Abiy shuffles the deck

What had been intended as a mini-reshuffle following the departure of four cabinet ministers has widened into multiple changes at the helm of Ethiopia’s political, legal and economic decision-making institutions. Change had been expected since the signing of the cessation of hostilities agreement between the federal government and the Tigray Peoples’ Liberation Front (TPLF) in November 2022, which put a tentative end to the two-year conflict in northern Ethiopia. With this agreement, rumours abounded about the return of TPLF representatives to federal ministerial positions, but these stakeholder changes did not materialise. Instead, unexpected changes at the Federal Supreme Court and National Bank of Ethiopia (NBE) took place, signs of angst at both the performance of Ethiopia’s justice system and wider macroeconomic woes. 

From ministers to ambassadors 

On 14 January, the Office of the Prime Minister (PMO) announced via social media that the Council of Ministers had “honourably” seen off four ministers from their positions: Minister of Agriculture Umer Hussein, Minister of Mines Takele Uma, Minister of Transport and Logistics Dagmawit Moges, and Chief of Staff of the PMO and Cabinet Affairs Minister Teferi Fikre. No mention was made of whether they had resigned or been removed from their positions,  and what other government positions, if any, they may move onto. Clues were however found with the appointment of both Umer and Teferi as ambassadors by President Sahlework Zewde on 30 December 2022, among a total of 21 new envoys. On 24 January, the House of Peoples’ Representatives (HoPR), the lower house of parliament, formally approved ministerial replacements, with Dr Girma Amente taking over at Agriculture, Alemu Sime at Transport and Logistics, Habtamu Tegegn at Mines and Alemtsehay Paulos assuming responsibility for running the PMO. 

Deploying former cabinet ministers and senior officials as Ethiopia’s diplomatic representatives has been a favoured tactic of the government, both under the previous ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) and its successor Prosperity Party (PP). Such moves have been routinely criticised for allowing political appointees to supersede career diplomats, undermining the country’s diplomatic standing and rewarding ministerial shortcomings. However, with this round of ambassadorial announcements, the overwhelming majority of posts went to career diplomats, signalling a recognition that Ethiopia is prioritising efforts to repair diplomatic relationships strained as a result of the conflict. 

Legal trouble? 

Three days after the 14 January announcement, Meaza Ashenafi, Ethiopia’s first female President of the Federal Supreme Court, and her deputy Solomon Areda, unexpectedly resigned. Meaza’s appointment was held up as a key sign of Abiy’s commitment to political reform and gender equality. A celebrated lawyer, she was a founding member of the Ethiopian Women’s Lawyers Association and a staunch advocate for women’s rights; her appointment came up against a court system marred by inefficiency, significant backlogs and entrenched corruption. 

Although Meaza’s departure, as with the ministerial replacements, had no explanation attached to it, the pervasiveness of graft and the scale of the anti-corruption challenge likely undermined her resolve. While her successor Tewodros Mihret has vowed to continue the reforms started by Meaza, his background in academia and lower public profile would see him face the same technical and capacity challenges. 

New central bank governor: a change of direction? 

Government changes, and the debate over the suitability of candidates, reached a crescendo with the 20 January announcement of Mamo Mihretu as the new governor of the NBE. He took over from Dr Yinager Dessie, who had been governor since 2018 and was a central part of the macroeconomic team steering Ethiopia’s economy. In an already familiar pattern, no mention was made of whether Dr Yinager had resigned, been removed from office, or if he would be moving onto another government position. 

Although Mamo’s appointment was unexpected, Dr Yinager’s departure had been mooted for almost a year. This was due to increasingly vocal criticism for the NBE’s inability to tackle stubbornly high inflation and the ever widening gap between the official and parallel exchange rates. Inflation has been over 30% for more than a year, and in double digits since August 2017, while the gap between the official and black exchange market rate has shifted from between ETB 85-95 to the USD at the end of September to ETB 112-120 at the beginning of January, a new record low. 

Mamo will be expected to both bring down inflation and prepare the ground for the devaluation of the Ethiopian birr – which although denied by State Minister of Finance Dr Eyob Tekalign – is likely to stem from Ethiopia’s struggle to manage external borrowing. Devaluation would enable the country to reduce the risk of sovereign default by making international debts easier to service in local currency terms. It would make exports more competitive, helping to shore up forex reserves and eliminate the exchange rate gap that has seen people and businesses flock to the parallel market and deplete the country’s official reserves, which reached a record low of USD 1.5 billion – equivalent to less than one month’s imports – in December 2022.

With Mamo’s closeness to Prime Minister Abiy Ahmed, as his former Chief Trade Negotiator, and strong links with multilateral lenders in his previous roles at the World Bank and PMO, he is expected to shift monetary policy to accommodate the government’s wider macroeconomic programme, with less friction than Dr Yinager. This applies particularly to the liberalisation of the banking sector, the next big sector target of Abiy’s economic reform programme. Despite this, Mamo’s proximity to Abiy could scupper his ability to set policies that will tackle inflation, boost foreign exchange reserves and promote banking sector liberalisation, independent of the government’s political and economic programme. 

More room for manoeuvring 

With the recent appointments, Abiy is clearly continuing the centralised nature of decision-making from the PMO. As Ethiopia implements the cessation of hostilities – and seeks to rebuild an economy shattered by the triple shock of COVID-19, conflict in the North, and the fallout of the Russia-Ukraine conflict – these changes may not be the last seen at the helm of government. Despite these new appointees, drastic changes in the government’s ongoing political and economic reform programmes are unexpected, as policy making and direction continues to be set by the PMO. 

About the author

Tewodros Sile is an associate director at Africa Practice, with a particular focus on Ethiopia and the wider East/Horn of Africa region. He can be contacted at [email protected].