Monday, 23 May, 2022
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Brazil, Ethiopia & Kenya: A new wave of unlikely economic reformers

ThePrint takes a look at how some countries are implementing reforms and what the politics behind the agenda is.

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Over the past couple of years, the Western world has seen a massive backlash against economic liberalisation and globalisation at large.

While the general mood in the global economy is that of doom, there are a few countries such as Brazil, Ethiopia, and Kenya that have adopted bold market reforms of late.

Given their historical records, these countries are unexpected reformers. Brazil has had a long history of populist economic policies, Ethiopia continues to be a partially authoritarian regime, and Kenya has historically been marked with high levels of civic and political violence.

Today, ThePrint looks at how some of these countries are implementing reforms and the politics behind their reform agenda.

Brazil

On Wednesday, Brazil put forth its most ambitious pensions proposal to reform the public finances of the country. In an unexpected political shift, President Jair Bolsonaro recently assumed power, dramatically shifting the Brazilian government towards the Right.

Latin American countries including Brazil have suffered from a chronic debt problem. In Brazil, pensions account for more than a third of the total federal tax revenues, which have led to chronic budget deficits. These pension costs about 7 per cent of the country’s GDP.

Bolsonaro’s proposal will save the state exchequers about over 1 trillion Brazilian reais.

Brazil’s economy minister Paulo Guedes, an unapologetic free marketer, is spearheading the country’s rather ambitious reform agenda.

While the move announced Wednesday is praiseworthy, there is still a massive legislative hurdle before the proposal can be turned into actual policy.

It must be highlighted here that with both Brazil and Argentina shifting to the Right recently, it is safe to say that Latin America is finally starting to move away from its left-populist economic consensus.

Ethiopia

Currently the youngest leader in Africa, Abiy Ahmed has launched a series of political and economic reforms within the first ten months of his tenure.

After assuming power at a time when the country was on the brink of a civil war, Ahmed has overseen the “swiftest” political liberalisation in Ethiopia’s 2000-year history. The country continues to be an authoritarian regime.

In an unprecedented fashion, he has made peace with long-time rival Eritrea, appointed women to make up half of his cabinet, released more than 60,000 political prisoners, and removed the ban on several political opposition groups. Moreover, after appointing an activist as the head of the electoral commission, he has promised a free and fair election in 2020.

While the Ethiopian economy has had a decent record over the past decade, Ahmed is helping further liberalise it. He has initiated the privatisation of several state-owned enterprises and ended state-monopolies in several sectors such as aviation, logistics, telecommunications, and electricity.

He is building a digital museum celebrating the country’s history, a theme park, and a zoo.

In an interview to the Financial Times Thursday, Ahmed said, “I have done so many great things compared to many leaders. But I didn’t do 1 per cent of what I am dreaming.”

Kenya

Over the past few years, Kenya has emerged one of the fastest growing economies in East Africa.

But a recent succession struggle in the ruling party is threatening the government’s reform agenda.

As President Uhuru Kenyatta nears retirement, a political battle has ensued between his deputy William Ruto and David Murathe, the former vice-chairman of the ruling Jubilee party.

The ruling president has a four-point agenda of delivering universal healthcare, manufacturing, food security, and housing to his electorate. Kenyatta believed that delivering on these policies would be his everlasting legacy.

Unfortunately, the political infighting might jeopardize Kenyatta’s reform agenda.

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