FORTUNE+ VIDEO SPONSORED CONTENTS ADVERTORIALS FORTUNE AUDIO Fortune Careers New TRADE AFRICA New

Fortune Logo

Month: March 2021

SESSION OF RECKONING

Posted on by Web Master

Speaker Tagesse Chafo (left) walks Prime Minister Abiy Ahmed (PhD) out after a session with members of parliament where the latter had to answer for one of the most challenging periods the country has gone through in recent times. Parliament last week was a session of reckoning in more ways than one.

Anxiety, fatigue and grievances characterise the popular mood. The country is going through trying times, from a devastating civil war in the north and inter-communal conflicts across the country to an exasperating economic slowdown. Last week’s question time by the Prime Minister has been one of the deconstructions of the official narrative since the war in Tigray began in the first week of November 2020.

After months of silence and ambiguity over reports of Eritrean involvement in the conflict and outright denial by several administration officials, the Prime Minister has deconstructed the issue. Eritrean forces are in Ethiopia; gross violations of human rights have been committed; and, rape and looting have happened. This official acknowledgment came days after the Ethiopian Human Rights Commission released a report documenting atrocities that were committed against civilians in Axum by Eritrean troops.

The Prime Minister told parliament that these are not acceptable coming from any side. But he insisted that the Eritrean “people and government” have done a great deal in assisting Ethiopian soldiers that had retreated to the other side of the Mereb River.

“Ethiopian history shall never forget what Eritreans have done to help our defense forces when they sought sanctuary from death and during our difficult times,” Prime Minister Abiy said.

Later in the week, after a visit to Asmera, he announced that Eritrea has  agreed to pull its troops out of the Tigray region. Unabated inter-communal conflicts were also issues that made MPs vocal – they have been raised in sessions such as these for a few years now with no end in sight.

“[The army] can’t just jump into any conflict . . . unless the regional state asks for help,” he said.

He called for more engagement in beefing up the security infrastructure institutionally beyond just armchair activism. Uniquely, the session also delved deep into economic issues, especially the increasingly alarming rise in living costs. With basic goods such as wheat and edible oil having escalated in price, headline inflation has persisted far higher than the single-digits his administration had aimed to achieve. The prices of goods have been increasing in step with a depreciating Birr and the gradual lifting of subsidies on basic goods. With growth expected to slow down to two percent, according to projections by the International Monetary Fund (IMF), the Prime Minister alluded to economic reforms. This week, the Transport Ministry held an investment summit to promote areas open for investment to the private sector, domestic and international. More historic, however, was parliament’s passing of an amendment to the over six-decade-old Commercial Code last Thursday. Such reforms were bearing fruit, the Prime Minister insisted, while inflation was portrayed as a stubborn annoyance.

At Odds with Dev’t Partners, Ethiopia Could Miss Out on Improving World Economy

Posted on by Web Master

In an unprecedented turn of irony, just as Ethiopia began an attempt to open up to the world economy, there is a likelihood that it could be stopped at the gates. As a series of condemnations by Western governments, international human rights advocates, and the global media against Prime Minister Abiy Ahmed’s (PhD) administration have arrived over the war in Tigray Regional State, the Ministry of Transport held a two-day summit at the Skylight Hotel welcoming investments in the transport sector.

The summit was a call for engagement by the private sector – both domestic and international – into areas that have been previously closed to it: from port-to-port development and railway operations to domestic air transport with no seat limits. It is a change in policy overdue for an economy facing obstacles from a logistics and transport sector choked by weak infrastructure, inefficiency and lack of competition. Unfortunately, it would have been an easier sell if Ethiopia was more identified with rapid economic growth, as it once was, instead of civil war, intercommunal conflicts and gross human rights abuses.

It could also mean that the country could lose out on the improving circumstances of the global economy.

Last year was nearly a universally bad period for the world after a global pandemic, the Novel Coronavirus (COVID-19), struck, leading to an economic recession. The initial shock and uncertainty have subsided but with several bumps along the way. Scientists developed a vaccine in record time. But just as it has begun to be administered, a new variant has struck, and cases have shown a sharp uptick from Brazil to Ethiopia.

Despite this, there is a reason to suspect that the global economy may be making a comeback faster than expected, potentially helping to lift countries like Ethiopia with it. Much of this has to do with how well the world’s two biggest economies – China and the United States – are expected to perform.

One of the few countries to have expanded its GDP last year, China has bounced back to beat expectations. With COVID-19 behind it, almost – new daily cases have mostly been in double-digits for about a year now – industrial output and exports have shown strong growth in the first two months of this year. Its economy is expected to rebound by 8.1pc this year, according to the International Monetary Fund (IMF). This should spell good fortune for the rest of the world.

The other promising news is half a world away in the United States. Despite having the highest number of deaths from this pandemic, cases have significantly declined from their highs in January 2021. It has also vaccinated over a quarter of its population, with a whopping average of two million doses being administered every day. This strongly suggests economic normalisation and the phasing out of lockdowns.

Of equal consequence to the world economy would be a fiscal stimulus in the United States amounting to 1.9 trillion dollars. This has led to the revision of most growth estimates made at the beginning of the year. The trade, investment and development wing of the United Nations (UNCTAD) revised US GDP growth up to 4.7pc. The Organisation for Economic Cooperation & Development (OECD) was even more bullish, revising its previous estimates in December by over a percentage point to 5.6pc, owing mainly to vaccine rollouts and the US stimulus.

Even with these pieces of good news, the global economy will likely not return this year to its pre-pandemic levels. But the turnaround in the circumstances for the world economy has consequences to which Ethiopia’s policymakers should pay close attention.

Of major importance is how the value of the dollar will fluctuate. Any government with a fiscal response amounting to 27pc of GDP – the combined amount of stimulus packages under both the Trump and Biden administrations – should expect a weak dollar. But the United States has an independent central bank – the Federal Reserve – likely to fight such inflation by raising interest rates. Counter-intuitively, investors are betting the dollar will be stronger going forward. They are not wrong, at least not yet, with the dollar strengthening starting in January.

All things being equal, for Ethiopia this should mean higher remittance and tourism flows, which together usually cover over a third of import bills. A stronger dollar will also give Ethiopian exports to one of its top destinations an edge as the Birr’s value declines comparatively.

There is bad news though, especially where dollar-denominated debts are concerned. Government and government-guaranteed external debts stand at 25 billion dollars, nearly a quarter of GDP. This does not include around 3.3 billion dollars of debt from state-owned enterprises (SOEs). The increasing debt stress has led the likes of Fitch to downgrade credit ratings already. Add to this a rising import bill for essentials such as fuel and wheat, and the stress on foreign currency reserves could cancel out the lift an improving global economy could have provided.

Abiy’s administration has not failed to see how the COVID-19 pandemic could disproportionately affect low-income countries. In an Op-Ed piece, the Prime Minister has argued for debt relief and an increase in the issuance of special drawing rights (SDRs). On the former, at least G20 countries have agreed on a limited debt service suspension, of which Ethiopia has already taken advantage.

Navigating out of these treacherous waters requires insight from policymakers to take advantage of the improving set of circumstances in the world economy and fend off the possibility of downward pressure on foreign currency reserves. The latter is just as much a political issue as it is an economic one.

The start of a war in the Tigray region last November has increasingly put the administration at odds with its traditional development partners. There should be no surprises here. Trying to resolve a problem of inherently political nature through the deployment of sheer force inevitably has consequences. They are knocking at the doors now.

The largest bilateral contributor of humanitarian aid at close to one billion dollars anually, the United States has raised concerns over what it considers an act of ethnic cleansing in the north. The European Union (EU), for its part, suspended budget support amounting to 107 million dollars last December, while its President has stressed that all foreign policy tools are on the table. He may mean imposing sanctions on institutions and individuals is not unthinkable if what the EU imposed on Eritrea last week serves as a signal.

More concerning could be the IMF and the World Bank’s response, both of which are influenced greatly by the US and the EU over human rights abuses. Both have provided billions of dollars in development assistance over the decades. The IMF alone is in the middle of executing a 2.9-billion-dollar financing package to help Ethiopia’s economic reform. The World Bank, which has made over a billion dollars in commitments this year, has programmes in sectors ranging from agriculture to digitisation. Here too, leaders of both institutions are bracing themselves to be vocal against atrocities committed in Ethiopia in their respective engagements with Ethiopian authorities.

This web of engagements and responsibilities has been necessary for Ethiopia’s economic development, no less in responding to humanitarian crises. Losing these could mean the country also not getting a piece of a global economy expected to liberate itself from the burden of a pandemic’s yoke.

Bowing to the international community’s demands because it has a much bigger purse could be viewed as sacrificing national sovereignty. But the administration ought to remember that exhausting every effort to have cessation of hostilities in Tigray is not just good for the economy or merely a face-saving effort. It is also the right thing to do for a country whose people have gone through half a decade of unabated political instability and are starved for – and, indeed, deserve – certainty and normalcy.

NO PLACE LIKE HOME: The Fate of Tigray’s Displaced

Posted on by Web Master

Merhawit’s days in the town of Mai Kadra, Tigray Regional State, were mostly calm and quiet. She worked shifts at the local health centre and cooked her lunch at home, where she lived alone. A regular day ended with her watching TV before settling in for the night.

The 26-year-old health worker was assigned to the post in this small dusty town, located near the Sudanese border, from her hometown in Adigrat, an eight-hour drive away. She would make regular trips to see her family, and her friends were the medical staff that she worked with; her life revolved around work and home. That was before November 9, 2020, five days after the federal government launched a military offensive in Tigray Regional State. The town of Mai Kadra was bombarded as Merhawit was giving care to patients in the emergency section of the health centre. Suddenly, she saw a flood of badly injured patients.

“Some had also lost limbs from machete attacks,” she said.

By the time she realised what had happened, the health centre where she was had come under heavy shelling. All the staff had fled for their lives. Armed men came in soon after and told her to start taking care of their comrades.

“The patients were asking me to stay as I was the last one left,” she told Fortune. “But I was scared and ran away when the militiamen weren’t looking.”

Merhawit jumped over the centre’s fence and joined hundreds of others who were making the mass exodus from their homes, away from the bombs and leaving everything behind. After walking nearly 30Km on foot to Humera, a nearby town, she came across someone driving a tractor who offered to give her a lift, a common sight she saw on her trip, as many farmers in the area used whatever means they could to escape the war.

Along the way, Merhawit helped women in labor give birth; the strenuous walks had hastened the due dates of many expectant mothers in their bid to flee the violence.

“I had nothing to use,” she said. “One time, I used a plastic bag to cover my hands to deliver a baby on the road.”

After two days of walking, Merhawit’s feet were badly blistered, and she was unable to go any further. She found refuge at a woman’s home in Dedebit, 164Km further from Humera and the birthplace of the Tigray People’s Liberation Front (TPLF) 46 years ago. The senior member in the EPRDF, a ruling coalition that led Ethiopia for 28 years and the ruling party in Tigray Regional State, it was the TPLF’s move in running over the garrisons of the Northern Command that provoked the massive military offensive by the federal government and its allies.

The coming days would prove to be as difficult for Merhawit as her journey took her through the towns of Axum, Adwa and Adigrat before she arrived in Tembien. She walked most of the way with the occasional passing truck giving her a ride.

“We’d spend a couple of days resting at one town, and then we’d continue as the military caught up and the shelling started again,” she recalled. “It felt like they were hunting for us.”

Five months later, Merhawit is now sheltered with her father at Hawelti Primary School, one of the 10 schools used as temporary housing for internally-displaced people in Meqelle, Tigray Regional State’s capital. Her two siblings, she would later learn, had crossed the border into Sudan. At Hawelti Primary School, she and her father are two of more than 1,700 people provided food and shelter.

Many have stories similar to Merhawit’s. They spent several days walking in the wilderness, fleeing the violent conflict.

Like Hawelti, schools in the regional capital have been a sanctuary for over 11,000 people displaced from all across the region, with a single classroom housing up to 50 people. Dedicated storage rooms are filled with assorted vegetables, injera, and sacks filled with donated clothes. The support at the centres has come primarily from the residents of the city.

Terhas, a 30-year-old woman who fled from Humera in early November, is grateful to residents of Meqelle, who she says “have saved us.”

“They’ve been organising among themselves to send us food every day,” she told Fortune. “They provide us with nearly everything we need, from sanitary materials to blankets and healthcare.”

She stays in Hawelti with her husband, while her three children stay at a relative’s house elsewhere in Meqelle.

Government input here has been minimal – most have been given a round of supplies consisting of 30 kilograms of wheat and soybeans and a litre of edible oil. Some earlier arrivals have gotten two rounds in the few months since they made it to Meqelle. But the wheat and soybeans are quickly exchanged for money that needs to be split a thousand ways. Water bills at the schools that have been accumulating since their arrival also need to be paid soon.

“We’re trying to get it waived at the social affairs office here, but so far it has been difficult,” Terhas told Fortune. “We’re also looking to get some security since the schools have none.”

She and a few others in the compound have taken matters into their own hands for the time being and started organising among themselves. Similar to other shelters in the city, they have formed committees to run the sites – managing donations, allotting resources and making pleas on behalf of the women and men in the shelters to government and aid agencies. Priority on her table last week was getting ID cards that help identify those sheltered in the school.

“This is for security reasons,” said Terhas. “We don’t turn people seeking shelter away, although there isn’t much else we can give.”

The shelters are receiving support from the International Committee of the Red Cross, which provides 64,000 litres of water a day to the sites in the region. The organisation has also donated essential items to over 9,000 households across Meqelle, Shire and Adigrat; items such as cooking pots, sleeping mats and blankets as many left their homes with only the clothes on their backs.

This is also true for Kisanet Primary School, the first school that turned to a shelter in the city. Over 1,300 people are housed there and most, like at Hawelti, have come from the western parts of the Regional State, where the war first showed its ugliest sides.

Armed conflict in Western Tigray has been compounded by the forceful takeover of disputed areas by militia forces from the neighbouring Amhara Regional State. More than 140,000 people have been displaced from the western part of the region alone, according to reports by the United Nations Office for the Coordination for Humanitarian Affairs (UN-OCHA).

One of these forcefully evicted people is Haile, a 40-year-old farmer from Dansha, a northwestern Tigray town. He left behind his wife and son, seeking shelter that he has found at Kisanet. His wife, unlike him, was born and raised in Dansha, and had been spared from the killing that quickly followed the open conflict in the region. She stayed back to look after their land and home, but she is being harassed because of her marriage to him, he revealed.

“I’m telling her to leave everything and come,” he said. “There’s no telling what they might do from one day to the next.”

Currently, the region has half a million internally-displaced people, some in official shelters and others seeking refuge in neighbouring towns. The numbers continue to grow as forceful expulsion commences in the western parts, according to aid agency reports. Coordinated efforts between humanitarian organisations have reached over one million people with food baskets, accounting for more than 1,160tn of food, according to the latest report from UN-OCHA.

But food aid provision has suffered heavy mismanagement — claims the government does not deny. Problems in the identification of beneficiaries, undue allotment, as well as the unfair distribution of rations across destinations are some examples, according to Etenesh Negussie, head of the region’s Communication Bureau.

“We’ve also come across evidence that some of the donated food is being stolen and sold,” she told Fortune. “Other sites have mentioned that [IDPs] are expected to pay for the food they’re getting.”

With the government opening up more access to humanitarian aid agencies, experts suggest that this is the time to ensure that those in need are supported.

But like the residents of Meqelle city, who have stepped up in this moment of need, campaigning and involving individuals in providing support is key, according to Yeraswork Admassie, (PhD), executive director at the Forum for Social Studies, a think tank for policy research and developmental issues.

“Support to these groups should include fuel and water needs as well,” he said. “As giving food support to people who have nothing to cook it with has no meaning.”

Attention should be given to hygiene in the shelters as neglect could lead to the spread of transmissible diseases, which could have devastating effects on the already struggling population.

“The role of civil society organisations should also be magnified here,” said Yeraswork.

But with little help from the government and food coming mostly from residents of the city, displaced people in the shelters say they have no guarantees for tomorrow. The conflict continues to rage, and their hometowns are more inaccessible than ever. This comes on top of an impending eviction date, with talks of the reopening of schools in the region casting a shadow on the small semblance of stability they have found at the makeshift camps.

Many like Merhawit and Terhas ask what they have done to deserve this treatment as they find themselves wedged in as collateral damage between two warring factions.

Idled Factory Disrupts Oxygen Supply amid Medical Demand Surge

Posted on by Web Master

A production disruption at the city’s primary supplier of medical oxygen, Chora Gas Factory, has fueled the severe shortage of oxygen in the midst of what experts dub the third wave of the Novel Coronavirus (COVID-19) pandemic in Ethiopia.

The capital gets its oxygen supplies from two plants: Chora Gas Factory and Gast Solar Mechanics Plc.

Chora Gas Factory, a facility under its parent company Amaga Plc that used to produce more than 1,000 cylinders a day, faced issues with its production machinery, according to a manager at the company who insisted on remaining anonymous.

“We had a technical problem, as any plant might encounter,” he said.

An accident that occurred during the machinery maintenance caused the plant to pause the supply of oxygen for days. The company, still unsuccessful in fixing the machines, has now started supplying oxygen to Addis Abeba from its other plant in Bahir Dar.

Meanwhile, a severe shortage of medical oxygen is crippling the city’s health centres. The shortage is attributed to the scarcity of supply coupled with the high number of COVID-19 cases, increasing exponentially over the past weeks. Officials from the Ministry of Health have continuously cautioned the public to adhere to public health safety protocols; however, large masses continue to gather for various social, business and political events.

With Gast Solar now serving as the only major supplier, the oxygen demand in the city has skyrocketed. Patients who are cared for at home are in desperate need of oxygen cylinders, pushing demand beyond the capacity of the plant.

“Demand has quadrupled over the past three weeks,” Solomon Bededmariam, general manager of the gas production unit at Gast, told Fortune.

The city’s need for oxygen cylinders has increased by 20pc with the resurgent spread of the pandemic, according to Seife Demissie, director of pharmaceuticals supply & service at the Addis Abeba Health Bureau. Supply, however, cannot keep up even though private and public-owned plants are almost fully dedicated to the health sector. But industry sources say the increase in demand is double what authorities claim.

Hospitals that used to buy 80-100 cylinders a day are now placing orders for 150-200, which is not surprising, considering the number of COVID-19 cases reported. The situation is extremely dire. Close to 2,769 people have died of COVID-19 since the first case was identified in March of last year; 28 of them died in a single day late last week. There are 769 patients with severe cases who require life-saving support such as oxygen and ventilators, according to health officials. The infection rate in Addis Abeba lingers at above 20pc, while it is much higher in places like Dire Dawa, which saw 65pc earlier this month.

Patients and relatives are paying visits to the plants begging for oxygen. Suppliers have had a series of discussions with the Ministry of Health to outline ways to achieve higher production levels. There is work in progress to fix idle or broken machines and start production.

The production of oxygen was not given attention before the pandemic. The companies with oxygen plants faced foreign currency shortages as it was not given much priority. But things have improved now, at least for the business, as the issue has been addressed along with problems having to do with power interruptions.

Another supplier of oxygen cylinders, Universal Gas Plant, founded in 2012, supplies to health centres in parts of Addis Abeba, Adama, Dire Dawa, part of the Southern region, and Wollega Zone in Oromia Regional State. Demand has surpassed its capacity, especially once Chora paused production, according to Yared Demissew, general manager of the plant.

The plant has almost stopped supplying oxygen to other sectors, completely dedicating its capacity to the health sector. However, although the plant has the capacity to fill 1,500 cylinders a day, it is producing far less than that as the machinery requires maintenance.

“We haven’t been able to bring technicians from abroad due to the pandemic,” Yared told Fortune.

They have, however, pleaded for support from the government and been told to stand by as it looks into possible solutions, he said.

The health sector has been struggling with supply constraints well before the pandemic, Siefe told Fortune. Insufficient oxygen supply has been one of the main causes of infant mortality for years.

Concerns are growing as the number of patients in need of intensive care increases tremendously, while the supply of oxygen and the number of ventilators remains the same. Experts from the Ministry of Health report that COVID-19 centres are operating at full capacity as cases surge with only 500 ventilators available for the critically-ill. The city’s Health Bureau plans to build more in-hospital oxygen plants and encourages private companies to move into the sector. Hospitals such as St. Paul, Yekatit 12 and Tirunesh Beijing General Hospital are among the health centres planning to have their own oxygen plants shortly, while treatment centres like Millennium Hall are already sourcing from a plant in the compound, according to Siefe.

Although addressing the supply issue of oxygen is important, focusing on preventive measures should be given priority, especially for a developing country like Ethiopia, according to Alemayehu Worku (PhD), professor of public health at Addis Abeba University. Treatment is expensive and costly in terms of human lives. He wants to see the authorities strictly enforce preventive measures.

Alemayehu is not pleased with the authorities, viewing their behaviour as less than exemplary with public rallies and gatherings broadcast through the media where officials are clearly ignoring preventive measures.

The public will learn that prevention is necessary, but it will be only after lives are lost, according to Alemayehu.

The government has also started rolling out the first round of COVID-19 vaccinations on March 14, 2021. It pledges to vaccinate 20pc of the population by the end of the year.

Hit by Supply Shortage, Textile Industry Eyes Salvation in Cotton Imports

Posted on by Web Master

Ethiopia is importing 20,000tn of cotton, representing close to 40pc of the textile industry’s annual demand, after floods damaged plantations in the main growing regional state and caused shortages in supply. Security concerns in two other cotton-growing regional states have contributed to the shortage as well.

The Ethiopian Industrial Inputs Development Enterprise (EiIDE) dispatched invitations last week to a closed bid by a selected supplier list of 12 companies. The bid, with each slot required to supply 2,500tn, is scheduled to open on April 7, 2021.

“The cotton is expected to be received in July,” said Solomon Girsha, deputy CEO for the Enterprise’s procurement sector.

Ethiopia’s textile industry requires an estimated 55,000tn of cotton annually; but only 33,000tn reached factories this year. The supply gap has occurred largely due to cotton plantations in Afar Regional State, which accounts for 80pc of domestic supply, that were damaged by flooding in September 2020. Security issues in Gambella and Benishangul-Gumuz regional states, other lowland regions where cotton grows, played a part in the shortage. The shortfall in pesticides brought on by forex shortages has also exacerbated the situation.

The Ethiopian Textile Industry Development Institute (ETIDI) has also allowed six textile factories and the EiIDE to import cotton. The factories have been given the green light to import an aggregate of 10,000tn, and the other half through the Enterprise. Kanoria Africa Textiles Plc, Adama Spinning, Kombolcha, ALCA, MNS Manufacturing Plc, and Bahir Dar Textile Factory are the recipients of foreign currency allocations for imports.

According to people familiar with the industry, the textile industry has survived the economic impact of the COVID-19 pandemic. According to Bantihun Gessesse, director of communications at the Institute, it is tested by a shortage of cotton.

There are more than 3,000 micro and over 200 medium and large textile industries in Ethiopia. The largest of these is Bahir Dar Textile Factory, which requires more than 30,000tn of cotton a year. The factory used to source cotton from commercial farms in Afar and Benishangul-Gumuz regional states; it now receives supplies from farms in the north and central Gonder area of Amhara Regional State.

Not getting enough from these sources, the factory is operating at half of its capacity, Mengistu Aregaw, CEO of the Factory, told Fortune.

Unable to import since the outbreak of COVID-19 last year, the factory has dropped its production.

“Even though we haven’t resorted to laying our employees off and closing the factory, if the situation continues like this, it might come to that,” said Mengistu of his fears on the threat of closure.

Another textile factory has temporarily ceased production due to supply constraints and going through difficult times. Adama Spinning Factory, which requires 3,500tn of cotton a year, stopped operating in October 2020 but kept employees on its payroll. Two months later, it started buying up cotton that survived the flooding in Afar.

“If access to foreign currency is not allowed now, we might end up closing the factory again,” Yimer Yimam, CEO of Adama Spinning, warned.

Officials at the Ethiopian Industry Inputs Development Enterprise, which is allowed to import 10,000tn of cotton, were keen to complete an international procurement bid issued on March 19, 2021, early.

Nonetheless, only one bidder showed up, although 15 bought the bid document.

Senior staffers at the Enterprise blame a lengthy bid process that lasts two months for bidders’ reluctance to participate as international cotton prices fluctuate in the meantime.

Natural and man-made disasters last year only aggravated the shortages in cotton production, which have long been in the making, according to experts studying the textile industry. For a country whre only three percent of its land suitable for growing cotton, supplies that are not increasing in tandem with the expansion of textile industries are most responsible, according to Abera Kechi (PhD), associate professor and scientific director at Bahir Dar University Institute of Textile & Fashion Technology.

The Institute is working on projects to increase the capacity of cotton producers, incentivising commercial farm developers to join the industry as long-term solutions to the supply crunch, Bantihun told Fortune.

No Love Lost Between Tsehay Real Estate, Homeowners

Posted on by Web Master

The relationship between a real estate developer and hundreds of homebuyers has not been warm and sunny of late. Embroiled in a series of issues from title deed issuance to manners in which shared properties are managed and the absence of commercial units as initially promised, managers of Tsehay Real Estate Plc are at odds with leaders of the Homeowners Association.

Delays in issuing title deeds to homeowners at Tsehay Real Estate have caused a dispute driving Association leaders to press charges at the Federal High Court.

Buyers and the real estate company signed contracts stating that lease ownership of the housing would be provided within “a reasonable” period of time. Even though most contracts were signed seven years ago and homeowners have moved in, transfers of ownership have yet to occur. The Homeowners Association, founded in 2017 with 105 members, has its legal standing challenged by the real estate company, however.

Tsehay, a China-based real estate developer, has yet to transfer lease holding rights to homeowners who bought apartment units at a Yeka District site near CMC. The real estate company claims to have invested three billion Birr in developing an upscale neighborhood that lies on a 30,000Sqm plot with more than 630 units in 13 apartment blocs; 55 units remain unsold.

The company took loans from banks, including Bunna International Bank, which advanced 240 million Br between 2018 and 2019. The Bank was close to pursuing foreclosure in February of this year after the real estate company defaulted on its loans, putting homebuyers’ property security at risk. Bunna’s move to auction the property caused anxiety to the 306 current members of the Association, according to Tewodros Yilma, the chairperson.

Tsehay Real Estate requested loan rescheduling in February 2021. Managers at Bunna are considering the request, looking into whether the real estate firm fulfills requirements set by the central bank. Bunna Bank has also agreed to hold the 55 unsold units as collateral instead of the entire property, where 575 people have bought units.

Managers at Bunna have declined to comment on the matter, despite repeated inquiries from Fortune.

However, Bunna is not the only bank in the saga.

Close to 29 homeowners have taken loans from Bank of Abyssinia against their respective units held as collateral.

The real estate company was supposed to start the process of seeing title deeds issued through the District office but has yet to do so.

A homeowner who bought a flat from Tsehay seven years ago never expected issues with title deeds would arise, as she believed the company was “large and renowned.” Her family’s concern began to grow about three years ago due to conversations with other homeowners. The family, originally planning to move in a few months, is now weary as the issue has yet to be resolved and Tsehay continues giving them unfulfilled promises.

Recently, they were told to bring documentation to Tsehay’s office. Later, a person claiming to call from Yeka District informed them that they should come in on a Saturday at 1:30pm and receive their deeds, the family member told Fortune. They realised that the District, like most government offices, is not open on Saturday afternoon. The same person called back a day before the appointment to let them know it had been canceled. The family later learned that the calls were coming from Tsehay Real Estate itself, this family member claims.

Managers at Tsehay Real Estate declined to comment on these claims and the trouble brewing with homebuyers.

Right about when Bunna Bank’s auction was made public, the family understood the depth of the problem and reached out to the Association.

“We contributed for legal fees,” said a member of the family.

The dispute over title deeds is just one reason for the growing disquiet at Tsehay. The issue of property management has caused fury among homeowners, who claim that property managers have failed to meet the quality of services they promised, according to Association leaders.

Power outages and unhygienic water discharge in the site’s water system are among the allegations laid out.

The Association filed a suit at a civil court of Yeka First Division in October 2020. Reliance Property Management & Security Services Plc, hired by Tsehay Real Estate to administer the site, has been ordered by judges to leave the premises in a ruling the court made on March 11, 2021.

Despite orders from the court, the property management company has yet to transfer shared properties. Neither has it evacuated the site nor has Tsehay Real Estate made an effort to facilitate the process, Association leaders claim.

“We’re going to file an application of execution,” said Hana Woldegebriel, secretary of the Homeowners Association.

Messebo Resumes Production, Cement Saga Continues

Posted on by Web Master

Shocked by the escalating price of cement, authorities at the Ministry of Trade & Industry have begun to take a series of measures hoping to discipline the battered cement industry and supply chain. A quintal of cement sold for as high as 750 Br last week.

One of these measures will be legal action against individuals found hoarding cement and facilitating the redistribution of any cement that is confiscated from the hoarders, according to Melaku Alebel, minister of Trade. Officials from the Ministry are to be assigned to factories to monitor and oversee production and distribution.

The announcements come a week after the Construction Contractors Association put out a call of distress about the ever-climbing prices and decried chronic shortages of cement in the market. Leaders of the Association welcome these measures, together with the reopening of Messebo Cement Factory in Tigray Regional State, as positive steps toward steadying the market.

Messebo’s resumption of production increases the amount of cement available in the market, but since the problem circled around distribution, the authorities should work more on regulating the supply chain, according to Girma Habtemariam, president of the Association.

Messebo restarted partial production on March 20, 2021, following a 130-day shutdown due to the interruption of electricity as a result of the war in the Regional State. The cement plant, which was established in 1997, is located on the outskirts of Meqelle, the regional capital. The plant did not incur significant damage during the conflict; however, after the conflict eased, most of its equipment was looted, lost or damaged.

“Cement production machinery hasn’t been damaged,” Robel Legesse, communications manager at Messebo, confirmed to Fortune. “However, operational materials such as office equipment, spare parts, computers and vehicles have been damaged or lost.”

Managers at Messebo are currently conducting a general inventory to assess the extent of the damage and financial losses incurred.

The factory, which has the capacity of producing 7,000tn of cement a day and over two million annually, is operating at a third of its capacity. It is producing clinker, an intermediate product in cement production. Due to security issues, the factory is sourcing raw materials from two of the four quarries that are located within a 100Km radius of the factory: Shuguwa Shugi, Adi Mesno, Wuqro and Mesenkot.

All employees of the factory, especially those who operate the machines, have returned to work despite there being a curfew and a state of emergency in effect in the Regional State.

Employees that are not involved in the operation of the machinery are on paid leave.

Messebo’s operation will no doubt have a positive effect on the country’s construction industry, particularly in the northern regions, since contractors in that area acquire cement specifically from Messebo, according to Yehualaw Sisay, managing director of Two Y Engineering Construction.

Contractors were buying a quintal of cement for more than 1,000 Br due to Messebo’s closure, leading to project delays and contract cancellations.

Yehualaw indicated that even though factories are producing and offering their products to the market, there are problems in distribution that need to be addressed. He sees the measures being taken by the Ministry as a good first step to solving these problems.

Disgruntled Labourers Walk Out at Coca-Cola Addis Abeba Plant

Posted on by Web Master

Almost one-third of employees at the Addis Abeba plant under East Africa Bottling S.C. have staged a walkout over a dispute with annual bonuses and unanswered requests about incentives and workplace compensation. Over this past week, close to 500 employees of the bottler of Coca-Cola abandoned their workstations for two days in light of a notice from the company informing them that this year’s bonus covers only two week’s pay.

Employees had expected bonuses amounting to at least two months’ salary. Even though the strike started this past week, the employees have been facing issues at work for some time now.

“This makes us doubt we’re even going to get the raise that we’ve been looking forward to,” one of the employees on strike told Fortune.

The company, 61pc controlled by South African Beverage Company (SABCO), employs close to 1,000 people at its Addis Abeba plant and has 2,500 employees across the three plants it operates in Addis Abeba, Dire Dawa and Hawassa. The largest soft drink bottler since 1959, East Africa Bottling distributes over 800 million bottles a year. But it is rare to see labour strikes at the company.

The disgruntled labour force now claims management declared on various media platforms that the company had provided about 12 million Br to assist the employees and their families in light of the COVID-19 pandemic, support which they say they have not yet received.

The complaints of the aggrieved labor were valid, according to Nigus Alemu, legal council and social affairs director at East Africa Bottling.

“But the way they presented then was inappropriate,” Nigus told Fortune.

The strike has led to the disruption of production, but things have normalised since then, and the employees are now back at work, he confirmed.

“We had a meeting with our employees and we agreed to start production the day following the strike,” he said. “The management is working to respond to their requests.”

Nigus declined to comment further on the matter.

How the management responded to date remains a source of disappointment to the workers.

“We’re saddened by how the management is treating us,” said an employee who requested anonymity. “We’ve been serving even during the pandemic; we never stopped production.”

The management wants a win-lose conflict-solving method, a person familiar with the case claims. Dissatisfaction by the workers has long been on the edge of boiling over, and it now has, because the top-level management has neglected the three incentives needed to keep employees happy: economic, social and moral, according to this person.

“Management should’ve allowed for open discussions rather than wait for things to escalate,” said this person. “They chose not to.”

It is within the legal rights of the workers to strike until their demands are met, but the issues raised in this case could be solved based on collective bargaining through discussions with their union, said Henok Teshome of the Ethiopian Labour Rights Watch.

“The worst-case scenario is that it goes to court,” he told Fortune.

A labour relations board under the Ministry of Labour & Social Affairs has the mandate to look into such labour dispute cases.

Overseas Wheat Supplier Emerges Triumphant over Litigation

Posted on by Web Master

A wheat supplier based in the United Arab Emirates (UAE) cannot be held liable for additional costs incurred by a federal public procurement agency in sourcing wheat at a more expensive price after the original supplier failed to fulfil the contract, ruled judges at the Federal High Court.

Failure to deliver the wheat by the winning bidder, Promising International Trading Co., led the Public Procurement & Property Administration Agency to suspend the company from participating in any public procurement bids in Ethiopia for one year. Promising, however, contested this at the Federal High Court.

Promising International won a bid two years ago to supply 200,000tn of wheat for 52 million dollars and signed a contract with the Public Procurement & Property Disposal Service (PPPDS). However, as Promising was getting ready to ship the wheat, the Ethiopian Shipping & Logistics Services Enterprise (ESLSE) marked up the shipping price from the amount agreed upon for its winning bid. The contract document dictated that ESLSE carry out shipping of all milling wheat.

Promising had asked the Service, which is accountable to the Ministry of Finance, for permission to shift to another shipper; in the contract, this was only possible upon receipt of a waiver from the ESLSE. The Service claims to have secured the waiver from the shipping company and agreed in a new contract for the defendant to supply the wheat for 2.6 million dollars less than the initially agreed upon amount. After the unexpected increase in shipment fares by the Enterprise from the initially quoted amount, Promising said it had asked the PPPDS for a waiver from ESLSE to change to the second quoted shipment. Though the Service claimed to have sent the waiver, Promising’s lawyers maintained that their client had never been notified.

The dispute reached the Federal Supreme Court Cassation Bench, which finally ruled that Promising was not liable for failing to deliver, resulting in the company being removed from the blacklist.

Due to the non-performance, the Service was then forced to conduct another procurement contract for the same amount of wheat with a purchasing price of 55 million dollars.

It instituted a case in July 2019, appealing to the Federal High Court, claiming that Promising should reimburse the five million dollars additionally incurred, along with interest. Lawyers representing Promising denied the existence of an alternative contract that brought down the original contract value by 2.6 million dollars. They argued their client had not received any notification on the granting of a waiver; nor was there any evidence presented to support either claim.

The Federal High Court, presided over by Judge Endale Tadesse, ruled that Promising is not accountable for the five million dollars sustained as a result of an act of negligence on the part of the PPPDS.

The litigation has already brought damage to the reputation and goodwill of Promising International, claims Biniyam Kebere, a lawyer who represents Promising.

“We’ve sustained irreparable damage to the good name of the company due to the suspension placed on us,” Biniyam told Fortune. “It was us that should’ve asked for compensation.”

Lawyers who represent PPPDS have yet to appeal against the ruling. Its officials were not available for comment when Fortunereached out to them.

Growing But Little Understood Business Afoot

Posted on by Web Master

An application developer who has recently taken up hiking to get some exercise, Mignot Tariku’s first experience with her new hobby came in November of last year. After the COVID-19-induced national state of emergency was lifted, she began to use hiking to relieve job stress.

One of her friends from her work shared a hiking group on Telegram, the social media platform, that led them to plan a hike on one Sunday morning.

“It was a different and unforgettable experience,” she told Fortune.

Mignot, 27, and her friends have gone hiking at least once a month since, and the experience has helped her develop an appreciation for places and people that she would otherwise not have.

“I thought it was a luxurious activity,” said Mignot. “It’s mostly foreign tourists that come to Ethiopia for adventurous things like hiking and trekking.”

She also found it to be a source of much-needed relaxation after spending an average of eight or more hours sitting at her computer on the weekdays.

“My job can be very stressful,” said Mignot. “Hiking gives me the time to meditate and relax in natural places.”

Hiking and trekking are closely associated with journeys and pilgrimages to different monasteries and religious centres in Ethiopia. It is common to see colourful posters on taxi windows or electric poles promoting trips to various religious sites such as Tsadkane Maryam and Debre Libanos or Zeber.

Feven Endayehu, a friend of Mignot’s, used to make pilgrimages to such monasteries and churches, usually during fasting seasons. However, she joined a hiking group last year before the pandemic broke out and has noticed that more and more people are taking part in hiking expeditions.

Hiking organisers have steadily been growing in number in the capital, catering to the needs of people like Mignot and Feven.

Promotions and marketing through social media platforms play a large role in the growing popularity of hiking. The business has expanded steadily since it first caught the attention of urbanites around a decade ago.

Addis Hiking is reputed to be the first to introduce hiking tours as a leisure activity to these urbanites. Binyam Shifa, the founder of Addis Hiking, is considered a pioneer in the hiking business, first organising trips eight years ago while working as a gym trainer.

On his first hike, Binyam took seven people, free-of-charge, to Entoto hills. It became a business the second time around when he took 30 people to the same site, charging each 100 Br, including expenses for snacks, lunch and water.

Hiking is growing popular due to people gaining better awareness about it and because hiking service providers are joining the nascent industry, according to Binyam.

Addis Hiking now has over 100 regular clients and 500 casuals willing to pay an average of 600 Br for a one-day hiking trip. If it includes camping, the cost goes as high as 2,000 Br a day.

Two years later, Mikiyas Tetemke entered the industry out of frustration at seeing that many Ethiopians from cities with better financial leverage tend to tour overseas to Dubai, Bangkok or the United States. A radio host at Gojo Music, it baffled him that they were not taking advantage of what “we have around and nearby.”

Four years ago, he was doing hiking not as a business but to encourage domestic tourism. In February 2020, he registered Gojo Hiking with the Ministry of Culture & Tourism and began to organise trips within a 200Km radius of Addis Abeba. Some of the destinations where Gojo offers trips for clients like Mignot and Feven include Gulele Botanical Gardens, Mount Erer and Wenchi Lake nearby, and farther away to Menilik Meskot near Debre Sina town, and Amora Gedel.

Since the national state of emergency was lifted late last year, Gojo and other hiking service providers have witnessed a considerable spurt in growth for both hiking and camping.

People look for places to get out more now following months of sitting indoors, Mikias observed. He sees that growing and regular promotions on social media have helped dispel the misconception that hiking and camping are expensive and luxurious. His company charges clients from 600 Br to 1,000 Br for daily hiking that includes lunch and snacks.

“People in the cities live in a polluted environment,” said Mikias. “The air is thick with smoke, and the streets are noisy and hectic. People need an activity that can help them get away from all that.”

The industry is new and upcoming. Not much is available in data to show its size or even the number of operators in the market. The Ministry of Culture & Tourism did not have a domestic tourism department up until last year. This shows how little focus the government has been giving to domestic tourism, despite Ethiopia having huge potential geographically and demographically, those who follow the tourism industry note.

One such person is Ayalew Sisay (PhD), who once ran the Addis Abeba City Administration Tourism Commission before leaving public office. He now works as a tour operation director at Chora Tours but could not conceal how surprised he was upon learning that hiking was growing to be such a popular pastime.

“The organisers should be encouraged and appreciated by the federal and regional government tourism bureaus,” Ayalew said. “They are contributing toward enhancing domestic as well as health tourism.”

Little is known about who the biggest operators are in the market. However, a company known as Ethiopia Community Trekking organises two-week trips to several destinations across Ethiopia for 3,330 dollars a person. An 11-day adventurous trip to the Danakil Depression costs travelers – mostly from overseas – a little over 1,700 dollars.

Biniyam Taye, a team coordinator at Happy Feet Hiking, saw the business growing fast ever since the measures against COVID-19 were relaxed and increases in demand, mostly due to growing interactions on social media, particularly on Telegram.

What led the company he works for to enter the market tells a story of such expansion. Happy Feet started hiking services as part of fundraising efforts for a fistula rehabilitation centre for women near Burayu on Addis Abeba’s outskirts. Happy Feet involves members of the communities at destinations they take clients, hiring them to provide catering services and as tour guides as well as translators.

“The roles of domestic tourism are many,” Ayalew told Fortune. “It produces social and cultural benefits for the local population who might not otherwise be able to experience their natural endowment.”

On the clientele side, many who go for hikes do so for reasons related to health, according to Biniyam. His team sends checklists to remind the clients to bring hiking shoes and first aid kits and to fully charge their electronic devices.

“We urge them to wear weather-appropriate clothing,” he told Fortune.

Ayalew believes for countries blessed with spectacular ethnic diversity like Ethiopia, hiking provides travelers with the opportunity to build their understanding about themselves and build up and strengthen national fraternity. Ethiopia’s tourism industry is cyclical and seasonal; activities like hiking can help boost the numbers during the off-seasons, according to Ayalew.

Some hikers, however, tend to show interest solely based on a location’s suitability for snapping a couple of photos or videos for social media, Feven noticed.

“They’re missing the point,” she says. “Hiking is all about avoiding the hustle and bustle of city life.”

Planning Commission Drops 16pc of Ministry-proposed projects

Posted on by Web Master

Several public projects under review by the federal planning commission failed to receive a positive nod due to an inability to meet the commission’s criteria and priorities.

Close to 16pc of the 129 projects assessed by the Planning & Development Commission were dropped after the office of the federal auditors general revealed 44.3 billion Br in public projects were misappropriated in the three years beginning in fiscal year 2015/16.

The Commission is mandated to do preliminary and initial screening with the passing of a law in June last year governing public projects administration and management. The law obliges officials to ensure projects are socially and economically viable and achieve their objectives by optimising the utilisation of resources allocated to them.

A new department, the Development Projects Directorate, has been up and running under Bereket Fesehatsion. It is tasked to identify whether a project’s rationale and scope have been accurately defined; whether the proposed projects could be carried out by the private sector; if it has a clear implementation mechanism; if regional states can implement it; whether it can be integrated with other projects; and whether it is in line with the administration’s priorities.

Bereket’s office has provided federal agencies project concept note preparations and pre-screening formats, which they use to formulate their submissions.

All federal agencies have been notified to send their concept notes for projects to be considered in the coming fiscal year. Federal agencies, including the ministries of Health, Innovation & Technology, and Water & Irrigation, have responded, submitting project proposals requiring finance or sovereign guarantees from the federal government.

About 54 public projects were accepted, and 30pc were sent back for revision, while the remaining were declined. The bulk of projects submitted were from the ministries of Health and Innovation & Technology.

“We’ve conducted one-on-one consultations with the agencies whose projects were unclear,” said Bereket.

After the ministers are given the go-ahead to carry out feasibility studies, the Commission keeps up its engagement through appraising the studies.

“We’ll have a rigorous appraisal,” Bereket told Fortune.

During the appraisal of feasibility studies, the Commission wants to ensure the studies are conducted as detailed in the concept note as well as keep track of standards. To address gaps noticed in the transition to the new project design system, the Commission held a five-day training last week with 15 agencies in collaboration with the World Bank. The training is the first among a series of capacity enhancement programmes, according to Bereket.

Sintayehu Demissie, a lecturer at the Addis Abeba University School of Business & Economics, appreciates the capacity-building training, as he believes it is crucial in making the whole process successful. He added that public offices should be able to retain the trainees.

“A system that retains capable professionals has to be in place,” he said.

Expert-specific projects not necessarily within the scope of public institutions should be outsourced or carried out in partnership with private institutions, according to Sintayehu.

However, the new system could be seen as disadvantageous since it creates bureaucracy and robs institutions of their autonomy in decision making.

“Resources allocated for public projects are limited; hence prioritisation and capital rationing come in handy,” Sintayehu said.

Prevailing Investor-State Dispute Settlement Hardly Stately

Posted on by Web Master

From foreign investors’ perspective, the main loophole in the existing customary international law is the lack of a dispute settlement mechanism. As a result, investor-state dispute has become an effective tool to remedy this defect. In various bilateral investment treaties (BITs), it is quite common to find two types of dispute clauses: investor-state and state-state dispute resolving mechanisms.

Investor-state dispute settlement (ISDS) is the legal mechanism that allows multinational corporations a forum other than the court system of the country in which the dispute arose – the host country – to arbitrate a controversy between a corporation and the host country.

ISDS is not a new phenomenon. It is a decades-old mechanism first drawn-up in Europe to enforce rights emanating from international laws without any discrimination between investors. Before incorporating investor-state disputes into treaties, foreign investors were compelled to bring their allegations to domestic courts for arbitration along national laws.

Things changed in the aftermath of WWI in 1919. The International Chamber of Commerce (ICC) was formed with the view that the private sector is the best-qualified institution for global business. Four years later, the Chamber established the International Court of Arbitration (ICA). States were skeptical of using these institutions; nor were they open to the private sector at the outset.

Although efforts were exerted in the League of Nations to extend legal protection for alien property, these never materialised. But the massive expropriation of foreign investors’ property by newly independent countries drove home the need to have a separate global state-investor dispute platform.

The International Centre for Settlement of Investment Disputes Convention was established in 1966, and as of June 2019, it has been ratified by 154 countries. Since then, the Centre has become the principal platform, and the number of caseloads is ever-increasing, partly because of the proliferation of BITs.

Although it provides arbitration and conciliation for any dispute between member states and investors, it also provides similar services for non-members and investors through additional facilitation rules.

There are various criticisms against the existing ISDS. High on the list is a lack of transparency. With the justification that sensitive business information needs to be protected, one integral feature of the investor-state dispute settlement mechanism is confidentiality.

“Their meetings are secret. Their members are generally unknown. The decisions they reach need not be fully disclosed,” reads a New York Timespiece, headlined “Nafta’s Powerful Little Secret; Obscure Tribunals Settle Disputes, but Go Too Far, Critics Say.” “Yet the way a small group of international tribunal handles disputes between investors and foreign governments has led to national laws being revoked, justice systems questioned and environmental regulations challenged. And it is all in the name of protecting the rights of foreign investors.”

This confidentiality puts a shadow on the legitimacy of the arbitration award, which is paid out of public money: taxes.

Another criticism is the lack of consistency and predictability in arbitration. This is well demonstrated in cases where the arbitral tribunal seat in Stockholm came up with a completely different judgment from another one in London on the same matter. To fuel this problem, the decision of an arbitration award is final and binding – an appeal is not an option.

No less cumbersome is skepticism on the independence and impartiality of arbitrators. With the view to promote arbitration and secure future appointment, some may favour investors over states in state-investor disputes. Moreover, lawyers that act as a counsel in one case can become an arbitrator in another and a professional witness in yet other ones. As a limited number of people have a say over the whole system, the impartiality and independence of arbitration is compromised.

The last but still critical challenges are cost and time. International arbitration is not a cheap process. For instance, to lodge an application before the international dispute settlement Centre, the claimant must pay a non-refundable fee of 25,000 dollars. For any supplement interpretation or re-submission, another non-refundable 10,000 dollars has to be paid. Administrative charges cost 42,000 dollars. When we add the cost of the arbitrator, the expense will go yet higher. On top of this, international arbitration is not fast and quick.

Still, the current prevailing system of investor-state dispute settlement can be reformed. An adjustment that can be made is the promotion of alternate dispute resolution mechanisms to litigation. These could be conciliation, mediation, negotiation and fact-finding. Although these alternatives are not binding, the process and outcome will enhance legitimacy, save time and money, and more importantly help the disputing parties reach a mutually agreeable solution.

Another option is to introduce a global investment court. Until now, there is no single investment court entrusted with resolving investment disputes despite its advantages of improved consistency, predictability and legitimacy – the latter of which by removing the perception that arbitrators are investor-friendly and impartial.

An international court will be perceived to be more legitimate to arbiters in at least three aspects: it is fair and unbiased; the court will interpret the agreement in line with what the law is and what the law should be; and it is more transparent. On top of this, it would make more sense for issues that involve human and labour rights and fiscal policy to be entertained by courts.

No less necessary would be to introduce appeals. One of the criticisms against the existing investor-state dispute settlement system is that even if the arbitrators’ decision is patently incorrect and unjustifiable, it is not possible to appeal against the decision. As a result, the likes of the European Union have proposed an appellate body that will have six members: two judges from the European Union, two from the United States and two other persons from another third country or region. Introducing an appeal system will improve international investment law’s consistency and unify the existing fragmented system. Anticipating the possibility of this option is a matter of time. For instance, the United States, in the bilateral investment treaties that it signs, provides that if an appellate mechanism is necessary for reviewing awards rendered by investor-state dispute settlement tribunals, institutional arrangements be established to review them.

Limiting investors’ access to the settlement system is also necessary. One mechanism to mitigate the number of cases filed before international arbitration is limiting access. There are different mechanisms for doing this. The first one requires the investor to exhaust all available domestic remedies before resorting to international arbitration. Another is limiting the jurisdiction of international arbitration not to entertain certain matters. Finally, a waiting period should be stipulated so that the investor shall not bring the dispute to international arbitration during this time.

Such safeguards would be critical to addressing the obstacles in the relationship between states and investors.