Opinion | By Yared Haile-Meskel, Engineer, UK*

It appears that the Ethiopian Government is about to outsource the management of the Ethiopian Telecommunications Corporation (ETC) to France Telecom (Orange). What Orange is going to do and to what extent it is going to get involved in the ETC's operations is not known.

Orange is one of the major players in the telephone, mobile, and broadband sector in Europe, with 193 million customers, 180,000 employees, and a 67.4 billion dollar turnover. It has operations in 32 countries, and 14 of them are in Africa, including Kenya, Egypt, and Uganda.

It is good: if Orange is brought in to restructure the ETC to create a competitive information communications technology (ICT) market. But bringing it in to only manage a monopoly may not improve things. If the intention is the later, we may see the worst of both worlds; that is, a monopoly from a controlled economy and profit driven management from a market based economy.

Contrary to the management philosophies of a controlled economy based on goals, the prime responsibility of free market managers is to maximise shareholders' values. In our case, the shareholder is the state.

The paradox is that the ETC is already a very profitable company (through extortion) using its monopolistic position. For instance, the ETC made a 3.5 billion Br gross profit in 2009 out of only 5.7 billion Br in revenue. A whopping 62pc profit margin is rare in legal businesses, and it would be very difficult for Orange to maximise the government's value from this dazzling height, without squeezing subscribers and employees for the last drop.

We all know that the state has been complacent with these extortion practices of the ETC, and we do not expect the government to hire expensive management from France to reduce its own revenues. This conflict of interest between what subscribers want, which is better services at lower costs, against what the government wants, needs to be properly discussed. Hence its outsourcing bid.

There are a number of management companies from India running state owned businesses, local endowment companies, and private businesses. On the contrary, there are no domestic players I know of that are involved in the turnover of the management sector.

We also hear of a similar lack of second-generation leaders in the political arena.

What is leadership? Why do we not have enough leaders Have we lost the opportunity for the development of business leaders in the last 30 years of controlled economy?

In the academic world, leadership is a widely studied subject. Many hundreds of academic papers, books, and articles get published every year addressing the issue of leadership. Simply entering the word "leadership" in a Google search engine brings more than 120 million entries.

This confirms that leadership is one of the most relevant aspects of organisations and society. Leadership and management are different things.

Warren Bennis says in his book, "On Becoming a Leader," "The manager administers; the leader innovates. The manager maintains; the leader develops. The manager focuses on system and structure; the leader focuses on people. The manager controls; the leader inspires trust... The manager accepts the status quo; the leader challenges it. The manager does things right; the leader does the right thing."

Nevertheless, even in academic literature, there is no clear consensus on the definition of leadership. Leadership is defined in various ways by different scholars.

Rauch and Behling, for example, define leadership as "the process of influencing the activities of an organised group in its effort toward goal setting and goal achievement." Blake and Mouton describe leadership as the "process of social influence, in which one person can enlist the aid and support of the others in the accomplishment of a common task."

These definitions of leadership as a "process of influencing" others towards a certain goal tend to reflect an authoritarian view of the world.

Recent definitions of leadership have also changed with the shifting values of the world. For example, Kourzes and Posner define leadership simply as a "relationship between those who aspire to lead and those who chose to follow."

If leadership is a relationship, then it has to be built on mutual consent between followers and leaders. This makes the "willing followers," as well as the leaders, partners in achieving a common goal, a common vision. The contemporary understanding of the role of business as well as political leadership is to inspire, motivate, and empower their willing employees or followers towards a desirable future.

Daniel Goleman in his book, "The New Leader," identifies six types of dominant leadership qualities: visionary, coaching, afflictive, democratic, pacesetting, and commanding.

People become more productive through motivation than fear of authority. Particularly, in a modern-day knowledge based economy like telecom, authoritarianism is ineffective. These classifications show the dominant traits of leadership, but there are no clear-cut boundaries between those types of leadership.

For example, a visionary leader may have to engage in coaching to create a new generation of leaders. the may have to be a pacesetter to move faster by creating a sense of urgency to meet deadlines and achieve ambitious goals. The same leader could be afflictive, commanding, or democratic in resolving conflicts, getting consensuses, making decisions, or kick-starting turnarounds.

I am referring here about the business leadership type, which is an important quality for turning around failing companies or leading them into the next level of growth.

There is enough evidence to believe that Ethiopia's businesses are facing challenges in moving from a command economy into a competitive, open market. The last 30 years of semi socialist economy did not create the necessary conditions for practicing business leadership in a truly competitive market environment.

Without capable business leaders, investments can fail and opportunities can slip through fingers. Today, it is not only the ETC but many private companies that are facing these challenges.

It is sufficient to note the number of companies that are being auctioned by the CBE, the DBE, Bank of Abyssinia, Dashen Bank, and other banks to understand the growing problem of foreclosure as the economy expands and liberalises.

These failing businesses are not only ambitious start-ups, like in the horticultural business, but also well established businesses built over many years by successful entrepreneurs. The trouble faced by the Bekele Molla family, with the CBE's threat to auction property down in Langano, is one example.

The root causes of business failure always involve bad judgment by business owners and their managers. Some have to face bankruptcy as a result of excessive borrowing; some mismanaging cash flow; some failing to do proper market research; and some failing to identify their strengths, weaknesses, opportunities, and threats. Some businesses fail with their second generation management when sons and daughters have not been coached properly to step in and lead the family business.

Business leadership is not only important to create new businesses and opportunities but also to save successful businesses from falling in the hands of creditors. In the past, demand used to outweigh the supply, and there was no competition.

 The landscape is changing faster than many business owners are prepared to realise now. That is why the development of a new generation of professional business leaders has to be part of the strategy for economic development and wealth creation.

The job of free market managers such as Orange is to please stockholders, in this case only one - the government.

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* The views expressed in this article do not represent the views of Jimma Times. The author can be reached at yarhm@aol.com To send articles to JT, contact us for more detail