 2016).
In the success of Ethiopia’s horticulture industry, tilted land policies, which specifically protects the industry from land sector corruption, are playing a critical role. Early entrants to the industry find themselves particularly restrained by difficulties in access to land (Gelb, 2020). Most farmlands are under state control, which requires unfavorable informal fees for production. These fees greatly reduced the incentives of private entrepreneurs to proceed in the business, making market exploration too costly to bear. Producers can only turn to small farmlands prior to 2003 for land resources (Gelb, 2020). Later, the government decides to make lands increasingly available to the horticulture industry (Gelb, 2020). Essentially, it allows the horticulture industry to bypass the widespread and almost unavoidable corruption in Ethiopian land sector, providing room for cost-effectiveness and economies of scale. If corruption had not been set aside for the industry, we would have not witnessed its growth and its tremendous contribution to the country.
Though we cannot solely rely on policy preference for resolving country-wide corruption, successful stories, like the one from the horticulture industry, provide a peek out of the current restrictions, into the astonishing potential of a corruption-free Ethiopia. Thus, the social environment will be tougher against corruption and more determined in relevant efforts. Nonetheless, policy preference can also be the source of corruption as the government may direct interest to private groups through policy tools. A very common example, not only for Ethiopia but for many other countries, is the observed monopoly in the telecommunication industry. To reduce corruption also means to limit government discretionary allocation of social resources, thus preventing the creation of rent-seeking (Mance and Pecaric, 2016).
Formalization of property rights will be helpful to Ethiopia if it is able to correct ill-distribution of property rights in the existing extralegal system. Aggressive, inconsistent, careless reforms may give rise to chaos but planned, long-term, meticulous effort will drastically improve the current system. Moreover, sufficient enforcement of property rights will essentially reduce the citizens' demand for corruption (Cancio, 2007). Government needs to ensure genuine protection against asset predation if they sincerely wish to decrease corruption (Kemal, 2007).
Conclusion
Corruption is a symptom, not a disease. In Ethiopia, the virus is an ill-distribution of property rights and systematic deficiency in protection. For the land sector, corruption presents itself in forms of elite capture, policy implementation failure, and deteriorated attitude towards bribery.
Corruption will cripple the emergence of private entrepreneurship, hamstring social innovation and economic growth. In an effort to kill corruption, the key is to redistribute property rights according to practical considerations. Finally, earnest attention should be paid to protection of property rights.
Works Cited
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