State Capture in Sub-Saharan Africa, with Special Emphasis on Ethiopia: A Comparative Approach

The concept of state capture gained currency beginning in the first work of the World Bank scholars such as Hellman (1998) and Hellman and Kaufman (2001). The general definition of state capture that these authors offered was that “… efforts of firms to shape the laws, policies, and regulations of the state to their own advantages by providing illicit private gains to public officials” (Hellman and Kaufman, 2001:1). State capture also occurs when powerful individuals or firms use “…legitimate and transparent of channels” in order to deny competing groups have access to state officials. It also occurs when “…unclear boundaries between the political and business interests of state officials” are exploited by specific groups and state officials for their mutual benefits at the expense of the society in question (Hellman: 1998:3). Broadman and Recanatini (2001) define state capture as one which is “particularly harmful form of corruption consisting in the ability of firms to subvert the entire political process to ensure that policies and regulations favorable to their business interests are implemented.” Two important features that characterize the theory of state capture are its contribution to our understanding in differentiating traditional corruption practices from the new phenomenon of state capture as well as its empirical application to the analysis of the bottlenecks of economic reforms in transitioning nations, most significantly in post-socialist states. In differentiating state capture from corruption as defined in a traditional manner, the consensus of the empirical literature is that the latter deals with the extent in which how the bribe payer uses the existing laws, rules, and regulations to tip the balance in his favor while state capture refers to corrupt efforts to influence how those laws, rules and regulations are formed and implemented. The second feature of the theory is that, unlike the conventional wisdom that holds the notion that a “loser class” frustrates the reform and transformation of the post-communist economies of states in transition, the state capture theory informs us that it is the “winner class” that creates the obstacles to the reform process. We support the theoretical conjectures using the evidence collected from both the empirical literature and the facts on the ground in regards to Sub-Saharan Africa. Furthermore the theory provides insight into the development of state-business oligarchic system, a new phenomenon of party politics and business owners that is both peculiar and pervasive in the national political economy. Our preliminary findings suggest that the case in Ethiopia appears similar to what has transpired in most transition economies where the ruling political party first captured the State and subsequently captured the national economy via party owned and controlled enterprises.Using the state capture theory framework, this research will review both the empirical and theoretical literature, present historical data of the nature and the governing processes of the ruling party of Ethiopia and offer an analysis of how the interlocking business empires in the nation that are owned and operated by the web of the political and economic decision-making processes of the ruling party. In this paper, we show the African phenomena, with particular emphasis on Ethiopian and how the phenomena shares some common characteristics of state capture practiced in Eastern Europe (transition countries) while at the same time illuminating several practices that distinguishes the Ethiopian case from the rest. We show how a doubling of the hegemony is accomplished on both the political aspects (creating and controlling regional parties) and economic aspects (creating and controlling regional party-owned parastatals with interlocking ownership structures) and illustrate the tactics deployed in the formation of an oligarchy that is unparalleled elsewhere. The authors suggest, prior to conducting a full-scale research, the findings of this study will extend and advance earlier works in the field.