« Ethiopia: Proving them wrong - the Ethiopian wayAn Ethiopian walking on eggshells »

The Role of Development Aid in fueling Corruption and Undermining Governance in Ethiopia



  11:47:49 pm, by admin   , 936 words  
Categories: Ethiopia

The Role of Development Aid in fueling Corruption and Undermining Governance in Ethiopia

Sid Hassan is an Ethiopian professor of economics at Murray State University inthe United States

The Role of Development Aid in fueling Corruption and Undermining Governance in Ethiopia

By Seid Hassan

My own research as well as the research of other scholars show that the control of donor resources allowed the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF), not only to consolidate political power that it seized in 1991, but also virtually penetrate the Ethiopian society at the grassroots level and expand its repressive and predatory tentacles.*

This paper also makes use of my ongoing studies regarding corruption in Ethiopia. The concluding part of the paper ties the corruptive practices of the TPLF/EPRDF when it was a liberation front (that is, the humanitarian aid-corruption nexus) with its current and similar activities (that is, the capture and misuse of development aid.) The paper exclusively focuses on the development aid -corruption nexus.

The paper uses theme-based cases (heavily donor-funded projects) in order to illustrate the captured nature of development aid and extent of corruption in the country. The theme-based cases used as examples of capture include corruption within the so-called Productive Safety Net Programs, privatization of state owned enterprises, trade mispricing and illicit financial outflows, the judicial system, resettlement and villagization programs, health extension programs and corruption within the primary and higher education expansion programs.

I use the concept of state capture (the highest and most intractable form of corruption) as a framework of reference to explain the predatory nature of the Ethiopian state. State capture is a form of grand corruption initially observed in post-communist countries evolving to captured-economies during their political and economic transitions. The concept gained traction after experts working for the World Bank and the International Monetary Fund described the phenomenon of corruption that was found in transition countries of Eastern and Central Europe and the former Soviet Union. The paper shows the Ethiopian corruption experience being a stronger form of the state capture that was observed in East and Central Europe and the former Soviet Union.

The paper establishes that, by creating opportunities to the highly organized groups and elites, donor aid has led to a legacy of corruption, maladministration, cruelty, brutality, money laundering and the establishment of a ruthless oligarchy in Ethiopia. I show that the type of corruption which has transpired in Ethiopia is the strongest and highest form of corruption known as State Capture. The paper documents how various powerful ethnic, social, personal, regional, political and economic groups in Ethiopia were able to extract rents and use it for their own political survival and hegemony. The case studies in the paper show the captured nature of the donor-funded projects by the ruling elites in Ethiopia and how those who are able to capture the foreign aid resources are using them as tools of control and repression. The work also shows how, when it comes to Ethiopia, donor aid has poisoned the wells with deep corruption and, by implication, the unholy alliance between donor aid and corruption and donor aid and tyranny. In addition to foreign aid being used to finance repression, it has exacerbated the extent and level of the income gaps between the haves and the have-nots while at the same time increasing the vulnerabilities of the poor. The increased level of rent-seeking that one finds in the country indicates that foreign aid has undermined governance in the country.

By exploring the heavy-handed use of development aid by the ruling party and the culpability of donors and aid agencies, the paper provides analytical support behind aid and corruption, aid and extraction of rents and the type of corruption that one finds in Ethiopia. The paper also shows that misusing and abusing of foreign aid by the TPLF/EPRDF is a learned behavior it acquired when it was a guerrilla force.

Taken together, therefore, both humanitarian aid and a large portion of development aid have exacerbated the already worse governance structures of the country. Despite the huge annual influx foreign aid (to the tune of $3.3 billion by 2009 and rising), life in Ethiopia has gotten worse, not better- with the poor getting poorer, income inequality worsening, citizens leaving their country in drones trying to escape the onslaught of poverty and oppression that has been aided and abetted by foreign aid and, close to 20 million Ethiopians still depending on foreign aid. In short, all that foreign aid begat is absolute dictatorship, repression, kleptocracy, aid dependence. The paper inescapably concludes that development has been a curse and both Ethiopia and its people would have been better off without foreign aid than with it.

* This short write-up is the synopsis of a much longer piece. It is the second installment of the three (and possibly four) short blogs which are intended to introduce the reader to research papers published in Ee-JRIF, Volume 5, and No. 1. In particular, this short write-up summarizes the rather lengthy paper entitled as “Aid, Predation and State Capture: The Role of Development Aid in Fuelling Corruption and Undermining Governance: The Case of Ethiopia.” Those interested in reading the (non-technical) entire manuscript will definitely benefit from the extensive literature that I have used and incorporated in paper.

This work is motivated in part by the studies and findings supporting the research and investigative findings made by Human Rights Watch (2010(a) & 2010(b), 2012(a) and 2012(b)), Epstein (2010), Hassan (2009), BBC (2011), Nigussa et al (2009), Bazezew (2012), Endale, Debalke (2012) and several others.

The specific article and six more articles are published in Ee-JRIF, Vo. 5, No. 1 (2013).
To access the journal and the articles, please follow this link:
To access the Development Aid Corruption Nexus, please follow this link:


Comment from: [Member]

“It has seemed to be more necessary to have regard to the weight of words rather than to their members” cicero,

Said Hassen is one of the diaspora dooms day preachers economist whose never ending lamentation and baseless accusation goes out of control.
Seems like he was on some kind of hibernation for a year or two. Long time since we heard from him and also the other economists in the diadpora who lack honesty.
Most of all, when are they come out at least to admit one single progress made in Ethiopia out of the hundreds of success and victory our govt registered? Jealousy???
Well, what ever you do, don’t forget “honesty is best policy”
The truth will set you free!!!!

07/06/13 @ 00:39
Comment from: teshome [Visitor]

Comeon Mr. Researcher! What did you research? You just playing your dirty politics.

07/06/13 @ 08:10
Comment from: Kena Keb [Visitor]
Kena Keb

An article of this character by Seid Hassan should not come as a surprise since he, in many other instances had fiercely attacked the economical policies of the Ethiopian government and even predicted a total collapse. To his embarrassment and disappointment things have gone and are going on not inline with his doomsday predictions. When the genius economist Dr Elleni Gebremedhin founded the Ethiopian Commodity Exchange, Seid Hassan was first to severly attack her and predicted that it was a dangerous move by her to create that establishment. She proved him utterly wrong and as we all know the Ethiopian Commodity Exchange has become very successful and received admiration and recognition by many renowned international financial organizations and governments.
This article has no purpose other than coming from another angle to discourage the financial aid donors and foreign investors who are increasingly being engaged in Ethiopia which has one of the fastest growing economies in the world. It is this established fact he does not want to accept and is campaigning 24/7(along with his friends Tamagn Beyene änd others in the toxic diaspora community)to discourage the many investors who have much interest in what is happening in Ethiopia.
Seid Hassan may continue to shed false tears but we all know his anti Ethiopia engagements will only prove him a failure as it had been concretely proven in the past.

Ethiopia is prospering and shall continue to prosper!

07/06/13 @ 08:19
Comment from: Abyssinian [Visitor]


There is no REAL Ethiopian who is going to deny the existence of corruption. My problem is that you take the easy road and take cheap political shots by using corruption to say that life has gotten worse. This is an outright lie and have lost credibility with me. If the IMF, World Bank, UN have all applauded Ethiopia’s progress, it leads me to think that you are either ignorant, stupid or, most probably, both.

I can safely state that you are intellectually dishonest

07/06/13 @ 08:47
Comment from: Belal Y. [Visitor]
Belal Y.

One of the tactics the Bedouin Governement in Egypt employ in time of stress is to look at the list of names of scholarship students from other countries brainwashed during their stay at colleges in Egypt, in particular, moslem students from the Horn of Africa.
By his own admission, Mr. Hassan is a graduate from one of the universities in Egypt. If I may add, he is most probably a sympathizer of Muslim Brotherhood in Egypt.
Add to this, his project is funded by infamous Human Right Watch Group.
Mr. Hassan looking at your background and groups you are associated with, it is difficult to give any credibility to your article. Your whole article is just echoing and repeating what the Egyptian Governemnrt was saying all along, time and again, “Don’t give any fund to Ethiopia". Mr. Hassan YOU ARE TOO LATE ON YOUR MESSAGE.

07/06/13 @ 10:23
Comment from: [Member]

the open minded and true Ethiopians, (AZ, Abyssinia, Kena Keb, Teshome,Asseta B. Gettu and the likes) Thank you for being who you are. You made my day.
I can not be prouder.

07/06/13 @ 13:02
Comment from: Aberaham [Visitor]

This analysis is used to decry the current development in our country that the whole world now compares it with that of South Korean Economic Miracle. Unfortunately, the analysis is farfetched and hence pointless. The author faces the same problem the other hate-mongering diaspora face every time they write to malign progress in Ethiopia. He writes about not the current Ethiopia, but an Ethiopia that he imagines. He does so - just like other fools and idiots - because he is so frustrated about the unfolding changes that are galvanizing the entire country in a way that we have never seen before. He and his hate-mongering ethno-regional bodies follow the principle of ‘ene kemotku serdo iybkel’. As such, it is better to imagine a famine-trodden Ethiopia rather than a prosperous Ethiopia as long as they are not at the helm. It is better to collude with arch enemies of Ethiopia to destroy it as long as they see that the ongoing progress is not for them. BTW, remember what this guy wrote about the Ethiopian Commodity Exchange (ECX)? The toxic Diaspora is frustrated by the Ethiopia where unprecedented changes are taking place!

07/06/13 @ 15:29
Comment from: C\'est moi senait [Visitor]
C\'est moi senait

To start with. More than 13 times you mentioned CORRUPTION . So if you write a book, one can guess how many times you are going to mention it almost 15-20 times in each page.

Corruption is born when these parasites NGO came to Ethiopia soil poising every single farmers life. We got to get ride of these NGO and other org. Just like Eritrea did. They good for nothing.

07/07/13 @ 00:48
Comment from: True Ethiopian [Visitor]
True Ethiopian

This paper is from the beginning to end politically motivated and bias paper. It was written by so called profession (politically involved with opposition party). He tried to explain his own political opinion by creating fax research paper.

07/07/13 @ 15:27
Comment from: Abyssinian [Visitor]


I agree with what you say BUT you destroy your comment. You don’t like hate-mongering but you hate-monger against diaspora. EVERYONE engages in hate-mongering. As a diaspora Ethiopian, I am offended (although I shouldn’t be), by stupid comments like yours. Regardless where one lives, an Ethiopian is an Ethiopian. You have anti-Ethiopians IN Ethiopia, so please, don’t continue this anti-unity propaganda by creating a meaningless and perhaps harmful divide among us. You remind of this guy who was so anti-diaspora but tried so hard for a D-V lottery.


07/07/13 @ 16:50
Comment from: afropolitan [Visitor]

How high can the art of academic dishonesty reaches? When it comes to Sid Hassan, the logical answer will be no limits,whatever damage dishonesty couses.What are you trying to sell this time a pig in a poke ?Do you think most people are naive enough so they take it home without a peek into the bag ?Your paper, not only a mendacious statment, it consists of confirmed (by yourself) large-scale plagiarism of text.Corruption exists everywhere, in every country , fight it with good intentions.
Proud to be an Ethiopian and an African

07/08/13 @ 08:28



The views expressed in this article do not necessarily represent the views of The views are solely that of the author. Become a blogger of, the #1 Rated Ethiopian Website according to Alexa. Contact us for details


  XML Feeds

blog tool