ADDIS ABABA UNIVERSITY SCHOOL OF POST GRADUATE STUDIES ETHNICITY AND ITS IMPACT ON ECONOMIC DEVELOPMENT IN AFRICA: CASE STUDIES FROM ETHIOPIA AND NIGERIA BY: ASNAKE ANTENEH A THESIS SUBMITTED TO THE SCHOOL OF GRADUATE STUDIES OF ADDIS ABABA UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN AFRICAN STUDIES ADVISOR DECHASSA ABEBE ADDIS ABABA UNIVERSITY MAY, 2014 Addis Ababa University School of Post Graduate Studies Center for African and Oriental Studies We hereby approve the thesis of Asnake Anteneh Chanie Candidate for the Master of Arts Date Signature __ _____________ Dechassa Abebe Advisor ___ _____________ Kidist Gebreselassie (Dr.) Internal Examiner ____ ___________ M.Venkataraman (Dr.) External Examiner ACCEPTED _____ _________ ___________________ Tesfaye Tafesse, PhD Director Center for African and Oriental Studies i ACKNOWLEDGEMENT First of all I would like to thank God and his mother Saint Virgin Marry for not only giving me great courage and strength to complete my study and looking forward, but also for allowing me to stay alive as a person with saving out of the horrible natural disaster during my childhood. I owe a special debt of gratitude to my advisor Ato Dechasa Abebe (PhD fellow) for his precious support and guidance throughout the study; without his constructive comments and observations, this research would be only a spare of ideas. I would like to express also my deepest gratitude to my professor Dr. Getachew Kassa for his invaluable guidance and motivation during the selection of my research topic. His encouragement was an eyes breaker for me to deal with such kind of probably sensitive issue. I would like to extend my thanks to my professors at the Center for African and Oriental Studies of Addis Ababa University especially for Dr. Kidist Gebreselassie for her all rounded and genuine support in and out the class, Dr. Mohammed Hassen for sharing me his immense experience about Ethiopian and African politics and being always positive, Dr. Tesfaye Tafesse for delivering two valuable development courses in a proficient manner and Dr. Yasin Mohammed for his dedicative course offering. Without the integrated knowledge obtained from these intellectuals, it was unthinkable to conduct such multidisciplinary kind of study. My gratefulness must goes to my family, for providing me the infinite love and inducement during all steps of my life. May God elongate my father Anteneh and mother Etagegn’s life with the rest of the family members. Most importantly, my special words should go to my lifelong girl friend, Tigist Bayinesagn, for her affection and love during the long journey of my life. Her care through the difficult times helps me to be strong enough to overcome challenges and see the positive side of life. Furthermore, I am highly grateful to Rahel Berhe, who has been my best Facebook friend since the last two years. Her virtual encouragements, amusing jokes, and friendliness have inspired me when I lost hope and got bored. Thanks to Mark Zuckerberg and his fellows, with Rita, each day was so pleasing! ii ABSTRACT Trends in Africa show that ethnicity has been manipulated by rulers for political appointment, economic control, social supremacy and cultural domination. Previous studies on the continent, extensively tried to explore ethnicity in terms of its political and cultural implications. Its economic inferences has not been well explored until recently. This study, by employing a qualitative approach, critically investigates the adverse effects of ethnicity on economic development in Ethiopia and Nigeria. It also aims at deriving constructive African lessons on how ethnic diversity can be managed and switched to fast, equitable as well as sustainable economic growth. In general, the research findings show that although federalism (either in ethnic or other forms) has been implemented as a system for state building in Ethiopia and Nigeria, still there are rising laments on political and economic inequality as well as manipulation of federal power by dominant groups. Ethnicity, with having a great space on the politico-economic structure of the nations, has hampered economic development through influencing investment, intensifying brain drain, amplifying corruption, leading unfair competition, eroding trust and exacerbating economic marginalization. Thus despite registering remarkable growth over the past couple of years economies in Ethiopia and Nigeria, while they enrich few sections of political elites and affiliated spectrums, leave masses of ethnic groups to live under poverty and face inequality. This directly shows the nations’ inability to implement genuine federalism for viable economic development. By recognizing the very existence of various ethnic groups and widening space for their prosperity through implementing genuine federalism, the study suggests that, the governments should propagate the grand positive impacts of national identity for state building and harness it accordingly. Key Words; Economic Development, Effects, Ethiopia, Ethnicity, Federalism, Nigeria. iii TABLE OF CONTENTS Page No. Acknowledgement---------------------------------------------------------------------------------------------i Abstract---------------------------------------------------------------------------------------------------------ii Acronyms ----------------------------------------------------------------------------------------------------vii Chapter 1. Introduction 1.1 Background of the Study---------------------------------------------------------------------------------1 1.2 Statement of the problem--------------------------------------------------------------------------------3 1.3 Research Questions---------------------------------------------------------------------------------------7 1.4 Conceptual framework-----------------------------------------------------------------------------------8 1.5 Objective of the study -----------------------------------------------------------------------------------9 1.6 Scope of the Study----------------------------------------------------------------------------------------9 1.7 Significant of the Study --------------------------------------------------------------------------------10 1.8 Limitations of the Study--------------------------------------------------------------------------------11 1.9 Organization of the Paper------------------------------------------------------------------------------12 Chapter 2. Review of Related Literature 2.1 Defining Concepts---------------------------------------------------------------------------------------13 2.1.1 What is Ethnicity? ---------------------------------------------------------------------------------13 2.1.2 Ethnicity and some key related concepts-------------------------------------------------------16 2.1.3 Economic Development---------------------------------------------------------------------------17 2.2 Theories on Ethnicity and Economic Development------------------------------------------------19 2.2.1 Ethnicity and its positive role on economic development -----------------------------------20 2.2.2 Ethnicity and its effect on economic development--------------------------------------------21 2.3 Ethnicity and Major Economic Issues----------------------------------------------------------------24 2.3.1 Ethnicity and Investment-------------------------------------------------------------------------25 2.3.2 Ethnicity and Brain Drain------------------------------------------------------------------------26 2.3.3 Ethnicity and Corruption ------------------------------------------------------------------------29 2.3.4 Ethnicity and Unfair Competition---------------------------------------------------------------30 2.3.5 Ethnicity and trust --------------------------------------------------------------------------------32 2.3.6 Ethnicity and Economic Marginalization -----------------------------------------------------33 iv 2.4 Relative Deprivation Theory --------------------------------------------------------------------------34 2.4.1 Meaning and Historical Trends -----------------------------------------------------------------34 2.4.2 Core Assumption -------------------------------------------------------------------------------- 35 2.4.3 Contextualizing Relative Deprivation Theory ------------------------------------------------36 2.5 Ethnic Federalism and Developmental State: Challenges and Opportunities-------------------38 2.6 Ethnicity and Economic Conditions in Ethiopia and Nigeria-------------------------------------40 2.6.1.How ethnicity is being denoted? ----------------------------------------------------------40 2.6.2 Ethnic composition--------------------------------------------------------------------------42 2.6.3 Economic Conditions -----------------------------------------------------------------------43 2.7 Federalism in Ethiopia and Nigeria ------------------------------------------------------------------45 Chapter 3. Research Method, Materials and Procedures 3.1 Study area ------------------------------------------------------------------------------------------------42 3.2 Study Design---------------------------------------------------------------------------------------------42 3.3 Sample Method -----------------------------------------------------------------------------------------44 3.4 Method of Data Collection-----------------------------------------------------------------------------44 3.5 Descriptions of Concepts-------------------------------------------------------------------------------45