Jul 09 - Pmwt Viewpoint - Alemu - Withered Hope - Final Draft
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Published in PM World Today – July 2009 (Vol XI, Issue VII)
PM WORLD TODAY – VIEWPOINT – JULY 2009
Withered Hope! By Getachew Teklemariam Alemu The challenge now is to make sure that Ethiopia’s growth continues. Ethiopia suffers from a lack of foreign exchange, which means it cannot afford machinery and equipment. Electricity shortage also makes it hard to run heavy industry. (Joseph stigliz, 2007)
The above phrase is taken from the writing of Joseph Stigliz, a Nobel-winning economist, who was also chief economist of the World Bank, in his article entitled on the ground: Joseph stigliz in Ethiopia. The quote would indicate the severity of the challenges that had surrounded the Ethiopian economy by that time. After two years, in this critical time of global financial meltdown, the Ethiopian economy remained to be ailing as exports of the country has decreased significantly, the once skyrocketed oil price has emptied the national reserve, inflation is still high enough (in double digits) eating up people’s income, private transfers are decreasing significantly and power shortage is still the major headache of the economy. Meanwhile, the only way of accounting for the uncertain future - proper planning (with precise risk analysis) – seems to be left aside. As a keen observer to what is going on around, I would pose two questions with simple answers, which I would elaborate in the following paragraphs. Why are we here? Ans. Because we are poor in planning. What is the way out? Ans. Thoughtful planning. It might seem too foolish to give such simple answers to questions referring to the very intricated socio-economic problems of Ethiopia. On the other hand, critics might follow stemming from the fact that Ethiopia is known for pioneering development planning in Africa. Yet, these points will not change the answers to the above questions. It is true that Ethiopia has a well articulated long term perspective plan, and medium-term development plan, in addition to indicative sectoral plans, which are crafted to guide the overall socio-economic development of the nation. In going through these documents, one can witness that they are filled with ambitious, positive and hopeful statements. They are designed in a way that they could give guidance to lower level efforts, which are expected to be the tangent points of beneficiaries and development activities. To assure this, the recent medium-term development plan of the country (PASDEP) says that “the objective of the plan is to define the nation’s overall
PM World Today is a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net
Page 1
Published in PM World Today – July 2009 (Vol XI, Issue VII)
strategy for development in the coming five years; to lay out the directions Ethiopia wants to take, with ultimate objective of eradicating poverty; and to outline the major programmes in each of the major sectors”. It is good that PASDEP has articulated the promises. Nay, what is mandatory is to instrumentalize the way to live the promises. To be as guiding as it was aimed, the plan should have been accompanied by a complete list of projects to be implemented within the planning period and their implementation history. Provided that any of the sectoral plans do not have the list also, it would show a big planning gap. Positive statements merely would not lead us to the point of eradicating poverty, rather a concerted planning of projects and their inclusion in the framework of the medium-term development plan. Doing so would have three important economic benefits. First, it would help to allocate scare resources in accordance with our national priorities. Second, it would help to control public expenditure so as not to be inflationary to the whole economy. Third, it would help to mobilize investment in tandem with the achieved milestones. As it is not being done, we are failing in all three. This could easily be observed in the power sector, where the nation is incurring huge costs as a result of poor project integration management, and its potential impact on national GDP. Another planning gap, which could also be augmented by evidences from the current problem in the power sector of the country, is the insufficient attention given to the three cornerstones of project planning; scheduling, cost analysis, and risk and uncertainty analysis. The cumulative impact of the poor practice in the three areas, improper risk and uncertainty analysis leading to unacceptable lag in project completion with huge extra-cost, has laid its shadow on the fragile economy of the country. The project managers should bear a fair share of their blame for not being attentive to their major responsibilities: watching the cost, schedule and risks of their projects. More of the blame, however, as to me, has to go to the planning office of the power corporation as it is the responsible unit for overseeing the whole portfolio of projects, where the whole work of controlling the cost, schedule and risk of portfolio of projects resides. Failing to do so has made the nation to pay unexpected 100-120 million Birr in fuel cost and 20 million Dollars in six-months renting cost for the two rented generators planted near the capital Addis Ababa, aside from the power shedding being undertaken all over the country. What is more important than this is the opportunity cost left by the economy due to incompletion of the major power projects on-time.
PM World Today is a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net
Page 2
Published in PM World Today – July 2009 (Vol XI, Issue VII)
Despite the fact that the above planning gaps are shaking our fragile economy, it seems that we are still giving deaf ears to our project planning and management practices. It is known that our economy has been witnessing a double digit growth for the past six consecutive years with accompanying progress in the human development (education, health, nutrition, and child development) sectors. But, owing to the fact that we are still poor and our economy is a toddler, we shall not scarify even one unit of our growth for the rampant planning malpractices. As time is clicking on us, we have to wake up, and move one step ahead towards standardizing our project planning and integration management practices. If we do so we might minimize the cost of our failures, and recover our plummeting hope.
About the Author:
Getachew Teklemariam Alemu Author
Getachew Teklemariam Alemu is an International Correspondent for PMForum and PM World Today in Addis Ababa, Ethiopia. Mr. Alemu is also an Infrastructure Projects Expert in the Development Projects Department of the Ministry of Finance and Economic Development, government of Ethiopia. Getachew is responsible for monitoring, appraising and reporting on public sector infrastructure projects financed by the Ethiopian government and bilateral/multilateral donor agencies. He has a Bachelor’s of Science degree in Land Resources Management and Environmental Protection from Mekelle University in Ethiopia. He has also been educated in macro economic development, infrastructure development in developing countries, national economic development and project management. Getachew is currently studying at Addis Ababa University for a Masters Degree in Regional and Local Development. More information about Getachew Alemu can be found at http://www.pmforum.org/pm %20forum%20team/index.htm#5. Getachew can be contacted at [email protected].
PM World Today is a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net
Page 3
PM WORLD TODAY – VIEWPOINT – JULY 2009
Withered Hope! By Getachew Teklemariam Alemu The challenge now is to make sure that Ethiopia’s growth continues. Ethiopia suffers from a lack of foreign exchange, which means it cannot afford machinery and equipment. Electricity shortage also makes it hard to run heavy industry. (Joseph stigliz, 2007)
The above phrase is taken from the writing of Joseph Stigliz, a Nobel-winning economist, who was also chief economist of the World Bank, in his article entitled on the ground: Joseph stigliz in Ethiopia. The quote would indicate the severity of the challenges that had surrounded the Ethiopian economy by that time. After two years, in this critical time of global financial meltdown, the Ethiopian economy remained to be ailing as exports of the country has decreased significantly, the once skyrocketed oil price has emptied the national reserve, inflation is still high enough (in double digits) eating up people’s income, private transfers are decreasing significantly and power shortage is still the major headache of the economy. Meanwhile, the only way of accounting for the uncertain future - proper planning (with precise risk analysis) – seems to be left aside. As a keen observer to what is going on around, I would pose two questions with simple answers, which I would elaborate in the following paragraphs. Why are we here? Ans. Because we are poor in planning. What is the way out? Ans. Thoughtful planning. It might seem too foolish to give such simple answers to questions referring to the very intricated socio-economic problems of Ethiopia. On the other hand, critics might follow stemming from the fact that Ethiopia is known for pioneering development planning in Africa. Yet, these points will not change the answers to the above questions. It is true that Ethiopia has a well articulated long term perspective plan, and medium-term development plan, in addition to indicative sectoral plans, which are crafted to guide the overall socio-economic development of the nation. In going through these documents, one can witness that they are filled with ambitious, positive and hopeful statements. They are designed in a way that they could give guidance to lower level efforts, which are expected to be the tangent points of beneficiaries and development activities. To assure this, the recent medium-term development plan of the country (PASDEP) says that “the objective of the plan is to define the nation’s overall
PM World Today is a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net
Page 1
Published in PM World Today – July 2009 (Vol XI, Issue VII)
strategy for development in the coming five years; to lay out the directions Ethiopia wants to take, with ultimate objective of eradicating poverty; and to outline the major programmes in each of the major sectors”. It is good that PASDEP has articulated the promises. Nay, what is mandatory is to instrumentalize the way to live the promises. To be as guiding as it was aimed, the plan should have been accompanied by a complete list of projects to be implemented within the planning period and their implementation history. Provided that any of the sectoral plans do not have the list also, it would show a big planning gap. Positive statements merely would not lead us to the point of eradicating poverty, rather a concerted planning of projects and their inclusion in the framework of the medium-term development plan. Doing so would have three important economic benefits. First, it would help to allocate scare resources in accordance with our national priorities. Second, it would help to control public expenditure so as not to be inflationary to the whole economy. Third, it would help to mobilize investment in tandem with the achieved milestones. As it is not being done, we are failing in all three. This could easily be observed in the power sector, where the nation is incurring huge costs as a result of poor project integration management, and its potential impact on national GDP. Another planning gap, which could also be augmented by evidences from the current problem in the power sector of the country, is the insufficient attention given to the three cornerstones of project planning; scheduling, cost analysis, and risk and uncertainty analysis. The cumulative impact of the poor practice in the three areas, improper risk and uncertainty analysis leading to unacceptable lag in project completion with huge extra-cost, has laid its shadow on the fragile economy of the country. The project managers should bear a fair share of their blame for not being attentive to their major responsibilities: watching the cost, schedule and risks of their projects. More of the blame, however, as to me, has to go to the planning office of the power corporation as it is the responsible unit for overseeing the whole portfolio of projects, where the whole work of controlling the cost, schedule and risk of portfolio of projects resides. Failing to do so has made the nation to pay unexpected 100-120 million Birr in fuel cost and 20 million Dollars in six-months renting cost for the two rented generators planted near the capital Addis Ababa, aside from the power shedding being undertaken all over the country. What is more important than this is the opportunity cost left by the economy due to incompletion of the major power projects on-time.
PM World Today is a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net
Page 2
Published in PM World Today – July 2009 (Vol XI, Issue VII)
Despite the fact that the above planning gaps are shaking our fragile economy, it seems that we are still giving deaf ears to our project planning and management practices. It is known that our economy has been witnessing a double digit growth for the past six consecutive years with accompanying progress in the human development (education, health, nutrition, and child development) sectors. But, owing to the fact that we are still poor and our economy is a toddler, we shall not scarify even one unit of our growth for the rampant planning malpractices. As time is clicking on us, we have to wake up, and move one step ahead towards standardizing our project planning and integration management practices. If we do so we might minimize the cost of our failures, and recover our plummeting hope.
About the Author:
Getachew Teklemariam Alemu Author
Getachew Teklemariam Alemu is an International Correspondent for PMForum and PM World Today in Addis Ababa, Ethiopia. Mr. Alemu is also an Infrastructure Projects Expert in the Development Projects Department of the Ministry of Finance and Economic Development, government of Ethiopia. Getachew is responsible for monitoring, appraising and reporting on public sector infrastructure projects financed by the Ethiopian government and bilateral/multilateral donor agencies. He has a Bachelor’s of Science degree in Land Resources Management and Environmental Protection from Mekelle University in Ethiopia. He has also been educated in macro economic development, infrastructure development in developing countries, national economic development and project management. Getachew is currently studying at Addis Ababa University for a Masters Degree in Regional and Local Development. More information about Getachew Alemu can be found at http://www.pmforum.org/pm %20forum%20team/index.htm#5. Getachew can be contacted at [email protected].
PM World Today is a free monthly eJournal - Subscriptions available at http://www.pmworldtoday.net
Page 3
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