Expected revenue in Birr for the Federal Government in the 2019/20 fiscal year from passport and visa charges, as well as administrative fees.
Month: August 2019
“We had many bad values, if they can be called values.”
Yeraswork Admassie (PhD), Executive Director of the think tank, Forum for Social Studies, in an interview with Addis Lisan, a publication of the Addis Abeba City Administration.
Ethio-Japan Business Seminar Takes Place In Japan
The Ethio-Japan Business Seminar is taking place in Yokohama, Japan with the presence of over 230 local and Japanese companies.
The seminary is taking place as a side event of the seventh Tokyo International Conference on African Development (TICAD), which is expected to be concluded today. About 193 Japanese and 42 local companies are attending the event.
Although Japan trails regional competitors like China and India in terms of trade with Africa, at 10 billion dollars last year Japanese trade with the continent grew by nine percent, the highest in a decade.
Gift Real State, Waryt Mulutila International, Technostyle Plc, Yohannes Abbay Consulting Architects & Engineers and Mullege Plc are among the local companies that are attending the three-day summit. Toyota, Mitsubishi, Isuzu, Marubeni Corporation, YKK and Hitachi are some of the Japanese companies that are attending the business seminar, which is organised by Wafa Marketing & Promotion Plc and the Ethiopian Embassy in Japan.
Gedu Andargachew, minister of Foreign Affairs, Sileshi Bekele (PhD), minister of Water & Irrigation, Eyob Tekalign (PhD), state minister for Finance, Beyene G. Mesqel, director-general of the Public Enterprises Holding & Administration Agency, and Kassa Tekleberhan, Ethiopia’s ambassador to Japan, are also among the government officials attending the session.
The session features presentations, panel discussions and business to business talks between companies from both sides.
African Chamber of Commerce Forms in Japan, by Diplomats
The African Chamber of Commerce in Japan (AfCCJ) was formed today, by members of the diplomatic corps gathered for a forum where high-level delegates from no less than 45 heads of state from African countries are represented. Ethiopia’s high-level delegation is led by Prime Minister Abiy Ahmed (PhD).
The chamber aims to accelerate and grow the private sector’s engagement between Africa and Japan. The founders also hope to use the platform in encouraging the involvement of Japanese businesses in African and its companies to consider the continent as an ideal investment destination.
The Chamber was launched during a side event that was held at the seventh edition of the Tokyo International Conference on African Development (TICAD) in Yokohama. It started in 1993.
Opened yesterday August 28, 2019, and will last for three days, the Summit is organised by the Japanese government with the collaboration of the United Nations, United Nations Development Programme (UNDP), World Bank and African Union (AU).
“Following the enactment of the Continental Free Trade Area Agreement,’’ said Ndiyoi M. Mutti, ambassador of Zambia in Japan who initiated the formation of the Chamber, ‘‘there is a huge of investment opportunity for Japanese companies in Africa.’’
CALLING ON THE GURUS
An initiative that partners the government of Ethiopia with economic experts from Harvard University was unveiled on August 23, 2019, at the Addis Abeba Hyatt Regency Hotel. The event was attended by Yinager Dessie (PhD) (center), Governor of the National Bank of Ethiopia, Michael Raynor (left), the United States Ambassador to Ethiopia, Ricardo Hausmann (right) (PhD), Director of the Growth Lab at the Center for International Development at Harvard University, and Fitsum Assefa (PhD), commissioner of the Planning & Development Commission.
The three-year initiative that is supported by USAID will see the experts consult the government in the areas of monetary and fiscal policy stability, structural and sectoral transformation, job creation and poverty reduction.
Hausmann, who is a professor with a long record of advising developing countries on creating effective growth strategies and development policies, is leading the team of experts. He met with representatives from the Ministry of Finance including Brook Taye (PhD), senior advisor to the Ministry of Finance, to discuss development plans, investment policy and private sector participation strategy.
“The project is expected to contribute to the ongoing policy dialogue and to craft plausible professional recommendations for the economic reform programme, which was launched recently,” said Yinager at the launching ceremony.
Ethiopia’s economic policies in recent years have resulted in important infrastructure investments, but these gains were made at the cost of incurring significant external debt and without commensurate progress in job creation or private sector investment, said Michael. The Ambassador added, “While this process can only be led by Ethiopians, it can benefit from the support of Ethiopia’s friends.”
City Faces Hurdles Taxing Hard-to-Tax Businesses
Two weeks ago Abiy Getachew, an accountant at Novis Import & Export Plc, a company that has exported pulse crops and imported Sino Trucks for the past two years, was at the Western Addis Abeba Taxpayers’ Branch Office.
Abiy was at the tax office to pay his company’s monthly income tax amounting to around 30,000 Br collected from the employees.
His company pays income tax on a monthly basis at one of the four federal taxpayer offices, i.e. Western Addis Abeba Taxpayers’ Branch Office located at Sierra Leone Street nearby Global Hotel.
The office where Abiy was beginning this month has collected 1.9 billion Br in income taxes in the last fiscal year from the employees working in the city.
The city’s revenues office collects tax mainly from three sources: direct taxes, indirect taxes and municipality taxes.
Direct taxes are collected from the salary of employees of private and governmental institutions, as well as trade profits. Indirect taxes which are consumption taxes paid by the consumers in the form of value-added taxes (VAT), excise taxs and turnover taxes (TOT). Municipality taxes are collected from service giving institutions such as land management, municipality, water authority, hospitals and schools.
In the past fiscal year, the city’s tax authority was able to collect 32.3 billion Br from direct, indirect and other taxes. The value was less by 2.2 billion Br from the target.
The revenue was collected through the 15 branch offices under the city’s tax authority and the four branches under the federal tax authority.
Out of the total tax revenues of the City Administration, 22.8 billion Br of it was collected by the city’s 15 branches. Arada District tops the branches with revenues of 6.4 billion Br, while Addis Abeba Large Tax Payers office sits on the bottom with 798 million Br in tax revenues.
Having a total of 341,517 taxpayers, the city’s tax authority classified the taxpayers in three categories depending on their incomes.
About 68,626 of businesses fall under ‘category A’ with annual sales income of one million Birr and above. The 45,199 businesses with annual income between half a million Birr and one million Birr are classified under ‘Category B’ taxpayers.
‘Category C’ taxpayers, the majority in number are those that have annual sales below half a million Birr. These 227,692 businesses are managed by a presumptive tax valuation method, as they are not obliged to have a well-organized account of their income.
Western Addis Abeba Taxpayers’ Branch Office has four schedules for taxpayers, according to Yared Fekade, director of the Western Branch Taxpayers’ Office.
‘Schedule A’ taxpayers are those who collect monthly income taxes from their employees, while ‘Schedule B’ taxpayers pay taxes from income earned by renting buildings. Under ‘Schedule C’, taxpayers pay taxes from earnings of businesses and ‘Schedule D’ taxpayers pay taxes from temporary incomes.
Abiy has already reported the tax through the e-tax system and was at the branch to collect a receipt that confirms the payment.
The branch office has dedicated a separate window for loyal taxpayers as well as for those who pay more than 250,000 Br and above a month. It has a total of 7,000 taxpayers, of which 2,000 of them are classified as loyal.
Even though the city has 347,000 businesses registered by the City’s Trade & Industry Bureau, employees cover one-fourth of the total revenue.
In the past fiscal year, 62,730 people have applied for new trade licenses, while 26,876 people returned their licenses due to various causes such as property sale and changes of trade address and trade type.
Income tax is one of the more transparent tax systems, since all of the companies like Novis are supposed to step through the doors of the tax offices monthly to pay the taxes.
In the last fiscal year, the employees of both public and private companies have paid 9.2 billion Br in income tax, which 28pc of the total tax revenue collected in the capital.
On top of that, income tax collected from 120,000 City Administration employees is around 3.2 billion Br, which brings the total tax collected from the federal and City Administration employees to around 12.5 billion Br.
The Income Tax Proclamation depicts seven salary ranges to be used for the tax deduction. The minimum tax rate is 10pc for salaries starting from 601 Br to 1,650 Br. Accordingly, the maximum tax rate of 35pc is applied for salaries over 10,900 Br.
The amount could go up, since tax collected from the employees of private companies is handled by schedule A taxpayers, according to sources close to the case.
This demonstrates that tax generated by the business community is relatively lower than the tax paid by the employees. The income tax collected by the Ministry of Revenues from the federal employees and transferred to the Addis Abeba City Revenues Authority covers over a quarter of the total of the city’s tax revenue.
Shisema Gebre Selassie, director-general of the City’s Revenues Authority, says that a slowdown in the economy has a negative impact on businesses.
“Causes of the slowdowns or freezes are considered by the Authority,” Shisema said, “but businesses have to bring justification if they pass the minimum days of operation.”
The maximum annual working days set by the city are 300 days and the minimum days are 152 days, and the acknowledged hard currency crunch has impacted most businesses.
However, the imbalance between the source of tax revenue upsets public servants, who pay their taxes loyally.
Solomon Argaw, 57, a father of two, working as a human resource clerk at one of the civil service bureaus, is one of them.
Solomon, who earns a monthly gross salary of 3,277 Br, receives a net salary of 2,695 Br after deduction of seven percent pension contribution and income tax of 352.90 Br.
“With such amount of money, it is difficult to manage four family members,” Solomon said, “while rent, foodstuff, education fee and others prices are climbing all the time.”
Experts in the area justify that there are many businesses that are not in the tax system.
“The city tax authority has failed to bring thousands of businesses into the tax system,” he said. “There is also no comprehensive reform or initiative from the Authority in bringing untaxed businesses on board.”
For this current fiscal year, the Authority targets to collect 36.2 billion Br in taxes, only a four billion Birr increase from the last fiscal year’s revenue.
“There is a potential of collecting between 50 billion Br and 80 billion Br in tax revenue in the city,” said the expert. “Thus, the city needs to work on bringing more businesses into the tax system.”
Ministry Removes Industrial Inputs Privileges
Imported complete knocked-down and semi knocked-down industrial inputs will not be getting a special privilege beginning this November, according to the revised customs tariff issued by the Ministry of Finance.
Issued in mid-July 2019, the revised customs tariff has removed the privileges of complete knocked-down inputs (imported products with parts that have been partly put together and then complete their assembly locally) and complete knocked-down inputs (products that arrive unassembled and are entirely assembled in the country).
In the past, these industrial raw materials have been imported either with reduced customs or duty-free tariffs.
These raw materials were classified under the second schedule of the tariff, which is applicable for items privileged to be imported with zero duty or reduced duty. However, the new revision classified the items under the first schedule, which treats them with at basic tariff rates.
With the previous system, manufacturers were getting preferential treatment to import inputs and raw materials for their respective final products. The government has been giving tax privileges for semi and fully disassembled items with the main aim of encouraging local assembly.
“Until the Ethiopian Investment Commission and the Ministry of Trade & Industry prepare classifications [for] these raw materials,” reads a letter signed by Ahmed Shide, the minister of Finance, “the items will be treated with the second schedule for three months.”
The revision on the customs tariff came into effect in line with the harmonised system [internationally standardized system of names and numbers to classify traded products] that was revised in 2017, according to Ahmed’s letter.
“Since Ethiopia is a signatory of the International Convention on the Harmonized Commodity Description and Coding System,” reads the letter, “it is expected to revise the customs tariff.”
The eighth round revision of the tariff arrived with the main aim of increasing revenue from taxes and duties and clarifying some ambiguities that have been seen in the former tariff book. While the Council of Ministers is mandated to issue the customs tariffs, the Ministry of Finance has been delegated to revise the tariffs.
During the recently started fiscal year, the government targets to generate 253 billion Br from domestic tax revenues to cover 65pc of the federal budget. During the past fiscal year, the Ministry of Revenues collected 197.2 billion Br from domestic taxes out of the planned 235.7 billion Br, which is 83.7pc of the target.
The tariff has two schedules classified for the purpose of determining the applicable tax rates. The first schedule encompasses raw materials, semi-finished goods and import items for public use.
The second schedule was granted as a special privilege to business organisations involved in activities such as manufacturing.
There are six duty tax rates ranging from zero percent to 35pc, which are applicable based on the type of good imported. Variation of duty tax rates is made with the intention of encouraging the importation of some goods by imposing the zero tax rate and at the same time to discourage importation of selected goods by imposing a higher tax rate.
Ahmed Shide, the minister of Finance
Lawmakers Legislate Controversial, Stringent Electoral Law
Candidates who run for a parliamentary seat should bring 3,000 endorsement signatures from their intended constituency, according to the new electoral law that was legislated last week.
The controversial bill, which was legislated on August 24, 2019, also stipulates that those running for regional councils get 1,000 signature endorsements from their constituency. The bill was legislated unanimously during an emergency parliamentary session called for the legislation of the bill.
The law, which will govern all general elections, local elections and referendums, as well as govern political parties along with their members and supporters, also requires independent candidates to gather 5,000 signatures to run for both regional and federal seats.
Having 164 articles, the law has spent almost a year in the making. It raises the number of founding members required to form a regional and national party from 750 and 1,500 to 4,000 and 10,000, respectively.
However, the new requirements were met by strong opposition from some political parties. A day before the proclamation was enacted, 57 opposition political parties expressed their disagreement with the proposed bill.
The political parties demanded the cancellation of 13 provisions and the revision of 35 articles from the draft Ethiopian Electoral Political Parties Registration & Election Ethics Proclamation.
The parties argued that such a requirement limits the citizens to exercise their political and constitutional right to organize, elect and be elected.
“The provisions that require signature endorsements to be a candidate and founding members of a party will narrow the political space in the country,” said Mulugeta Abebe, vice president of All Ethiopian Unity Party, one of the 57 parties that voiced their concern.
Apart from demanding revisions of articles on the draft, the parties claimed that their concerns and comments were not included in the proclamation and urged the parliament not to ratify the draft proclamation without rectifying their concerns.
However, the parliament in its third emergency meeting disregarded the concerns of the parties and found the bill to be comprehensive and detailed.
In replying to concerns raised over the bill, The Law, Justice & Democracy Standing Committee of the parliament stated that the 10,000 and 4,000 founding members’ requirements to run for national and regional election are reasonable for a country with over 100 million people.
“Such a requirement is practical, and any political party that can’t find 10,000 members should not run for a national election,” said Tesfaye Daba (MP-ODP).
Though the committee disregarded the propositions of the parties, it had made around 145 amendments of its own to the draft that was proposed.
One amendment that led to a fierce debate among the parliamentarians was the insertion of a new article that gave women the right to win the election whenever votes are tied.
The Standing Committee stated that the motive behind the article was to motivate women and ensure their fair participation in the political process.
But the article was met with strong opposition from some who claimed that the provision was unconstitutional.
The parliament took a separate vote on the specific article, and the majority voted for the removal of the article. But after further discussion on other articles, the parliament unanimously approved the law.
“Such provision can not be seen as affirmative action, and the constitution clearly states people would only get a seat if they get a 50+1 vote,” argued parliamentarian Sara Abe (MP-ADP).
Though new parties are required to fulfill the requirements when they register, the law gives existing parties a transitional period to transform and adapt to the new requirements. Currently, there are around 160 political parties in the country.
The new law gives the Ethiopian National Electoral Board the power to set the time frame for the transitional period through a directive, according to Soliana Shemelis, public relations adviser of the Electrical Board.
“The Board will set the deadline for the transitional period after holding discussions with political parties,” she said.
A few months ago the parliament legislated a bill that re-established the National Electoral Board of Ethiopia. The proclamation restructured the composition of the board members and their service years. It also made the board members full-time employees.
Two months ago, the parliament allocated three billion Birr for the May 2020 election. In addition, UNDP contributed around 1.2 billion Br pulled from various developmental partners. Half of the contribution came from the United Kingdom, while the rest was from Denmark, Finland, Ireland, Japan, Norway and Sweden.
Experts in the area believe that the law addresses the practical problems in Ethiopian politics.
“The major problem in Ethiopian politics is fragmentation,” said Yonas Ashine (PhD), a political science lecturer at Addis Abeba University’s College of Social Science.
He argues that the new law can solve this problem, as it produces benchmarks that would force political parties to be more inclusive.
However, he adds that in the implementation of such constitutional principles and ideas should not compromise the basic rights of political parties.
“The law, as it is, shall provide exceptions, so that it would not be limiting to minority groups,” he added.
Chamber’s Project Award Disgruntles Bidders
Cancelling a bid for the design of a five-year strategic plan and training, the Ethiopian Chamber of Commerce & Sectoral Association has awarded the contract to a company owned by a member of the Chamber’s board of directors.
The tender was announced by the Chamber on March 10, 2019, searching for companies that will design a five-year strategic plan for the Chamber and give training at three separate sites – one in the capital and the remaining in two regional states.
On March 22, the bid was opened, and five companies passed the technical evaluation stage for the strategic plan and five qualified for the strategic plan training.
Fortune Management Consultancy & Training, Golden Africa Capacity Center, Goldie Management Consultancy Service, Damu Management Consult Plc and Gebeyaw Aychile Business & Management Consultant are the companies that passed to the technical evaluation stage for design of the five-year plan.
Afro Universal Consult & General Trading Plc, Goldie Management, Girma Beyne Sahile Management Consult in partnership with Dahi Management Consultancy Service, Gebeyaw Aychile Business and Abate Zewdu Business & Management Consultant made it to the technical evaluation stage vying to provide the strategic management training for the Chamber.
The technical result of both bids, which are weighted at 70pc of the total result, was announced on April 5, 2019. Goldie Management Consultancy Service, which is founded by Aynalem Abayneh (PhD), who is a member of the board of directors, placed third with its technical result for the two bids.
The financial bid opening was held on April 8, 2019, and Goldie Management came in first place for the training bid and third place for the strategic plan design.
“After that, the Chamber remained quiet in notifying us about the winning company,” said Amare Adugna, general manager of Damu Management, which came in first place with a weighted average for the management strategic plan design bid. “We’ve been asking the Chamber to notify us of the result in person and with letters.”
On July 16, 2019, the Chamber posted a notice stating that the board of directors has cancelled both the financial and technical results of the bids. Then the companies were told to collect the cash payment orders they submitted while entering the bidding process.
Later, Goldie Management Consultancy Service, which was founded a decade ago by Aynalem and engages in research, consulting and training services, was awarded the project. Participants of the bid say that the Chamber did not notify them while awarding the company for the projects.
Aynalem confirms to Fortunethat his company was awarded for the project, but stated that he is not aware of the awarding process and decision of the board of directors.
“I wasn’t involved in any of the decision making processes,” Aynalem told Fortune, “and I know nothing about the process.”
However, a legal expert with a wide range of experience in the field says that the Chamber made a fundamental mistake in letting the company take part in the bidding process in the first place.
“It should have been excluded in the preliminary screening process to avoid conflicts of interest,” said the expert.
“This is done by a Chamber, which says that it stands for the rights of the business community,” said one of the bidders for the strategic plan training bid.
According to sources close to the case, Goldie Management has already started training members of the Chamber on strategic planning.
Endalkachew Sime, secretary-general of the Chamber of Commerce, and Melaku Ezezew, president of the Chamber, did not respond to questions from Fortune before the paper was sent to print.
Global Recession Looming: Inaction Has Consequences
Last week, the Office of the Prime Minister unveiled a three-year economic reform plan dubbed the “Homegrown Economic Reform Programme.” For a change, people of the highest order are showing their keenness to engage the public imagination with, as Bill Clinton once put it, “It’s the economy, stupid.”
It was a time in the United States when the superpower came out from its war that forced Iraq’s Saddam Hussein out of Kuwait. A young governor from Arkansas, Bill Clinton, had challenged the incumbent, George H. W. Bush, whose approval rating at the time was over an unprecedented 90pc. The United States economy was, however, in recession, which led Clinton’s campaign strategist, James Carville, to coin the popular phrase: “It’s the economy, stupid.” The following year, in 1992, Bush’s approval rating regressed to 64pc, hence Clinton’s victory to the presidency.
It is hard to think the Prime Minister’s men bear this in mind when they unveiled the administration’s road map for macroeconomic growth last week. But it is a reassuring departure from a near neglect of macroeconomic issues since the rise to power of Prime Minister Abiy Ahmed (PhD). His macroeconomic and policy advisors briefed the media that this was part of the government’s plan to address inefficiencies identified in the economy. Among other things, the programme targets the mining and tourism sectors as areas that create jobs and generate foreign currency.
Ironically, this came in the same week when international markets were facing their own challenges. The business pages of the international press were filled with stories that warn of a global recession ahead. Some notable economists are now forecasting a real possibility of that happening, beginning perhaps as early as 2020.
What triggered this episode of fear could be indicators of economic downturns, such as the “inverted yield curve,” that are hard to overlook. Primarily, they pointed toward an immanent slowdown of the United States economy. Long-term interest rates are falling below short-term prospects, showing that investors are nervous. Declining investor confidence is feeding the fear of a global recession.
Add to that an ongoing trade war between the US and China, as well as the uncertainty around the UK’s planned exit from the European Union. These are developments that are not helping either. The signal from wizards of the global economy has been one of caution. In April, the IMF’s Chief Economist warned that the world economy was entering a delicate moment. The Fund’s global growth outlook for the year is the slowest in 12 years.
It will be consequential for Ethiopia’s policy makers to ignore these as matters far removed from their reality. They are not.
There is never a good time to get hit by a global recession; however, if all these were to lead to a global recession next year, it will be the most unfortunate timing for Ethiopia. For a country with structural issues in its trade deficit (it spends five times more on imports than what it exports), the impact from a global recession cannot be underestimated. Ethiopia wants to export, attract foreign investments and beef up its forex reserves.
All these depend on the robust performance of the global economy.
Take the rolled out economic plan. The administration has identified mining and tourism as areas of focus to create jobs and generate foreign currency. They are both sectors that will be highly affected by the international investment climate and business confidence. If there is a recession, long-term foreign direct investment will dry up, and there will certainly be a lot fewer tourists travelling around the world.
And all these will be happening as the country may be entering into national elections that many fear will exacerbate skirmishes and conflicts that are already causing displacement and instability. It all seems to lead to a forecast of a perfect storm of challenges.
Some may argue this is being too pessimistic. Recessions are notoriously hard to predict accurately, and it is possible that the world may dodge a bullet. But that is hope, not a plan. The prudent thing for policy makers entrusted with the nation’s economy is to hope for the best but prepare for the worst.
Global slowdowns usually have the most impact on developing economies in expected declines that will come through lower commodity prices, a reduction in demand for export items and less tourism, as well as a reduction in financial flows like official development assistance, FDI and remittances. Also, rising import prices, tighter financial settings and high debt-servicing costs could cause debt distress.
Avoiding these conditions altogether might be impossible, but efforts could be expended and policy options set out in order to limit the damage and expedite the recovery. That would require timely and suitable responses from the administration and international development partners. One of the things to consider is to set pre-planned priorities so that possible damage to a certain sector of the economy can be contained. Redoubling efforts to increase the tax base and mobilising more domestic resources, including stronger domestic deposits, can be a wise start.
Prudent macroeconomic efforts have to be applied to expedite the creation of an enabling business environment for the private sector so as to ease the burden on the public sector. The administration can refocus its priorities in boosting competitiveness in the economy to enhance innovation and productivity, the twin challenges for Ethiopia through the years despite changes of regimes and systems. It helps to acknowledge the fact that it is not countries that compete in the global economy. Instead, it is companies that are standard-bearers and need to be supported through policies.
In an adverse economic climate, like all crises, the role of strategic leadership is crucial. It is essential that leaders rise to the occasion and inspire confidence and kindle hope, as fear and uncertainty do more damage than an empty pocket.
Delayed Rail Academy Begins to Fall into Place
For the construction of the nation’s first-ever railway academy, the Ethiopian Railway Corporation compensated 150 farmers with 65 million Br to relocate from their land.
To rest on 60ha of land, the academy will be located in Bishoftu, 45Km southeast of Addis Abeba. The Corporation also plans to compensate the remaining six farmers residing on the land in the coming two weeks.
Planned four years ago, the project was delayed, since securing the land was the major challenge for the Corporation, according to Yehualaeshet Jemere, deputy CEO of the Corporation in charge of rail network division.
The feasibility study for the construction of the railway academy was completed in 2014.
“Securing the land was one of the major challenges,” Yehualaeshet said.
Located adjacent to Bishoftu’s railway tracks, the academy will be a Technical Education, Vocational & Entrepreneurship Training (TEVET) centre and offer a first-degree level.
Expected to begin in two months time, the construction will take two years to complete. It will have classrooms, a laboratory, railway tracks, tunnels, a playground, a dormitory and a cafeteria.
For the construction of the academy, the Chinese government granted the Corporation 60 million dollars. The academy will have an enrollment capacity of 900 trainees a year.
The World Bank has also provided 13 million dollars for the construction of an additional laboratory, curriculum development and capacity building training for trainers. Half of World Bank’s funding is in the form of a grant, while the remaining is a concessional loan.
“The academy aims to address the need for skilled manpower in the rail transport sector,” said Yehualaeshet. “The academy will also train professionals from East African countries.”
The country has been sending students to get training abroad in the past.
China Railway Eryuan Engineering Group, a company that was founded in September 1952 and has headquarters in Chengdu, will supervise the construction of the academy.
Training ranging from construction to operation of the railway system will be provided by the academy. The duration of the training will depend on the curriculum, but most last from six months up to a year.
“As soon as we secured the land from Bishoftu City Administration, we notified the Chinese government to start the construction,” said Yehualaeshet.
The academy will train professionals for the country, which already has two operational railways, Addis Abeba Light Rail Transit and Ethio-Djibouti Railway. The former gives service for 120,000 people a day and earned three million dollars during the first nine months of the past fiscal year by transporting 29 million passengers using 41 light trains.
The latter was constructed by China Railway Group and China Civil Engineering Construction Corporation. It was inaugurated in October 2017. It has 1,100 rolling stock, of which 41 are locomotives with motors used for pulling the train.
Eshetie Berhan (PhD), a lecturer for nearly two decades at the Addis Abeba Institute of Technology’s School of Mechanical & Industrial Engineering, says that the construction of the academy is delayed.
“The Corporation shouldn’t only focus on physical infrastructure. Rather, it has to focus on implementing the strategic document practically,” Eshetie said. “If the project is completed in the time frame, it will help in producing professionals in the railway sector.”
Electric Billing Gets Worse Before it Gets Better
On the morning of August 21, 2019, Mekdes Tuffa, 40, a housewife and a mother of one, stood in a long queue at the Ethiopian Electric Utility Addis Abeba District, the seventh customer service branch located at Arat Kilo.
Mekdes, who lives at Ferensay Legasion, has not been able to pay her electric utility bill, despite coming to the utility for a second day.
“Paying the electric utility bill used to take two hours, but now I couldn’t pay it in two days,” Mekdes, said.
She is not the only one who faces this problem. Many other residents have experienced difficulty in paying their electric utility bills.
The four cashiers at the utility were trying to provide service to more than 800 customers.
Yeshiharg Mulatu, a housewife who is in her late 50s and lives at Menelik, was also at the payment office for the second time attempting to pay her electric bill.
“Previously, we paid at the Lehulu branch around Sidest Kilo, and it was never this crowded,” Yeshiharg said.
“I was here at 5:00am but couldn’t get the service,” she adds, “and I have a lot of tasks at home.”
For the past seven years, utility payments for electricity, telecom and water had been managed by Lehulu, a one-stop-shop for various utility payments operated by Kifiya Financial Technologies, a public-private partnership (PPP).
Kifya, an IT company established in 2010 with over 1,000 employees, launched Lehulu in 2013 in a partnership with Ethio telecom, Ethiopian Electric Utility, Addis Abeba Water & Sewerage Authority and the then Ministry of Communications & Information Technology for the specific purpose of facilitating utility bill payments.
However, beginning this month, Lehulu Payment System handed over the assignment to the respective government offices after its contract with the government expired.
Following that, the offices under the City Administration have been negotiating with the Commercial Bank of Ethiopia (CBE) to handle these payments. CBE launched an electronic platform and entered into service agreements with Ethiopian Electric Utility, Addis Abeba Water & Sewage and Addis Abeba Traffic Management Agency to process payments from customers.
A few months ago, the City’s Traffic Management Agency and Addis Abeba Water & Sewerage Authority provided window service payment, debt service payment, mobile banking and internet banking as payment options to their customers.
Commercial Bank of Ethiopia and Ethiopian Electric Utility, the state-owned electric power distribution agency, had signed a memorandum of understanding (MoU) on January 21, 2019. However, the service has not started yet, creating inconvenience for the customers.
Gelan Telila, north Addis Abeba electric utility service director, admits that the problem exists.
“After the contract with Lehulu was ended, there is an overflow of customers who come to pay their bills at the branch,” Gelan said. “Besides this shortage of workforce, connection problems are an additional factor.”
The EEU has hired 150 new cashiers throughout the utility and extended working hours to 8:00pm this month to overcome this problem.
“We believe that this situation will be solved in the coming month when we cluster customers in groups according to their registration number and when CBE starts its operation,” he adds.
Equipment and facility shortages have also caused another problem in the service delay at the Utility’s office.
“We have five cashiers, but only four are working because of a shortage of equipment such as computers,” said Yibeltal Aniley, one of the cashiers at Ethiopian Electric Utility North Addis Abeba Region Service.
“Most customers come all at once, and the shortage of manpower limits us from operating at full capacity,” said Girma Hailu, technical head at the branch. “Starting from next week, we plan to serve our customers according to their registration clusters.”
At the second customer service branch of the North Addis Abeba Electric Utility, Fortunewas able to observe around 300 customers standing in long queues to pay their electric utility bills.
As a permanent solution, CBE is in the final stages of handling the service, according to Yeabsera Kebede, communications manager of the Bank, which has 22 million customers and earned 17.9 billion Br in gross profit during the recently ended fiscal year.
“Currently, we’re working on integrating the systems and registering customers,” said Yeabsera. “When we begin operations, customers can pay their bill at any of the 300 branches of the Bank in the city.”
Melaku Taye, corporate communications director at EEU, which earned 7.1 billion Br in profit during the recently ended fiscal year, also believes that the problem is temporary and hopes that the problem will be solved next month.
However, Nega Wubie, a lecturer at Addis Abeba University’s Public Administration Department, believes that these kinds of problems happen because of spontaneous decisions and lack of research.
“Before shifting services from Lehulu to EEU they had to complete their preparation,” Nega said. “The government should trust private banks for such services, and there is no basic reason to make CBE the only service provider.”
To avoid overcrowding and modernise its system, EEU has already registered its clients’ data on its new Enterprise Resource Planning database, which enables EEU to collect, store and manage customer information, according to Melaku.
“Besides this, EEU has also arranged 33 paying centres in the four corners of the city for low power electricity users,” he adds.
Ethiopian Electric Utility has 50,000 high power users, around three million low power or domestic users, and approximately 500,000 prepaid card users.
For high and medium electric power users, they must use Commercial Bank of Ethiopia to make their payments, but low power users can also use the Bank for settling their bills if they already have savings account at the Bank. New users must sign an agreement with the Bank.
So far, 4,000 high, medium and low power electricity users are registered to pay their electric bills through the CBE platform.
In Ethiopia, the demand for electric power increases by 13pc each year, and the electricity coverage of the nation has reached 58pc.
The country currently generates 4,300MW of power, of which 90pc is produced from hydropower, while 8pc is generated from wind and 2pc from thermal sources.
Ethiopia has a potential of generating over 1.4 million megawatts from hydroelectric, solar, geothermal and wind sources, according to internal studies.
Currently, 58,000 households are waiting to get electric service in the country.
Atlaw Alemu (PhD), assistant professor at Addis Abeba University’s College of Business & Economics, believes that inappropriate service, besides discomfort and dissatisfaction of the customers, will affect the revenue of the government.
“Customers would have been more effective if they had spent their time doing their jobs rather than spending their productive time in queues like this,” said Atlaw.
Atlaw says during transitional periods, these kinds of problems can happen, but they should have been prepared, and in the future, they will have to take this as a lesson.
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