I found an article on nazret.com that ends with this somewhat interesting factoid:
But the most interesting thing on the page was this comment:
Bloomberg reports, Ethiopian Telecommunications’s monopoly enables it to charge $35 for a mobile-phone SIM card, which is required to obtain a phone number. In neighboring Somalia and Kenya, which have private mobile services, cards cost less than $5.
But the most interesting thing on the page was this comment:
yeah liberation on market and ethiopia doesn't go together, the government should accept overseas and diaspora ethiopians to come to the country and establish business there.
Follow the example of Somalis in the diaspora, they all came back to Somalia, and established great business there, specially in the telecommunication sector(there are more than 10 telecom companies in somalia), and in the area of aviation(Somali airline companies number more than 8 now), and those diaspora Somalis did well ine stablishing business in the hotel sectors and real estate.
Can Ethiopian nationals living in the diaspora follow the example of their brothers in Somalia, yes they can follow but ONLY if ETHIOPIA GOVERNMENT allows free market and trade and liberate the telecoms and other sectors to open for competetion.
I cannot use my 3G iphone in Ethiopia, but I can in Somalia, simply because 3G service doesn't exist in Ethiopia since telecome is fiercely controlloed by the government.
The governemnt should know, it is for the good, for the economy, for the people, and the government would benefit in terms of tax revenues generated by the competeting companies.
posted by Steve | 12:19 PM
9 Comments:
Somalia has a functioning banking system, a functioning telecom system, unilaterally free trade and I also believe that agricultural production is stable and/or increasing.
Admittedly the political situation is very fluid and most likely more stability and predictability would help, but if the price of that would be restrictions on banking, regulations on trade and a nationalized telecoms system it is probably better with a fluid situation.
After all there are many countries that are not too industrialized and yet extremely wealthy. I am thinking of the US, New Zeeland, Australia and Denmark.
I do not believe that the fluid political situation hampers banking, agriculture or commerce, though it most likely hampers industrialization. However, considering the situation in the USA, Australia, New Zeeland and Denmark one might have reason to believe that the importance of industrialization with regard to prosperity tends to be over-estimated.
The USA initially prospered because of freedom combined with fertile soil and abundant other resources. These factors made it an industrial giant. The country's industrial might, combined with the wars of the 20th century engineered by the Anglo-American elite, made the dollar the world's reserve currency. The reserve currency status keeps the country wealthy even though it also tends to erode the country's industrial base.
As for Somalia, I'm struck by how stable it has become.
But if you compare Germany with the US, the US is and has always been the by far less industrialized country. I think that industrialization is a precondition for prosperity in an international perspective, but that does not meen that a less industrialized country can not prosper. Denmark prospers on the basis of its extremely efficient agriculture.
By the way: I also tend to think that Somalia is more stable than most people believe, but is there something special you would like to point out when you say that Somalia is stable or at least more stable than most people think?
I do not know, but one interesting question to answer is how large percentage of the geographical area and/or the population is affected by warfare?
My impression is that there are millions not too affected by warfare and that those people benefit from peace as well as of the absence of unsound government regulation. The actual need of security and order can probably be satisfied by local militias and or the fact that a lot of people carry guns.
Conflicts concerning the control of specific fertile areas can probably be settled through clan justice.
You mention the dollar. I believe that the use of dollars in Somalia will come to an end within forseeable future. Since the US dollar is not legal tender in Somalia there are no obstacles against the use of gold and gold-denominated assets as means of payments and once everyone has a mobile phone there is no need for dollar notes. Once the dollar notes has ceased to circulate in Somalia, the way for gold is paved.
You just shift from dollar-denominated assets to gold-denominated assets by pressing a buttom on your mobile phone.
From your previous post:
>one might have reason to believe that the importance of industrialization with regard to prosperity tends to be over-estimated
Intellectuals mostly serve the state, so it's no surprise that many of them would frame the debate as agriculture versus industry rather than freedom (which promotes rapid capital accumulation that is rationally distributed across the economy, and therefore promotes prosperity) versus government control (which impedes capital accumulation and distributes it irrationally, thereby destroying wealth) as factors that make people prosperous or not.
>the US is and has always been the by far less industrialized country
To put it more precisely, the share of available resources, including labor, employed in industry has been lower.
>but that does not mean that a less industrialized country can not prosper
True, because at the level of individual workers and entrepreneurs, in a free market, both will respond to market signals (prices) to decide where to seek employment or invest, so that, in the long run, industry shouldn't be any more or less profitable than agriculture so long as resources are employed rationally with regard to the comparative advantages present in the particular geographical area.
>is there something special you would like to point out when you say that Somalia is stable or at least more stable than most people think?
Yes. I can use your words to answer your question:
>The actual need of security and order can probably be satisfied by local militias and or the fact that a lot of people carry guns
and
>Conflicts concerning the control of specific fertile areas can probably be settled through clan justice.
What you said about mobile phones is interesting. It would be so much easier to pay and be paid by mobile phone. Here in Russia, I get paid in cash and have to pay a courier to collect my remuneration (I'm a translator, so I don't call the money I earn "salary") or collect it myself. If I got paid through the banking system, I would almost certainly have to pay income tax.
So in a country without income tax and thus no income tax to evade, it is in all aspects better to get paid by mobile phone.
So in Somalia, where they have mobile phones, and no income tax, there is no need for bank notes.
Once the dollar notes are gone the somalis can shift to the gold standard by pressing a buttom.
Have a look at this.
http://www.telegraph.co.uk/finance/personalfinance/investing/gold/4967936/iPhone-users-can-now-jump-on-the-gold-bandwagon.html
My prediction is that some government or other will shut it down. Then, when all the states collapse, it will come back.
In my opinion all that has to happen is that Somalia gets a stable economic situation and i higher standard of living than the surrounding countries.
Once that has happened people and capital will go there.
The question is to which extent warfare disturbs economic life.
It seems to me that the violence has dropped significantly, like maybe to the level of Israel or Mexico, and not many people call those countries war-torn.
My impression is also that the level of violence has dropped significantly in recent times.
Therefore I believe that the economy is doing fine, although from a low level.
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