Where is Ethiopia going after the deal with the IMF?

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The agreement recently negotiated between the Government of Ethiopia and the International Monetary Fund (IMF) not only imposes austerity on the government, but also risks destroying the country鈥檚 model of economic development.

Ethiopia, Africa鈥檚 second-most populous country, has featured tremendous progress in its economic development in the past twenty years. A developmental state driving public investment while imposing tight regulations on the financial sector, a managed exchange rate, and capital controls, achieved a significant decline in hunger and malnutrition, and improvements in literacy and other relevant human development indicators.

Nonetheless, Ethiopia is facing serious macroeconomic challenges including high inflation of close to 30 percent, a current account deficit, foreign exchange shortage, and slowing growth, jointly with domestic conflicts and climate change impacts. This situation has forced the country into negotiations with creditors on its external debt, even though Ethiopia鈥檚 external debt stock compared to GDP is less compared to other low-income countries. International financial institutions see government budget deficits as the main culprit in causing inflation and an overvalued real exchange rate that causes trade deficits and balance-of-payments problems while crowding out private investment in the country. End of July 2024, the Government of Ethiopia and the International Monetary Fund (IMF) concluded an agreement on policy action to be taken for a stepwise release of a loan of USD 3.4 billion from the IMF, starting with the immediate release of USD 1 billion, as well as additional grants and loans from the World bank. The agreement is built on the following : 1) floating the exchange rate; 2) modernizing the monetary policy framework going from reserve targeting to interest rate targeting; 3) ending monetary financing of the government budget via the National Bank of Ethiopia (NBE) and exiting financial repression; 4) improving mobilization of domestic government revenues; 5) debt restructuring with external creditors; 6) strengthening the financial position of state-owned enterprises.

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C. T. Kurien and Rethinking Economics

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Born in 1931, C. T. Kurien contributed to rethinking economics through his various writings, particularly books and his vision for a practical B.A degree in Economics at Madras Christian College (MCC), an autonomous college situated in Chennai, a port city in Southern India. Besides MCC, another institution he contributed to was Madras Institute of Development Studies (MIDS), a research-only institute, also in Chennai. Kurien passed away in July 2024 aged 93.

This blog post provides a brief introduction to Kurien鈥檚 life and economics.

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Migration and Trade Explainer

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The Gender and Trade Coalition was initiated in 2018 by feminist and progressive activists to put forward feminist trade analysis and advocate for equitable trade policy.

This article is the third in a series of short, Q&A format 鈥榚xplainers鈥 unpacking key trade issues produced for the Gender and Trade Coalition by Regions Refocus. It was written by Erica Levenson (Regions Refocus) with inputs from Carol Barton (WIMN) and Catherine Tactaquin (WIMN). The authors give their thanks to Neha Misra (Solidarity Center), Irem Arf (ITUC), Liepollo Lebohang Pheko (Trade Collective), and Mariama Williams (ILE), who reviewed various versions of the article and provided helpful feedback. Read the full article and catch up on past explainers .

1.     What Does Trade Have to do With Migration?

The movement of people is a phenomenon as old as human history, and indeed predates nation-states. Migration is not something that begins and ends so much as it is a process, from the roots of the conditions which form the imperative to migrate, to the migration journey, gradual integration, and complex notions of citizenship and identity. This is precisely what makes migration flows a reflection of the social, economic, and political context in which they happen. Modern migration flows, then, reflect the stark structural inequalities that exist in the global economic order. This view correlates to the core-periphery model of migration, which sees migration as the result of acute labor shortages in capitalist centers that need to be filled through migration inflows from peripheries, drawing parallels to the Marxian concept of a reserve army of labor (Sassen-Koob 1981). As feminist scholars have argued, continuous flows of labor power from the Global South to the North are possible not simply due to the will of the Global North, but because institutions in countries of origin facilitate them (Nawyn 2010).

Rather than this core-periphery model of migration, a simplistic push-pull model guides migration provisions in international trade agreements. Informed by neoclassical economics, the push-pull model assumes that migration is the result of micro-level decision making processes that weigh the 鈥榩ros and cons鈥 of migration, envisioning a simplistic calculation of factors such as perceived wage differentials, employment conditions, and migration costs. Migration is effectively reduced to a household decision meant 鈥渢o minimize risks to family income or to overcome capital constraints鈥 (Aldaba 2000, 6).

There is a persistent assumption in trade governance that migration and trade are substitutes. Both European Union and United States policymakers have tried to substitute open markets for open immigration policies: to open their markets to exports from states in the Global South in order to reduce migration. This was the explicit goal of former US President George H.W. Bush when he signed NAFTA, and of the EU in liberalizing trade with Northern African states (Campaniello 2014). Simultaneously as the US and EU agreed to liberalize trade, they increased their border policing and passed restrictive migration policies. But these and other free trade agreements have failed to curb migration through substitution because of a key flaw in their assumption: that increasing free trade leads to increases in GDP and wages in developing countries. In fact, quite the opposite is true鈥 trade liberalization has severely hindered the economies of developing countries. Consequently, free trade agreements have actually increased migration in the long-term (Orefice 2013).

There is a clear gap in structural understandings of the relationship between trade and migration and a need to challenge the ideologies of the people governing them. It is high time to acknowledge the many unfulfilled promises which have been hung on trade liberalization and the socioeconomic catastrophes it has instead led to (Aguinaga et al. 2013; Bener铆a, Deere, and Kabeer 2012; Flynn and Kofman 2004; Hannah, Roberts, and Trommer 2021; Harrison 1997). A critical feminist analysis of the relationship between trade and migration points out the numerous connections between deeply unequal trade and migration governance regimes and illuminates urgent areas in need of improvement.

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The state in Africa is a colonial state

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Map of Africa from 1583

The default unit of analysis for many economists when dealing with national economics is the state. Yet, in economics textbooks 鈥榯he state鈥 is often assumed to be a neutral actor exogenous to economic processes. It is assumed to be the same 鈥 in essence – everywhere. This conception is based on a Eurocentric view of the state, which assumes all states are ahistorical Westphalian nation states based on Enlightenment principles. However, states are not neutral, but deeply shaped by historical processes. Analyses of 鈥榮tates鈥 in economics – country analyses, country data, evaluations of so-called 鈥榤acroeconomic fundamentals鈥 – must be rethought by taking the complexities of the state in Africa into account in their conceptualisations, analyses and policy proposals. In this piece, I unpack how the African state evolved as a colonial project and the implications of it being mischaracterized as neutral state.

A state like no other

The state in Africa has been mischaracterized as a neutral institution devoid of a problematic history which affects its present. In its simplest terms, the state is an institution of governing, i.e., a political organization whose main aim is to establish and maintain security, law and order within its geographic jurisdiction. In economics, the state is discussed and perceived as a one size-fit-all institution, one that is and must be similar in Europe, Asia, Africa, and the Americas. The African state, in particular, has been presented as if it is similar to other states, especially in Europe and the United States of America to which it must aspire.

Moreover, the African has been evaluated and judged on the basis of other perceived progressive states, especially those on the western hemisphere. That states are the same is both untrue, misleading, and ahistorical. African states are very different from other states as they are products of conquest, colonialism, genocides, epistemicides and slavery. It was created to support these processes and it still dispenses them mainly through violence. Those who colonised African countries did so not only to access markets and raw materials, but to displace epistemologies and decentre the colonized; and in the process they centered the colonising countries as the centre of knowledge production and essence of humanity. This is the origin of the superiority of liberal economics as the dominant way of understanding and doing economics in Africa.

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What is the impact of international economic law on developing countries?

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Just as at the time of Bretton Woods, international economic law is essential to discourage destructive national policies. But it is also vital to understand how law, regulations and institutions are located within a longer historical trajectory of colonialism, inequality and exploitation.

The Covid-19 pandemic and the climate crisis demonstrate how the world today is more connected economically, socially, politically and ecologically than at any other point in history.

Actions in one country have impacts, sometimes very serious ones, on the societies, environment and economies of other countries. The globalisation of economic markets and technological change affect how countries, companies and individuals conduct economic exchange, including trade in goods and services, capital investment and financial transfers.

These developments also accelerate the social and environmental costs of transnational economic activity. For example, while products, such as mobile phones, can be used in one part of the world, their production can criss-cross multiple other geographical regions. Similarly, raw materials can be extracted from one country to be manufactured into consumer products in another.

This means that the social or environmental costs of production 鈥 such as low wages, poor health and safety standards and/or air or water pollution 鈥 are not necessarily borne by the countries or communities where the final product is sold and used by consumers.

These changes underscore the critical importance of global collective action and international economic law 鈥 the set of global rules and institutions that regulate transnational economic transactions.

As discussion turns to how international economic law deals with contemporary global problems 鈥 such as managing global supply chains, settling trade disputes, overcoming sovereign debt crises and financing transitions to low-carbon economies 鈥 it is important to consider how the historical legacies of the current system can affect its capacity to do so effectively.

This will enable us to move beyond the economics discipline鈥檚 approach to international law, which is often limited to narrowly measuring the 鈥榚ffect鈥 of different laws and legal institutions on various economic indicators, such as growth, investment and poverty. Taking this approach will enable us to explore how law is itself developed in a colonial and imperial context, which may serve to reproduce and perpetuate colonial harms and exploitation.

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On recentring people鈥檚 voices to decolonise FinTech narratives

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In 2009, I was interested in studying the phenomenon of M-Pesa as a legal scholar鈥攋ust a year after its launch and intense rollout. My standpoint enabled me to see the initial regulatory paradoxes that M-Pesa presented. In 2010, I began my PhD, exploring what a regulatory framework should look like. My analysis focused on the complexities presented by the storage and transfer of customer funds within mobile money systems. Central to were themes of financial regulation, consumer rights, financial stability, conceptualising 鈥榝inancial inclusion鈥, and the meaning of 鈥榖anking the unbanked鈥. At the time, the study was significant, in understanding the contractual tensions between mobile money users and Safaricom, a non-bank entity, which provided services akin to a traditional bank鈥檚 deposit system鈥攜et did not appear to be subject to the same regulatory restraints as conventional banks. Crucially, banks and financial institutions had historically dominated much of the financial system, through practices due to colonialism. Therefore, M-Pesa caused much upheaval to established banks, but simultaneously provided hope for the excluded. Various actors extended this new hope, in the 鈥榮uccess鈥 narrative of M-Pesa. Its beneficial use as a storage and transfer system was extolled as , and the restatement of its trajectory was and continues to be modelled across the developing world. The global development and digitalisation agenda have subsumed M-Pesa鈥檚 pervasive influence, both valorising the pathways to 鈥榙evelopment鈥 and 鈥榠nnovation鈥 through FinTech with a singular aim of 鈥榝inancial inclusion.鈥

As a result, Kenya has become the site of contestation for overwhelming empirical research, interest, and knowledge production, particularly by Western scholars and institutions. A 鈥榞old rush鈥 has emerged, and the scramble for knowledge extraction has intensified across academic disciplines and across methodologies. Studies from Ghana, Senegal and Kenya dominate. The study of 鈥榙evelopment鈥 in all its iterations has gained a new development. However, much of the ways in which mobile money (M-Pesa) and FinTech are discussed and framed demonstrates a Western understanding of the everyday lives of the Kenyans who use it. Scholars, activists, and proponents often situate the premise of its use as being between two paradigms: advancing through the enhancement of global development aims, and its function as a tool that includes Kenyans in extractive cycles of financialisation. Both of these are true.

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On recentring women鈥檚 grassroots struggles to decolonise FinTech narratives

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Drawing realised by artist Pawel Kuczy艅ski for Serena Natile’s book

I came to the study of fintech as a feminist socio-legal scholar researching the gender dynamics of South-South migration. While doing fieldwork in Kenya for my PhD in 2012, I came across M-Pesa, a mobile money service used by locals as an instrument for transferring money from urban to rural areas. From the start of my research in 2011 to the completion of my PhD in 2016, ongoing studies on M-Pesa were mainly celebratory. It was acclaimed as an innovative instrument for poverty reduction, development, and gender equality and was enthusiastically supported by donors and international financial institutions such as the World Bank and the International Monetary Fund (IMF), as well as by tech entrepreneurs and corporate philanthropy. Its success story was so uncontested that I decided to change my research question to focus on the gender dynamics of digital financial inclusion, rather than on my initial interest, migration.

The key narrative of M-Pesa鈥檚 success in terms of gender equality was, and still is, that it facilitates women鈥檚 access to financial services, providing them with a variety of opportunities to improve their own livelihoods and those of their families, their communities, and ultimately their countries. In the specific case of M-Pesa, a basic-mobile-phone-enabled money transfer service is considered more accessible and available than transferring money via mainstream financial institutions such as banks, and more reliable and secure than informal finance channels such as moneylenders or the handling of cash via rotating credit and savings associations (ROSCAs). This claim is based on three assumptions: first, that women have less access to financial services than men have; second, that women would use their access to finance to support not only themselves but also their families and communities; and third, that digital financial services are better than informal financial channels because they overcome the limits of cash, ensuring traceability and security. These assumptions motivated advocacy and investment in digital financial inclusion projects and the creation of ad hoc programmes and institutions, all strongly focused on the question of how digital technology can be used to facilitate women鈥檚 access to financial services.

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Decolonising for Whom? Recentring grassroots struggles and voices in the 鈥榙ecolonising fintech鈥 narrative

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By and

Over the last few years 鈥榙ecolonisation鈥 has become an increasingly popular subject in Western academia. Broadly considered the process of recognising and undoing the intellectual and institutional structures that enabled and maintain the reproduction of imperial power, calls for decolonisation have opened uncomfortable debates about epistemological privilege, forcing us to confront biases and injustices and to revisit hidden histories and visions for the future. While these debates remain essential, particularly at a time of political authoritarianism, racism, and violence, they also highlight the contradictions in Western academia between decolonisation as a fashionable conceptual trend and its real commitment to justice.

In formerly colonised communities, generational consciousness of colonial oppression and struggles to recover land, property, wealth, and political institutions have created a lived experience of the long-term consequences of colonialism, usually conceptualised as 鈥榗oloniality鈥, that is not a concept but a reality. This experience has shaped movements and protests in the Global South, including within universities. An example is the movement in South Africa, which followed the significant decline of government subsidisation of universities with discriminatory consequences for the disadvantaged Black population without historical wealth and economic privilege. Similar protests concern the recognition of and fight against pillars of colonial power including philanthropists such as British colonialist Cecil , who accumulated wealth by appropriating land, enslaving people and extracting resources, and used that wealth to shape knowledge production.

Other significant protests involve resistance against such as Western financial infrastructures, corporations and international institutions i.e. the International Monetary Fund (IMF) and the World Bank. A  recent example is the ongoing youth-led (Gen Z) round of protests in Kenya , motivated by demands to reject the IMF-supported that, if approved, would have imposed a fresh round of government cuts to basic services and austerity measures on Kenyans. The young people protesting in the streets of Nairobi showed awareness of the colonial legacy and long-term impact of the 1980s structural adjustment policies (SAPs) on the lives of people 鈥 particularly those at the lower end of the income distribution, and demanded economic sovereignty as the only way to achieve social justice. The protests were successful in impeding the adoption of the Bill, but many young people paid with their lives, as the government deployed a deadly military response to the protests. 

The demands for decolonisation are based on ending economic and epistemological oppression, two interrelated aims, each grounded in colonialism. Reclaiming knowledge and the economic means that allow its production and dissemination has always been at the centre of decolonisation as an opportunity to remake societies, nations, and the world itself for the better. In its fight for justice, decolonisation is a grassroots struggle against colonial and neo-colonial rulers and rules, as well as against all global and local actors and structures that enable and reinforce those rules. For this reason, grassroots voices need to be at the centre of any decolonisation project.

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