Issue No. 158

What corporate scandals can teach us 
 

Since the signing of the Cessation of Hostilities Agreement, international stakeholders have followed one another around Ethiopia like fairy godmothers hovering above the cradle of a newborn child. Each one competes with promises and gifts. The United States, China, France, Italy, and the World Bank have already offered reconstruction aid or budgetary support to prevent Ethiopia, a regional and even continental economic pillar, from collapsing. This is positive but, at the same time, it is important to be vigilant about the flow of the financial support and the selection of national or international companies awarded contracts in Ethiopia’s reconstruction.  
 
Donor countries are not always aware of the ecosystem of national organisations and subcontractors in Ethiopia. While some are rooted in civil society and understand the needs of the Ethiopian people, others are surrogates for political parties or illegitimate personal interests. Extreme care must be taken when choosing local partners, otherwise there will be injustices and the target of reconciliation will be missed. 
 
When billions of dollars in aid are announced by a state or an international organisation, it is well known that a large percentage will go back to the donor country. The government will contract out the work to companies registered in that country. Some corporate scandals in Ethiopia have been in the news. And even though the scandals were not over reconstruction, they should draw attention to the need for rigorous due diligence and monitoring of projects involving corporate responsibility. 
 
On 8 February 2023, the Oakland Institute released a new report on the catastrophic effects of the construction of the Gibe III dam and large sugarcane processing facilities (Kuraz Sugar Development Project) on ethnic groups in the Lower Omo Valley. Mursi, Kwegu and Bodi peoples have been displaced, which has disrupted their ways of life and livelihoods, leading to an acute food and health crisis. The Ethiopian federal government is reportedly slow to recognize the problem, concerned to maintain current funding. 
 
Population displacement is also at issue in the case of the Heineken brewery in Kilinto on the outskirts of Addis Ababa. The brewery, the largest in the country, opened in January 2015. 
 
Some 500 km southeast of Jigjiga in Kalub in the Somali region, villagers are complaining of various mysterious ailments they linked to the exploration of oil and gas fields by the Chinese company Poly-GCL Petroleum Group Holdings Limited. The company was licensed in 2013 to explore and exploit gas and hydrocarbons in the Ogaden Basin, then process and transport these products to Djibouti. On 28 June 2018, Prime Minister Abiy Ahmed personally announced the launch of the crude oil extraction phase, an exceptional opportunity for Ethiopia. When Minister of Mines Takele Uma Banti announced that the contract was broken on 21 September 2022, it sounded like a thunderclap. 
 
Most people in Ethiopia’s exploration and mining areas are nomads not connected to local communities. Many of them have died without it ever having been reported to health authorities. Sedentary villagers brought the case to the public arena. A legal process is underway to determine whether the symptoms they report are linked to mining and, if so, what would be the responsibility of the company. In such cases, even with appropriate compensation and penalties, the damage is done.  
 
On the eve of colossal reconstruction in Ethiopia, it is unquestionably essential to repair and build critical infrastructure. It is equally imperative to exercise due diligence in awarding contracts and protecting the well-being of Ethiopia’s peoples.