07 January 2014 News Round Up


Dr. Tedros held discussion with China’s Foreign Minister

Starting his five-day tour to Africa, Minister of Foreign Affairs of the People’s Republic of China, Wang Yi, arrived Ethiopia today (January 6 2013). The Minister upon arrival was welcomed by Foreign minister of Ethiopia, Dr.Tedros Adhanom. The two Ministers held discussions afterwards focusing on existing bilateral relationship between China and Ethiopia and on ways to take it to an even higher level.

Dr. Tedros thanked the Foreign minister of China for making Ethiopia as his first destination in his tour to Africa. He also noted that the Ethio-China relations is growing much stronger evident in frequent high level exchanges between the two governments. He expressed his gratitude for the people and Government of China for their relentless support to Ethiopia’s economic development through development finance, investment, and in capacity building through transfer of Knowledge, skill and knowhow.

Dr. Tedros also called for a stronger partnership between Ethiopia and China in its multifaceted engagement and noted that China’s volume of investment is number one in Ethiopia. Dr. Tedros pointed out that Ethio-China relationship covers wide range as shown in its multi-layered form of government to government, party to party, people to people and business to people relations. Since this relationship is wide and covers all important areas, it is growing stronger and exemplary, he noted.

Dr. Tedros appreciated china’s involvement in projects like the Ethio-Djibouti Rail way project and the Addis Ababa Light Railway project. He also appreciated China’s interest to finance the Melkele-Asayita Rail way development project as it will give an opportunity to develop the huge potash potential of the region. Such kinds of infrastructural developments will make Ethiopia’s economy more competitive, he said. Dr Tedros also expressed his appreciation for the signing of an agreement between China Association of Development zones (CADZ) and the Ministry of Industry to work together with the Government of Ethiopia in developing Special Economic Zone, noting paramount importance to industrial development. He finally noted that the all- inclusive development process that China follows is a model for Ethiopia.

Ethiopia and China also built strong relationship in terms of finding lasting peace and stability in the region as well as in the international forums.  In this regard, Ethiopia appreciates china’s contribution to solve the crisis in this volatile region.

Foreign minister of China Mr. Wang Yi stated that he made Ethiopia his first stop in his African trip because the relation is in a stronger shape. The mutual economic relation is growing along with vibrant people to people and cultural relations, he noted. In order to take this strong relation in to an even higher level, the Foreign minister underlined the need to deepen the bilateral political relations , improve on  cooperation in various fields including education, culture, technology and other fields, and strengthen the cooperation between the two countries and uphold their positions in the international stage.



Japan PM to visit Ethiopia

Addis Ababa – Japanese Prime Minister Shinzo Abe will visit Ethiopia this week.

Abe will commit some 10 billion yen to Ethiopia for the construction of a geothermal power plan.

The premier will also visit Mozambique, Ivory Coast and Oman. The premier is expected to provide over 60 billion yen ($577 million) in loans to Mozambique for the construction of highways.

Officials from some 50 Japanese corporations are likely to accompany the Prime Minister.

At the Tokyo International Conference on International Development in June, Abe said “Africa will be a growth centre over the next couple of decades” and Japan must make a commitment in a way that would benefit both sides.



Indian meat processor sets up plant in Ethiopia

Allana Sons, one of the largest Indian meat processing companies, has invested $20 million to establish its first meat processing and exporting plant in Africa.

The company has made its base in Ethiopia’s Ziway town in Oromiya state of Ethiopia, 159 km from capital Addis Abeba.

The company signed an agreement Wednesday at the ministry of industry with ETG Designers and Consultants Plc, a local private firm, for establishing the modern meat processing and exporting plant. India’s Ambassador to Ethiopia Sanjay Verma, who is concurrently accredited to Djibouti and the African Union, was present.

“The arrival of Allana will add more value to the Ethiopian economy, following the demand for meat production in the country, and to the existing $5 million investment by Indian companies,” Verma said.

The company hopes the integrated meat plant will start production by September 2014, slaughtering around 200 cattle (25 tonnnes) and 5,000 sheep/goats (50 tonnes) a day.

Initially, the plant is expected to produce 75 tonnes of boneless meat daily ready for export, according to Aman Khan, who heads the Allana Group in Ethiopia.

“Ethiopia has the largest livestock population in Africa and it is striving to achieve benefits from the sector and we are just adding our part to the economy and to the development of the sector in the country,” said Khan.

Khan said that the Allana Group would strive to add value to the Ethiopian meat and livestock market.

The first phase of the project will see the employment of some 600 permanent staff.

On the issue of environmental protection, Khan said a world-class effluent treatment plant would be constructed alongside the meat processing project.

In the second phase, the company plans to more than double its slaughtering and exporting, depending on the market demand.

The government has provided 75ha of land and the company intends to begin commercial production by September. Khan said the waste from the slaughterhouse will be processed to produce biogas and animal feed.

The design of the plant has been finalised and the company is in the process of evaluating a contractor, according to Eshetu Temesge, executive director of ETG.

“It is not just about signing a contract but also importing good practices from Allana”, he said.

The Allan Group, known as Allana Sons in India, exports frozen halal buffalo meat, coffee, fruits and other commodities from India to some 70 countries. It was established in 1865 and has come to Ethiopia with its own capital and market knowhow.

Khan said that his company would continue investing in Ethiopia to make it the “hub of meat in east Africa”.

“This particular project will open our eyes to use the resources we have yet fail to pay attention of their potential,” said Keba Hunde, commissioner of Oromiya Investment Commission.



Residents make way for new stadium

The area between Bole Medhanialem and Imperial Hotel is being cleared to make way for the construction of a 60,000-seat stadium, estimated to cost 1.6 billion birr.  Residents of the area, commonly known as “Chereqa sefer, have been relocated, as many houses had to be demolished for the construction. Many squatters have also been removed from the area.

Last year in June the Federal Sport Commission officially declared the winner of the new architectural design of the new stadium that it plans to build. The Winner of the design was reportedly JDAW and its engineers. The stadium will be Ethiopia’s first that is up to FIFA’s standards and guidelines. Currently there are only two stadiums in Addis Ababa. The Addis Ababa Stadium which was built by Emperor Haile Selassie half a century ago. Another stadium, which has yet to be fully finished, is  Abebe Bikila Stadium.

It was reported that the commission believes the old stadiums are preventing them from holding more football matches. In addition, the bigger stadium will generate more revenue, as is common for other nearby countries that have bigger stadiums.



Horticulture sector growing despite communication, power, bureaucratic challenges

The Ethiopian Horticulture Producer Exporters Association (EHPEA) showcased seven of its farms to display the successes and challenges the sector faces.  Tewedros Zewede, director of the association, told media members that flower and produce growers need more land, more consistent power and better telecommunications in order to grow the industry, during the tour that occurred January 2-4, 2013.
“The government is always trying to attract investors to the sector,” Tewedros said. “But when they do come they have to struggle through a quagmire of bureaucracy to obtain land and every little thing takes time and unnecessary effort,” Tewedros said while walking reporters through the flower, fruit, vegetable and herb plantations.
Telecommunication is also becoming one of the biggest challenges in the sector Tewedros added. The produce has to be sold and transported quickly. For that the producer and consumer have to meet at the farms daily. This wastes time and cripples the country’s ability to compete internationally, he said.
“We are competing with countries like Holland and The Netherlands in the international market,” he added. “We have to be more competent and solve the problems of logistics.”
The association has 96 members which makes up the majority of the producers and exporters in Ethiopia. It was established in 2002. In the 2011/12 fiscal year, the sector garnered USD 265 million. Tewedros claims that the 2012/13 revenue exceeded all previous years but he was unable to reveal the exact amount because the result is still being audited.



Inflation takes downward turn

The Ministry of Finance and Economic Development (MoFED) released a statement saying that there are indicators that the inflation rate of the country is about to take a downward turn.

A senior economist who requested anonymity told Capital that inflation can be a growth indicator provided that it is kept in check. According to the Central Statistics Agency (CSA), the Inflation rate for the month of November 2013 was 7.9pct.  The economist believes that a decrease in inflation is only possible when there is a surplus of production. Indeed the data from CSA seems to support the economist’s opinion. It states that the crops from this year’s harvest will be 254.2 million quintals, 22.9 million more than the previous year’s. This includes major components of Teff, Barley, Corn, Wheat, and Maize. Among the major reasons cited for the rise of prices was importing food products especially staple diet supplies.

The statement from MoFED claimed that the inflation for food stuffs had decreased from 30.5pct November in 2012 to 6.5pct in 2013. The overall rate has decreased from 25.8pct to 8.6pct. Prices for other materials have deflated from 20.3pct to 19.9pct. Capital investigated at local bakeries. The price for wheat in September was 950Br a quintal, in October it rose to 1,150Br during the wheat shortage and now the price stands at 960Br. The expert maintains that this stabilizing of prices won’t have an adverse effect on Ethiopian farmers. “It is after all only a prediction,” they said. “You have the right to sell your products at the price where you can make a profit”.

The economist argued that  opening the market to more private investment would further reduce inflation. They cited examples like the government getting involved in the wholesale market and influencing the wholesale market which decreases competition. “Competition will allow fairness to reign in the Ethiopian market,” our expert concurs. “For too long the market has been controlled by an oligarchy of rich and powerful businesses. It is time for the rise of middle class traders,” they said.

One measure the government took is the distribution of imported staple food products like sugar, and cooking oil from abroad to sell to low income citizens at reasonable prices, according to MoFED’s report. It further stated that the government is doing the best it can to insure that these products don’t end up on the black market.

Overall, the expert agrees with the measures of MoFED but cautions that decreasing  inflation has to be balanced with a trade-off. “At the start of the GTP the government decided to tackle four macro-economic problems,” the economist said. “Namely, unemployment, balancing payments, increasing the country’s GDP and stabilizing market prices. But you have to realize that you can’t achieve all of them at the same time. In economics, a trade-off is necessary. Like we Ethiopians say, just because you have two legs doesn’t mean you can climb two trees,”

The expert continues by saying that every economic decision made by the government has to be study-based. “It also has to put the realities of the time in mind,”. “That calls for a revolution in CSA’s data collection methods which are archaic and leave room for inaccuracies,” the economist concluded.



ERCA admits confidence issues among staff

The Ethiopian Revenue and Customs Authority (ERCA)  says it has observed employees suffering from a lack of confidence possibly due to recent events at the Authority.   Taxpayers who have been asking for their taxes to be reviewed have said that employees have been reluctant to make decisions or hear their cases. During discussions held between management of the Western Addis Ababa branch of ERCA and taxpayers on Friday January 3, 2014 at the National Cultural Center, in Sidist  Kilo the issue was frequently raised by the taxpayers. At the latest discussions between taxpayers and the Authority, many repeated experiences that others have been complaining about for the past several months.

They say that ERCA staff have been unwilling to give decisions and have lost confidence in their work. Taxpayers who participated at Friday’s event complained that they could not get their tax issues cleared up because they could not find someone willing to be responsible to give a decision about their complaint.   “I can’t participate on bids because I have not been able to get clearance from ERCA for over six months,” one of the participants said. Participants said that employees who did decide on their tax cases were fired or accused of corruption because they conducted their ordinary responsibilities. Meanwhile they say that those who do not do anything are able to remain at their jobs. As a result, they argue, inaction becomes in the best interest of employees causing a bottleneck in the system.

The taxpayers further complained that they were unable to get solutions to their tax issues for several months and were not given any specific reason as to why. Emuye Adera, head of the West Addis Ababa Taxpayers branch of ERCA, admitted that lack of confidence and hesitation is something they have been observing from staff. “The staff is very frightened and retreating from making decisions.  She said some of employees are looking to upper officers to handle their cases. Lack of decision making  negatively affects the entire  system,” Emuye said. “We have to work to eliminate the fear on the faces of the employees using innovative ways to build their confidence,” she added. “There is also lack of efficiency between employees when they are dealing with cases,” she clarified.

She said that ERCA has identified the problem as a challenge. “The Authority will work to solve the issue,” she added. “We need the employees to consider customer’s problem as their own problem, if we can do this decision making will improve,” the branch head explained. She advised that the taxpayers to stand up for their rights confidently rather than accepting every action  taken by the tax officers. Some  ERCA directives are not clear, and some of them are confused with other directives issued by ERCA. One of the participant said that authority directives sometimes are issued against the proclamation  amended by the parliament, which is the only body that can ratify proclamations, and published them on the  ‘Negarit Gazette’, taxpayers argued.

At the event the tax office management claimed that very few people show up at hearings, discussions and education events about taxes that are organized by ERCA. “We have frequent awareness creation events that are meant for new taxpayers to keep them from tax faults but the number of participants has been much less than expected,” the branch head said.    The number of participants at the discussion held on Friday was also lower than expected.   ERCA’s management agrees that some tax related directives and proclamations are not clear and might be hard for employees to implement when working with customers on a daily basis.  Emuye said that the Authority is working to clarify the directives and other laws.



Melaku denied bid for Supreme Court hearing

The House of Federation (HoF) ruled out Article 8 (1) of Proclamation No. 25/96 of the Federal Court’s Establishment Proclamation that grants the Federal Supreme Court exclusive first instance jurisdiction over criminal cases involving government officials saying that it is unconstitutional. The articles states that the ‘Federal Supreme Court shall have exclusive first instance jurisdiction over the offences for which officials of the Federal Government are held liable in connection with their official responsibility.’

On November 20, 2013, the Federal High Court’s 15th Criminal Bench referred the case of Melaku Fenta, former director general of the Ethiopian Revenues & Customs Authority (ERCA), to the Council of Constitutional Inquiry, saying that the latter needed to determine whether the Federal High Court had material jurisdiction on the case. The Court decided that the case needed interpretation by the Constitutional Inquiry Commission – an expert group under the House of Federation – against counter arguments from prosecutors of the Federal Ethics & Anti-Corruption Commission (FEACC). Prosecutors for FEACC during the proceeding argued that the former director general may have a ministerial portfolio, but that it was meant only as a benefit of his job. They also claimed that the office Melaku led is an authority and not a ministry.

During its urgent session on Thursday January 2, 2014, the House of Federation with a majority vote decided that the article was unconstitutional referring to Article 20 (6) of the FDRE constitution that reads ‘All persons have the right of appeal to the competent court against an order or a judgment of the court which first heard the case.’ When it was time to vote, 76 members voted in favor of the council’s decision with eight objections and two abstinences. The decision means, the Federal High Court will retain jurisdiction over Melaku’s case.

The decision also means, subject to jurisdiction, government officials, including members of House of People’s Representatives, HoF, ministers and officials above the rank of ministers, judges of the Federal Supreme Court could be brought before any court.



Over 2,400 Investment licenses face cancellation

The Ethiopian Investment Agency stated it will be canceling 2,497 investment licenses with an accumulative investment worth well over 60 billion birr within the next week if the listed business owners do not report and give explanations to the Agency.

The Agency posted a notice some two weeks ago listing down the names of the companies whose investment licenses would be potentially revoked, along with other information such as the sector in which they are involved together with their investment worth.

“We are currently going through documents of various companies and conducting an evaluation. We are checking to see if everything is done correctly. Accordingly we have put up a notice here asking companies who do not have the appropriate and necessary documents, come and report to our office,” a PR officer at the Agency told Capital.

Both local and international companiesare listed on the issued notice by the Agency. “If the companies listed report and provide the Agency the necessary documents that are currently missing, then there is no reason their license would be canceled,” the PR officer stated.

Some of the reasons for the licenses to be revoked include failure to renew business licenses as well as not starting the operations for which the license is issued.

“Some of the companies acquire licenses for projects but end up failing to begin operations in the specific time provided in the law. These companies will have to provide a persuasive and acceptable reason in order to keep their license,” he further added.

The companies on the list are involved in a variety of sectors such as construction, tour operation, hospitals, restaurants, many of which specialize in Chinese cuisine, consultancy firms, higher education institutions, construction machinery rentals, flower farms, hotels and more.

“We are still in the process of evaluating more documents. We will release names of more companies, if there are any, who have failed to provide full documentation shortly,” he said.

The companies have been given a window of 20 days to be able to fix the problem and stop their license from being revoked.



Banks move into new business

The National Bank of Ethiopia (NBE) is set to roll out a new directive that will make it easier for banks to become directly involved in non-banking businesses, such as agriculture, commerce and industry. The directive that will replace a previous one issued in 1996, entitled ‘Limitation on the Investment of Banks’, allows banks to directly engage in businesses not related to banking, provided that they do so in a joint venture or partnership agreement with their customers, through an interest free banking service. “We expect the directive to be ratified in the coming few weeks,” President Abi Sano of Oromia International Bank said. “It will help us in our endeavor to be the best service provider in the Islamic banking sector,” he added. NBE in 2011authorized interest free banking, as part of the services given by a conventional bank and not as an independent operation in and of itself.  Zemzem Bank, which began mobilizing funds in December 2010 to establish a purely interest free bank, was deterred by this restriction, and was later forced to dissolve. In interest-free banking, funds are mobilized and advanced without payment or receipt of interest, in accordance with Islamic principles.

Instead, such banks depend on investments in client businesses, equity financing and charges for services rendered, to mobilize funds. “It is this restriction that the new draft directive is trying to resolve,” the president said. In the 1996 directive, banks were allowed to invest only up to 20 percent of the company’s share capital in a single non-banking business and total holdings in such businesses can only reach 10 percent. However the new directive will increase banks involvement in the investment sector. Currently, insurance companies enjoy relatively more freedom in investing.



Nib selects four candidates to design its HQ

Nib Insurance Corporation(NIC) selected four finalists to  design their headquarters, which will include a branch for its’ sister company , Nib International Bank, on Africa Avenue next to Mega Printing House.  The four finalists were chosen by impartial judges in the architecture and financial sectors. The three runner-ups were given monetary prizes and one was awarded first prize, according to the Bank’s PR office. The prizes, however, were undisclosed.

Nib Insurance was founded on May 2, 2002, by 818 shareholders, with  30 million Br in paid-up capital. Before the NIC, Nib International Bank (NIB) was established on 26 May 1999 and started giving service on October, 1999. It had a paid up capital of 999.4 million birr and a total capital of 1.7 billion birr as of the last fiscal year.

There have been disputes over the construction of the Nib Bank headquarters located at Senga Tera among shareholders and board members, according to sources close to the issue. Most of the shareholders found the price for the construction of the 35 floor building, which now stands at one billion birr excessive.

Only time will tell if the shareholders of Nib Insurance will have similar misgivings about their headquarters, when the design and construction cost of the building is revealed in the coming months.



Anti-Corruption Commission establishes alliance with consumer unions

The Federal Ethics and Anti-Corruption Commission held a consultative meeting with consumer unions to talk about a draft regulation written by the commission that would form an anti corruption alliance.

According to the draft, the alliance will make the fight against corruption stronger by using trainings and sharing experiences between the unions and the Commission. It also aims to help the unions become more efficient through transparency and capacity building.

The document states that the alliance is being founded by the Federal Ethics and Anti-Corruption Commission, Ministry of Trade, Addis Ababa City Trade and Industry Development Bureau, Trade Practice and Consumer Protection Authority as well as ten consumer unions.

According to the regulation, members of the established alliance are expected to educate their community members as well as fellow alliance members on ethics and ways to fight corruption. It will also be a platform for the unions to have transparent and constrictive discussions about challenges they face. The alliance has a structure of a General Assembly, Executive Committee, Chairman, deputy Chairman and Secretary.  The General Assembly will meet once a year and will be in session only if half of the members are in attendance.

Through this and other alliances with different sectors  throughout the nation, the Federal Anti-Corruption Commission plans to sculpt a society that fights and becomes free of corruption. The consultative meeting was held at the Ghion Hotel for two days on December 30th and 31st, 2013.



Premier calls for respect of workers’ rights to associate

Prime Minister Hailemariam Dessalegn has called on employers to recognize and respect the rights of employees to form associations.

The Premier made the call on Saturday during a discussion held with representatives of the Confederation of Ethiopian Trade Unions (CETU) and the Ethiopian Employers’ Federation (EEF).

The discussion held at the office of the Prime Minister was graced by the presence of ministers and state ministers as well as higher government officials.

Representatives of CETU on the occasion raised various questions to the Premier and the Ethiopian Employers Federation including about the freedom of association.

Responding to the questions, the Premier said, “Ethiopian Constitution guarantees the rights of workers to form or join associations. It is an internationally recognized human right.”

In addition to being a right, freedom of association enables workers and employers to join together to protect better their own economic interests, he said.

Associations enable both workers and employers to hold genuine dialogue and to understand each other’s problems and find ways to resolve them, he said.

Employers need to utilize associations as a good opportunity to improve the productivity, quality and competitiveness of their businesses and reduce cost, the Premier said.

He said employers and employees should work hand in hand to maintain indusial peace and attain government’s vision to propel Ethiopia to a middle income country.

EEF President, Tadele Yimer said the Federation honors the rights of workers to form associations and will do all it can for its success.

CETU President, Kassahun Follo for his part said employers and employees need to work in collaboration towards industrial development.

The confederation will play its role in the move to realize the Growth and Transformation Plan (GTP) of the country, he said.




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