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Month: June 2023

ETHIOPIA’S DEBT: ABIY’S PLEA

Posted on by Tizita S.

Prime Minister Abiy Ahmed (PhD) alighted in the French capital last week, ushering his high-level entourage, Mamo Mihretu, the central bank governor, and Ahmed Shide, his finance minister, into the “New Global Financing Pact” talks. He was met by the world’s financial elite, including Ajay Banga, the new chieftain of the World Bank Group; Melinda Gates, the American philanthropist; Janet Yellen, the US Treasury’s guardian; and Malfada Duarte, the helmswoman of the Green Climate Fund.

During a spirited panel discussion on the subject of multilateral development financing, Abiy delivered a lucid diagnosis of the daunting crisis cocktail beleaguering the African continent, a mélange of climate financing shortfalls, weighty debt burdens, and potent political instability. Abiy proposed a remedy of sorts, recommending that prior financing promises be upheld, more concessional loans and grants be awarded, and restructuring of IMF`s special drawing rights (SDRs) be instituted.

“Private and public debt has scaled new altitudes,” the Prime Minister admonished the gathered financial titans.

The Prime Minister’s plea for more favourable financial conditions, in light of Ethiopia’s pressing debt burden, is a vivid illustration of the broader economic plight faced by many developing countries, particularly in Africa. The fiscal plan set forth by his Finance Minister to the Ethiopian parliament demonstrates the gravity of this issue. The budget bill proposes a 159 billion Br allocation to debt repayment next year, which only grazes the surface of the looming 27 billion dollars debt Ethiopia`s economy is shouldering. It appears that, despite all the rhetoric, the harsh reality of the country’s economic straits cannot be ignored.

The Dire Cost of Weaponising Humanitarian Aid

Posted on by Tizita S.

As one confronts the unfolding tragedy in Ethiopia – Africa’s second most populous country – it is difficult to ignore the overwhelming sense of déjà vu. For too long, the spectre of famine has haunted this country and its people; a tragedy made all the more dreadful by the vast scale of human suffering accompanying it.

This time, however, there is a new, horrifying dimension to the crisis: the explicit and deliberate suspension of food aid to millions in desperate need. The United States (US) and the United Nations (UN), whose humanitarian largesse Ethiopians have long relied on, are holding back their generosity over concerns of alleged misuse by Ethiopian officials and non-state armed insurgencies.

This gambit, arguably an attempt to force the Ethiopian government to reform its aid delivery mechanisms, may appear a justified response to chronic corruption and mismanagement. But the stark reality remains that civilians bear the brunt of this policy.

Can such a strategy be condoned?

The justifications for this dramatic move are far from trivial. Allegations of large-scale theft and diversion of aid have been mounting for months. Interim administration officials of the Tigray Regional State claimed to have uncovered, in a single town there, stolen food aid enough to feed 134,000 people for a month.

The Ethiopian government has long maintained a troubling level of control over aid distribution, from manipulating beneficiary lists to directly pilfering supplies. Given this background, the impulse to withhold aid until better oversight and accountability are secured could be understandable.

Sean Jones of USAID-Ethiopia and Carl Skau, WFP’s deputy executive director for Ethiopia, who is also the chief operating officer, face an unenviable choice between tolerating corruption and causing immediate suffering.

However, while there are no easy solutions, a policy of deliberate starvation is not just morally reprehensible. It is strategically misguided. Holding the most vulnerable victims of war and militarised conflict hostage in an attempt to force the hands of their leaders is a dangerous gambit.

For one, it underestimates the grim reality of politics in a country like Ethiopia. Despite the harrowing reports of starvation deaths, there is no guarantee that the government would bend to external pressure. Experience should have been a better teacher for Messrs Jones and Skau that Ethiopia’s leaders have the habit of politicising external pressure for the domestic end. They often use the crisis to consolidate power and scapegoat foreign powers.

The result is the same for the people on the ground: further suffering.

Instead of using food aid as a bargaining chip, the crisis in Ethiopia should be viewed as an opportunity to rethink how humanitarian aid is delivered in conflict zones and states plagued by corruption. This starts with acknowledging that the onus of reform should not lie solely on the shoulders of Ethiopia’s government but also on those of the international donors.

For too long, aid has been given without enough attention to how it is distributed and used. It is an uncomfortable fact that humanitarian agencies have often tolerated a degree of corruption by government officials, and aid diversion by armies of cadres with authority on the ground, either due to logistical constraints, or as part of an implicit quid pro quo for access.

A response should thus seek to find a balance between the imperative to deliver aid and the necessity of ensuring it is not misused. Transparency and accountability need to be strengthened on all sides: from donor countries, humanitarian organisations, and, crucially, the Ethiopian authorities.

This begins with a robust, impartial investigation into the allegations of food aid diversion and theft, conducted not just by Sean Jones and his team but also by independent experts with the necessary credibility and impartiality.

Aid distribution must be depoliticised. The Ethiopian government’s role in the supply chain needs to be monitored, if not limited. Considering how many such countries overblow the principle of “sovereignty” to shelter impunity, the internationals should emphasise the convention on the “responsibility to protect”.

Simultaneously, diplomatic pressure needs to be exerted on the federal and regional authorities to ensure cooperation. A potential path towards this is coupling aid provision with increased visibility and condemnation of corruption. Highlighting the government’s responsibility and publicising its failure could be a powerful tool in forcing its hand towards reform.

The key to reforming aid distribution lies in not merely rehashing existing structures, but implementing creative and innovative solutions that limit the scope for graft.

The internationals can have a powerful ally in technology. Biometric registration of beneficiaries and real-time monitoring of aid distribution, for instance, can ensure that aid reaches the intended recipients. Third-party distribution can also play a crucial role in limiting the opportunity for political manipulation of aid.

Ethiopian authorities would do themselves a favour if they understood that theft of aid will not only lead to a suspension of emergency and humanitarian assistance but will also be accompanied by international public shaming.

It is imperative not to ignore the larger geopolitical context within which this crisis is unfolding. The civil war in Tigray and neighbouring regional states has been not just a domestic issue. It is part of a larger regional dynamic involving other players, notably Eritrea. The internationals can actively engage with these regional dynamics to create a framework that allows for the smooth and unimpeded flow of aid, thereby reducing the chances of it being siphoned off by non-state actors and insurgent groups.

The crisis in Ethiopia should be an affront to the collective conscience, a damning indictment of the global community’s failure to respond to a foreseen tragedy effectively. While the theft and misuse of food aid is an issue that demands urgent attention and resolution, it should not be used as an excuse to penalise the very people the aid is meant to help. This would be tantamount to punishing the victim for the crime of others.

Instead, the focus should be on a more transparent, accountable and efficient aid distribution system that does not play into the hands of corrupt officials. This could be a tough call, one that could not be accomplished overnight. However, the alternative – maintaining the status quo or, worse, using food aid as a weapon – is simply untenable.

In an increasingly interconnected world, the starvation of millions in Ethiopia is not a distant tragedy but an immediate crisis that requires a compassionate, yet firm response. Over 20 million Ethiopians remain food insecure. These are not just numbers on a page, but human lives hanging in the balance.

Messrs Jones and Skau, as well as their bosses in Washington D.C. and Rome, owe it to the victims to act decisively and wisely. Anything less would be a dereliction of their moral duty.

Such a transformation could be costly, complex and riddled with potential failure points. But the cost of inaction is far greater. It is measured not in dollars and cents, but in human lives. A society can be judged by how it treats its most vulnerable members. The internationals are failing miserably. Ethiopia presents them an opportunity to change this, to choose compassion over cold calculus, hope over despair.

The Burden of Soaring Property Taxes Dawns on Homeowners

Posted on by Tizita S.

Erget Tareke is one of the 4,000 residents of the Bole Bulbula condominium that penned a letter to the Addis Abeba Revenues Bureau pleading for postponement of the revised property tax.

She became a proud homeowner of a three-bedroom condominium house four years ago, but the partially finished accommodations lacking electrical lines and a sewerage system prevented the family from moving in. Following the retirement of her husband from the military a year and a half ago, they had to leave the residential camp near the Signal area and confront the challenge of living with their six children.

“My husbands’ pension is our only income source,” she told Fortune.

Besides the 3,000 Br pension fund, Erget has been seeking financial assistance from relatives abroad to pool in much-needed financial support. However, the 40-year-old is experiencing anxiety due to the impending tax and is unsure about the obligation to pay taxes on an unfinished property.

“We’re using remnants of the infrastructure that the contractor left,” she told Fortune.

Condominiums housing projects are a subsidised housing initiative from two decades ago that sought to provide homes to urbanites who managed to save a certain portion of the construction costs, with the city administration lending the rest in 40:60 and 20:80 schemes.

Although they were previously exempt from taxes, these properties are now subject to newly recalibrated property tax rates that consider factors such as construction materials, property purpose, and location when calculating taxes.

A residential condominium unit with a 120sqm size, similar to Erget’s house, is set to have its owner subjected to an annual property tax of around 13,871 Br per the revised rates.

Homeowners dismayed over the scheme that included incomplete infrastructures from eight community associations across the 52 blocks of the Bole Bulbula condominium sites came together under a single union to file a complaint to the city administration.

Yohannes Fantahun is a member of the steering committee behind the 4,000-strong union. He has saved up his 40pc share and was given a grace period by the Addis Abeba Housing Development Corporation for full payments as his house remains incomplete.

He questions why the same courtesy could not be applied to the property taxes that was sprung on the residents a couple of months ago. Yohannes claims that representatives have been scouring the Weredas at the Bole district over the past 12 days trying to find a tax appeal hearing committee to no avail.

“Our pleas have fallen on deaf ears,” he told Fortune.

The Addis Abeba City Revenues Bureau, headed by Adem Nuri, dispatched the revised property tax rates in April. The bureau outlined plans to collect up to nine billion from property tax in the forthcoming budget year.

Adem stated that districts were ordered three weeks ago to form hearing committees comprised of members from land management, finance and revenues bureaus to tend to disputes between taxpayers and collectors. He said that the human capital shortage has impeded the formation of committees up to the Wereda level while the degree of completion of the homes is considered before the taxes are levied.

“The taxes will pay for the infrastructure,” Adem told Fortune.

The Woreda 12 Administration Bureau, which has 86,000 households, including the Bole Bulbula condominium residents, receives at least three complaints a day related to the property tax.

“We don’t have a properly formed committee,” said Zerihun Teka, head of the Bureau. He explained that Weredas does not have the mandate to grant grace periods but has readjusted rates for two residents based on their claims.

Several businesses in the capital have also had their feathers rattled upon hearing of the imposition of the revised property tax rates. Landlords have plastered announcements on the walls of their buildings informing tenants of an upcoming rental fee increment a day after the restriction set by the city administration expires in July.

Rehima Dagne runs a small gift shop inside the KKARE Building, located in the heart of the capital around the Mexico area. She sells chocolates, flowers and photo frames in a small six square metre shop on the second floor.

The building administrators plan to call a meeting with all the tenants for a discussion on a possible raise. However, poor market conditions compounded by inflation and a 10,000 Br rental fee have the 27-year-old at the breaking point.

“I’m closing up shop if rent increases; I just can’t afford it,” she told Fortune defeatedly.

Officials at the Addis Abeba Finance Bureau are confident the tax burden will not corner tenants. According to Asmamaw Mulugeta, the coordinator of the property tax project at the Bureau, they have conducted studies that indicate the burden of taxes will be restricted to homeowners.

“We recommended continuing the ban on increasing rental fee will prevent the burden from being passed on to tenants,” he said.

Close to 602 million Br has been collected through the revised rates from 91,000 taxpayers as of last week—a stark increase from the total 47.5 million Br collected from 182,000 taxpayers the prior year. Mayor Adanceh Abiebie disclosed that only 0.7pc of commercial building owners have settled their property taxes, while condominium owners consist of 62pc of the paid amount, in her recent interview with Ethiopian Broadcasting Corporation.

Last week, multiple stakeholders held a discussion with officials from the city administration organised by the Addis Abeba Chamber of Commerce & Sectorial Association at the Inter-Luxury Hotel on Tito Street.

President of the Chamber Mesenbet Shenkute kicked off the session by explaining that it is an awareness creation session on the restructured rate.

The moderator Getu Jemaneh, CEO of HST Consulting Trading, took centre stage, inviting Yohannes Woldegebriel, director of arbitration at the Chamber and Yared Halilmeskel, an investment consultant, while Addis Abeba City Revenues Bureau Head Adem Nuri and Property Tax Project Coordinator Asmamaw Mulugeta joined from the city administration.

Both Asmamaw and Adem told attendees that the prior rate barely covered administration costs, and taxes were the only solution to cover the increasing capital expenditures that account for half of the city’s budget. They stated that the concept of property tax is nothing new, with mere readjustments done in the calculation, which remains on the lower curve when compared to neighbouring countries.

A heated argument followed the presentation from panellists representing the private sector and attendees of the event.

Yohannes contested the historical roots of the tax and the necessity for such an expanded revision by members of the city administration. He argued that the 1975 proclamation, which ushered in property taxes came about during a communist political order which actively objected to private property ownership.

He argued that several modalities for property ownership and real estate development have changed over the past three decades, and a mere revision of rates is incompatible with the current legal framework.

“It’s a decision made in the spur of a moment,” he said.

Yared concurred, stating his assumption that the wave of taxes and austerity measures arise from requests from international financiers like the World Bank, who request structural reforms before debt restructuring.

He emphasised the need for public hearings before a tax that could lead to mass evictions and sweeping displacements is imposed and questioned if the new taxes had anti-poor leanings.

Concerns over the timing of restructuring the tax rates while the Ministry of Finance is working on the proclamation were raised among attendees.

Kedier Seid, an engineer, and architect conducting research on property valuation, indicates that property taxes are a common tool worldwide for covering budget deficits. However, he believes that the 4.5pc multiplier used by the authorities is much higher than international rates, which typically fall between 0.25 and 1.2pc.

He reasoned that inclusion into the cadaster system should come before trying to impose taxes as the number of houses is not exactly known.

While the city administration maintains that the 182,000 taxpayers so far are small considering the one million households eyed by the revised taxes, residents like Erget remain trepid over their futures as a 33.4pc inflation rate hovers above the economy.

Trade Ministry’s Price Floor Sparks Discord in Edible Oil Industry, Threatens Supply Stability

Posted on by Tizita S.

Trade Minister Gebremesqel Chala’s imposition of a price floor on the exports of oilseed cakes has spurred a dispute with edible oil manufacturers, highlighting the delicate balance in the global agricultural market.

The Ethiopian Edible Oil Manufacturing Industries Association, a 600-member-strong lobby group, argues the minimum price – set three months ago – has resulted in a cash-on-hand squeeze due to a surge in soybean seedcake stocks, thereby threatening the domestic supply of edible oil. The Association’s Board Chairman, Mohammed Yusuf, revealed that an estimated 30,000qntl of oilseed cakes have been stockpiled in most factories’ storage areas.

As crude oil prices have declined over the past few months, so has the price of edible oil and demand for oilseed cakes. He asserted that the recently set price floors failed to factor in the volatility of international oil prices.

He also lambasted the price floors as “completely unnecessary.”

The vital concern stems from about 75pc of oilseed processing output being cake, primarily shipped to the United States and Europe. The recent slump in crude oil prices has suppressed the price of edible oil and demand for oilseed cakes, causing the stocks of soybean seedcake to surge.

In response to the industry’s discontent, Mesfin Abebe, an advisor at the Ministry of Trade & Regional Integration (MoTRI), argued that the pricing decision had considered the international market. He disclosed to Fortune that the Ministry revised the floor price two weeks ago, dropping it by six dollars for a quintal of soybean oil cakes, which he said reflected the international prices.

“We’re offering fair prices,” said Abebe, recalling the oil processing plants seeking the Ministry’s certification for export.

The recent policy adjustment pegged the minimum price at 62 dollars for a quintal. Abebe questioned why manufacturers would want to sell below this rate.

“They are not NGOs after all,” he told Fortune. “Why do they want to sell cheap?”

The Ministry of Agriculture, with the authority to restrict exports, lifted a ban on oilseed cake exports last December, its officials justifying the decision with a surplus at the domestic market. Despite the price floors, Ethiopia has still earned 3.1 million dollars this year from exporting oilseed cakes.

However, as the Trade Ministry maintains the essentialities of price floors, oil processors lament the resulting challenges in negotiating with international buyers, who can often find discounted offers from other countries.

Alemayheu Lema Edible Oil Processor entered the market this year. The major shareholder Genene Lemma disclosed the difficulties of finding buyers for oilseed cakes, a byproduct of soybean processing. His medium-scale processing plant has the capacity to process 250qtl of soybean daily; it is operating at 40pc capacity.

A quintal of soybean produces oil contents of up to 20pc, while the remaining by-product is oilseed cake, for which Genene searches for local buyers. Despite having regular customers for the oil, selling the oilseed cake domestically and abroad has proven to be an uphill task.

Genene cited the imposed price floors and stringent quality standards required by foreign buyers as significant hurdles in the international market.

“The buyers want to trace the oil cakes from their sources at the farms,” Genene said.

He was compelled to pause production due to the overwhelming build-up of oil cakes in their storage facilities, which he says is straining the working capital.

“Basically, no one wants to buy in the local market,” Genene asserted.

He projected a decline in domestic demand with the onset of summer, as pastoralists usually prefer to graze livestock on grass.

An agricultural economist, Assefa Tilahun (PhD) blamed a lack of understanding of oilseed cake’s value as animal feed among local pastoralists, despite the expansion of soybean cultivation area from 1.8 million to 7.9 million hectares this year.

“The high livestock yield in developed countries arises partly from their choice of animal feed,” Assefa said. “Proper animal feed is a game changer.”

The economist posits that better awareness of the value of oilseed cake for livestock nutrition could potentially stimulate domestic demand and reduce the stocks currently causing issues for processors.

However, the Association’s plea for intervention remains unaddressed. Under Adise Garkabo, the lobby group submitted a formal appeal to State Minister Kassahun Goffe last month, soliciting a meeting to discuss the working capital issues instigated by the price floor. The pushback from the Association’s leaders, the accumulated stocks, and the warnings of an impending squeeze on the edible oil supply has spurred debates on policy reforms.

Authorities Open Doors for KEFI’s $390m Gold Mine Amid Sweeping Regulatory Changes

Posted on by Tizita S.

KEFI Gold & Copper Plc, the London-based mining and exploration company, has received the green light to open an offshore account as it edges closer to commencing its ambitious 390 million dollars gold mining project in the Wellega Zone of the Oromia Regional State.

Offshore accounts are banking with a financial institution that is different from the jurisdictions where companies are incorporated. They simplify managing financial commitments across multiple countries and regions, enabling account holders to make or receive regular international payments and transfers.

This milestone follows a successful deal with regulators at the National Bank of Ethiopia (NBE), who cleared the way for the Tulu Kapi Gold Mining project’s offshore account setup and a debt-to-equity convertibility scheme.

“Recognising the strategic importance of Public-Private-Partnership projects, we are enabling the opening of an offshore account,” said Fikadu Digafe, the central bank’s vice governor.

This development comes as Ethiopia becomes the 40th member of the African Finance Corporation (AFC), a move designed to reduce the cost of debt financing and mobilise global capital. The AFC, a significant creditor in the Tulu Kapi project, is joined by the Eastern and Southern African Trade & Development banks to provide 190 million dollar in debt financing.

Initially formalized in April 2015, the Tulu Kapi Mining contract offered KEFI a 20-year mining concession and a five percent free-carry interest to the government. However, the project suffered a setback following a two-year suspension when four staff members were abducted. Officials of the Ministry of Mines cited the ongoing security crisis in the region as the main reason for not imposing administrative actions on the Company, even in light of the extended exploration period and schedule adjustments.

“They would have been producing by now if there was peace,” Tsehay Mulugeta, head of legal affairs at the Ministry, regretfully acknowledged.

Mining officials disclosed that permanent security has been deployed near Tulu Kapi gold mining project.

The mining sector in Ethiopia has undergone significant legal changes, such as eliminating the special small-scale mining classification deemed environmentally hazardous. These changes, coupled with limits on the quantity of gold submitted to the central bank, signal a more stringent regulatory environment for miners.

However, according to the Company’s June annual report, new policies issued by federal agencies have “removed various obstacles to financing.” Harry Anagnostaras-Adams, KEFI’s executive chairman, expressed his gratitude to the restructured administration at the Ministry for its dedication to the mining sector.

KEFI, incorporated in 2006, began as an exploration company on the Arabian-Nubian Shield, with an initial public offering of 2.5 million euros on the Alternative Investment Market (AIM) of the London Stock Exchange. With two development-stage projects in Saudi Arabia (Hawiah and Jibal Qutman), over 93pc of the company’s ownership stake is now in public hands.

The acquisition of Nyota Minerals Ltd, an Australian firm, for 5.2 million pounds sterling in 2014 marked a significant moment for KEFI. The acquisition gave them access to a concession estimated to contain nearly one million ounces of gold, equivalent to 30,000Kg. To date, KEFI has invested over 80 million dollars in pre-development in the country. More recently, an agreement was signed to increase the regional government’s total equity to 30 million dollars.

A final financial commitment of 20 million dollars will go toward compensating hundreds of households due to be resettled in the project area, 28Km east of Ayra-Gulliso town in the Oromia Regional State. Company management stated that the process “will take up to three months so that there is no accusation of railroading the community.”

Upon reaching full capacity, the Tulu Kapi Gold Mining project could be a game-changer for Ethiopia’s mining industry. It is poised to become the largest industrial mining initiative in the country, producing up to 5,670Kg of gold annually from its open-pit and underground operations, expected to go full throttle by 2025. The country’s other industrial-scale gold mining project, MIDROC Lega Dembi, has averaged about 4,000Kg in its most productive years, despite Ethiopia only producing 2,850Kg this year.

According to the Extractive Industries Transparency Initiative (EITI), a global standard for monitoring oil, gas, and mineral resources across 57 countries, Ethiopia’s gold reserves are estimated at 200tns. Recent regulatory changes by the central bank have seen royalty fees for gold supplied by artisans rise to a record 55pc for every five kilograms. These royalty fees have brought in a significant 281.8 million Br in the first nine months of the fiscal year.

Industry experts emphasize the complexity and risk associated with mining projects.

Wondemagegn Gebreselassie, a seasoned expert in the mining sector, stated that economic, political, and geological factors that are difficult to predict could heavily influence the trajectory of mining projects. Many companies distribute risk among stakeholders in the industry to mitigate potential fallbacks.

“Mere proof of a deposit does not guarantee successful excavation,” Gebresellasie told Fortune. “After years of exploration, reserves might be found in a spot that is inconvenient for immediate exploitation. It’s looking for material buried underground, after all.”

Recognizing the mining sector’s challenges, he noted the importance of patience, risk mitigation, and, to some extent, good luck. Prospective locations rich in Precambrian rocks could offer promising opportunities for further exploration in Ethiopia.

Still, the mining sector is a waiting game.

“It’s a high-risk industry that will take decades to bear fruit,” Gebreselassie noted, adding a dose of reality to the optimism surrounding KEFI’s ambitious project.

Commission Steers Joint-Employment Modalities for Civil Servants

Posted on by Tizita S.

Joint employment modalities permitting civil servants to work at two public offices simultaneously have been introduced in a new directive penned by officials at the Civil Service Commission.

A minimum of a graduate degree is required to qualify for the modality. Mulugeta Wubshet, head of the inspection desk at the Commission, reasoned that the severe shortage of skilled manpower and expertise in public institutions required a double staffing arrangement.

He highlighted the importance of implementing the new modalities across all regional states as the shortage is pervasive.

“There is a growing demand for experts,” he told Fortune.

This comes amidst an impending restructuring of civil servants in the country, which was indicated by Eyob Tekalegn (PhD), state minister for Finance at a Parliament session reviewing next year’s federal budget last week.

Eyob said reprioritization of the public service from quantity to quality would decrease the strain on the budget along with improving service. He hinted at the waning of the federal government’s role as a primary employer in the country by saying, “the civil service is not the sole employer in the country.”

An evaluation every six months upon which continued joint employment is revisited by the pair of employers will determine whether or not the public servant goes back to the former sole position.

Jointly employed individuals will maintain their initial wages while having to renegotiate for the second position with the respective employer. While 80pc of working hours will be allotted to the original public office, the remainder of the time is adjusted to meet the needs of the second job administered by communication between the two employers.

According to Ayele Demise, human resource & employment expert at the Commission, the modality will provide increased wages, diversified working environments and the chance to branch out career paths for employees.

“It’ll broaden their horizon,” he said.

He said that drawing more experts into public offices will have far-reaching impacts in both academia and public service.

While the Commission will be tasked with monitoring and regulating joint employment procedures, submission of the contractual details governing the tenure will have to be presented by the pair of employers.

Signed by Commissioner Mekuria Haile (PhD), the directive cites the lack of policy advisors, consultants and technical assistants across the 176 federal agencies within the 22 ministries employing around two million people as the driving force for implementation. It caps the share of jointly employed experts at two percent of the total workforce.

Mekuria was appointed to head the Commission two years ago, having served as a Minister of Urban & Infrastructure and as Executive Director of the Ethiopian Policy Studies Institute.

The Ministry of Finance is on a continuous lookout for prospective employees that have specialised in tax policy. Tax Policy Advisor Wasihun Abate lauded efforts by the commission to fill the demand for specialised labour through this scheme while he questioned some aspects of its practicality in terms of the division of working hours between institutions.

“Some bureaus need their employee within 20 paces,” he said.

Wasihun questioned whether employees would opt to work for a public office as a secondary job with a smaller financial reward. While the advisor noted that a slight increment in total wages would be in the cards, he indicated that most would prefer working in the private sector.

Despite the wide application of joint employment being brought forth by the new directive, it has been a common practice in the medical profession.

Demelash Gezahegn (MD), emergency medical services director at Tikur Anbessa Hospital, says the 768 staff and faculty under the largest referral Hospital are constantly called on by the Ministry of Health in advisory capacities. He heralded the directive as a “milestone”, but is reserved until the full implementation.

Experts affirm that joint appointments will help public servants maintain their high spirits along with minimising their influx into the private sector. Several countries in the Western world have differing joint employment standards.

A paper by Jeffery M. Hirsch submitted to the University of North Carolina indicates the complexity of joint employment standards, underscoring the importance of clarity and predictability to prevent further costs on employers and increased burdens on employees.

Legal experts observe the directive is in line with the labour and income tax laws of the country, recommending detailed enforceability.

Yared Seyoum, a labour lawyer, indicates that the new modality gives employees space to utilize their full academic capacity while rewarding them with additional income.

“Wage stagnation in civil servants has become prevalent,” he said.

However, he questioned the implementation as reforming the public service sector proves to be a complex and challenging task involving fundamental changes in the rules of engagement requiring a long-term commitment.

Yared emphasised that employers should clearly specify the job qualifications they need along with wage specifications.

Digital Classifieds Pioneer Qefira Shuts Down Under New Ownership

Posted on by Tizita S.

One of the early pioneers of online markets, Qefira shut down its website a month ago following the full consolidation of the holding company ROAM by the Swiss media giant Ringier on December 2022.

The website steadily gained popularity over the past decade for connecting buyers and sellers with close to 400,000 monthly visitors. It showcased from electronics to property listings, with the company’s revenues arising from advertisements as it did not provide communications and transactional modes.

The ownership structure of Qefira entails an intricate web of foreign companies managing and operating classifieds across Sub-Saharan countries since its early days in 2014. It is a branch in a corporate tree that extends to international bases.

Eskias Yilma is indicated as the founder and CEO by CrunchBase, which is an aggregator of online business data for 75 million users, while ROAM has been the prime mover behind the company.

ROAM came about following a 2017 merger between One Africa Media and Ringier Africa. It had 20 shareholders, including the Australia-based SEEK Ltd, which had a 31pc stake with two rounds of capital raises, amounting to 30 million dollars until it was consolidated by Ringier: a 190-year-old family-owned business has 140 companies across 18 countries and reported 1.1 billion dollars in revenue by the end of October 2022.

Johanna Walser, chief communications officer at Ringier, disclosed that discussions on the future strategic options about Qefira are ongoing despite declining to comment further.

“We’re evaluating future strategic options for the platform and have decided to cease operations temporarily,” she told Fortune.

Eskias, who is now cited as the CEO of HahuZon, another company providing similar services as Qefira, declined to comment on the development of this story.

A host of online businesses pop up over the past few years, with many being folded by the absence of seed money. Challenges related to payment, post-service care, delivery and consumer adoption have undermined the development of the sector. Officials disclosed that only one website was legally registered with an e-commerce license in the country a couple of months ago, leaving out the rest of the online markets uncategorised by the Ministry of Trade & Regional Integration.

Jirata Nemera, head of licensing and regulation at the Ministry, said a number of companies have been coming recently, increasing the number to 41 licenses.

He disclosed an online mechanism for issuing licenses has been set up by the Ministry where national identification is required for local companies while they look at the “articles of incorporation” for share companies affiliated with foreigners.

“We look at the propriety of their documents before issuing licenses,” he told Fortune.

The 2021 report by Cephus Capital looked at 570 digital businesses in the country and was accurate in its prediction that Telebirr would emerge as one of the prominent disruptive forces in the sector. It forecasted a ninefold increment in the digital economy by 2025, accounting for 39pc of the nation’s GDP based on rapid urbanization, growing internet penetration, improving networks, and better data affordability.

Industry insiders identify initial ownership structures as one of the primary reasons why many online businesses fold before reaching great heights in Ethiopia.

Nurhassen Mensur is a digital entrepreneur with stakes in Yenepay and an active participant in the burgeoning online sector. He observes most digital businesses in the country have foreign owners who use local individuals as pretexts with minority stakes which end up closing shop when the return on investment is not in line with their expectations.

“Repatriation of funds expected by the foreign owners usually can’t be met,” he told Fortune.

He emphasized that costs accrued in the expansion of market shares cannot be handled by local companies, forcing them to look for investment abroad. Nurhassen argues wide adoption of e-Commerce businesses needs competent staff backed by a state of the art of technology that can adapt to market changes while being focused on long-term growth.

“Referring to any online business which facilitates digital transactions ‘an e-commerce business’ is inaccurate,” he said. “Qefira, for instance, had a classifieds business.”

ZamZam Eyes Potent Resilience, Growth in Untapped Market Defying Initial Losses

Posted on by Tizita S.

In Ethiopia’s nascent and somewhat turbulent Islamic banking industry, a narrative of daring ambition, loss and potential resilience unfolds.

ZamZam Bank, Ethiopia’s first full-service Islamic bank, recently declared an annual loss of 146.42 million Br in its fiscal year ending June 2022, a development that contrasts sharply with the firm’s aggressive expansion plans. The news, however, has not dented the upbeat outlook of the Bank’s executives, who highlight the positive strides made in their launch year.

Experts say given its considerable paid-up capital, a large pool of depositors, and a sizeable CAR, ZamZam Bank appears to be in a strong position to weather the initial turbulence. Indeed, the Bank’s performance during its inaugural year does not detract from its substantial potential to grow in the nascent Ethiopian Islamic banking industry. Its competitive positioning and alignment with global Islamic banking trends position it favourably for the long haul.

Melika Bedri, the inaugural President of the Bank, contended that such losses were a common hazard for industry pioneers, particularly within the banking sector, where initial capital outlays can be steep. An economics graduate from Addis Ababa University and postgraduate in business administration from the Open University in London, Melika honed her skills in various roles at the state-owned Commercial Bank of Ethiopia (CBE), eventually serving as chief financial officer (CFO).

“High expense is expected in the first year of operation,” she told Fortune.

The first-year financial performance of ZamZam was characterised by revenues of 6.5 million Br and towering operational costs of 187 million Br, with overhead expenses accounting for two million Birr. This narrative of initial struggle is not unique to ZamZam Bank; it is a trend common to Ethiopia’s emergent Islamic banking sector, as mirrored by the loss reported by Hijira Bank, another nascent Islamic banking institution.

ZamZam’s considerable financial loss can be attributed mainly to its bold move to scale its physical footprint quickly. In a departure from traditional banking norms for a start-up, the Bank established 40 branches across Addis Abeba and other urban areas, accounting for a significant 30pc of its total expenses. Melika has underscored the urgency to set up physical branches to cater to the pent-up demand for Islamic banking services.

With a population of over 114 million, of which a considerable proportion practises the Islamic faith, Ethiopia is an untapped territory for the Islamic banking industry, teeming with vast growth prospects. The success of Malaysia’s Islamic banking industry, representing about 30pc of the country’s total banking sector, paints a picture of the potential market size awaiting Ethiopia’s Islamic banks, including ZamZam.

Nasir Dino (PhD), chairman of ZamZam Bank, who has been advocating the inclusion of interest-free banking in Ethiopia for the past 14 years, first presented the idea to then Prime Minister Meles Zenawi and Abay Tsehaye, the then chairman of the state-owned Commercial Bank of Ethiopia (CBE). Nasir fondly recollects the ensuing policy debates that considered three different models for Islamic banking services: operation as a conventional bank with an interest-free window, establishment as a full-fledged interest-free bank, and transitioning from the former to the latter.

“It gave us hope to start promoting the idea,” he said.

Despite managing to raise 330 million Br in subscribed capital, the promoters were unsuccessful in obtaining a license for a full-fledged Sharia-compliant bank from the National Bank of Ethiopia (NBE), confining such ideas to a window service within traditional banking operations.

However, the tide turned when Abiy Ahmed (PhD) ascended to the position of Prime Minister, paving the way for full-fledged Sharia-compliant banking. ZamZam Bank took the lead and launched in 2021, raising 872 million Br in paid-up capital and 1.68 billion Br in subscribed capital. This move was closely followed by Hijira, Shebelle, and Rammis banks, which joined the industry as full-fledged Islamic banks.

Nasir, who completed his postgraduate studies in Islamic banking at the London Institute of Islamic Banking & Insurance, believes the ZamZam Bank continues to have a robust market despite intensifying competition. In a shareholders meeting in December 2022, he reassured the stakeholders of long-term success and relevance, hinging on their trust and support as the Bank continues to refine its personnel, systems, and processes for better outcomes in the upcoming years.

Nadim Abdulsemed is a founding shareholder with 40 million Br invested in the Bank. Although he is yet to see dividends, Nadim is hopeful about the future.

“It’ll get better after the Bank breaks even,” he told Fortune.

Despite its initial financial setback, ZamZam’s entry into the market reflects a broader global trend in the Islamic banking sector. It is not unusual for new entrants in this industry to experience losses during the initial years due to the high costs associated with launching Sharia-compliant financial products and services, establishing a customer base, and setting up an extensive branch network.

According to Allied Market Research, despite such setbacks, the global Islamic banking sector continues to flourish, with assets in the industry reaching 2.5 trillion dollars in 2019 and an expected compound annual growth rate (CAGR) of 5.5pc, projected to touch 3.8 trillion dollars next year. ZamZam’s strategic orientation aligns with this global trajectory, indicating its intent to carve a niche in the fast-growing Islamic finance market.

However, the operational losses incurred by the Bank underline the high barriers to entry in this niche sector, particularly the complexities around developing Sharia-compliant products and establishing a trusted brand. Abdulmenan Mohammed, a London-based financial statement analyst, and a keen observer of Ethiopia`s financial sector, says ZamZam Bank, along with its peers, needs to focus on improving operational efficiency and cutting down on expenses. This could potentially involve reconsidering its aggressive branch expansion strategy and exploring digital banking solutions, aligning with the broader global trend of digitisation in banking, according to Abdulmenan.

Despite its rocky start, the financial trajectory of ZamZam Bank has not been altogether disappointing for its sharholders and executives.

There is a silver lining to the financial turbulence in which the Bank finds itself. Notwithstanding the apprehensions this may provoke among its 12,700 shareholders, long-term indicators present a positive picture of potential growth for ZamZam Bank. The Bank’s paid-up capital has soared to 1.34 billion Br, a clear indicator of resilience amid losses, while it has successfully managed to mobilise 1.59 billion Br in savings, underscoring its potential to draw in depositors.

ZamZam’s interest-free financing to savings ratio stands at a promising 52.9pc, a figure that surpasses several conventional banks offering interest-free banking services.

“The ratio is promising for a newcomer,” said Abdulmenan.

ZamZam’s total assets stand at 3.16 billion Br, against a total liability of 1.9 billion Br, showcasing a healthy balance sheet. The Bank also exhibits significant liquidity, with cash and bank balances accounting for 45.3pc of total assets and 73.4pc of total liabilities.

Muhama Mohammed, the manager at the Bole Atlas Amana Branch, attributed the ability to attract large businesses and serve corporate clients to the branch’s strategic location, and called for more investment in aggressive promotion to maintain a positive brand image.

One of the more compelling aspects of ZamZam’s growth strategy is its drive to invest in innovative Islamic banking products such as “Mudarabah,” an Islamic contract regime in which one party provides the funds while the other offers expertise and management. ZamZam’s disbursement of interest-free financing (including profit receivable on Murabaha) of 839.7 million Br, generating a return of 350 million Br, exemplifies the commitment to customer-centric innovation.

Another promising feature of ZamZam’s financial position is its robust Capital Adequacy Ratio (CAR) at an impressive 144.5pc, far exceeding the minimum requirement, a testament to a strong capital base and low credit risk. According to Abdulmenan, given the sizable CAR, the Bank should utilise its capital more effectively by expanding its interest-free financing and other investment activities.

“We’ve designed a strategy that leverages our robust capital base,” said Melika, highlighting the Bank’s resolve to navigate through the initial hurdles.

The Bank’s commitment to bolstering its operational foundation is visible in its substantial investment in core banking solutions, a vital infrastructure supporting all banking functions. This investment will likely be the bedrock for the Bank’s future growth and efficiency.

In a quest to enhance its technological capabilities, the Bank has shown a proclivity towards self-reliance. It is planning to build its core banking system in-house and, in this pursuit, has established a strategic alliance with Hibret Bank, one of the first-generation private banks, for knowledge transfer.

Policy Looms Amid the Pursuit of Intra-Continental Trade Integration

Posted on by Tizita S.

A bill that subsidizes local producers and levies tariffs on imported goods that have domestic alternatives is put forth by the Ministry of Trade & Regional Integration (MoTRI). Officials hope to calibrate economic liberalisation while maintaining the development of domestic producers and traders with efforts underway to join the African Continental Free Trade Area (AfCFTA).

The absence of trade policy and constant alterations in the law had stakeholders struggle to buildup trust, while underdeveloped logistics infrastructure and weak industry linkages hampered the development of local trade.

According to Destaw Mequanent (PhD), Ministry’s policy & strategy research executive, they hope the bill will garner trust between authorities and industry players while integrating the service outlets to facilitate a swift operation. He indicated that the policy will serve as a benchmark for negotiations in international trade treaties guiding duty-free entries and local value chains.

“Improving the efficiency of cross-border transport is essential,” he said.

Officials at the Ministry envision digitising customs, tax and licensing authorities will simplify the bureaucratic framework. Destaw recognizes the necessity of a careful balance between trade liberalisation to international business and protecting domestic traders already teetering on the verge of collapse.

“Foresight in policy is critical with the inevitable and gradual opening up of the economy,” he said.

Data from the United Nations Conference on Trade & Development (UNCTAD) indicates that more than 90pc of African countries depend on trade that requires little to no value addition. The sale of primary commodities in agriculture, mining and livestock characterizes a significant portion of the continental economy.

The Ministry’s Advisor and Former Export Director, Mesfin Abebe, observes that the high volume of informal participants in the country’s trade practices has curtailed its growth. He reasoned that in healthy international markets, a rise in production usually results in decreased prices; in contrast, Ethiopian trade is marked by sustained price increments regardless of production.

The Advisor believes that the new policy will provide fair, transparent, competitive trade for local producers while enhancing appeal from foreign buyers.

Several experts have cited continental free trade as holding the promise of growth and greater trade volume for the continent, with many of the countries beginning to trade two years ago.

A study by the World Bank estimates that 30 million Africans will be lifted out of poverty in 2035 and wages will be boosted by 10pc if AfCFTA is implemented properly. Africa is home to 44 million small businesses accounting for 80pc of the continent’s workforce, while Intra-African export potential amounts to 22 billion dollars.

Only 14pc of the continent’s exports are destined for other African countries, most of which are primary commodities. Despite ongoing efforts to diversify sources of growth and trade, more than 80pc of countries on the continent remain highly commodity-dependent, according to African Export & Import Bank (Exim Bank).

Addis Chamber of Commerce & Sectoral Association, with over 17,000 members from exporters, importers, and Small and Medium Enterprises(SMEs), has been voicing the necessity of formalizing the national trade laws, practices and regulations to create a better image of the country in international trade for several years.

Seyoum Chane, policy, research & advocacy manager at the Association, disclosed that the country had lagged in trade promotion, where most valuable commodities have remained internationally unknown. He suggested an institution promoting commodities internationally should be formulated through the policy, with a clear articulation of why the country has not been able to become a signatory to some of the international trade organizations.

“Remedies should be identified,” he told Fortune.

The mandates of trade authorities regarding duty-free entries and management of transit hurdles become priorities in future trade policy, according to Seyoum.

The bill is expected to serve as a guiding principle for international trade if realised. However, a meticulous calibration of potential pitfalls is recommended, according to legal experts believe.

Yehualashet Tamiru, a corporate lawyer, applauded several elements of the trade policy as he believes it can showcase a formalized legal trade framework in bilateral and multilateral negotiations.

He agrees with the importance of a continental free trade area, citing that the country should change from commodity-driven transactions to value-added transactions, which can generate higher returns.

“The capacities of the private sector should be given an emphasis to play a significant role in manufacturing,” he told Fortune.

France’s Bold Bid to Reshape Development Finance Amidst Global Crises

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Fortune: I understand this was not a summit for any particular resolution or trying to create any new international organisation. Can I say it was designed as a warming up for something big?

Amb. Marechaux: Its unique structure brings together state and non-state actors alike in a collective endeavour to reimagine the world’s financial systems. The roster is a far-reaching mix of 32 state actors, 28 international organisations, and a constellation of philanthropies and NGOs, each with a role to play in the collective fight against these global challenges.

Neither does it aim to produce immediate resolutions, but rather to create a roadmap for future actions, providing guidelines for subsequent summits and specific gatherings. Proposals formulated last week will shape the agendas of the G20 Summit, World Bank and IMF meetings, and the International Maritime Organization gatherings. This approach represents a departure from traditional diplomacy, reflecting the changing dynamics of the 21st Century and the increasing role of non-state actors.

The scale of the proposals tabled for discussion matched the audacious ambition of the summit. The summit challenged existing norms and structures by creating a carbon emissions market that accurately represents 60pc of emissions – a 15-fold increase from the current four percent – to mobilising new guarantee tools to make development bank loans more affordable.

The initiative builds on France’s historical role as a leader in development finance, capitalising on its positions within the G7, G20, the Paris Club, the IMF, and the World Bank. France’s commitment to development – evident in its annual outlay of 15 billion dollars and its instrumental role in launching new SDGs and pioneering innovative financing solutions – sets the stage for this transformative meeting.

With a focus on improving global financial mechanisms, the summit also looked at catalysing the full funding of the Alliance for Green Infrastructure in Africa, another step towards a greener future. This initiative, coupled with the aim for better cooperation between the World Bank and regional development banks, sought to harmonise financial products offered to developing countries.

For instance, the taxation of maritime transport emissions is still a hot-button issue and its proposal remains highly contentious. Currently exempt from taxation, these emissions play a significant role in the unfolding climate crisis. The summit sought to grapple with the challenge of effectively integrating this large and influential sector into the global climate action plan.

Lucile Porte: Transparency in carbon emissions reporting was also a focal point of discussions. The proposal aimed to instil trust in a currently opaque system, bolstered by establishing a credible and neutral international body to verify emission declarations. Coupled with this is the ambitious goal to expand the carbon market to include 60pc of global emissions, a transformative move designed to incentivise corporations to reduce their emissions more aggressively.

The summit was set to address the thorny issue of credit ratings. Developing countries have often criticised the system, administered by predominantly Western-based agencies, as biased and unrepresentative of the realities of emerging economies. By advocating for more transparency in ratings and arguing for a more objective appraisal of risk, the summit tried to mitigate the lending costs for developing nations.

One summit objective is to bring the private sector to deal with and create incentives to put resources into clean climate-related investments. It also encouraged the big banks to buy back private debts to reduce the burden on the indebted countries.

Q: The geopolitical landscape is in flux, with the traditional creditors sharing the stage with emerging economies like the Middle East, India, and China. How do you expect the summit to chart the course with this changed playing field?

Amb. Marechaux: These ‘new kids on the block,’ as you call them, were part of the summit. For instance, the Prime Minister of China has participated, as was the UAE and Brazil’s President Lula. Their inclusion signified a crucial evolution. The G20’s Common Framework initiative is a prime example of this evolution, marking a shift in the traditional creditor-debtor dynamics by bringing China into the fold. The Committee of Creditors for Ethiopia, co-chaired by France and China, reflects this shift. There is a growing recognition among potential creditors about the necessity of working together towards debt sustainability. It is a departure from the past when developing countries could shop for favourable conditions. Despite minor disagreements, as in Zambia’s case, we observe a convergence of views, as illustrated by Ethiopia’s case.

Q: Leaders of developing countries like Ethiopia, Ghana, Zambia, and Chad participated in the summit. What do you think was their takeaway from the gathering?

Amb. Marechaux: The leaders attending the summit should gain clarity on the Common Framework. This includes understanding its methodologies and the timetable for its application. It is particularly important for countries like Ethiopia, which needs to secure the replenishment of very concessional resources to fund its next IMF program.

Q: Could you elaborate on the role of the private sector in this new debt landscape? What are some of the ideas floated to ensure meaningful private-sector participation?

Porte: There are three primary focus areas for engaging the private sector. Reforming the risk assessment system could lead to better private sector mobilisation. The push towards standardising the Public-Private Partnership (PPP) process is essential. This would mean that private sector participants would not need to negotiate conditions separately with the state they plan to invest in. Lastly, introducing mechanisms for buying back private debt is a significant step. Additionally, initiatives like the process to steer a global roadmap on bio credits led by France and the UK aim to increase private investment in natural capital and foster green investment strategies. All these measures are designed to incentivise the private sector to participate actively.

Q: Given the potential influx of private capital, how does the summit plan to strike a balance between taxing and incentivising private investment?

Porte: An important part of our strategy is the expansion of carbon markets. This not only encourages companies to reduce emissions but also provides resources for countries impacted by climate change, which can fund projects dedicated to adaptation and compensation for losses.

Q: The role and structure of multilateral financial organisations like the IMF and the World Bank are under scrutiny, with newer creditors calling for reform. Do you think there could be any breakthroughs in this context?

Amb. Marechaux: While there is unanimous political support for the idea of reform, the details of these reforms are yet to be defined. I have not seen any specific proposals with definitive figures in the preparatory papers. However, the discussion surrounding these reforms will certainly be lively and enlightening.

Q: The world is under intense economic pressure, grappling with inflation, climate issues, and geopolitical tensions. How did this summit fit into this global context?

Amb. Marechaux: The summit is a platform for all stakeholders to rally around previously agreed global goals, such as the Paris Agreement and the Sustainable Development Goals (SDGs). It is an opportunity for everyone to discuss with a shared target in sight, fostering a sense of unity in working towards these common goals.

Q: Looking ahead, do you think this summit will leave a significant mark on global governance when you look back 10 years from now?

Amb. Marechaux: Our intent in organising this summit was guided by our conviction that it would yield tangible results. The summit is not merely a diplomatic exercise; it is a strategic assembly of countries committed to tackling the world’s most pressing issues. We believe it can effect changes evident in global governance a decade from now.

Q: From your perspective, what would constitute a disappointment from the summit?

Amb. Marechaux: Failure to deliver on the agreed timetable and proposed reforms would be a significant disappointment. The summit’s success will not be measured solely by what happens within its duration but by the results it fosters in the months to come. If we fail to seize the opportunities for reform in the months following the summit, that would be a disappointment.

 

Parched City Relies on Water Trucks to Quench Unmet Thirst

Posted on by Tizita S.

Kidist Dessie, 28, is a mother of one that lives in a condominium around the Yeka Abado area. As a mother to an infant, the daily consumptions had forced Kidist to resort to informal delivery services by water trucks owned by individuals.

Despite filling up every jerrycan, bucket and barrel in the house whenever there is running water, she finds herself paying at least 2,000 Birr extra per month. Kidist has stopped drinking the water after coming across residues last year. However, she plans to continue using the water truck services for cooking and cleaning until a permanent solution is devised.

“A day without water is unimaginable,” Kidist told Fortune. “The running water barely makes it to the upper floors.”

Water truck owners have turned the lack of adequate water supply in the city into a job opportunity. The largely thirsty city seems to have adapted to the shortage by relying on these informal businesses that provide door-to-door water deliveries.

Construction sites that have slowed down activities due to a shortage of cement and input price hike used to take the bulk of deliveries. Now, the delivery has expanded to businesses that are dependent on water, such as car wash services and spas, while homeowners also take the share.

Tucked in a green Iveco water truck that belongs to his brother, Bamlaku Aschale has made his living by delivering water to homeowners and businesses around the CMC area for a little over a year.

His income rounds up to 5,000 Br in a slow week. As a driver for hire, he earns around 250 Br per trip, fitted with a 15,000ltr tanker that usually delivers nine orders. Bamlaku claims that his brother earns an average of 70,000 Br after expenses and is currently building a house in his hometown.

“Most truck owners hire drivers,” he told Fortune.

The 24-year-old sends whatever money he has left from paying his 2,500 Br rent and extra expenses to his family that reside in Gonder, Amhara Regional State. His older brother had purchased the car for 900,000 Br, which now soared to 1.5 million Br. Bamlak fills up the truck by going to individual homes or businesses that have underground water access; they are charged around 600 Br per filling and sell for around 3,000 Br.

Freight trucks carrying home water tankers charge around 1,500 Br for 5,000ltr, while they get their supply from underground water wells for 200 Br. The gradual removal of fuel subsidies seems to be the major concern for these operators as their overhead cost is mostly benzene for the water pump and diesel for the car.

Kedir Seid, who manages a car wash around the CMC area, says that a 5,000ltr tanker can only get him through two days. While Kedir’s car wash business is not solely reliant on water trucks for its supply, he considers them as a valuable tool.

“We depend on their supply, especially during the dry season,” he told Fortune.

The Addis Abeba Water & Sewage Authority relies heavily on underground wells and surface water from Legedadi, Dire, and Gefersa dams. There are 68 water reservoirs and 220 underground wells that contribute up to 65pc of the supply.

The 5.2 million residents of the capital need 1.2 million cubic meters of water daily, of which the  Authority supplies a mere 60pc amounting to 0.72 million cubic meters. A city-wide census has not been conducted in 16 years, hinting at a significantly larger population size due to rural-to-urban migration amidst growing instability in regional states.

To address the shortage, the Authority is providing water in shifts as a temporary solution and has dug 28 wells that can produce 75,000 cubic metres of groundwater per day.

Sirkalem Getachew, communications officer at the Authority, said aside from water supply through the pipe and collecting tariffs, the Authority has 40 trucks to deliver water when there is a supply disruption with up to 16,000ltr capacity each.

“It’s provided for free,” she told Fortune.

She emphasizes the illegality of private water truck delivery services.

“It is absolutely prohibited for anyone outside the Authority to sell water,” she stressed to Fortune. The Authority charges seven Birr per thousand litres which is significantly lower than the fees charged by the water trucks.

Serkalem highlighted the consequences faced by companies that sell underground water without permission by issuing warnings, filing lawsuits, or removing their water counters. She said charges were filed against 14 organizations where two had lost their counters. However, their counters were returned to them after they promised not to repeat the offence. According to Serkalem, the Authority is working to find a sustainable solution but giving out licenses to pump water is not one of them.

The quasi-legal nature of the water trucks that operate under a liquid transport license is outstanding. Their utility to urbanites is recognized by legal experts who observe that opening up the sector to private investment might provide a lasting solution to the city’s demands.

Yohannes Weldegebriel, a legal expert in commercial law, emphasises the importance of carefully managing water as a natural resource considering the risk associated with private water trucks supplying unpurified water to residents. He advises that the supply should be limited to construction sites and car washes.

While Yohannes acknowledges the illegality of privatising public utilities, he suggests that allowing the private sector by concession, similar to companies that generate electricity, could address the prevailing water scarcity. He said those who can afford the hefty investment to supply should be allowed to set their own rates and participate so those who can afford could have access.

“They do provide an alternative solution to water scarcity,” he said.

A Human-Rights Approach to the Global Food Crisis

Posted on by Tizita S.

When former Brazilian President Jair Bolsonaro came to power in January 2019, one of his first acts in office was to abolish the National Food & Nutrition Security Council (CONSEA), a globally lauded body that had significantly reduced food insecurity. It was a huge step back for the country, which the United Nations Food & Agriculture Organization (FAO) had removed from its “hunger map” in 2014.

People immediately mobilised to protest Bolsonaro’s decision, including by organizing impressive public meals held on the streets of many cities – a national banquetaco. Gathered around tables laden with healthy food, communities’ resistance simultaneously celebrated and reclaimed the right to adequate food and nutrition. Many also strengthened their political commitment, calling for a process of permanent mobilisation over the four years of Bolsonaro’s rule through the People’s Conference on Food & Nutritional Sovereignty and Security, which meets every four years to monitor policies and develop proposals based on a thorough analysis at local and national levels.

Immediately after Luiz Inacio Lula da Silva was sworn in as Brazil’s president in January, he reinstated CONSEA, which one of us heads and which will meet the people’s conference later this year to hear proposals.

This spirit of resistance – if replicated elsewhere – could transform food systems worldwide and ease the global hunger crisis that the pandemic, climate shocks, and conflict have exacerbated. As UN Special Rapporteur on the Right to Food, another of us attributed rising rates of hunger to “systemic violence and structural inequality in food systems,” which are “a central feature of a global economy that is supported by relationships of dependence among individuals, countries, international financial institutions, and corporations.”

An estimated 258 million people faced acute food insecurity in 2022, the highest number on record since the Global Report on Food Crises began reporting data in 2017. In his introduction to this year’s GRFC report, UN Secretary-General Antonio Guterres said the current crisis required “fundamental, systemic change.”

An approach based on human rights principles is essential to bringing about this change.

In Brazil, the scandalous increase in food insecurity during Bolsonaro’s presidency resulted from policies that neglected marginalized people and violated their rights. As a result, the newly reinstated CONSEA advocates for policies that fight hunger and address its root causes, such as structural racism and gender inequalities. We cannot continue supporting unsustainable food systems that concentrate power and wealth in the hands of a few.

The UN’s Right to Food Guidlines, adopted by FAO in 2004, outline how to address the structural causes of discrimination and inequality in food systems. These guidelines pioneered the implementation of economic, social, and cultural human rights and have inspired countless national policies and legal reforms. They also sparked the development of an entire body of human rights-based norms and policies adopted by the UN Committee on World Food Security (CFS), the UN General Assembly, and other UN agencies, including women, peasants, indigenous people, and fishers.

In Brazil, national and international efforts have translated these principles into a suite of domestic policies and programs aimed at overcoming gender and racial discrimination, ensuring decent incomes and social protection, and securing land and water rights. These efforts have also resulted in agroecology and food-sovereignty initiatives that actively involve civil-society groups, ordinary citizens, and school-meal programs sourced from family farms.

But Brazil is far from an outlier: other governments enact similar reforms. Local, regional, and national food-policy councils are being established globally, and parliamentary alliances are working to pass right-to-food legislation in many countries.

Scaling up these efforts will require significantly greater policy coordination among all levels of government. The UN Human Rights Council and the CFS have stressed the need for a coordinated response to the ongoing food crisis. But, at the same time, civil society, indigenous peoples, and academics have warned against the corporate capture of food governance and called for an UN-wide corporate accountability framework.

There is growing momentum for change ahead of the 75th anniversary of the Universal Declaration of Human Rights, which will be commemorated in December. And the right to adequate food and nutrition, in particular, could be at the top of the agenda. In late June, the German government will host the “Policies against Hunger” conference; this year’s edition will focus on rights-based approaches to transforming food systems.

With the UN High Commissioner for Human Rights having proposed a human-rights economy, and with Brazil preparing to assume the G20’s rotating presidency in 2024, we may see ambitious proposals to advance the right to food internationally.

Food systems’ profound inequality, structural discrimination, and systemic violence have persisted for too long, and ordinary citizens around the world are demanding change. A transformation on this scale requires close collaboration between the diverse mix of people who are engaging in creative forms of resistance, as well as progressive governments that are ready to listen to them and represent their interests.

Respect for human rights must form the basis of any effort to reduce acute hunger. It is the only way to create a sustainable and equitable system providing all adequate food.

This article was provided by Project Syndicate (PS).