Editor’s note: WardheerNews is pleased to re-publish this in depth interview conducted on November 20, 2014, with Dr. Ali Issa Abdi, a presidential aspirant of Puntland’s 2019 election. The interview mainly focused on the Horn of Arica Economic and political affairs. Dr. Abdi’s announcement for the presidential election in Puntland has being creating a buzz and is seen as a history making candidate and definitely a game changer. His arrival in Garowe in recent days had made the political landscape that much more unpredictable.
The Horn of Africa region is known for its civil war, terrorism and famine, it’s also home to some of the fastest growing economies in the world with large untapped natural resources. However, there is widespread unemployment, particularly among the youth, pervasive corruption and lack of transparency that are posing huge challenges, hindering economic development of many of the countries in the region. With so much interest from private and public investors from the West as well as China, India and Turkey, one must look into the monitory and fiscal policies (financial market stability, employment, inflation, interest, taxation and economic growth) of those countries in the region. Thus, it’s with great honor that WardheerNews.com has had a rare opportunity to interview Dr. Ali Issa, the managing director of The Horn Economic and Social Policy Institute (HESPI). Abdelkarim A. Hassan conducted the interview.
_____________
WardheerNews (WDN): Dr. Ali Welcome to WDN, we are delighted to welcome you, before we delve into the interview, could you please share with us a brief background about yourself?
Dr. Ali: I am one of the privileged Somalis who were offered fellowships granted to the Somali state to study at top universities in the United States. Through this opportunity I completed a first degree in economics, an MBA in international Finance, and a PhD in economics at Washington University, St. Louis. I spent several years working with Citi Bank NY, the National Bank of Somalia and teaching at Universities in the United State in the 1970s. I worked at the International Monetary Fund for two decades plus assisting member countries of that institution in sound macroeconomic policy formulation and management. I left the Fund to be a founding member and the Managing Director of the Horn Economic and Social Policy Institute (HESPI).
WDN: What was the idea behind HESPI’s establishment, who are the founders, what countries the institute serves and was there a particular reason for HESPI to be based in Addis Ababa?
Dr. Ali: HESPI is an independent, regional research institute and not for profit think-tank founded by half a dozen like-minded Somali Professionals, who worked for many years with International Development Institutions and United Nations agencies with a view to contribute to the stability of, and economic and social development of the countries of the Horn of Africa (or the member countries of IGAD) in particular and African countries in general. The current Associates of the Institute include professionals from practically all the members of the IGAD.
The Board of Directors of the Institute selected Addis Ababa as the regional head office of the Institute on account of the attraction of co-locating with the United Nations Economic Commission for Africa (UNECA), The African Union (AU), and numerous other regional or continental organizations. Other possible attractions include access to all the countries served by the Institute and the fact that the Ethiopian authorities welcomed the Institute as a regional organization. HESPI had presence and a country office in Nairobi for many years and is in the process of establishing new country offices in Djibouti, Juba and Mogadishu in the near term.
WDN: There are many economists who overwhelmingly believe aid to Africa has made the poor poorer, and slowed or stunted economic growth. What is your take on this issue since Africa receives more than $50 Billion in aid and it’s unfortunately sometimes referred to as the dumping ground of Aid agencies?
Dr. Ali: There is an element of truth to advocate that Aid alone does not develop a country, and that a number of other prerequisites have to be met to attain sustainable development; key among these are quality leaders that ensure stability and are nationally oriented, and effective institutions to formulate and implement sound economic and social policies. The endemic misuse of national resources and improper use of Foreign Aid has impoverished many African societies; and it will be unfortunate to blame Foreign Aid as the cause instead of holding accountable those that misuse it for personal gain instead of nation building. Africa losses through ill-gotten capital flight annually more than it receives in aid, and would not require foreign assistance if the continent utilizes its own resources for the general benefit of the continental community.
WDN: The Horn of Africa region is devastated by prolonged civil unrest and economic stagnation. How would economic development be feasible in war-torn countries such as Somalia, South Sudan and Eritrea?
Dr. Ali: Your premise of the pre-eminence of peace and security for a nation to develop is conventional wisdom and unassailable—the first order for countries in conflict is to attain security and return to rule of law for recovery to be initiated. An interesting question is how societies attain stability, security and development. There are many post-conflict countries that have made miraculous recovery and sustainable growth from post WW II Germany, Japan and S. Korea, and, within the sub-region, post-genocide Rwanda and Ethiopia since the early 1990s. Countries that achieved successful recovery from wars and traumas had in common most of the following: “capable and development oriented leadership, strong and effective institutions, sound policies implementation, and skilled and committed workforce”.
WDN: Ethiopia and Kenya are among the fastest growing economies in Africa and yet follow two different economic models; Kenya follows an open market economy while Ethiopia employs a command economy. Which model in your experience best suits for developing countries such as those in Africa for sustainable development and why?
Dr. Ali: There is no ONE model or prescription that alone can ensure or guarantee fast and sustainable economic growth for all countries. Open-market economies with effective regulations, oversight and sound macro policies by the state authorities have attained admirable growth and development; while state-managed economies like China and many state-directed economies of South East Asian countries have flourished in recent decades. Most of the growth achieved even in China and of course in Ethiopia has been as a result of allowing space for the private sector to operate—neither economy could have achieved the recent decades high growth without private sector participation and of course a strong state that was development focused.
Kenya on the other hand could have grown even faster than realized had it not been for the weaknesses associated with the state governance that has not been accountable and transparent.
WDN: The region served by HESPI is mired in growing unemployment (40-50%). How can this unemployment issues be curbed?
Dr. Ali: There is an emerging consensus among policy makers that unemployment particularly among the youth of Africa is a ticking time bomb and needs urgent attention and solutions. The first order after peace stability and stability is to target high inclusive economic growth that would be broad based. Growth in “one city states” as has been prevalent in the Continent will be a source of conflict and contention. Attention to agricultural reforms and labor intensive industrialization has been the principal sources of employment in countries outside Africa and should be replicated when feasible. Appropriate skill development to match available demand for labor; and targeted public investment projects when resources permit are other avenues to relieve the crisis in inadequate employment particularly for youth.
WDN: Somalia is often referred to as a failed state with no strong federal institutions that are critical to the development and economic growth of the country, such as a functioning central bank and financial institution. Yet, the Somali shilling is used throughout the country. In your opinion, by having a currency with no central bank backing, how the Somali shilling gained the trust of the Somali merchants and consumers and how this confidence is sustained?
Dr. Ali: Somalia indeed lacks functional monetary and other key public policy making institutions. We at HESPI have been instrumental in assisting with upgrading of the legal base –Central Bank of Somalia Act and financial Institutions Act in 2012, which were enacted by Parliament and are currently being operationalized. The Country is for all practical purposes dollarized and many other regional currencies co-circulate with what is left of the Somali shilling in circulation. The stability in the exchange rate of the shilling of late reflects the limited currency in circulation as there has been no new printing for many years. Once stability is realized in the country a first order of business should be a currency reform initiative that will replace the entire Somali shilling denomination in existence and introduce a NEW shilling with redenominated value that will permit its use as a store of value and for transaction purposes.
WDN: The United nations Monitoring Group for Somalia and Eritrea (SEMG) has written numerous reports alleging widespread corruption in Somalia by the current administration headed by President Hassan. Since HESPI is involved in the economic development of the region, what is your take on these reports on corruption allegations?
Dr. Ali: The UN Monitoring Group reports for Somalia, according to many, are deficient and lack analytical credibility and in that case the authors should be asked to substantiate all their allegations. There is nevertheless a broad perception that recent Governments in Somalia including the current administration have not been accountable or transparent in the use of Public resources– the Country is rated by Transparency International as the most corrupt in the world almost every year.
HESPI has been forefront in efforts to rebuild financial integrity in the country at the Federal level and the states. We have been responsible for reintroducing national budgets since 2008 at the Federal level and have trained many of the staff of the Ministry of Finance, the Audit department and other agencies of Government. These efforts not withstanding Somalia has a long way to go to manage public resources in an accountable manner and for the common good of the entire community and to desist from the endemic lack of ethics that has led to comingling of state and personal assets at every government level in the country.
WDN: Hawala money transfer continues to be popular in Somalia replacing the lacking banking systems, due to its speed, cost, and convenience; however, these Hawala institutions are not subjected to taxation that would support the improvement and the rebuilding of the infrastructure in Somalia. How do you see the role of these Hawala financial intuitions in supporting development programs?
Dr. Ali: The Hawalas provide an essential service for Somalia and many other countries in the world through the quick and safe transmission of remittances at an affordable cost. The telecommunication companies and airlines and other private firms do likewise in their respective domains. None of these entities have contributed their fair share and there is no functional Inland tax system in the country as yet. Unless and until companies making profits contribute to the national treasury in an accountable and transparent manner (Not through ad hoc transfers to individuals), it will be extremely difficult to rebuild a capable national state in the country.
WDN: How would you characterize the monetary policy of the countries in the region your institute serves (Kenya, Ethiopia, Uganda, Sudan, South Sudan Eritrea, Djibouti and Somalia) particularly in the areas of employment, economic growth, financial stability and inflation?
Dr. Ali: Response is varied and requires pages length response—HESPI puts out Annually review of macro policies in the IGAD region and will be happy to share the latest for your summary. See the link – Annual Report on the State of IGAD Economies.
WDN: Most of the fastest growing economies in the world are currently based in Africa, do you think Africa in general and the Horn/East Africa in particular would produce economies such as those commonly referred to as “The Asian Tigers” like South Korea which were under developed and poor only in the 1950s than some countries in Sub-Saharan Africa but are flourishing and are great examples of economically stable countitres today. Could you point to any of these afroementioned countries such as Kenya and Ethiopia ever cactching up to such level of economic success?
Dr. Ali: A majority of the fastest growing economies in the last decade have been in Africa, including Ethiopia and Kenya in this sub region. The transformation of these countries’ economies is expected to permit these and other African countries to attain middle income status and classification if the high growth is sustained through another decade and more. As a demonstrated by Botswana and Mauritius in the recent past, African countries are indeed capable to attain sustained growth and transformation
Read more: An Interview with the Managing Director of HESPI Dr. Ali Issa Abdi
WardheerNews
We welcome the submission of all articles for possible publication on WardheerNews.com. WardheerNews will only consider articles sent exclusively. Please email your article today . Opinions expressed in this article are those of the author and do not necessarily reflect the views of WardheerNews.
WardheerNew’s tolerance platform is engaging with diversity of opinion, political ideology and self-expression. Tolerance is a necessary ingredient for creativity and civility.Tolerance fuels tenacity and audacity.
WardheerNews waxay tixgelin gaara siinaysaa maqaaladaha sida gaarka ah loogu soo diro ee aan lagu daabicin goobo kale. Maqaalkani wuxuu ka turjumayaa aragtida Qoraaga loomana fasiran karo tan WardheerNews.
Copyright © 2024 WardheerNews, All rights reserved
