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Month: January 2019

Lion Roars: Flipping Slow Growth Over

Posted on by Web Master

Despite sluggish foreign exchange earnings, Lion Bank, one of the 16 private banks, marked a successful financial cycle last year by recording 69pc profit growth.

Last year’s performance of the 12-year-old bank far surpassed the previous year’s results when the Bank registered a profit growth of just three percent and a slump in shareholder return.

Last year’s profit stood at 390.77 million Br, earning investors 7.55 Br a share with a par value of 25 Br. The shareholders’ return has shown an increase of almost two Birr.

The reason for the performance improvement was the efficiency of the Bank, according to  Getachew Solomon, the fourth president of Lion who assumed the post in 2014.

“We attained efficiency by converting our resources into earning assets,” Getachew toldFortune. “We have invested the resources in the areas that generate revenues.”

The management of Lion should be applauded for this, according to Abdulmenan Mohammed, a financial statement analyst with a decade and a half experience in the finance and audit industries.

In addition to rising profit, the bank managed to show improved performance by increasing revenues.

Incomes from loan and advance interest and treasury bills of the National Bank of Ethiopia spiked to 1.17 billion Br, while incomes from fees and commissions went up by 14pc to 157.68 million Br.

Even though the Bank managed to register positive performance in increasing income from foreign exchange dealing by five percent to 53.08 million Br, the result is far lower than what it gained two years ago.

The Bank has been hit by a steady decline in earnings from foreign exchange transaction between 2011 and 2014 due to stiff competition, according to Abdulmenan.

But it had managed to reverse the trend for two years until 2016, before declines in earnings from forex returned in 2017, admits the president.

“Honestly, we didn’t perform well in generating much foreign exchange in the reporting period,” said Getachew. “We were just sharing the forex coming to the country.”

Tassew Woldehanna (Prof.), the board chairperson of the Bank and the current president of Addis Abeba University, attributes under performance in the export sector and the chronic foreign exchange shortage as a major headache for the financial sector.

“These were the major challenges that left the banking business in difficult circumstances,” wrote Tassew in his annual message to shareholders.

To reverse this trend, Lion should develop a strategy to improve this area of business, according to Abdulmenan.

Getachew agrees.

“We will focus on exports to improve our forex earning,” he said. “Of course, we will have fallbacks and different scenarios if one of the strategies fails.”

Lion’s increased income is accompanied by a significant rise in expenses that reached 1.08 billion Br.

Interest on deposits, employee salaries and benefits and other operating expenses increased by 76pc, 35pc and 15pc, respectively.

“We have done well in reducing controllable expenses by eight percent,” said Getachew.

Yet, Lion’s balance sheet grew remarkably in the reporting year.

The total assets of the Bank increased by 31pc to 14.32 billion Br; paid-up capital grew by 26pc to 1.18 billion Br; and the Bank had capital and non-distributable reserves of 1.58 billion Br.

Lion’s capital adequacy ratio, the ratio of a bank’s capital to its risk, stood at 21.4pc – considered safe territory.

Deposit mobilisation, at 11.64 billion Br, was another strength where the Bank registered a 32pc increase. Lion disbursed 7.37 billion Br as loans and advances, a 36pc growth.

This caused the loan-to-deposit ratio of the bank to increase to 63.3pc from 61.7pc. The bank is ranked as the eighth largest private bank in terms of the size of its loan disbursment, which has a 2.4pc share of the overall market. Commercial Bank of Ethiopia was the leading bank last year, disbursing 44.4pc of total loans.

Despite improvements in its loan-to-deposit ratio, Lion is still lower than the industry average of 66pc.

Lion, which ranks third among private banks in aggressive branch expansion last year, has invested 3.31 billion Br in National Bank bonds. Investments in bonds represent 23.11pc of Lion’s total assets and 28.4pc of total deposits, which remained similar to the past four years.

Analysis shows that the Bank’s liquidity level increased in value terms but was down in relative terms.

Lion increased its cash and bank balances by 13pc to 3.02 billion Br. Its liquid-assets-to-total-assets ratio fell to 21.1pc from 24pc, and liquid assets to deposits also decreased to four percent from 30pc.

Established by 6,392 shareholders with 200 million Br in paid-up capital, Lion increased its paid-up capital to 1.18 billion Br. It had capital and non-distributable reserves of 1.58 billion Br.

Investment Income Uplifts Ethio Life’s Achievement

Posted on by Web Master

Even though gross written premiums showed no significant increase, the decade-old insurance firm Ethio Life & General registered 19pc profit growth in the past fiscal year with the support of investment income.

In the reported period, the firm managed to net 23.61 million Br in profits, which pushed shareholder returns to 235.12 Br a share, an 8.8pc increase from the previous year.

The year was multifaceted, an exciting as well as a challenging year, according to Yoseph Endeshaw, board chairperson of the firm.

“The stiff and unethical competition and a critical shortage of insurance professionals posed challenging conditions in our business undertakings,” said Yoseph, addressing shareholders in the firm’s annual report. “Despite the hurdles, we continued to perform strongly.”

Along with a high underwriting surplus, incomes generated from time deposit interest and dividends jumped by 15pc to 17.59 million Br and by 18pc to 1.72 million Br, respectively.

The firm put 143.37 million Br in fixed time deposits and 47.62 million Br invested in shares, bonds and properties.

Underwriting surplus has also risen by 47pc to 50.66 million Br due to a reduction in premiums ceded and claims.

The total gross written premiums, both in life and general insurance, has increased marginally by two percent to 131.9 million Br.

“The increase in gross written premiums is not satisfactory,” commented Abdulemenan Mohammed, a financial statement analyst with vast experience in the financial industry.

Being very selective in issuing insurance coverage has kept the firm from writing huge premiums, according to Shimeles G. Giorgis, the firm’s chief executive officer.

“It lowered our market share in the industry,” Shimeles told Fortune. “At the same time, it helped us to control claims.”

Claims paid by the firm went down by four percent to 49.24 million Br. This is recorded despite the trend in the industry, where claims have been soaring.

Out of total gross written premiums, 36.25 million Br was ceded to reinsurers. The retention rate rose to 72.5pc from 68.8pc.

“There is still room for increasing the retention rate,” Abdulemenan says.

A huge expansion of expenses accompanied the income surge.

Salaries and benefits and general administration expenses went up by 49pc to 23.7 million Br and by 14pc to 17.05 million Br, respectively.

Last year, Ethio Life opened a single branch, which was one of the 40 new branches opened by the 17 insurance companies last year. About 84pc of the total new branches were privately owned.

The total assets held by Ethio Life & General increased by 34pc to 400 million Br.

Total investments of the firm account for 47.7pc of total assets of the company. This proportion is far lower than the preceding year’s ratio of 55.8pc.

This must have been due to a huge amount of money held in receivables, according to Abdulmenan.

“The company should collect this money and put it in income-earning activities,” said Abdulmenan.

Liquidity analysis shows that cash and bank balances of Ethio Life decreased in value as well as in relative terms. Cash and bank balances decreased by nine percent to 40.94 million Br.

Cash and bank balances to total assets fell to 10.2pc from 15.1pc.

Despite the reduction, the liquidity level of Ethio Life & General is at a reasonable level, according to Abdulmenan.

The firm’s capital and non-distributable reserves account for 24pc of its total assets, demonstrating Ethio Life’s strong capital.

However, the capital of the firm has increased by a marginal increase of four percent to 89.92 million Br; while the industry in gross recorded a 26.4pc growth to 5.5 billion Br. Out of this, the share of private insurance companies was 72.1pc.

The insurer had a plan of raising its capital to 200 million Br during its latest general assembly but failed, because it did not have a quorum.

“We have called for an extraordinary meeting to raise our capital,” Shimeles said.

Online Betting Service Joins the Fray

Posted on by Web Master

The first of its kind, Abyssinia Bet, an online sports betting platform with both a mobile application and website, was launched last week. The application allows users to place their bets and collect their winnings electronically.

The online sports-betting service offers users a choice of teams and athletes to bet on in Amharic, English and Mandarin. Customers make deposits and cash out their earnings through the Hello Cash mobile payment system.

“Anyone can play and bet anywhere and at any time without coming to our office,” said Ashenafi Nigussie, managing director of Abyssinia Bet.

The service acquired an application and online-based license from the National Lottery Administration, established over half a century ago to regulate all gambling-related activities, last October.

“We plan to excel in the business beyond the fact that we are app based by offering better odds than our competitors,” Ashenafi says.

The platform enables players to win up to one million Birr each week by placing bets that start at a minimum of 10 Br.

There are currently six firms with licenses, and another five in the process of obtaining licenses for sports-betting services from the Administration, which takes 15pc of their profit as a fee.

The two-year-old Habesha Sports Betting is in the process of setting up a similar system, where cash transactions can be made through Hello Cash.

“When we started, it was difficult because the public’s awareness of sports betting was not as deep,” said Misikir Hassen, CEO of Habesha Sports Betting, which has expanded to 23 branches since its establishment.

“Nowadays it is getting better, and our clients are asking us to make the service more accessible.”

This is a seasonal business since sports competitions are not available all year round. The most popular betting games are the English Premier League and the European Champions League, according to Misikir. Both games are off season during the summer months, which dries up business for the betting companies.

“The sports betting business is in its infancy here in Ethiopia,” says Aweqe Abraham, a sports journalist with over a decade of experience. “The number of users is very small when compared to other African countries like Kenya and Uganda, but in recent years public interest to participate in sports betting has shown a significant increase.”

By 2017, Kenya had more than 20 local and international firms who opened their doors to betting services, making it the third-largest market in Africa next to South Africa and Nigeria.

“The ugly side of this business is that it could lead to match-fixing by parties involved in the games once the business thrives,” according to Aweqe. “As long as the betting is done on games of other countries, this should not be an issue though.”

 

TRAFFIC HICCUP

Posted on by Web Master

A truck carrying a container trailed off the road into the divider along the highway from Addis Abeba to Adama, on Thursday, January 25, 2019. It was lifted out in the afternoon after a crane was used to unload the container onto another vehicle before the truck could be disengaged from the highway divider.

Glass and the Flimsy Plot Twist

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The problem with attempting to be dramatic is that it is easy to be full of oneself, which is what M. Night Shyamalan has been for far too long.

The filmmaker that gave us The Sixth Sense and Unbreakable thought he could get away with The Village and Lady in the Water. Fortunately, it seemed like he began to see the pompousness of his own work after a time. Unfortunately, he thought he could remedy it by making light, commercial and mindless movies such as The Last Airbender and After Earth.

It is said that Shyamalan returned to form with 2016’s Split. Indeed, it was his best movie in 16 years, after Unbreakable, the prequel to the movie. But it was generous acclaim considering the masterful filmmaker he was predicted to become in the early 2000s.

Glass is the last film in the trilogy of the Unbreakable film series. The first movie was about David Dunn (Bruce Willis), a.k.a the Overseer, a security officer who comes to recognise that he has superpowers, including durability, hence the title. Split introduced us to Kevin Crumb (James McAvoy), a.k.a the Horde, a man with 24 personalities, thus the split, including one that resembles a beast in body and character.

Glass brings all of these characters, including the villain from Unbreakable, Elijah Price (Samuel L. Jackson), an evil genius that suffers from brittle bone disease. Also referred to as Mr. Glass, he is the titular character of the movie.

The three characters cross paths when they are admitted into a psychiatric hospital after being caught by the police on differing occasions. There they meet Sarah Paulson, a doctor that tries to convince them that they do not actually have superpowers but only suffer from delusions of grandeur. They are not super, they just think they are, she tries to convince them. She almost persuades them, except Mr Glass, who, even heavily sedated, is smart enough to see the holes in her theory.

Almost every scene of Glass is exciting. It is cerebral, introduces us to characters that are unforgettable and presents an engaging plot. I would have been more impressed had the psychiatric hospital not been laxly guarded, making escape too convenient. But the fixation of the movie on the characters’ psychological development makes it beyond the point.

Crumb remains the most memorable of the characters, owing to the performance of McAvoy. As in Split, Shyamalan allows the actor a great deal of screen time to try out every extreme of his acting ranges, which he does with enthusiasm and success. He barely misses a beat when shifting gear between acting as a nine-year-old to a professor of Japanese cinema.

Unfortunately, Glass’ excitement only persists until the finale of the film, where Shyamalan is traditionally expected to deliver a plot twist.

Why can the plot twist not be the lack of a plot twist this time?

Expectations are high, and Shyamalan pops out one of his infatuations – beside the supernatural and a cameo of himself both of which are also part of Glass. It is not easy to have been anticipated by the audience and serves as a vindication for one of the protagonists. But it felt too much like a self-serving plot twist, concocted by Shyamalan not to disappoint fans of his style.

Still, the Unbreakable film series deserves a special place in the superhero genre. It is a drama, interested in the psychological implications of the effects of being superhuman. It is slow paced, noiseless and more character-driven than most superhero movies – characteristics Marvel and DC would rather close up shop than entertain.

 

It Takes a Village, but Mainly Parents

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Almost every parent hopes their children will turn out to be upstanding citizens and successful individuals. Many believe that this is a matter of having to inculcate into their children’s psyche the “right” spiritual lessons, sending them to good schools and helping them get honest friends.

There is some truth to such efforts by parents, but without the proper environment within the home, they will be for naught.

Parenting behaviour is a complex of physiological processes and psychological drives which are greatly influenced and modified by cultural norms and individual experiences.

It is more than an instinctive response – it is a learned behaviour. In most cases, parents are much like their parents. Those that have been abused in childhood, either physically or mentally, have a higher chance of abusing their offspring. Children of such parents usually develop low self-esteem. There is also role reversal, with the child being expected to give sympathetic comfort and financial support to the parent.

Parents that suffer from mental health issues such as clinical depression are more likely to be involved in cases of child abuse. Child neglect, other forms of maltreatment and verbal abuse are also more common in families living in poverty and among parents who abuse drugs or alcohol.

This is doubly unfair given that it is children that are not provided with enough food, clothing, shelter or medical care by their parents that are also deprived of affection.

Emotional and psychological abuse and neglect deny the child the needed support to cope with stress and to learn new skills to become resilient and successful in life. Children who are maltreated are more likely to grow up to use drugs or alcohol, run away, refuse to abide by the law and abuse others.

Usually the younger the child, the longer the abuse continues, and the closer the child’s relationship with the abuser, the more serious the mental health effects will be.

I know of two sisters who have been through physical and psychological abuse by their parents. One of the girls was raped when she fled punishment. The crime was never reported, and she was blamed for what happened to her.

Their stories were horrifying for me to listen to. They were prevented from going to school, not allowed to eat and beaten almost daily. They had a mother who never wanted to have girls, thus they grew up being spoken to in ways that children should not be. They had severe suicidal tendencies and suffered from major bouts of depression.

Such stories can only surprise a few, for they are not unheard of in the places the victims sometimes turn to – hospitals, courts and schools.

Children will not become emotionally healthy adults out of the blue. They can be inspired, equipped and mobilised to make a difference in their lives, but only if schools and communities have put in the work. As they say, it takes a village to raise a child.

But parents take the lion’s share of the responsibility. Thus, they should have solid moral and ethical foundations, compassion, integrity and commitment.

This is all the more crucial in Ethiopia, where children do not have the proper institutional and legal systems to fall back on when the problem is their parents. It gets worse as a result of a culture that holds family life to great significance, even if it is at the expense of the well being of members of the family. Community members often fail to report to the authorities for fear of falling out with their social groups. This aggravates the problem and leaves children to bear abuse until they become broken shells of the individuals they could have been.

Child protection policies and laws in Ethiopia ought to be effectively implemented to protect children and allow them to exercise their full rights. Without taking actions, it is hard to expect that the laws and TV ads in themselves will put an end to child trafficking, labour and sexual abuse.

The most important thing we can do for children is to help them exercise their human rights and provide them with values they can rely on throughout their lives. In this way, they will have the best chance to lead healthy lives as individuals and citizens.

Society must collaborate for child protection to thrive in Ethiopia. One of the most effective means is addressing the taboo of poor parenting skills that exist in Ethiopia.

 

Social Issues Society Refuses to Acknowledge

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Social problems continue to be one of the chief challenges in the world, including Ethiopia, only changing its face and texture from time to time. High rates of substance abuse, with just about half of Ethiopian adults suffering, the tensions with the family fabric and increasing rates of delinquency are some of the common social problems that are widely seen.

Such problems have not gained enough attention despite their graveness, perhaps because it is not an economic or political problem that can be fixed by the implementation of new policies. It is as well not a walk in the park to take stock of the cause of the full scale of the problem and present alternatives to address them without affecting economic and political situations.

Unfortunately, it is also not easy for us to agree on what can constitute a social problem. For the most part, it is merely a condition that people in a community view as being undesirable. Some are easier to gauge out, such as the Opioid epidemic in the United States.

Other social problems may not be viewed as such by certain groups of people. Teenagers who play loud music in a public park do not see it as a problem, but other people may consider it an undesirable social behaviour. Similarly, non-smokers may view smoking as an undesirable social condition that should be banned or restricted in public buildings. Typically, social issues result from factors beyond an individual’s control and can disproportionately affect people who share characteristics such as race, religion, economic status or geographic location.

It is the media that usually sets the tone on how we look at social issues. It can be racism, unemployment, crime, violence, drug abuse and environmental problems, most of them found at the local, regional, national and international levels. Some of these problems often get more attention than others, mostly depending on the cultural and religious norms and popular opinion within society just as much as the seriousness of the issue.

For an issue to be considered a social problem, a segment of the population should agree that the condition is counterproductive. For instance, some people favour a ban on smoking in public, but others oppose a total ban on smoking. The same goes for the right to bear arms, which some consider to be a nuisance that opens the floodgates to lawlessness while others violently disagree.

Given that whether or not social issues will be addressed largely rests on the opinions of the public, it is minorities or groups left out of political participation that pay the higher price. This gives way to political movements that have substantially affected the political and economic organisation of a nation. It is crucial to note that many political and economic issues have a social basis. For instance, a cigarette smoker becomes a victim of lung cancer, which in itself translates a public health issue.

Of the great many social problems that we face, that of the youth should be most worrying as it would come to inform their worldviews in the future. Since social issues have more to do with the attitude society has towards them than their pervasiveness, it is crucial that young people come of age satisfactorily informed of what the logical steps that should be taken are.

The young generation is growing up in an environment with easy access to information that can be easily misconstrued or misleads people. Substances that can be abused are only growing, and there is an abundance of opportunities to be lost in a virtual world that offers no means to get acquainted with opposing ideas.

If these problems are not addressed, society will become unsafe for the individual, not to mention minorities, and negatively influence the lives of future generations. It would require a societal reform to address these problems, which must start from an assertion of culpability. It also needs responsible institutions that are dedicated to protecting the few from some of the negative inclinations of the majority.

 

Agriculture Transformation Crucial to Tackle Food Insecurity

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The world population will top nine billion by 2050, with most of that increase expected to occur in sub-Saharan Africa and South Asia. Compounded by consumption growth, this will mean that the demand for food will substantially increase, a significant challenge given the planet’s limited resources.

African countries are in luck – they have the youngest population in the world and the largest share of the world’s available arable land. Unfortunately, the youth rarely own land, and the average plot size is declining. While there is considerable heterogeneity to the region’s land pressures, many of the region’s most populous countries will soon exhaust their land frontiers, while others have largely already done as such. Agricultural development strategies that base production growth on area expansion will thus be increasingly untenable in many areas.

All of these are challenges that will face Ethiopia. With a population expected to reach 160 million people by 2050, the majority of Ethiopia’s population resides in the highland regions that have the country’s best soil and highest rainfall. The highlands are also one of the most densely populated areas in the country. Most of the arable land in these places are already under cultivation.

It does not help that the economy is heavily dependent on agriculture, with the growing population relying on the land for their livelihoods. Agriculture in Ethiopia includes crops, livestock, forestry, fisheries and apiculture and the main source of livelihoods for over two-thirds of the population.

Together with increased populations dependent on agriculture, climatic, social and institutional factors are contributing to low production and productivity. Despite the continuously increasing yields for every hectare, food supplies remain insufficient. Compared to annual population growth, they stand at 2.5pc, according to the World Bank.

Young farmers are cultivating substantially less land than previous generations did. This fact further emphasises the need for either successful agricultural intensification or more rapid migration out of agriculture. Off-farm diversification out of smallholder farming is also important.  In more land-abundant areas, the last decade has seen a shift in emphasis from smallholder resettlement to large commercial farms, which has been functional for purposes not much more than creating seasonal employment.

The food security that countries such as Ethiopia are faced with remains a top development priority and global concern. It is enshrined in the 2030 Agenda for Sustainable Development by the United Nations.

Food security is also a core component of the human development and capability paradigm since food access and entitlements are critical for reinforcing essential human capabilities. Agriculture is central to this discussion, especially in the effort to increase land productivity and yields.

Rural areas can also benefit from agricultural transformation in the improvement of food and nutrition security. They can increase farm income from the growing urban demand for agricultural products and off-farm income from employment along the value chain.

The Ethiopian highland areas have been contributing as major food producers and benefit in turn. But the rising human population is resulting in land pressure, rural-urban migration, increasing the price of food products, lack of raw materials for industries such as wheat, barley, oilseeds and fodders. This is while the urban population and land have been increasing, which is characterised by high living costs and socioeconomic challenges such as unemployment.

These calls for the concerted effort of government, especially in building the capacity of institutions that are tasked with implementing strategies and policies to deal with this mega challenge.

Integrated and interdisciplinary actions should be taken to respond to the complex challenges of food deficits, raw material demand and unemployment. This should start from the innovations and technologies that have come a long way in food production practices for more output to be generated with less input. Production of essential commodities will also have to rise in consideration of environmental protection against deforestation and soil erosion.

Sustainable intensification of agriculture and livestock systems can ensure food security, better incomes and smallholder competitiveness if research, extension and infrastructure can be improved.

A major challenge will be engaging rural youth in intensive agricultural practices and businesses as a self-employment option. The sector demands a skilled workforce, which is barely possible to attract without ensuring the profitability of agriculture beforehand. There should as well be an effort to control the massive migration out of rural areas into urban centres, which can seriously skew the demand and supply in the market.

In dry regions, where crops are impractical, livestock can be the only option, whereas in higher rainfall areas mixed crop-livestock systems are dominant, since nutrient cycles and traction rely on livestock. With attention to protecting the local population and the environment, incorporating potential lands in the lowlands and pastoral areas in the form of commercial ranching and large-scale irrigated crop farming, especially for producing raw materials for industries and export, are the best means of absorbing a large supply of labour.

The insufficient supply of agricultural inputs and services, including fertilisers, improved crop and forage seeds, livestock genetics, veterinary drugs, feed and small-scale product processing equipment, also needs attention. The high cost of inputs needs to be addressed by the government in partnership with the private sector and donors through investment and allocating resources.

This includes subsidies for farm inputs and technology until it is produced in the country. Improved agricultural extension services are as well necessary for market-oriented farmers to enhance food security and livestock feeds to meet the growing demand.

Smallholders are faced with land insecurity, mainly due to urbanisation, which can cause severe losses in the availability of productive agricultural land unless institutions become capable of implementing the appropriate urban policies on land tenure.

Universities should be part of the institutional capacity building programs necessary to tackle this problem. Through the testing and demonstration of technologies and scientific knowledge for wider uptake, they can inform policy making and implementation.

The government’s efforts should also not stop at universities. Agricultural science should be incorporated in primary education as it encompasses broad multidisciplinary natural, economic and social fields. How food is produced, their value and the importance of balanced diets deserve expanded attention in the education of primary and secondary schooling.

The emerging food crisis requires the development of sustainable food production. This is a challenge that requires a concerted and holistic approach to future agricultural development, which needs to begin now.

 

City Mired in Gridlock, Mismanagement

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The gridlock of Addis Abeba’s traffic is a gruelling experience on any ordinary day, but early last month the situation changed into a virtual nightmare. A sea of stopped and idling vehicles morphed the streets into one colossal parking lot.

Fuming travellers abandoned their buses and taxis and started to walk, outpacing the cars. Trips that usually take an hour in the morning rush hour saw stranded commuters sitting in traffic for two and three hours, still far from their destinations.

“It is the celebration of the nationalities and peoples day at Mesqel Square,” said a man in a taxi stuck behind a semi-truck on the old Asmara Road.

He was immediately corrected by another passenger who pointed out that there was a ceremony to be held on Thursday too. Alas, the authorities had switched the date.

“The city has finalised preparations of the 13th Ethiopian Nations, Nationalities and Peoples’ Day to be held on Saturday, December 8, 2018,” read the announcement from the Ethiopian Press Agency. “The City’s Press Secretariat head, Feven Teshome, said, ‘Addis Abeba is ready to receive the guests who come from all over the country,’ continued the report.

Why there was a ceremony on Thursday, without prior announcement, was never explained. Or what preparations city had in mind to manage the event and the closure of one of the most important traffic arteries of the city, Mesqel Square, remains a mystery. But the end result was chaos, utter and unmitigated bedlam.

Regrettably, Addis Abeba city officials can only be expected to bluster and cover their tracks with pomposity. They are not expected to show care toward the pubic they serve or look after the interests of the citizenry.

Why should they, when the rest of the state machinery operates likewise?

Even issuing simple warnings, as a public service, of impending major road closures in the city is beyond them.

At the very least, the closing of roads leading to the International Airport; blocking the main hub of the north-south axis of the city; and denying vehicular access to the east-west connector of the business centres during rush hour, in the middle of the working week, requires the issuance of prior warnings to alert citizens.

But municipal authorities do not seem to be governed by a sense of duty to the public they serve. The result is that without any notice a completely cordoned off Mesqel Square greeted residents of the city on the morning of December 6.

It appears that a fanciful decision was made to hold a traditional Ethiopian coffee ceremony in the middle of Mesqel Square that day. The plan appears to have been made without consideration of the impact the closure of the main thoroughfare may have on the transportation system of the city.

Hassled and unprepared traffic officers attempted to direct vehicles away from the jammed streets. They scrambled drivers up toward Menilik II Palace; forced others to make U-turns back to Bole Road; and sent motorists into impassable logjams that had already knotted most of the roads in the capital.

The congestion spread quickly to Arat Kilo, Kazanchis, Sarris, Ledeta, Legar and Lam Beret, exasperating the daily woes of commuters.

“They are trying to enter the Guinness Book of Records by serving the largest number of coffee to people,” said a colleague jokingly to another who arrives several hours late to an office caught in the gridlock.

“What? How could they do that in the middle of the rush hour? Are they so ignorant? Couldn’t they have held it on the weekend? Why not hold it in Janhoy Meda or at the National Stadium?”

It is frustrating to observe the inability of municipal officials to tackle the myriad of problems that the city faces. But when bureaucrats undertake irresponsible and unnecessary decisions that add to the daily anguish of citizens, it becomes inexcusable.

It seems that the city authorities operate without the understanding of the mechanics and skills that are required to run the city properly. Their idea of expanding transportation capacity, for instance, is to encircle the city with tasteless concrete ballasts, lay giant concrete slabs, excavate unfinished dirt roads and turn the metropolitan landscape into what it is today a giant dysfunctional hulk. Little do they know that adding more road capacity will never be enough to eliminate traffic congestion.

In another example of the lack of understanding of planning and management, the municipal authorities are in the process of constructing thousands of bus shelters.

Sadly, city officials have not conducted a feasibility study prior to planning and initiating construction of these bus shelters at a cost of almost 39 million dollars.

“The project doesn’t need a feasibility study, since we will install the new shelters at existing public bus stop locations,” was the officials of the Addis Abeba City Transport Authority, when questioned about the matter.

The same officials also admit that there are major design and installation flaws with the shelters already built. But such small details do not trouble our public leaders, and the project proceeds unhindered.

 

 

Migrant Law’s Socio-Economic Reality

Posted on by Web Master

Ethiopia recently amended its refugee law, granting asylum seekers a range of rights available in only a few other places around the world.

It is now “one of the most progressive refugee policies in Africa,” according to the United Nation’s High Commissioner for Refugees.

The amendments to the 2004 refugee law are hard not to praise for their broad-mindedness and for the benefits that they provide to over 900,000 Somali, Sudanese, South Sudanese and Eritrean refugees currently residing in camps within the country. It is a landmark law that paves the way to the same political freedoms enjoyed by Ethiopians and should serve as a model to combat the xenophobia that has grown rampant around the world.

The law allows refuges access to primary education and health services on par with Ethiopians. It also grants them the freedom of movement and, more importantly, access to favourable employment opportunities equal with other non-nationals under Ethiopian law. This is a liberal policy if there ever was one and is in keeping with the nation’s long history of an open-door policy.

Despite the ambition of the amendments, it has a lot to do with the Jobs Compact program. African migrants drowning in the Mediterranean on their way to Europe, and the less than liberal public sentiments flourishing on the continent, have prompted actions to try to address the problem at the root, or at least somewhere along its chain. Political and economic reform in countries where migrants are coming from has been discussed as one solution.

The other has been supporting countries with large migrant populations. Europeans are essentially making it clear that while they are willing to support migrants, by paying the bills, they do not want to do it within their continent. This was the case with the deal reached between the European Union and Turkey in 2016, where the latter agreed to host refugees in return for favourable policies, such as on aid.

The Jobs Compact is different and has already been tried in Jordan. The Middle Eastern country hosts hundreds of thousands of Syrian refugees. In return for providing work permits to the migrants and employment quotas, the EU made exporting from certain industrial parks in Jordan easier.

The Jobs Compact Ethiopia got is not much different. Under review since 2016, the 500-million-dollar program will be funded by the UK Department for International Development, the World Bank and the European Investment Bank. It is aimed at providing employment opportunities to 100,000 people, just about a third of it for refugees.

It should sound like a win-win situation. The refugees get jobs, the nation gets even more employment opportunities, the Ethiopian government is not overly burdened, and Western countries can support migrants from a distance.

But the refugee law will reverberate past the Jobs Compact it is aimed at facilitating. The program will not be able to address the socio-political consequences of allowing such a large number of people the right to free movement within the country and grant some of the most favourable employment opportunities to non-nationals.

In an ideal world, this is a policy that every country should follow. In the real one, however, nations that are unprepared to open sufficient employment opportunities for their own citizens, provide adequate services to the public and fail to properly integrate refugees within their territories should steer clear of such open-door policies.

Making the Jobs Compact work is thus only the beginning and perhaps the easiest part of the task that lies ahead. What comes next should be an across the board agreement between regional and local governments over the handling of migrants, transparency with the public and a means of directing the state to work for the benefit of its people, including all that come from elsewhere to join it.

If this does not happen, we will have only succeeded in giving radical groups and political parties that pander to xenophobia punching bags in times of economic crisis.

 

Bureaucracy, Anathema to Economic Development

Posted on by Web Master

The vision of Prime Minister Abiy Ahmed (PhD) for economic and political progress in Ethiopia is commendable, and many of us wish him success. But a great deal needs to be done before that vision can be accomplished, as a recent experience of mine has shown.

In Norway I recently bought a surveying instrument for construction and sent it to Ethiopia for my sister, an unemployed surveyor, as a gift. I read some of the rules and regulations and calculated the tax that she might have to pay in Ethiopia based on the price offer that I got from the seller. I was confident that my sister would not have a problem if I sent the instrument through my brother, who has a formal license as a contractor.

I finished the necessary processes here in Norway, got a customs clearance, attached all the necessary documents and sent the instrument to Addis Abeba, where the problem started.

The process started once my sister went to the post office and showed the tracking code. The officer checked that the instrument was at Bole International Airport and informed my sister that she needed to pass through a series of bureaucratic processes to receive the instrument.

She went to cargo services at the airport with a letter from the post office for package identification and content verification, which went smoothly, and then was asked to go to the customs office for tax estimation and payment.

But customs officials informed her that they could not estimate taxes before the instrument was cleared for security reasons by the Information Network Security Agency (INSA), which took a couple of days before approval.

I attached the necessary documents for estimation and informed her what she would be asked to pay using the tax calculator system provided by the Ministry of Revenues. However, the amount she was asked to pay by the tax estimator was 10 times more than what I had calculated.

The estimator tripled the price instead of using what I paid for the instrument in Norway. My sister was also asked to pay twice the normal tax estimate as a penalty since the instrument was bought directly in Norway without going through the banking system in Ethiopia.

Shocked, I agreed with my sister to ask the post office in Ethiopia to return the package as my sister could not afford to pay what was asked by the estimator.

I contacted the post office in Norway to get the instrument returned to me. But we were informed that the instrument would not be returned to Norway but instead be registered as an illegally imported good and sold through an auction. We had no choice but to pay the tax for my sister to make use of it.

This whole process took four weeks and involved four different government institutions. More than 15 officials participated in addition to my sister and brother, not to mention myself, through the telephone and the internet. Bureaucratic only poorly describes the inequities of the process.

Had it been in Norway, everything starts and ends at the post office. It takes a maximum of half an hour and the involvement of just one official from the post office. If a simple instrument that costs 1,200 dollars must pass through all these processes, one can guess what to expect for materials that are more expensive and up-to-date.

As the process multiplies, it will only cost the country, especially in lost productivity. Many have experienced what I described, and it is unfortunate that the flow of technology into the country is hampered as a result.

It is not surprising then that Norway is much more productive than Ethiopia. But such a system can be established in Ethiopia too, where the whole process can be finalised at the post office.

The proper collection of taxes is one of the critical foundations of a country’s civilisation and development, as the Prime Minister pointed out at a new initiative to improve domestic revenue. Indeed, the impact of proper mobilisation of tax revenues has been witnessed in developed countries.

People are willing to pay taxes as long as the rates are low and collection and management are done transparently, based on facts and not assumptions.

The rule of penalty in Ethiopia should be reevaluated if the country is to get modern instruments essential for development from the diaspora. This must apply especially when one delivers customs clearance documents and receipts from countries where the rules are strict.

My experience should be an example of the challenges in the lack of a standardised way of interpretation of rules and regulations, illogical penalties, unnecessary involvement of government institutions and bureaucratic processes. Communication is also weak, with it being impossible to carry out tasks through the telephone or the internet, a problem endemic to many other public sector institutions.

These are not difficult issues to deal with as long as the rule of law prevails in conjunction with accountability and a mindset open for change. For the nation to succeed, the legal and regulatory rules, institutions and the bureaucracy ought to be improved. This will help millions like my sister have a better future.

 

New Bill Harms Tobacco Industry, Benefits Illicit Trade

Posted on by Web Master

A bill was recently tabled in parliament on the amendment to the food and pharmaceutical law of Ethiopia. If legislated, it will put unwarranted impositions on tobacco products production and distribution in Ethiopia.

The government’s desire to enhance the regulatory regime for tobacco control is understandable. Indeed, minors should not smoke and should be prevented from obtaining and using tobacco products. It is also crucial that non-smokers not be affected by the actions of tobacco users.

Appropriate, evidence-based and proportionate regulations will be in line with the internationally accepted principles of the Organization for Economic Co-operation & Development.

Nonetheless, the draft legislation proposed by the Food, Medicine & Health Care Administration (FMHACA) is bound to fail given that the cost-benefit analysis is skewed. It goes beyond the minimum requirements of the WHO’s Framework Convention on Tobacco Control (WHO-FCTC) and fails to take the realities of the country into account.

There are better ways to enhance tobacco control in Ethiopia. Using the existing space mandated for health messages for different health warnings, removing the right of retailers to sell to minors and targeted public information campaigns about the risks of smoking and respect for non-smokers are some of them.

The draft proclamation proposes more than doubling the size of the health warning to 70pc of the cigarette packet. The National Tobacco Enterprise’s (NTE) current packs feature a 30pc health warning in accordance with local law and WHO requirements. These warnings, in English and Amharic, provide clear information about the health risks associated with smoking. In contrast, contraband products do not comply with such requirements.

If the bill becomes law, and the health warning portion of the cigarette packets is more than doubled, legal tobacco producers such as NTE will comply. The black market would not, however.

Increasing the size of these health warnings would not change smoking behaviour and, accordingly, would not cause a reduction in tobacco consumption. It will only hinder NTE’s ongoing efforts to convince smokers to buy legal products instead of contraband.

If the change as proposed passes, it will only benefit the illicit business, as this initiative will drive smokers’ preference toward illegal brands. Considering that the current 30pc health warning sign already complies with WHO requirements, it is not only unnecessary but counterproductive.

The draft also proposes a tobacco display ban. Currently, products are displayed to consumers to provide them with a choice. Despite contraband products being illegal by definition and despite enforcement, many retailers are not shy to display contraband in plain sight, next to legal products. When a retailer is more risk-averse, contraband products are sold under the counter.

The proposal made is to prohibit the display of tobacco products. While legal tobacco producers are mandated to ensure cigarettes are sold in compliance with this measure, such a measure will not make a difference on contraband products as they are illegal already.

The consequence of this is that in the more cautious outlets, legal tobacco products would be sold under the counter at the same level as contraband. With more daring retailers, contraband products would continue to be displayed, but not legal ones.

Even if contraband had not been a major problem in Ethiopia, a tobacco display ban is arguably ineffective. All this measure will achieve is reducing the chances of smokers to choose legal products over contraband.

What is evident from the bill currently under consideration in parliament is that FMHACA’s main objective is to regulate for the sake of regulating despite their benefit to the illegal trade. If this draft is legislated by parliament, without sufficient positive impact on public health policy, the tobacco industry will be affected.

The almost three-quarters of a century old NTE, for instance, provides direct employment to over 1,200 Ethiopians and indirect employment to over 10,300 tobacco out-grower farmers. The out-grower farmers who have been working with the company for several decades are using their plots of land to grow tobacco on a rotation basis with other crops.

Seventy-one percent of NTE is owned by Japan Tobacco International, headquartered in Geneva, Switzerland, after acquiring shares from the government over a year ago for one billion dollars, the largest private sector investment by a Japanese company in Ethiopia to date. It is such an industry that is at stake.

The government is another loser. It misses out on revenue generated from the industry and gives the wrong signal to potential foreign investors. It will be noted when a company that paid about a billion dollars faces such restrictions that have never been initiated and implemented in the entire region in less than two years.

It goes against the economic agenda of the current administration in terms of encouraging FDI, growing business and increasing tax revenue and employment opportunities.

Instead of the proposed measures, the government should conduct an appropriate assessment of their potential impact on smoking consumption and prevalence and the unintended consequences. There also need to be non-regulatory alternatives, such as enforcement of existing regulations, public information and tailored education initiatives.