Overview Of Corruption And Anti-Corruption In Ethiopia - Knowledge Hub

The Worldwide Governance Indicators (WGI) byimprovements in judicial effectiveness andthe World Bank (2018c) accord the following scoresmonetary freedom offsetting declines in businessin percentilerank1to Ethiopia:freedom, labour freedom and trade freedom.Ethiopia is ranked 27 of 47 countries in the sub-IndicatorControl ofcorruption20162017Saharan Africa region, and its overall score is belowpercentilepercentilethe regional and world averages (HeritagerankrankFoundation 2018).39.933.2Bertelsmann Stiftung's Transformation Index (BTI)2018 ranks the country 113 out of 129 countries. Itadds that corruption poses a serious errorismRegulatoryqualityRule of lawVoice andaccountabilitypopulation and its economy. The report furtherstates that there is a problem of capacity to controlPolitical stabilityand absence ofmultifaceted problem to the overall wellbeing of thecorruption at all levels, negligible political will, anddiminished legal commitments to hold accountablepowerful actors implicated in corruption and thosewho facilitated massive capital flight. According to11.513.9Global Financial Intelligence, Ethiopia lost US 26billion to illicit financial outflows between 200433.733.79.49.9and 2013 (Bertelsmann Stiftung 2018).Freedom House, in its 2018 Freedom in the Worldreport, on the other hand, accords the status of“Not Free” to Ethiopia, with an aggregate score ofThe 2017 TRACE Bribery Risk Matrix places12/100. According to the 2018 Ibrahim Index ofEthiopia in the “high” risk category, ranking it 178African Governance (IIAG), Ethiopia ranks 35 outout of 200 surveyed countries. Similarly, Ethiopia'sof 54 with a score of 46.5 out of 100 in OverallDoing Business rank for 2018 is 161/190 with aGovernance.Distance to Frontier (DTF)2 score of 47.77 (TheWorld Bank 2018a).Forms of corruptionEthiopia’s economic freedom score is 52.8, makingPolitical corruptionits economy the 142 out of the 170 surveyed in the2018 Index of Economic Freedom by the HeritageThe widespread propagation of political corruptionFoundation. Its overall score has increased by 0.1in Ethiopia has significantly aborted the country’spoint, with an increase in investment freedomdemocratisation process, eroded the rule of law, led(which nonetheless remains poor), andto the politicisation of the country’s civil servicePercentile rank indicates the country's rank among all countriescovered by the aggregate indicator, with 0 corresponding to lowestrank, and 100 to highest rank (World Bank 2018c).2 The distance to frontier (DTF) measure shows the distance of eacheconomy to the “frontier”, which represents the best performanceobserved on each of the indicators across all economies in theDoing Business sample since 2005. An economy’s distance tofrontier is reflected on a scale from 0 to 100, where 0 represents thelowest performance and 100 represents the frontier. The ease ofdoing business ranking ranges from 1 to 190 (World Bank 2018a).1U4 Anti-Corruption HelpdeskOverview of corruption and anti-corruption in Ethiopia5

system, as well as the monopolisation of thePetty and bureaucratic corruptioncountry’s economy (Kebede 2013).Ethiopia’s bureaucracy is also considered to beParliament and the judiciary are not independentinstitutions that can use their constitutionalauthority to hold the executive accountable. Theexecutive uses various ways of controlling orcoercing parliamentarians and the judiciary toensure the harmonisation of judicial and legislativedecisions with the government’s anti-democraticand repressive policies (Bertelsmann Stiftung2018).All of the 547 seats of the parliament are controlledby the EPRDF, that abides by unforgiving partydiscipline of democratic centralism (Kebede 2013;Hassan 2015; Freedom House 2018). The EPRDF“leadership discuss and decide beforehand whatthey want to be decided by parliament”. In thecurrent Ethiopian political culture, the party andthe executives are fused, creating conditions ofstate capture (Kebede 2013; Hassan 2015). Theregime has been accused of being kleptocratic,while reportedly being involved in no-bid contracts,complex, creating opportunities for officials andstaff to attempt to circumvent rules, and thereforebe more open to giving and receiving bribes tosecure contracts (Wheatland 2015).The power, tax, investment and transport sectorshave been identified as having the highest level ofcorruption, according to a study under the FederalEthics & Anti-Corruption Commission (FEACC)(Mulatu 2014).Petty corruption seems to exist in almost everyoffice. Officials from the traffic police, court,customs and trade licences office, land acquisitiondepartment, licensing, and tax collection, as well asgovernment procurement, have faced allegations ofbribery (Mulatu 2014).Sectors affected by corruptionEnergy sectorembezzling from donor aid and demanding bribesEthiopia enjoys a vast amount of renewable and(Hassan 2015). Opponents of the EPRDF find itnon-renewable energy resources, ranging fromnearly impossible to operate inside Ethiopia.hydro- and solar-power to biomass and natural gasAuthorities frequently invoke anti-terrorism(Wheatland 2015).legislation against dissenters (Freedom House2018).It is estimated that between 2005 and 2015,US 3.4 billion was required for Ethiopia to meet itsIn 2017, as part of an anti-graft drive (partly as aelectricity development capacity. Such high levelsresponse to 2015-6 unrest), dozens of governmentof investment in this sector create a number ofofficials, including the state minister for finance,opportunities for bribery and corruption, as thewere arrested on suspicion of corruption. Officialshuge investment sums can allow officials to skimfrom the Ministry of Finance and Economicmoney from budgets by overcharging for goods andCooperation, the capital’s housing developmentservices (Wheatland 2015).agency, the state-run Ethiopian Sugar Corporationand the Ethiopian Roads Authority were alsoarrested, on charges including embezzlement andthe siphoning off of billions of Birrs (Maasho 2017).It has been suggested that the Ethiopiangovernment has intentionally violated procurementand investment guidelines to maintain investmentin its energy sector. For example, the governmentdirectly awarded construction contracts to theU4 Anti-Corruption HelpdeskOverview of corruption and anti-corruption in Ethiopia6

Italian company Salini without competitive biddingPoliceprocedures (Wheatland 2015).Local police are often known to act on their own,JudiciaryWhile the judiciary is formally an independentbranch of the government, mechanisms that allowfor checks and balances in Ethiopia are weak,courts are overburdened, and the executive branchexercises great influence over the judiciary. It isfairly common for the government to interfere inthe application of the law and even in theenforcement of court orders (Martini 2015;Business Anti-Corruption Portal 2017; USDepartment of State 2017a; Bertelsmann Stiftung2018).In practice, political influence and not meritdetermines the appointment and removal of judges(US Department of State 2017a). There have beencases where judges who refused to act inaccordance with the government were disciplinedor dismissed, in fact, since 2005, several judgeshave fled the country, claiming governmentinterference (Martini 2015).Moreover, in the name of “developmentaldemocracy”, the government has transformed itscourts into another security apparatus whose job isnot to question the government, but merely torubber-stamp decisions made by the governmentand its security apparatus (Bertelsmann Stiftung2018).Corruption within the judiciary at the local level issevere, but rarely reported. The judiciary fails toprevent violence in prisons. Civil rights andindividual liberties are systematically violatedbecause the judiciary and other national humanrights institutions are controlled by the ruling party(Bertelsmann Stiftung 2018).and security forces, by and large, have impunityagainst their transgressions throughout the country(US Department of State 2017a).During the recent state of emergency (SOE), anexecutive body called the Command Post managedsecurity policy, holding broad powers, includingthe ability to detain individuals, restrict speech andrestrict movement. Individuals, including children,arrested by security forces during the SOEtemporarily were held incommunicado. Policeinvestigators used physical and psychological abuseto extract confessions (US Department of State2017a).Corruption within Ethiopia’s police is perceived tobe rampant, and the solicitation of bribes by policeofficers remains a widespread problem. Companiesare also known to pay the police for their security(Business Anti-Corruption Portal 2017).Land administrationThere is a high risk of corruption in Ethiopia’s landadministration with petty corruption, landgrabbing, corruption in the auctioning process, andstate capture being common in the sector (Lindner2014; Business Anti-Corruption Portal 2017). Thecountry’s legal and institutional structure, withregard to land administration, has been criticisedfor being unnecessarily complicated (Lindner2014).There are a number of elements in Ethiopia’scurrent land administration system that can createpotential entry points for corrupt activities tooccur. These include: lack of clear policies, weakinstitutions, lack of transparency, limited publicparticipation and capacity challenges (Lindner2014).U4 Anti-Corruption HelpdeskOverview of corruption and anti-corruption in Ethiopia7

Social Services (Health and Education)Corruption in the education sector includes fraudThe 2012 World Bank report on corruption in thein examinations, falsification of qualification,health sector found that the sector does not sufferfrom pervasive corruption compared to othersectors or countries. However, the existence ofcorruption in the health sector cannot be denied.Corruption and fraud in the health care delivery isone of the barriers to implementing policies ofhealth care financing (Ethiopian Public Healthteacher absenteeism, and favouritism towardsmembers of the ruling party both in teacherrecruitment and in student selection andassessment (FEACC, 2012). In the past years, therehave been huge investments in the education sectorincreasing corruption risks in procurement,management and delivery of stock (buildingInstitute, 2014).equipment, and so on) (FEACC, 2012).In the second corruption perception survey done inare perceived as relatively honest institutions, with2012, household respondents were asked to assess57% of the respondents in the 2012 perceptionthe quality public health institutions that they hadsurvey concurring. Out of these respondents,used and indicate the general trend in healthhowever, only two (2) out of the 22 publicservices. 62% said overall quality had improvedinstitutions on the list were considered as honestduring the previous five years, while 21% felt theby more than 50% of the respondents (FEACC,quality had become worse and 17% said there had2012). Only 2.7 % of respondents said they hadbeen no noticeable change. The perception reportbeen asked to pay bribes in this sector. Within theadded that “the fact that almost two-fifths reportedbusiness community, the public education sector iseither a static situation or deterioration in theconsidered as honest or very honest by 46.6% ofquality of services should be cause for concern torespondents (FEACC, 2012).health officials” (Federal Ethics and AntiCorruption Commission, 2012). 6.2% of therespondents answered that they had been asked toNonetheless, education establishments in EthiopiaLegal and institutional anticorruption frameworkpay gratification in Woreda health offices/bureaus.39.6% and 39.1% respondents of household andbusiness respondents considered public healthinstitutions as honest or very honest respectively.Another area in the health sector where risks wereidentified was in the referral of patients from publicto private health facilities. Referral of patients frompublic to private health institutions is open toabuse as “medical practitioners referringpatients to private clinics and hospitals withwhich they are associated either to generatemore business for those facilities or toaugment their own remuneration when theyprovide private treatment to those referredpatients” (FEACC, 2012).U4 Anti-Corruption HelpdeskOverview of corruption and anti-corruption in EthiopiaInternational conventionsEthiopia signed the United Nation Conventionagainst Corruption in 2003 and ratified it in 2007(UNODC 2018).The country signed the African Union Conventionon Preventing and Combating Corruption in 2004and ratified it in 2007 by the (African Union 2018).Domestic legal frameworkThe legislative framework to prevent and sanctioncorruption in Ethiopia is strong on paper; however,the government does not implement these lawseffectively, and the judiciary is known to be8

politically influenced (Business Anti-Corruptionof 2010 requires that all “appointees, electedPortal 2017).persons and public servants of the FederalGovernment and the Addis Ababa and Dire DawaSince May 2016, important powers of the anti-city administrations” must declare and registercorruption commission – corruption crimesassets owned by them and their family members.investigation and prosecution – have been grantedThe Federal Ethics and Anti-Corruptionto the Federal Attorney General. Under the newCommission (FEACC) is responsible for registeringlaw, all the rights and duties given to the Federalthe declaration as well as for verifying whether theEthics and Anti-Corruption Commission related tocontent is accurate. Implementation of the law is,investigation and prosecution are transferred to thehowever, assessed as relatively slow, and only aFederal Attorney General as per article 22 (2) of thesmall percentage of officials had their assetsproclamation. Therefore, the current legal regimeregistered according to the timeline prescribed byof anti-corruption includes, Proclamations, No.the law. Moreover, the extent to which the FEACC433/2005, 434/2005, the amendments to thesehas the necessary capacity and resources toproclamations No. 883/2015, 884/2015 and theeffectively verify the content of the registeredFederal Attorney General Establishmentdeclarations remains unclear (Martini 2015).Proclamation No. 943/2016.3 The fact that theAttorney General has taken over the investigationTax rules in Ethiopia are very complex and oftenand prosecution powers of the FEACC makes a bigcontradictory, making it difficult for citizens andportion of the existing anti-corruption lawscompanies to understand their obligations andinapplicable. These recent changes thereforeallowing officials to apply the rules unequally.necessitate the revision of the commission’s powersMoreover, there is also the perception that tax andand obligations.custom rules in Ethiopia are not always appliedequally, with well-connected businesses andThe Revised Federal Ethics and Anti-corruptionindividuals benefiting from tax breaks or otherCommission Establishment Proclamation of 2015incentives (Martini 2015).and the Revised Anti-Corruption Law of 2015criminalise attempted corruption and extortion,Despite some legislative efforts (Article 444 of thewhile the Criminal Code of 2004 criminalises activeCriminal Code, and the Proclamation on theand passive bribery, money laundering and bribingProtection of Witnesses and Whistleblowers ofa foreign official. Private sector corruption,Criminal Offences) to protect employees andincluding bribery and embezzlement, iscitizens who report crime and corruption, Ethiopiacriminalised, although there are no known cases oflacks a comprehensive system to shieldprosecution in the private sector. Facilitationwhistleblowers from retaliation and prosecution.payments are also illegal (Business Anti-CorruptionOnly a few whistleblower cases have been reportedPortal 2017).publicly in recent years (PPLAAF 2018).Asset disclosure is another anti-corruptionEthiopia asserts a constitutional guarantee of themeasure adopted by the government. Theright to information (RTI) in the public interest inDisclosure and Registration of Assets ProclamationArticle 29 of the constitution and a Freedom of theHowever, the Regional Ethics Anti-Corruptioncommissions retain these powers.3U4 Anti-Corruption HelpdeskOverview of corruption and anti-corruption in Ethiopia9

Mass Media and Access to Informationforeign exchange; textiles, electronics andProclamation 2012. The reality of RTI, however, ispharmaceuticals inbound) and the profit madedifferent. Ministerial guidelines to actualise thefrom providing illicit financial services. It is notaccess to information law are yet to be published,entirely clear how these proceeds are launderedand the enforcement of national laws, such as the(ESAAMLG 2015).Mass Media and Freedom of InformationProclamation adopted in 2008, undermine RTIInstitutional frameworkguarantees. The mass media law allows for theprosecution of any member of the media fordefamation against the state, also the governmentcriminalises dissent through the use of broaddefinitions for “terrorist acts”, ambiguous offencessuch as “moral support and encouraging of”“terrorist acts” (Jalipa 2014; Martini 2015).Federal Ethics and Anti-Corruption Commission(FEACC)FEACC was established in 2001 to provide aninstitutional mechanism to counter corruption andenforce anti-corruption laws (FEACC 2018). Itaccepts reports and information from the public,Although Ethiopia’s anti-money laundering (AML)but it lacks a formal role in protectinglegal framework has improved in recent years,whistleblowers, and its role in investigatingbeing largely in accordance with international gooddisclosures and retaliation complaints is unclearpractice and standards, it is on the Financial Action(PPLAAF 2018).Task Force (FATF) list of countries that have beenidentified as having strategic AML deficiencies(ESAAMLG 2015; Martini 2015).Under article 3(2) of the 2005 Revised FEACCestablishment proclamation, the commission wasdirectly accountable to the Prime Minister, but thisRecent studies show that Ethiopia is among the tophas now changed and the commission accountable10 African countries by cumulative illicit financialto the Parliament. This has been regarded as aflows (IFFs) related to trade mispricing. Thispositive development that will give it moreamount may be much higher if funds fromindependence from the executive.corruption and other criminal activities areconsidered (Martini 2015).The 2005 revised proclamation also establishesEthical Liaison Units at all levels of Public OfficesAccording to the Report of the High Level Panel onand Public Enterprises. Their duty is to coordinateIllicit Financial Flows from Africa, Ethiopia,ethical issues and advise the heads of thefeatures in the top 10 African countries byconcerned bodies. The Liaison’s task is to ensurecumulative illicit financial flows from 1970 to 2008that employment, promotion, and transfer are(AUC/ECA n.d.).corruption free and transparent, and to tackle oneof the most dominant forms of corruption -The main sources of illicit proceeds-generatingembezzlement in public institutions. In a recentactivity in Ethiopia are corruption (specificallydevelopment, the government is drafting a new billinvolving administration of land, procurement, tax,to mandate liaison offices at governmenttelecommunications and pharmaceuticals), taxinstitutions to directly report to the FEACC.fraud/evasion, human trafficking and migrantsmuggling, arms trafficking and smuggling ofThe FEACC has prosecuted a number ofcontraband (coffee, “khat” and livestock outbound;individuals, including high-ranking governmentU4 Anti-Corruption HelpdeskOverview of corruption and anti-corruption in Ethiopia10

officials. In 2013/14, the FEACC investigated 3,918and duties given to the Federal Ethics and Anti-cases, prosecuted 2592 of them and achieved 1265Corruption Commission related to investigationconvictions (UNODC 2015). However, its integrityand prosecution are transferred to the Federalas an institution of truth-seeking and justice hasAttorney General as per article 22

U4 Anti-Corruption Helpdesk Overview of corruption and anti-corruption in Ethiopia 3 at the desired level, increasing burden of foreign debt, increasing disparity between domestic saving and investment, and corruption, among others. These have, in turn, affected the lives of the population (Hailu 2018).