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Month: July 2019
Premier Forms Committee to Draw Investment
Prime Minister Abiy Ahmed (PhD) has formed a new national steering committee to oversee and reform the investment climate and employment regime.
To be chaired by Prime Minister Abiy, the steering committee will have high-level government officials and regional state heads as members and is expected to be operational in the coming weeks. A representative from the Ethiopian Investment Commission will be the secretariat of the new committee.
The committee will consolidate the existing National Ease of Doing Business Steering Committee as a subcommittee under it. After the formation of the new National Investment & Employment Steering Committee, the Ease of Doing Business Subcommittee will be jointly led by the ministries of Trade & Industry and Innovation & Technology.
Six months ago, the Office of the Prime Minister formed the National Ease of Doing Business Steering Committee in a bid to relax the regulations involved in running businesses in the country to make it more suitable for investment. It also aims at bringing informal businesses on board the formal system.
The National Ease of Doing Business Committee has representatives from eight ministries and agencies including the Investment Commission; the ministries of Finance, Innovation & Technology and Trade & Industry; the National Bank of Ethiopia; and the offices of the Prime Minister and Attorney General, among others.
The initiative also envisions placing Ethiopia among the top 100 countries in the Ease of Doing Business Index by 2021. The World Bank’s 2019 Ease of Doing Business Index places Ethiopia at the rank of 159 among 190 countries.
The Investment Commission is the coordinator of the reforms, while the Office of the Prime Minister is the initiator. The other government institutions will implement the reforms by forming task forces.
The Committee has been holding a monthly meeting for updates, while the Investment Commission has been meeting with implementing agencies on a bimonthly basis. Implementing agencies and ministries have also been sending weekly updates to the Committee.
Since becoming functional, the Committee managed to recommend the reform of eight proclamations and regulations along with 40 procedural and administrative legal frameworks.
The registry of a movable asset as collateral for credits, a value-added tax refund system and the registry of microfinance institutions and leasing companies into the National Bank of Ethiopia credit system are among the laws that followed the reform. The mandatory requirement to obtain a business license, which includes newspaper publication of trade names and lease or rental agreements, was also lifted.
Introduction of an electronic single window system, issuance of an online construction permit and tax payment through banks were also introduced as part of the reforms over the past couple of months. In the past six months, the government has digitised title deed records in Addis Abeba and added commercial benches at the Federal High Court as part of the reforms.
Though all of the reforms were reported to the World Bank, the upcoming Ease of Doing Business Index to be released in October will not consider most of them, since the Bank counts reports until the end of last April, according to Abebe Abebayehu, commissioner of the Ethiopian Investment Commission.
“Most of the reforms were implemented after April,” said Abebe.
Launching online business registration; reducing the number of days to obtain a business license from 11 to five and cutting the procedures from 32 to four; and fully implementing one-stop-shop services at all levels are the medium-term plans of the Committee to be achieved by December of this year.
Replacing cash register machines with software for Value Added Tax (VAT) invoices; automating tax payment systems; fully automating court processes; the legislation of the amended commercial code; implementation of e-payment, national ID and e-signature are among the long-term plans to be achieved by May 2020. Cutting the number of days to obtain a business license from five to two and the procedures to one from four are also targets of the long-term plan.
“The performances of this year enable us to conduct impact outcome studies of the reforms,” said Prime Minister Abiy, adding that the outcome of the reforms would attract more investment that could help create three million jobs. “Therefore, we’ll upgrade our focus to employment and investment.”
In the past 10 months of the just-ended fiscal year, the country was able to attract 2.8 billion dollars worth of foreign direct investment (FDI). During the just-ended fiscal year, the country has created 1.4 million jobs.
Zereyaqob Belete, the managing partner of Nexus Investment Solution, a decade-old investment consultancy firm, says the undergoing reforms will have a significant impact in attracting more FDI from Western countries.
“The reform will break the bureaucratic chains and reduce the level of corruption,” said Zereyaqob, “which will end up cutting the unforeseen expenses of the investors, encouraging them to invest in Ethiopia.”
Zereyaqob also suggests the government give attention to the stability and security of the country, another major factor for the improvement of the investment climate.
Bill Proposes Creating Administrative Bench
A new bill that will enable citizens to take federal government institutions to the federal high courts for judicial review has reached a final stage.
Under draft for the past year, the proclamation proposes the establishment of an Administrative Bench at Federal High Courts, where citizens will lodge complaints on the decisions made by federal government institutions.
If approved by the Council of Ministers and parliament, the proclamation will add the Administrative Bench as the fourth bench on the existing court system along with the criminal, civil and labour benches.
Aiming at ensuring the provision of administrative justice, the proclamation will govern government agencies’ decision-making power, procedures and day to day activities. It also empowers the courts to revise the decisions passed by the institutions and remand the cases to be seen again.
The Administrative Bench, which will have three judges, will preside over administrative disputes lodged by citizens against all 20 ministries and agencies. However, the provision excludes decisions made by police, the military and public enterprises.
A working group with 10 members under the Advisory Council for Legal & Justice Affairs drafted the bill. Chaired by Mehari Redae (PhD), a lecturer at Addis Abeba University’s School of Law & Governance Studies, the Legislative Procedure & Administrative Justice Reform Working Group is tasked with writing an administrative law to ensure administrative justice.
The group started operations by identifying the major problems in administrative justice and found that directives that were issued by different government institutions were the leading cause of the problem, according to Abduletif Kedir, the vice secretariat of the Legal Reform Working Group.
“There have been multiple administrative drafts that had been prepared by different government offices over the past years that were never legislated,” said Abduletif.
But as the working group found the drafts to be incomplete, lacking clarity and structurally wrong, it decided to draft a whole new proclamation, according to him.
In principle, administrative institutions have a delegated power to issue laws, as they are closer to the problem. Parliament, which is the main legislative organ of the state, neither has the time nor the expertise to address all necessary details.
However, in practice, the institutions passed directives that violated other laws and passed laws on matters that were outside of their jurisdiction, according to Abduletif.
The draft proclamation proposes that any decision made by the administrative institutions that establish rights and duties should be regarded as a directive. However, the law exempts decisions that govern the internal working structure of institutions from being considered as directives.
“There is a lack of clarity as administrative institutions pass decisions in the forms of circular letters, manuals and guidelines,” said Abduletif.
Decisions that govern the public, in general, are regarded as directives and should be passed after fulfilling specific criteria, according to the bill.
The bill also proposes a new procedure that will make administrative institutions make the proposed directives available for public discussion for not less than a month in order to receive feedback.
The bill also tries to address the accessibility of the directives after they come into effect and prohibits the applicability of any directive before it is made available to the public.
At the very least, the directive should be submitted to the Office of the Attorney General or be posted on its website for it to be implemented, according to Abduletif.
Any directive that was made without fulfilling the above criteria is subject to judicial review, and citizens can ask for the annulment of the directive at the Federal High Court Administrative Bench within three months after the directive is passed, according to the bill.
When reviewing a directive, the Administrative Bench will only ensure that it is in line with the principle of legality; whether or not the subject matter of the directive is within the power of the institution; and identify if necessary procedures were fulfilled before the passing of the directive.
If the Administrative Bench finds that the directive was passed in violation of any of the above principles, it can cancel the directive and order the institution to enact a new directive fulfilling the principles.
The other major issue the administrative bill tries to address is the day to day functions of administrative agencies.
Government institutions in fulfilling their duties and giving service to the public should adhere to international principles of good governance, according to Abduletif.
The bill mandates that government institutions should be transparent, reasonable, act in good faith, pass decisions on time and be non-discriminatory.
It also requires government institutions to give receipts whenever they receive a demand for service and reply to the requests in writing.
The bill empowers any person who believes that a decision made by government agencies was not in respect to these principles and procedures to lodge complaints to the Administrative Bench within one month from the date the decision has been passed.
However, with the view of prohibiting the abuse of such provisions and limiting a large number of cases that could end up at the Administrative Bench, the bill only allows people to lodge their complaints at the court after they have exhausted internal procedures of the specific institution to solve their case.
The Administrative Bench, similar to its judicial power in reviewing directives, does not review the merits of a particular case but rather ensures that an institution of government has followed necessary procedures before the passing of the decision. The court will either sustain the decision or order the institution to review its decision and remand the case.
The first draft of the law was opened for stakeholder discussion on July 20, 2019. The team expects to table the bill to the Council of Ministers this August and the legislation to be voted on this October when parliament returns from recess.
Addis to Build 40 Intersections
The city’s road traffic management agency is planning to build 40 intersections in the capital with the main aim of easing the city’s traffic flow.
To hire a consultant to study, design and supervise the construction of the intersections, the Addis Abeba City Road Traffic Management Agency floated a tender this month.
The winning company is expected to conduct traffic flow surveys and analysis, prepare the preliminary and final designs, locate where to build the intersections, estimate the cost of the design and construction phases, prepare bid documents and supervise the project during implementation.
In addition to identifying intersections that require upgrading, the consultancy firm will study the existing pavement and drainage systems within a 100-metre radius of the proposed area.
With the main aim of ensuring and maximising road safety, the Agency implemented a couple of interventions last year. Upgrading 31 road intersections and deploying signage and traffic lights are among them. Last year’s project cost 220 million Br.
A separate six-year project costing 600 million Br and financed by the World Bank was launched last March by the City Road & Transport Bureau. The project will design an Intelligent Transport System Master Plan and make improvements to five corridors, 132 road junctions, 22 existing signalised locations and 27 intersections.
In the recently ended fiscal year, 10 roundabouts were converted to intersections with traffic lights. For the current fiscal year, the Agency is planning to add traffic lights to seven roundabouts, which it will also convert to intersections.
“After the interventions, traffic flow has improved and accidents have been reduced,” said Tamene Belle, communications director at the Agency.
Road safety is a major challenge in the country. More than 64 people per 10,000 die annually from vehicle accidents, making Ethiopia the eighth-worst country in Africa. Two years ago, 456 deaths were recorded in the capital due to traffic accidents.
The city hosts about 60pc of the total vehicles in the country with 585,000. About 1,127 Anbessa, Sheger and Public Service buses, 100 Sheger student buses, 423 Higher midi-buses and 14,213 minibus taxis operate in the city along with 120,000 trucks.
A recent study conducted by an Indian firm shows that the roads in the city, which only have 45 traffic lights, host 4.2 million trips a day. The city’s road network coverage reached 22pc last fiscal year.
More than 20,000 additional vehicles join the roads every year, fueling the traffic congestion in the city, according to data from the Agency.
Fekadu Gurmessa (PhD), an expert on transport geography and a lecturer at Addis Abeba University, argues that the high number vehicles are beyond the capacity of the roads and are the main cause of congestion.
“Beyond building the new road infrastructure, the Agency should employ a better and well-organised traffic management system,” said Fekadu.
Repetitive design problems at intersections have inconvenienced the flow of traffic, such as changing a square to a road or vice versa, according to him.
“These inconsistencies would be rectified by strengthening institutional capacity,” Fekadu said.
Six Transporters Offer 805.4m Br to Ferry Wheat
Six cross-border transporter associations offered a combined lowest price of slightly over 805.4 million Br to transport six million quintals of wheat from Djibouti Port to eight warehouses in various parts of the country.
The six companies placed the lowest offers out of 19 companies that submitted their financial and technical offers during the bid opening held on July 25, 2019.
The National Disaster Risk Management Commission, which procured the wheat for four billion Br for the internally displaced and drought-stricken citizens, floated the tender at the beginning of this month. A total of 23 companies bought the bidding document.
Agrocorp International Pte Ltd won the tender to supply five million quintals, while Gemcorp Capital won the bid to supply the remaining one million quintals.
To transport the commodity, 19 companies submitted bids, with ten vying for all eight destinations and one company placing offers for five. Three transporters bid for four destinations; two transporters for three; and the remaining three transporters competed for two destinations.
Haile Tesfakiros Cross Borders Transport S.C offered the lowest price of 138 Br a quintal to carry two million quintals of wheat from Djibouti to Adama.
Horu Cross Borders Transport S.C placed the lowest price of 115 Br and 125 Br a quintal to transport nearly 1.1 million quintals and 800,000 quintals of wheat to warehouses in Kombolcha and Meqelle, respectively.
To transport 300,000 quintals of wheat to Shinile, Jet Cross Borders Transport quoted 96.95 Br a quintal. It also offered 94.8 Br a quintal to carry 200,000 quintals of wheat to Dire Dawa.
Dejen Cross Borders Transport placed the lowest offer to transport one lot to Shashemene. The company proposed 145 Br a quintal to transport 350,000 quintals to Shashemene.
Tikur Abay Transport Plc offered 150 Br a quintal to transport 0.7 million quintals to Woreta.
Semen Cross Borders Transport S.C placed 175 Br a quintal for 600,000 quintals of wheat destined for Wolaita.
The financial readout is not final unless documentation provided by the companies are full and up to date as per the requirement of the bid document, according to Meseret Berhane, marketing and supply team leader at the Commission and chairperson of the bidding committee.
“The announcement of the final results depends on the response of the bidders in fulfilling their documents,” she said.
Due to the shortage of trucks, the price offered by the companies is higher than normal, according to Salahadin Khalifa, board chairperson of Ethiopian Freight Forwarders & Shipping Agents Association.
“The transportation fee has increased by 50pc,” said Salahadin.
Over the past three months, there is a shortage of trucks due to the mass transportation of fertiliser by the government. Thus, importers have faced a challenge to get trucks to transport commodities.
“The number of carriers can’t cope with the developmental needs of the country,” said Salahadin.
However, the Ministry of Transport argues the opposite.
“This time, the transportation will go smoothly, prioritising consumer goods,” said Endalkachew Tsegaye, communications affairs director at the Ministry, which formed the National Transport Committee to oversee the logistics of the commodity.
Tesfaye Melaku, an economist at Bahir Dar University, said inefficiency of government procedures has more impact on delaying the transportation of the items than the shortage of trucks.
“Planning problems and the inefficient procurement laws of the country are the major flaws,” he said.
Once the bidding process is completed, the winning companies are expected to transport the wheat before October. The Commission plans to ferry 80,000ql to 120,000ql of wheat a day by deploying 200 to 300 trucks with a loading capacity of 400ql a day.
Upon arrival, nearly two-thirds of the wheat will be distributed to the approximately 8.5 million people affected by drought and displacement, while the remaining two million quintals of wheat will be held in reserve in the eight warehouses.
Currently, the transportation of 200,000 quintals of wheat from Djibouti Port, financed by the government and facilitated by the World Food Programme, has begun. So far, around 60,000ql have arrived inland.
Committee Emerges to Rescue Mining Sector
Concerned with the ever-declining revenues from the export of minerals, the government has formed a new committee to rescue the sector.
Composed of 12 members from the Ethiopian Geological Survey; Mining, Oil and Biofuel Corporation; and the Ministry of Mines & Petroleum, the National Steering Committee will be responsible for restoring the contribution of the mining sector to the economy.
Six years ago, the export of mineral products had generated 654 million dollars, which has plummeted to 49 million dollars in the just-ended fiscal year, while the target was to generate 766.9 million dollars.
Lack of access to markets and market linkages, unreasonable prices offered by the government to buy the minerals, contraband, failure of policy and institutional frameworks, lack of human and technological capacity and lack of infrastructure are the major bottlenecks in the sector identified by the new Committee.
“However, the major root of the problem is lack of coordination between the various stakeholders,” said Tamiru Mersha, public relations and communication director at the Ethiopian Geological Survey.
The major target of the Committee is to enable the sector to create a minimum of 200,000 jobs and generate a minimum of 265 million dollars from exports in the current fiscal year.
“We also aim to combat contraband by creating a formal chain to eliminate the causes that result in informal trade,” said Yidnekachew Takele, planning head at the Ministry of Mines & Petroleum.
The other focus area of the Committee is suggesting law and policy reforms by working with the Ethiopian Customs Commission, National Bank of Ethiopia and regional authorities.
The government has also started making some reforms in the sector. Recently, it amended the establishment regulation of the Ethiopian Mining, Oil & Biofuel Corporation. The bill, which has been tabled to the Council of Ministers, will make the Corporation report to the Ministry rather than the Public Enterprise Holding & Administration Agency for better administration.
Currently, the sector provides livelihoods for 177,000 people who are engaged in artisanal mining and 2,000 people employed formally by mining companies.
During the past fiscal year, the Ministry issued 24 mining licenses out of the requested 60, a record high. Out of the total licenses, 19 were for exploration, while the remaining five were for extraction. The companies will invest a total of 4.9 billion Br and create 1,200 jobs when they become fully operational.
A few months ago, the Federal Ethics & Anti-Corruption Commission started surveying five regional states endowed with rich mineral deposits. The survey aims to explore corruption practices and their outcome by suggesting measures that should be taken to combat corruption in the mining sector.
Last year the Ministry revoked the extraction concession of MIDROC Legedembi Gold Mine.
Two weeks ago a soda ash manufacturing plant administered by the National Mining Corporation, a subsidiary of MIDROC group, has also stopped working because of disputes over environmental issues.
A task force has been formed by the Prime Minister Office to resolve the issue, according to Michael Mengesha, communications director at the Ministry.
“The newly established committee will focus on working with companies that are operational,” said Michael.
Worash Getaneh, an expert in the area, believes the continuous decline in the mining sector is mainly attributed to political reasons more than economic factors.
“The underlying reason behind the low performance in the sector is the political unrest that had unfolded in past years,” said Worash, economist and mining geologist at Addis Abeba University’s School of Earth Science.
Mining in the country has become so dangerous that even academics have failed to get geological data and conduct surveys in many parts of Ethiopia, according to Worash.
“The state should mainly work on providing security and guarantee their safety so mining companies can increase the revenue of the sector,” Worash told Fortune.
The Ministry also agrees that security is a major challenge and aims to address the problem by involving more of the surrounding communities. It plans to give mining sites to organised youth groups and provide them with technical, logistical and knowledge-based support, as well as ensuring mining companies are fulfilling their social responsibility.
Bill to Relax Media Investment Law
Non-nationals will soon be able to hold up to 25pc equity in local media companies if parliament legislates the amended media law.
The bill, which has been in the making for the past year, is expected to be tabled to the Council of Ministers next month before it heads to parliament for legislation. The opening of this area of investment for non-nationals is believed to create space for the transfer of skills, knowledge and capital from foreign media organisations.
The bill proposes the opening of the media investment for non-nationals a year after the government compelled non-national media owners in the country to give up their shares in local companies.
Non-nationals and the Ethiopian diaspora equity holders in three of the local broadcasters have transferred their shares to Ethiopians. Non-national co-owners of Nahoo Television, the Ethiopian Broadcasting Service (EBS) and Kana Television have also transferred their shares after being required to do so by the Ethiopian Broadcasting Authority.
The process of revising the media law was started last year by a working group composed of 13 members under the Justice & Legal Advisory Council [Disclosure: the Managing Editor of Fortuneis part of the working group]. The Council was formed to revise proclamations that have been criticised for narrowing the political space in the country and limiting freedom of expression.
Chaired by Tilahun Teshome (Prof.), a lecturer of law at the faculty of Addis Abeba University (AAU), the Council was delegated to prioritise the reforms of four proclamations: anti-terrorism, mass media, election and civil society laws.
The Media Law Reform Working Group, one of of the groups under the Council, started the amendment process last year with a diagnostic report, which identified the major problems in the existing law. The report identified 33 laws that governed and dealt with the media and held a stakeholder discussion to address these laws.
Freedom of speech, freedom of information, censorship, lack of self-regulation, heavy punishments related to crimes committed by the media, and areas of internet-based communication and data protections were some of the major problems detected in the existing media laws, according to Solomon Goshu, the secretariat of the Media Law Reform Working Group.
After collecting feedback from these discussions, the law reform group selected four laws from the identified laws that dealt with media issues.
“The four laws were chosen, since they largely deal with the media and the rest were out of our jurisdiction,” said Solomon.
Freedom of Mass Media & Access to Information Proclamation was split up as the working group found the two issues to be separate and broadly defined. While the freedom of mass media deals with journalists and media institutions, access to information deals with the public in general and the obligation of government institutions.
The freedom of mass media section was bundled together with another law, the Broadcast Service Proclamation, which became the Mass Media Proclamation and the access to media information proclamation became a separate proclamation on its own.
After working on the revision for the past month, the Group submitted the first draft of the proclamation for stakeholder deliberation last month. Along with allowing the opening up of non-nationals’ equity ownership in media companies, the bill proposes the decriminalisation of defamation.
Besides liabilities arising from the criminal law, the current broadcasting service law gives power to the Ethiopian Broadcast Authority to confiscate property used for broadcasting defamatory content. In the draft law, defamation can only be raised in civil suits with a claim ceiling of 300,000 Br.
“Defamation is proposed not to be considered a crime to protect freedom of speech as well as to stop the abuse of the provision by government officials,” Solomon told Fortune.
The law also proposes to lift current law restrictions when it comes to cross-platform media ownership.
The draft allows a media institution to own a newspaper, magazine, radio and television channel. Owners of print media companies can also own whatever number of print outlets.
The final validation workshop took place last Saturday, July 27, 2019, and the bill is expected to move to the Council of Ministers in August 2019. The team also wishes the legislation to take place when parliament returns from recess this October.
The bill also proposed the establishment of a transparent and impartial regulatory body by restructuring the Ethiopian Broadcast Authority and making it report to parliament. It also proposes that media operators step into a judicial review if they are discontented with the decisions of the Authority.
The Working Group has also been working on revisions to the Access to Information Proclamation and the Computer Crime Law.
“We’ll finalise the two bills after sending this one to the Council of Ministers,” Solomon said.
Currently, there are 29 licensed satellite television and 28 radio stations. The previous month saw 17 publications from the print media.
Tewodros Wudneh, a media law lecturer at Addis Abeba University’s School of Journalism & Communication, supports the limitation of the equity share of non-nationals.
Whenever there is a huge capital injection, there are always conditions attached to it, according to Tewodros.
“Foreign companies are profit-oriented with their own agenda, and public interest might not always be their priority,” he said.
Tewodros also believes that the current law of criminalising defamation resulted in a chilling effect and indirect censorship and supports the proposed decriminalisation of the act.
Prime Minister Abiy Ahmed (PhD) is reviewing the current foreign policy of the country…
The administration of Prime Minister Abiy Ahmed (PhD) is reviewing the current foreign policy of the country, in place since the days of Meles Zenawi. Unlike his predecessor, he has assembled a group of foreign affairs punditocrats, with clear instruction to separate the national security element from the document that has guided the nation’s army of diplomats since the mid-2000s, gossip disclosed.
The punditocrats have presented their first work to a public discussion held at the Hilton a couple of weeks ago. They had presented it as a guide that will address regional geopolitical matters, if not the ever-evolving dynamic in the broader Red Sea arena. The wise men of foreign affairs, the absence of a single female in whose company makes it a boys’ club, could be right on the regional focus they want to provide in the document, according to gossip.
For the traditional allies of Ethiopia in the Greater Horn of Africa, they see many of its diplomats as unguided planes with hardly a sense of direction, gossip observed. This could perhaps be as a result of volatility at the top leadership Menelik II Avenue has been going through over the past eight years. While one person – Seyoum Mesfin – had served the Ministry for two decades, the last decade has seen a change of guard four times.
The incumbent, Gedu Andargachew, appears to be in the mood to take his time to learn the craft of foreign relations and policies. And he has a lot on his plate; and never mind that he was absent from his bosses visit in Asmara last week. He will have to ensure Eritrea’s strongman, Issayas Afeworqi, will have to proceed with the many proposals Ethiopia tabled to move forward in the rapprochement and normalisation between the two countries, says gossip.
But first, he will have to persuade the Eritrean government to accept the credentials of Ethiopia’s ambassador in Asmara, Redwan Hussien, claims gossip. To the frustration of the latter, Ethiopia’s envoy to Eritrea cannot carry on his responsibilities for lack of diplomatic credentials, gossip disclosed.
Djibouti is another neighbour which is following Abiy’s Ethiopia under watchful eyes, claims gossip. Several issues make its leaders wary, including Ethiopia’s desire to renegotiate the terms of a port utilisation agreement, according to gossip. Ethiopia’s posturing in Somalia, where Abiy administration’s nod to send troops outside of AMISOM’s platform created a grave concern not only to Djibouti but also down south to the authorities in Kenya, claims gossip.
The Kenyans for their part are locked in a feud with their Somalian neighbours over a disputed marine territory. Both have gone to the international court of arbitration seeking justice, despite Prime Minister Abiy’s effort in mediation. His country has a standing military pact with Kenya signed in the mid-1960s, between Emperor Hailesellasie and the father of the current Kenyan President, Kenyatta.
President Kenyatta now desperately wants to see his country elected to the non-permanent seat at the United Nations Security Council (UNSC). His diplomats are busy lobbying countries, including Ethiopia, to support their country’s bid. The trouble for Prime Minister Abiy’s administration is that one of the three African non-permanent member seats, reserved for the Eastern African region for the 2021-2022 term, is equally contested by Djibouti.
The election is set to be held during the UN General Assembly’s 74th session scheduled for September of this year. Both Djibouti and Kenya will fight to secure the support of Ethiopia, not only on its own accord, but also in its stature and influence at the African Union (AU) whose support to either one is indispensable for the success of each candidate, claims gossip.
MetEC Supplies City Transporter with 50 Buses
The Public Service Employees’ Transport Service Enterprise, the state bus service provider for public servants, added 50 more buses to its fleet after investing 197 million Br.
The Enterprise bought 45 middle and five low floor buses for 3.9 million Br and 4.2 million Br a piece, respectively, from the state-owned military-industrial conglomerate Metals & Engineering Corporation (MetEC).
The agreement between the Enterprise and the Corporation was signed last March, and MetEC is expected to deliver all the buses next month.
Bishoftu Automotive Industry, one of the dozen industries under the Corporation, assembles four buses a day with parts from China. Each has a capacity of carrying 85 commuters with 50 seats.
Bishoftu, established in 2010, operates with more than 3,400 employees assembling civil vehicles and manufacturing military armaments. It supplies buses to Anbessa, Sheger and other governmental institutions.
The buses will have a Global Positioning System (GPS), e-ticket facility and petroleum consumption controlling system.
Established in 2015 with 55 buses to alleviate the transport problem of public servants, the Enterprise transports more than 82,000 commuters using 410 buses daily from 24 starting points to 48 destinations in the city.
In addition to the regular service, the Enterprise provides transport services using 193 buses for more than 35,000 people daily. It also provides contract and leased transport services by signing contract agreements with clients.
The Enterprise is limited to giving services in the city, but considering the increased demand for mobility, it is conducting a study to expand its services to the outskirts of the city, according to Solomon Ambachew, communications director at the Enterprise, which has over 900 employees out of which 461 are drivers.
“We’ve started piloting transport services to Bishoftu,” said Solomon.
Initially located at the depot of Waliya buses around Lideta, the Enterprise currently has four branches where the buses dock at night. The branches are located at Jemo, Lamberet, Wingate and Aqaqi for the western, eastern, northern and southern parts of the city, respectively.
Fekadu Gurmessa (PhD), an expert in transport geography, commended the procurement of buses, saying that it reduces the number of vehicles that are swarming the city roads, which in turn will ease congestion and lessen traffic accidents in the city.
“In cities such as Addis Abeba where the density of population is high, using public transport options is recommended,” said Fekadu. “This is because public transport vehicles carry a lot of people, which decreases the number of cars on the roads.”
Arranging separate priority lanes and establishing rapid transit buses will increase the effectiveness of public transport, according to Fekadu.
“The government has to promote usage of public transport and discourage the movement of small vehicles on the roads,” Fekadu.
Apart from the experts, users have also appreciated the service given by the enterprise.
Elisabeth Melkamu, an administrative clerk at the Bethlehem Elementary School, has been a regular user of the public service bus since the service from Bethel to Piassa started.
Before that, she was a loyal customer of Anbessa, which required her to rise early in the morning at 5:00am to get the first bus and cost her up to 10 Br when she failed to catch the bus on occasion.
“With less waiting time and no cost, it is a great service for public employees that the government provides,” She concluded.
Hyatt Regency Sets Up Water Bottling Plant
Hyatt Regency, an internationally franchised hotel in the capital, is the first hotel to bottle water for its own consumption.
To set up the water bottling plant, excluding the treatment facility, the hotel invested 40,000 dollars. Installed in the basement of the hotel, it currently treats and produces 1,000 glass bottles of water in half and one-litre sizes a day. Production started about two weeks ago.
Hyatt Regency, the second franchise hotel owned by a non-national, aside from Sheraton Addis Hotel, which is owned by business tycoon Mohammed Hussein Ali Al-Amoudi (Sheik), imported the bottling machinery from Spain in May 2019. The installation of the machinery took two and a half months.
Standing at the junction of Africa Avenue and Jomo Kenyatta Street near Mesqel Square, the hotel keeps 5,000 reusable half and one-litre glass bottles in stock.
The hotel aspires to be a plastic-free hotel and contribute to the protection of the environment, according to Heddo Siebs, general manager of Hyatt Regency Addis Abeba. The Hotel is owned by Albwardy Investment, a Dubai-based company founded in the mid-70s. Albwardy Investment owns a total of 30 companies globally, including in the food retailing, food distribution, engineering, construction and hospitality sectors.
“The primary aim of building the water bottling plant is not maximising profits,” said Heddo. “Instead, it focuses on creating a sustainable environment.”
High-income countries that account for 16pc of the world’s population are generating more than 34pc of global waste, according to a World Bank report from 2018. The East Asia and Pacific regions are disposing of close to 23pc of global waste. By 2050, waste generated by Sub-Saharan Africa is expected to triple that of current levels.
The largest country by population, China, produces a massive quantity of plastic at nearly 60 million tonnes, followed by the United States at 38 million tonnes, Germany and Brazil at 14.5 million and 12 million tonnes, respectively.
The hotel opened its doors on December 31, 2018, with 188 guestrooms, 12 suites, two executive suites, a presidential suite and a royal presidential suite. The Hotel will sell the water at a similar price to other plastic bottled water in the market.
Hyatt Regency is one of 164 star-rated hotels in the capital that hosts a total of 8,000 to 10,000 rooms. It is located five kilometres from Bole International Airport. Hyatt Regency is also the eighth internationally franchised hotel in the capital along with Sheraton, Radisson Blu, Hilton, Ramada, Marriot, Best Western, Golden Tulip and Tulip Inn Olympia.
Feyera Senbeta (PhD), lecturer and researcher at Addis Abeba University’s Centre for Environmental & Developmental Studies for more than two decades, appreciates the initiative for using non-plastic bottles.
“Using plastic bottle nowadays is a major environmental concern across the world,” he said. “Besides, plastic takes a long time to degrade and releases harmful chemicals into the surrounding environment.”
Feyera recommends other hotels follow suit in using environment-friendly products.
Potential for State Capture Risk to Economic Reform Agenda
The administration of Prime Minister Abiy Ahmed (PhD) appears keen on introducing some rebalancing in macroeconomic policymaking. Focusing on easing the regulatory environment for businesses and determined to see the creation of jobs – millions of them – it wants to shift the drive from state-centric to private sector led economic growth.
The focus is now on redirecting loans to private borrowers to help them generate export revenues. The hope is to cut further financing to state-owned enterprises to address the issues of exposure to external debt and avoid further escalation in debt amortisation.
Understandably, doing this is not so much a matter of preference. They are left with few other options before the economy crushes in on its own weight. These policy measures, properly executed, will release the so-far dormant potential of the private sector and may propel the country to the next decade of economic growth.
Despite reaching its limits, the journey over the past decade and a half has not been a disappointment. The macroeconomic policy followed with incredible discipline in creating “aggregate demand” has achieved results beyond everyone’s expectation. It is not an exaggeration, to say the least, that it has over-delivered. Ethiopia evolved from being perceived as a poster child of drought, famine and misery to one celebrated globally as the “African Lion.”
However, it has now become clear that the Keynesian model of deploying the state as a force to create aggregate demand has taken the country as far as it can. Should current policymakers bring some rebalancing into the economic model, it can only be understood.
While this may be the right course to take, it is also as important to note that transitioning economies face a myriad of challenges when jumping from one model to another. No doubt, the road ahead will not be a picnic at a park. It is more likely to be a bumpy road.
Moves to deeper privatisation, liberalisation and deregulation are delicate matters that will create winners and losers in an economy. If not handled judiciously and competently, the outcome may even lead to destitution by the majority, and a sense of helplessness and loss of a dignified life for the many. As these processes go forward and state behemoths are being swallowed up by private giants, the threadbare regulatory capacity of the state becomes a big hurdle. While running away from the inefficiencies of state-owned enterprises (SOE), great care needs to be taken not to run into the mouths of predatory forces and vulture investors.
The experiences of transitioning economies in the last 30 years – from Russia to South Africa – bear witness to the fact that there is a real danger of falling prey to state capture.
State capture is a form of grand corruption whereby a small number of interests exercise undue influence over the state apparatus. They do that with the desire to shape a regulatory environment to benefit their interests and partisan agenda. South Africa illustrates a contemporary example of state capture during the presidency of Jacob Zuma. None the less, state capture is a widespread phenomenon from Russia to Asia and from Eastern Europe to Latin America and even the sugar plantations of Florida in the United States.
The main feature this worldwide phenomenon has in common is that all forms of checks and balances in a country fail to restrain it. It is usually because the captors, working behind the scenes with great cunning, manage to neutralise any potential challenge to pursue their interests. They compromise them through various means, ranging from outright vote-buying to secret funding for the incumbent parties and even the media.
In places where there are inefficient public services and unprofessional bureaucracy, as well as weak media laws and lack of freedom of speech and association, forces keen in capturing the state thrive easily. Countries that see the absence of well-run small to medium enterprises; a civil society that is not aggressive and vocal; and the opposition that is pathetically divided are the fertile ground for state captors. If rapid privatisation of assets in the commanding heights of the economy is added into this mix, it creates the ideal conditions for state capture, which will be consequential for a country.
Ethiopia has the advantage of coming late into economic liberalisation, because there are plenty of examples to learn useful lessons from and avoid the pitfalls. One such experience is the importance of beefing up the regulatory capacity of the state. It should start from recognising that merely setting up regulatory agencies and writing thick rule books is not enough.
Not only do these agencies need to be staffed by people with particular expertise in the area they are supposed to regulate, but they also have to have tremendous integrity. Even then, it will be an exercise in futility if the legislative body is not one representing the diversity and differences of interests and desires in society and the judiciary is neither autonomous nor competent.
This is not a fight the state can win by itself.
A community-wide effort is essential. Chambers of commerce and business associations, as well as leaders of labour unions and civil society organisations, need to be vigilant to ensure that the processes of privatisation, liberalisation and deregulation are not taken hostage by special interests.
Without a doubt, the most robust solution and overarching mechanism to fight state capture is creating a culture of transparency. The foundation for building that is liberal checks on the might of the state and those who hold the lever of executive power through the watchful eyes of non-state actors and an independent judiciary.
If the administration is determined to see through its economic reforms to a gainful conclusion, it has to avoid the trap of state capture. That can only happen if it shows a commitment to the building of strong state institutions with robust regulatory capacity.
Somalia’s Relative Stability Sparks Grants
The African Development Bank (AfDB) Group approved a 28.9-million-dollar grant for Somalia in recognition of its promising progress toward stabilisation.
Approved on July 19, 2019, by the board of directors of the Bank, the grant will be used to finance water, sanitation and road infrastructure designed to improve livelihoods in Somalia and boost the resilience of the region.
Out of the total budget, nearly 12 million dollars is from the Bank’s Transition States Facility, which was established in 2008 to address weaknesses in the performance-based allocation of resources and has raised two billion dollars so far. The funding is designated to be used for an urban water and sanitation project for the cities of Kismayo and Baidoa.
The project is expected to boost access to potable water and improved sanitation in Jubbaland and the southwestern states of Somalia. It is expected to benefit around 200,000 urban and peri-urban people of Somalia, which has been affected by continuous drought, three decades of civil war and where half of the population lives in poverty.
Last year, the real GDP growth of Somalia was an estimated 2.9pc. Classified as being in debt distress, Somalia has a debt estimated at 65pc of GDP.
The remaining 16.9 million dollars of funding will go to the rehabilitation of roads. The funding is pledged by the African Development Fund, which provides concessional financing for low-income regional member countries and provides technical assistance for capacity building projects and programmes.
The road infrastructure project is designed to enhance connectivity through rehabilitation of some 247Km of roads, on top of the construction of a new 100Km feeder road.
Out of the total funding, the Italian Cooperation contributed 5.2 million dollars through the Transition States Facility, split into 1.6 million dollars for the water and sanitation project and 3.7 million dollars for the road projects.
The European Commission is also contributing 47.1 million dollars in grants for the road infrastructure project, making the total funding from the Commission 64 million dollars under this programme.
The grant will help improve quality of life, inclusiveness and engender resilience in the communities, especially in Kismayo and Baidoa, where an estimated 65pc of the population live below the poverty line, and 70pc are younger than 30 years old and unemployed, according to Akinwumi Adesina (PhD), president of the Group.
“We should look at the whole issue of fragility and transition states in a more comprehensive way. We need to do a lot more engagement. We need to work aggressively to help these countries,” Adesina told board members during the approval process. “It’s important we do what we are doing to build their resilience.”
In Somalia, the Bank has 12 ongoing projects with a total commitment of 109.1 million dollars in agriculture, water and sanitation.
“Somalia is showing promising signs of increased stabilisation through the formation of recognised state institutions, fostering a country-owned and led approach to transition from fragility,” said Nnenna Nwabufo, the Bank’s deputy regional director-general for East Africa.
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