The EFFORT Conglomerate Monopoly
By B. Aklilu
The Endowment Fund For the Rehabilitation of Tigray or better known as EFFORT is a conglomerate of various companies formed in 1992 initially as a PLC with a capital of 100$ million but later were converted to an endowment in 1995. This “Endowment” was formed to rebuild the war torn region of Tigray when the military junta Derg was overthrown by the TPLF armed struggle in 1990. The armed struggle of the TPLF, however, had started in the mid 1970’s and continued to gather momentum and finally formed EPRDF with other armed movements form other parts of the country to finally topple the Derg. To this day however, the TPLF has dominated the EPRDF and the entire politics of Ethiopia where its senior member hold some key positions in security and military and other important ministries. But the influence of the TPLF doesn’t stop there. This political party has also monopoly control of the Ethiopian economy through the web of interrelated companies whose real owners are veiled behind a curtain of secrecy. Recent studies and publication done by prominent people like Ermias Legesse point to EFFORT, a little known conglomerate whose details are vague and not publicly available. According to an article be Oman Uliah, of Addis Standard, the capital build up of this secretive organization is more than US$3 billion in paid up capital and employs more than 47,000 people. EFFORTS main operation and the bulk of the employment opportunity is mainly in the region of Tigray. So just how did this giant of a company that virtually no one knows about manage to create assets which is one fourth the budget of the Ethiopian government for the supposed benefit of only 6% of Ethiopians? And where did EFFORT get the massive initial start up capital of a US$100 million?
How EFFORT was formed
The official narrative of how EFFORT was formed is that, it was formed with the assets of TPLF that was accumulated during the armed struggle mainly from the sale of wheat bags. It doesn’t take a bright mind to figure out you can’t create a huge conglomerate with just the sale of wheat bags. This forces us to think what other ways are there in which an armed group of insurgents can use to accumulate assets. If we look at how other such groups have created assets and income for the sustenance of the group, most have used armed force to rob institutions of state and other private ones. TPLF is no different. According to Aregawi Berhe who was a former veteran TPLF fighter in his PHD thesis dissertation describes how the TPLF robbed banks in the northern region using arms to generate income and create assets. Furthermore, there are allegations of siphoning aid money meant for feeding people in the 1980’s famine for the party’s agenda. The famous Band Aid also known as Live Aid organised by Bob Geldof generated $65 million pounds (US$100 million) currently estimated at more than $1.5 Billion for aid to Ethiopia.
The UK’s Daily Mail in an article by Zoe Brennan confirms to this saying “…the Tigrayan People’s Liberation Front (TPLF) used the cash, meant to pay for food for the starving, to fund attempts to overthrow the government of the time in a bloody civil war.” (2010)
To add to this BBC was also reporting that aid money from Band Aid had been funneled by warlords (mainly the TPLF) in the 1980’s away from aid to fund their operations. The BBC also confirmed that the accounts of Band Aid showed that at least US$11 million had been given to TPLF controlled relief agencies like REST.
Other sources like Gebremedhin Araya, a former veteran TPLF who was dealing with foreign aid workers at the time state that US$95 million had been used by the TPLF and its sister parties for war purposes and building of assets.
Although the exact amounts may be debated, it can be said that TPLF had accumulated its assets from carrying out heist operations like the one at the Axum bank and diverting substantial amounts of aid money in the 1980’s for the party’s use.
It is these accumulated assets that the TPLF used to create and establish EFFORT.
How did EFFORT transform into a Goliath
Even though the formation of the EFFORT conglomerate and its subsidiaries like SUR construction, Mesfin Industrial Engineering, Almeda Textile and 10 others(unofficial figures put number of companies at 66) is under very questionable grounds, how it got to the US$ 3 billion company is even more controversial. The board member of the member companies and management of the conglomerate are also members of the TPLF party which currently rules the country. This inherent characteristic of EFFORT makes it susceptible to corruption and conflict of interest. Hence we see that big government projects are repeatedly given to EFFORT companies. This can be shown by looking for the supplier of the Ethiopian military armed forces and police force uniform are all supplied by Almeda Textile. Sur construction is also handed big government construction projects like Gebba dam project, Zarema River May Day Dam Project, Tekeze Hydro plant and Tis Abay II hydro project. Electromechanical projects are handled by Mesfin Industrial Engineering. Messebo cement which is also a subsidiary of EFFORT is the sole supplier of cement for the Great Renaissance Dam. Gunna Trading, also another subsidiary, is the import export business and exports mainly coffee. With the backing of the EFFORT group, Gunna has disrupted the coffee export market in Ethiopia.
According to Addis Fortune, in 2011, the TPLF-led Meles regime authorized the Ethiopian Petroleum Enterprise (EPE), a government agency, to import 650,000 ton of coal worth US$29.5 million from abroad to supply Messobo’s cement factory.
These five companies between them have an annual turnover of a whooping 16.5 billion birr. The disparity with other local companies is enormous. The shadow of the EFFORT hegemony looms over the rest of the country’s economy in a playing field that is not level.
Another way EFFORT has used to grow is vertical integration which means material and service processed by one company is often an input to another company. So any expense of one company is an income of another. This is evident in the recent expansion of Ezana Mining(subsidiary of EFFORT) which includes the building of a new gold processing plant at a cost of 700 million birr. The electro mechanical is however being undertaken by Mesfin Industrial Engineering.
EFFECTS of EFFORT in the local economy
A monopoly on any economy destroys free trade and healthy competition. This in turn hurts other business and discourages other new ones from opening. But the ultimate victim is the Ethiopian people. Instead of businesses competing for a customer it’s the other way around, customers competing for products and services which drives up prices. This disturbs the equilibrium of the markets and hurts the wellbeing of the economy. This creates envy from more than 90% of the Ethiopian population that do not feast on the fruits of EFFORT which makes the grounds fertile for resentment against the establishment.
What Should be done
The case of EFFORT is a very complicated issue one that requires dialogue between all stakeholders mainly the Ethiopian people. Justice is always the best place to start. Officials who have committed corruption, profiteering and theft of resources of the country like the top management of EFFORT and elites of the TPLF should be served justice. The embezzlement of aid funds in the 1980’s for the purchase of weapons and turning it to cash for TPLF’s use which is the most inhumane act. Light should be shed in this matter because countless lost their lives while TPLF members advanced their propaganda. Those responsible for the demise of the Ethiopian economy should be held accountable. This would kick start the healing process and will signify the beginning of a new chapter of Ethiopian where all citizens are truly equal.
posted by Gheremew Araghaw