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Month: August 2023

THE THEFT OF NOURISHMENT

Posted on by Tizita S.

The pervasive theft of therapeutic foods and nutritional supplements intended for malnourished children is critically undermining efforts to provide life-saving assistance to millions nationwide. Minister of Health Lia Tadesse (MD) revealed last week that ready-to-use therapeutic foods (RUTFs), designed to supplement nutritional programs supported by donors, are subjected to illicit trade after being siphoned from organisations.

UNICEF procures approximately 80pc of the global production of therapeutic food, equivalent to nearly 50,000tn a year, and distributes it to countries where malnutrition and stunting are widespread, including Ethiopia. Yet, despite these efforts, the number of malnourished children nationwide has skyrocketed to an alarming 1.3 million due to conflicts and drought. The rampant illegal sale of supplements like plumpy nuts at kiosks and online chat groups mirrors a recent scandal that garnered significant media attention, where food aid intended for war-affected areas was found on sale.

Hiwot Darsene, the lead executive officer at the Nutrition Coordination Office within the Ministry and chair of the National Food & Nutrition Technical Committee, says the diversion of supplements occurs during transportation from Djibouti ports and 20,000 health posts across several regional states. Although a few sachets can be removed from carton boxes carrying 50 pieces during transport, the proliferation of these products in the market suggests a coordinated operation involving multiple actors.

“It’s a large-scale operation that may include some officials,” Hiwot said, disclosing several active cases under investigation, in joint operations with the federal police commission and intelligence agencies. “This approach is necessary due to the expansive scale of the operation.”

International donors have submitted several reports to the Ministry revealing large-scale theft and misuse throughout the country. The 500-calorie peanut-based supplement is favoured for its high nutritional content and ease of consumption, as it requires no cooking. On sale for 40 Br a sachet, it is more affordable than a decent meal. However, Hiwot warned that regular consumption could cause imbalances and hinder access for the malnourished. She also highlighted a severe lack of public awareness.

A report published by the United Nations (UN) last month disclosed that 34pc of Ethiopian children under five suffer from stunting, while 6.2pc are victims of wasting. Shockingly, 28pc of child deaths in the country are associated with under-nutrition, while 21pc are underweight. The report also revealed that 25 million people are grappling with severe food insecurity due to war and disrupted agricultural cycles.

Tigray Regional State, one of the war-stricken states, faces a severe shortage of supplements.

Abraha Gebregziaber (MD), medical director of Ayder Hospital, emphasised the critical importance of therapeutic foods for treating malnourished children in their facility. Although Ayder is a referral hospital, where most patients require immediate assistance and are discharged after recovery, Abraha noted that efforts are made to reintegrate undernourished patients, primarily children, back into regular diets after a period of care.

However, several health posts in the regional state displayed notices declaring: “We’re out of plumpy nuts”. While some of these posts were looted during the two-year conflict, disrupting the supply chain, Abraha suspects that the illicit vendors might have sourced their supplies from therapeutic foods diverted during transportation. Although therapeutic milk availability is relatively better, he noted that health posts in the regional state consistently run out of supplements like Plumpy Nuts, despite their availability in numerous shops.

“We never have enough to get us past the month,” he told Fortune. “It’s perplexing how the shops manage to receive their supplies.”

Regional states like Somali and Afar have also experienced similar predicaments. Mdecins du Monde (MDM), a French charity involved in humanitarian medical aid, has operated in Ethiopia since 1988. Its Country Representative, Shimelis Gebeyehu, witnessed the plight of malnourished children in the Somali Regional State. After rainfall ceased for three years, beginning in October 2021, the predominantly pastoralist community was engulfed by rabid hunger.

Shimelis recalled that stabilisation centres operated by MDM were inundated with children in the last stages of hunger, highlighting the crucial role of therapeutic foods in helping children recover and regain health during emergencies.

“The demand is consistently higher than the available supplies,” Shimeles told Fortune. One child needs about 100 sachets consumed over the course of six weeks to recover.

The diversion problem resurfaces worldwide. A report by Doctors without Borders (Médecins Sans Frontières) in response to allegations of parents selling off the prescribed therapeutic foods in Nigeria indicates that large quantities are a result of diversion by people working in the health system and non-governmental organisations.

PlumpyNut, a peanut-based paste developed by André Briend in 1999 for treating severe acute malnutrition, is the most widely consumed nutritional food globally and locally. It is hailed as a miracle food for its effectiveness in combating malnutrition worldwide.

Hilina Enriched Foods Plc has been Ethiopia’s sole manufacturer of plumpy nuts since 2007. The company produced 240,000 cartons this year and 345,000 the preceding year for its primary clients, UNICEF and the World Food Programme (WFP). General Manager Hilina Belete revealed that the company employs a tracing mechanism for production. Although the company considered incorporating barcodes into its products, the idea was shelved as health facilities nationwide would need barcode readers.

Hilina urged enforcing more stringent legal measures for those involved in the illicit trade as a deterrent. She recalled legal actions a few years ago where individuals possessing therapeutic foods were sentenced to a two-year jail term as a positive course despite not being thoroughly followed up.

Ethiopia’s Gambit in a Shifting Geopolitical Chessboard

Posted on by Tizita S.

In the rain-drenched streets of Addis Abeba, there was a distinct ripple of optimism last week. The reason? The BRICS – Brazil, Russia, India, China, and South Africa – opened their embrace to include Ethiopia.

For Prime Minister Abiy Ahmed (PhD), who was in Johannesburg attending a summit, this act affirms Ethiopia’s rising stature in a world order undergoing seismic shifts. The jubilation in Ethiopia’s power corridors is palpable.

The BRICS alliance, first coined in the 1990s, represented emerging economies that once contributed a mere 17pc to the world’s economy. Fast-forward to today, and this group commands an impressive 31pc of the 105 trillion dollar world economy, a feat worth noting considering the 29pc share by the Group of Seven (G7) countries.

More than mere numbers, this shift underlines a deeper tectonic move. This coalition seeks to offer an alternative to the liberal order birthed and bolstered since the Second World War.

The primary mover in the G7 has traditionally been the United States. But for the BRICS, it is the leviathan, China, a symbol of towering trade and tantalising investment possibilities. Six new entrants have now been welcomed into the BRICS fold, with Ethiopia and Egypt from Africa, revealing the group’s ambitions. The other countries enlisted include Saudi Arabia, Iran, Argentina, and the United Arab Emirates (UAE).

Their inclusion marks a geopolitical shift of note, as many began to see these emerging markets holding the promise of the future.

A few weeks ago, the streets of Addis Abeba were a spectacle of grandeur. The visit by the UAE’s President, Mohamed Bin Zayed Al Nahyan, was for Prime Minister Abiy not just another leader’s stopover but a “Dear Brother” and a reliable ally in turbulent times gracing him with his valued presence.

Historical records depict Ethiopian rulers and leaders often leaning on external might to bolster their reign. Emperor Hailesellasie, Mengistu Hailemariam (Col.), and Meles Zenawi are but a few names in this long chronicle of external reliance.

The Emperor owed it to the British to reinstate himself after the Italian occupation and to tame the rebellion from Tigray. If not for the Royal Air Force bombing the hills and mountains of Raya, he would have been challenged to clamp down on the revolt. Credit goes to Cuba and Yemen, whose troops fought and died alongside Ethiopians in fending off Somalia’s incursion in the late 1970s. Mengistu relied on Russian military advisors and their generous supplies of weapons in his failed attempt to win the insurgency in Tigray and Eritrea in the 1980s.

Albeit differently, Washington’s political and diplomatic support and military aid were no less crucial for Meles’s invasion of Somalia two decades later.

The UAE has been a rock for Abiy, notably when three billion dollars poured into Ethiopia, galvanising the country’s morale during his early days in office. But it would be a mistake to consider this relationship merely one of convenience. The UAE is embroiled in a power-play, attempting to stamp its authority in the Middle East, where the great powers seem to be waning.

Whether the United States is abandoning the Middle East is a fiercely debated subject among the pundits following the region. A broader consensus is emerging, however, that America is deprioritising the Middle East, opening a space for middle-powers competition to fill the vacuum. Saudi Arabia, Iran, Turkey and Israel are fighting to claim their place in the wider Red Sea arena, with small countries such as Qatar and UAE asserting themselves using their economic leverage.

Across the globe, it is becoming patently clear that the liberal global order is being redefined. China and Russia, with their burgeoning economic influence, are sculpting a world that does not prioritise individual freedoms in the same vein as the West. The narrative is shifting towards community wellbeing over individual rights, and a more opaque governance system. Accountability of those who hold public offices and the transparency of decisions they make on matters of public interest are hardly their forte.

Illustratively, financing from the UAE for projects in Ethiopia remains lacking transparency.

Mild parliamentary rumbles over the vagueness of project funding met with cheeky retorts from the Prime Minister. He suggested that those curious about the financing of the flashy Unity Park might as well buy tickets to Abu Dhabi. Such brashness, while evoking chuckles, raises serious questions about the financial prudence and transparency of leadership.

Ethiopia’s fiscal laws affirm the need for heightened transparency. Recent diktats on financial transactions with China and the undisclosed financial intricacies of a special economic zone signal the government’s opaque tendencies. Prospective investors awaiting the launch of the anticipated capital markets may find it hard to trust a system that seems to shuffle its financial cards behind a veil.

The challenge here is not just about the economy. The core ethos of the country’s governance is under the scanner. It appears to be a mélange of development-oriented state controls, neoliberal proclivities, and a tinge of autocratic management, all combined with a rather nonchalant attitude towards spending accountability. This cocktail could lead to dire fiscal and political ramifications.

Many of the Prime Minister’s projects are marred by ambiguity in terms of funding. The general populace in a country with a shoestring federal budget, may soon find such opacity grating, if not outright outraging.

Ethiopia’s newly chosen partners in BRICS bring along their contrarian cultures, particularly when it comes to public transparency. For those advocating for accountability within Ethiopia, international support might wane. The G7, traditionally the harbinger of humanitarian aid and developmental support, is seemingly retreating. Yet, it would be premature to assume BRICS is the de facto global powerhouse.

The road ahead is strewn with both challenges and opportunities. Despite its awe-inspiring 19.4 trillion dollars GDP, China is wrestling with economic tribulations. Russia’s military adventurism in Ukraine has left its economy gasping, with a projected growth of a meagre 1.5pc of its 2.1 trillion dollar economy. South Africa, another BRICS stalwart, struggles with a mere 0.3pc growth projection.

While rife with possibilities, this juncture could be fraught with perils for Ethiopia’s leaders. It is akin to playing a game of high-stakes poker. The rewards are tempting, but the risks, all too real. The onus lies on Ethiopia’s contemporary leadership to steer the country with sagacity, ensuring that they do not sideline their traditional partners while they leverage the BRICS’ potential.

While the G7’s influence seems to wane, heralding BRICS as the successor could be precipitous. The world order is in flux, and countries like Ethiopia, poised on the cusp of this transitional phase, must deploy a mix of wisdom, resilience, and a touch of good fortune. The global game of geopolitical chess is in motion, and Ethiopia’s move is under the spotlight. Time, that impartial judge, will reveal if this gambit is a masterstroke or a mere folly.

A Perfect Storm Pummels Khat Exports

Posted on by Tizita S.

At the crack of dawn when the forex surrender criteria was altered by the central bank, selected exporters from livestock, khat, pulse and oilseed sections were joined by authorities to discuss the ended year’s export performance that registered a 1.58 billion dollar decline from the targeted amount.

The meeting at Elily International Hotel on Guinea Conakry Street saw the attendance of officials drawn from the National Bank of Ethiopia (NBE), Customs Commission and Ministry of Trade & Regional Integration (MoTRI).

Chaired by State Minister Kassahun Goffe and Girma Birru, advisor for the Prime Minister, a discussion was unveiled following a presentation by Mesfin Abebe, an advisor at the Ministry, that entailed possible causes for the lacklustre performance and plans to revive the sectors.

Officials expressed their rapture over the performance of pluses and oilseeds, which saw a significant increase in exports last year. However, they were dismayed with the performance of khat and livestock exports, which both declined. This decline in export earnings was reflected in the country’s overall export earnings, which stood at 3.64 billion dollars last year, a decline from the previous year’s record high of 4.2 billion dollars.

The dwindled export volumes of coffee and khat have contributed to the lacklustre performance in the ended year, where 240,000tn of coffee and 31,382tn of khat were exported worth 1.3 billion dollars and 248.36 million dollars respectively.

Although coffee exports showed a marginal decline, the performance of khat exports both in volume and earnings astoundingly plummeted by nearly half from the previous year where 56,353tn were exported earning 392.3 million dollars.

“Khat exports take the lion’s share for the declined figure,” said Mesfin.

The fall does not occur spontaneously. Exporters cite multiple taxations at several checkpoints, particularly near production areas, insufficient understanding of the perishable nature of khat and the weak partnership with the Somalian government as primary factors for the unprecedented result.

Mohammed Abdi was an attendee from Biftu Adugna Business S.C., a major khat exporter to Djibouti and Somalia. Established with 100 million Br capital, his company has been in business for three decades.

The informal trade and has forced him to pause shipment to Somalia after experiencing a 1,000kg volume decline which did not bring good news to his 350 employees who were paid 120 Br a day.

“It was disappointing,” he said.

He indicated that the khat alone is not weighed upon passing the checkpoints but along with the protective layers and covers which results in a lofty taxation.

“Meanwhile, the export tariff is set for a plucked khat,” he told Fortune with a frustrated tone.

Exporters depicted apprehension about the widespread contraband trade, depressing their businesses. They suggested inspections be extended beyond a few kilometres of the border areas.

Among the exporters who attended the meeting was Getachew Regassa from the Legerames Khat Exporters Association with 4,000 members. He voiced concern about how the 16,000Kg daily quota to Djibout’s market sold for eight dollars a kilo is often filled by the illicit traders of the exporters while slashing the price by half.

According to Getachew, taxpayers who provide job opportunities for 280 employees within his Association alone should benefit from the system.

“It’s unfair,” he said.

Based in Dire Dewa City, another member of the Association Abdulkerim Bedri saw his daily export volume decline from 4,500kg to one-third last year. He shares the sentiment that traders who take the unconventional route played an undeniable role in their revenue decline.

Illicit exportable goods including khat and livestock worth 2.3 billion Br were seized in the year by the Customs Commission, a staggering incline from the previous year’s 800 million Br.

Tegene Derese, head of inspection at the Commission, lauded the report as a successful performance. He dismissed concerns raised on the control and inspection being restricted to 15Km from the border.

“That’s our jurisdiction,” he said.

Of the 4,999 licenses issued to export khat, only 487 are active exporters.

In a move meant to fight the growing contraband trade that officials believed was across the board through scattered permit issuance, the Ministry retracted the mandate from regional trade bureaus.

The Ministry required exporters to present the contracts with the overseas buyers last year. This created inconvenience for exporters, as most of them reside in Dire Dawa City and neighbouring towns and had to travel long distances to the Ministry’s headquarters in Addis Abeba to present their contracts, said the Advisor.

The unsuccessful negotiation with Djibouti officials to adjust the delivered quota and being outperformed by other countries’ supply in Somalia’s market were attributed as another challenge.

According to the Business Daily reports in August 2022, Kenya exported khat worth 2.2 million dollars to Somalia four days after entering the market.

The Advisor at the Ministry confirmed Oromia, Somali, Harari regional states and Dire Dewa City Administration impose taxes.

Oromia region is a top producer of khat with 1.3 million quintals a year, followed by the Southwestern and Sidama regional states with 650,000qtl a year each.

Oromia Revenue Bureau officials believe the tax imposition was not targeted at cornering the export but to collect revenues for infrastructural development of eastern and western Hararege Zones.

Meanwhile, farmers are vying to join the export scheme themselves as they believe to have been ripped off by multiple actors on the supply chain.

Kalid Abdulhamid, a father of three, is a farmer in the eastern Hararge zone of Haramaya town unhappy about his income compared to what intermediaries get after the market centre 23Km from his farm.

Depending on the weather conditions and access to water, he produces Aweday khat twice a year on his two hectares inherited from his father eight years ago.

The exorbitant price of fertiliser deterred him from applying which resulted in 500Kg production last year.

The farmer is not appeased with purchasing fertiliser at 4,000 Br a quintal and selling the five-kilo estimated khat bundle for 1,700 Br at peak season.

Kalid and 889 farmers under a union are considering applying for the export permit and benefit better.

“I’m being ripped off,” he said.

Economists such as Shimelis Araya suggest diversifying options in terms of destinations will serve better when another country penetrates the market like this. He recalls the plummeting textile exports when Ethiopia was banned from the African Growth & Opportunity Act (AGOA).

“It should have been a lesson,” he said.

While he acknowledges the regional states are attempting to increase their source of revenues, Shimelis suggests major export items be tax-free for the greater good.

The government plans to revert to last year’s loss by aspiring 450 million dollars from khat exports this fiscal year.

Kassahun disclosed representatives from the Ministry travelled to Djibouti despite boring no fruit. However, he is optimistic that things will change through repeated attempts.

While he accepted that Ethiopia was outperformed by Kenya on khat export last year, he asserted that the multiple taxations at several points will be dealt with.

“The multiple checks points will be repealed,” he said.

 

Editors’ Note: This article was updated from its original version on August 28, 2023.

Coffee Price Dive Threatens to Hit Exporters Hard as Brazil Rebounds

Posted on by Tizita S.

Coffee exporters are grappling with a sharp decline in the international price as the world’s largest producer ramps up its supply. A 43pc plunge in prices last week to 1.48 dollars for a pound prompted the Ethiopian Coffee Exporters Association (ECEA) to caution its 510 members from stocking inventory and reassess suppliers’ prices.

This setback follows a period of windfall for Ethiopia when a devastating frost in Brazil two years ago resulted in the loss of 13 million bags of coffee. The incident coincided with record coffee exports valued at 1.4 billion dollars, as prices soared to 2.58 dollars a pound and demand jumped by six percent. However, Brazil has made a robust recovery this year, boosting its coffee Arabica output by 11 million from two years ago to 44 million bags; industry analysts projected Brazile could sustain the momentum throughout the year.

Ethiopian exporters are bracing for tough times ahead, as forecasts indicate a surge in Brazil’s exports to 66.4 million bags next year.

While navigating a turbulent period marked by plummeting international prices and surging domestic costs, a sense of cautious optimism remains. Experts urge strategic planning, coupled with a focus on quality, value-added products, and market diversification, to offer a path forward in these challenging times.

Rijalu Negash (PhD), an agricultural economist at Jimma University, contends that the primary obstacle to developing an export market for premium coffees is the widespread use of traditional harvesting techniques among growers. He asserted that providing adequate financing to farmers and suppliers is crucial for unlocking the potential for large-scale production of high-quality coffee. Rijalu argued that while Brazilian coffee can compete in volume, it cannot match Ethiopia’s coffee quality, due to the country’s favourable agroecology.

He urged a transition to value addition, as the latter currently represents less than 0.04pc of total exports.

“There needs to be a shift from commodity-based to added value-based export,” he recommended.

Gizat Worku, the Association’s general manager, warned that further price shocks are on the horizon, which could destabilise the financial footing of exporters who have been amassing inventory in anticipation of a stabilisation in global prices.

“We’re advocating for a quick response from exporters,” Gizat told Fortune.

He highlighted the divergent trends in global and domestic prices, with a remarkable 50pc increase from last year sweeping across regional suppliers, exacerbating the difficulties faced by exporters.

“It’s going to get worse,” he warned.

While the full impact of Brazil’s increased supply has yet to materialise, Ethiopia’s signature commodity has already experienced a decline in both volume and revenues, with 240,000tn shipped, earning 1.3 billion dollars this year, a 100 million dollars dip from last year.

Coffee is a linchpin of Ethiopia’s economy, accounting for over 30pc of its export earnings. As global supply chains rebound from a 15.2 million bag deficit two years ago, which triggered a surge in prices, new strategies for adaptation are becoming increasingly necessary.

Shafi Umer, deputy director at the Ethiopia Coffee & Tea Authority, considers the export performance relatively robust, given the worldwide socio-economic turmoil.

“The country earned better than expected,” he said.

However, a 94pc plunge in revenues from Germany, Belgium, and Japan was reported. According to Shafi, the Authority successfully marketed in Saudi Arabia, the UAE, and Sudan to compensate for the shortfall. Its officials have prioritised setting price floors and introduced incentives, although Shafi acknowledged that more work is needed to promote the speciality coffee over commercial varieties.

“Quality remains an issue,” he conceded.

While the price shock has left many exporters bewildered, there remains a sense of optimism about Ethiopia’s potential if regulations are tailored to address exporters’ needs.

Desale Mitku, general manager of DUR Ethiopia Agro-Industry Plc, noted that the global preference for raw coffee rather than value-added varieties has compounded the company’s challenges. Incorporated with a paid-up capital of 10 million Br, the company buys coffee beans from high-yield areas in the southern regions of Guji and Yirga Chefe.

Besides the 50pc surge in raw coffee prices, Desale blamed recurring disruptions in shipments from the coffee-producing states, cyclic supply shocks due to conflicts, and soaring transportation costs for the shortfalls.

Nevertheless, Desale was hopeful that the global demand has yet to be fully satisfied. The Authority shares this sentiment and has dispatched a team of experts to coffee-producing states to develop strategies for next year’s exports, focusing on organic coffee.

Fekadu Adefres, head of production at the Authority, identified climate change, pests, limited cultivation, and illicit trade as factors contributing to the coffee output deficit. He disclosed plans to increase production by 100,000tn from the current 760,000tn harvest. He advocates for the broader adoption of organic inputs like compost to double output per hectare to 15qtl.

“The global demand for organic coffee is far from being met,” he said, urging for a more widespread use of compost.

Large-scale coffee cultivation is concentrated in a few regional states, with Oromia accounting for 59pc, South Western 15pc, and Sidama seven percent, while the cash crop employs 5.8 million people nationwide. Despite robust international demand for speciality coffee, most Ethiopian forest coffee is uncertified and unbranded, hindering exports and suppressing revenues. Only 15pc of export companies trade in specialty coffee.

“It’s a challenging business,” Desale said wearily.

One of the principal suppliers is the Sidama Coffee Farmers’ Cooperative Union, established over two decades ago and comprising over 70,000 farmers across 68 unions.

The recent slump in nominal prices and surging supply has compelled the Union to postpone 30 containers of shipments as it searches for buyers. According to Tsegaye Anebo, the general manager, the doubling of prices from farmers to 60 Br for a kilo and the struggle to preserve profit margins in the face of export challenges has placed them in a precarious position.

“The domestic price has surged unexpectedly,” Tsegaye told Fortune. “And we’re trying to keep up with quality demands from buyers.”

After the washing, drying, and milling processes, which reduce the weight by 70pc, the Union has exported up to 5,000tn over the past two years, generating nearly 25 million dollars in revenues. Tsegaye aspires to reach new markets in the coming years, despite the recent hurdles of challenging deals and exhaustive negotiations resulting from Brazil’s increased supply.

Addis Abeba Unveils Ambitious Economic Hub Despite Feasibility Concerns

Posted on by Tizita S.

The Addis Abeba city authorities have ambitious plans for a sprawling new Special Economic Zone (SEZ) planned in the Gotera area of the Nifas Silk Laphto District. The project, dubbed “Addis Tomorrow,” is an initiative of Prime Minister Abiy Ahmed (PhD), slated to include zones dedicated to international trade, education and culture, business and finance, and modern housing.

According to Bereket Takele, press secretary at the Mayor’s Office, the initiative aims to transform Addis Abeba into an economic powerhouse in addition to its existing political and diplomatic significance. The details of the financial deal between the city administration and the contractor remained undisclosed, leaving city finance bureau officials in the dark about the investment scheme.

Mayor Adanech Abiebie revealed that a three-year preparation, feasibility study, and a hunt for a prospective developer preceded the agreement signed with China First Highway Engineering Group (CFHEC), a subsidiary of China Communications Construction Company (CCCC). The contractor has previously undertaken projects in other African countries, including the Democratic Republic of Congo (DRC).

The company was fined 18.6 million dollars and debarred for three years by the African Development Bank Group (AfDB) for “fraudulent and collusive practices” in a past project in Congo.

“The developer will handle all technology and construction costs,” said Bereket, emphasising that the city only provided the land. “They`ve paid the lease under the current price.”

A land lease auction recently saw values in the District fetching between 63,000 and 103,000 Br for a square meter.

The 35,000sqm area from Gotera junction to Saris has a history of failed mega projects. It was formerly a manufacturing site for Addis Abeba Cement (later acquired by Mugar), now mined by local youth for leftover metals and equipment.

In 2015, former President Mulatu Teshome (PhD) laid the foundation stone for a 21-floor and 20-block real estate complex jointly launched by a Chinese developer, Sino Mark, and Saba Engineering Plc. Touted as the largest and most luxurious real estate development with a budget of four billion Birr, the ‘Royal Garden’ project never materialised. Four years later, plans for a modern housing project in partnership with CCCC were announced by Deputy Mayor Takele Uma, on a 27hct plot. It did not take off.

The area has since become a hotspot for petty crime, causing concern for residents.

Local officials have begun surveying residents going door to door, signalling an imminent relocation plan.

Haji Habesha resides in one of the Kebele-owned homes, sitting squarely amidst the budding construction site. He hopes for finality to the nearly decade-long row of projects that are still only imaginary constructs as the area becomes rife with crime, with the tall grasses providing a conspicuous haven for the perpetrators. Residents recalled that the site was levelled out by Chinese contractors a year ago after the dozens of makeshift tents were razed after hoards of patrolmen flocked in.

Haji expressed hope for a smooth process, lamenting the almost decade-long series of failed projects that have left the area crime-ridden. Visitors who claimed to be District officials had appeared at his home while at work last week, enquiring about their preference for a condominium site or alternative Kebele rented houses.

“We’ve known that relocation was imminent,” he told Fortune. “We just hope for a smooth process.”

Sami Mohammed, a construction materials vendor, hopes the project will boost business in the area.

“Development is good for business,” he told Fortune.

The City Administration recently launched another ambitious project near Bole International Airport, dubbed “Windows of Africa,” to provide “Africans the opportunity to observe themselves.”

However, the Addis Tomorrow project faces legal hurdles as no ratified legal instrument designating economic zones exists. A bill endorsed by the Council of Ministers last year is awaiting ratification by Parliament.

Aschalew Tadesse, investment promotion director at the Ethiopian Investment Commission, disclosed that the project is under development outside the modality defined under the pending draft proclamation.

“I learned of the project from the news,” he told Fortune, suggesting alternative means to greenlight the project.

An Oxford University study by Thomas Farole reviewing African special economic zones revealed that most fall well below expectations due to inadequate knowledge and distorted incentives within a political economy. Local economists share these concerns, questioning the feasibility of creating economic zones in the heart of the capital.

Atlaw Alemu (PhD), a prominent economist, pointed out that China, a pioneer in economic zones, built them around ports and logistics hubs.

A World Bank report from last year indicated that Ethiopia’s industrial parks had recovered only half the one billion dollars in construction cost.

Atlaw highlighted the financial impracticality of transporting raw materials or finished products for producers in the pending project. He suggested establishing economic zones near borders, such as Dire Dawa City or Afar Regional State, to slash transportation costs.

“What would be the economic advantage of an SEZ in the capital?” Atlaw asked in a puzzled tone.

Trade Bureau Ousts Consumers Associations from Sugar Distribution

Posted on by Tizita S.

Following repeated attempts to address the distribution challenges of commodities in the city, the Addis Ababa Trade Bureau is adopting a digital system developed by Makiba General Trading Plc.

The system, dubbed Agelgil Delivery, was incepted three years ago with an investment of 5.5 million Br. It aims to deliver government-subsidised consumable goods such as sugar and edible oil directly to consumers, bypassing Consumer Associations.

The company sought permission from the Addis Ababa Trade Bureau to digitise coupons used to streamline commodities, and the request was granted. A pilot program was launched in Kolfe Keranio District Wereda 08 in July 2022, delivering sugar from the Consumers Association.

After the officials observed improved distribution, the service was expanded to Weredas 1, 6, 9, and 10 in July 2022.

The decision was met with apprehension from Consumer Associations, who were dismayed by the shift, which prompted Agelgil to suspend delivery services for a year.

According to General Manager Awash Mohammed, the company lost over 3.2 million Br during that period.

Makiba Trading, which previously distributed goods from factories and wholesalers to shops, was founded five years ago with a capital of 16,000 Br. Its flagship service, Agelgil, came into effect during the COVID-19 pandemic.

Agelgil has registered over 100,000 customers in the 10 Weredas of Kolfe Keranio District. According to Awash, it has monthly expenses of around 850,000 Br, 10-15 employees per Wereda, and a profit margin of 0.80-1.25 Br.

“Our goal here is to deliver, not to squabble,” Awash told Fortune.

The company was not initially interested in purchasing and selling sugar, as it would require significant resources and capital. However, because the Bureau wants it that way, they are demanding to be supplied with sugar on credit and to pay after delivery.

Ethiopia’s local sugar consumption demand was estimated at 1.2 million tonnes in 2020/2021, compared to 340,000tn of local production. As of June 2022, the Ethiopian Sugar Industry Group (ESIG) has procured 100,000tn of sugar, with an annual production capacity of 450,000tn.

Addis Abeba City Administration subsidised eight billion Birr for commodities such as sugar and petroleum and distributed half of the planned one million quintals of sugar in the last fiscal year due to a supply shortage.

The Addis Abeba Trade Bureau has had difficulty monitoring the distribution channel and frequently clashes with Consumer Associations over a lack of transparency. According to the Bureau’s annual report, 82.9qtl of illicitly distributed sugar was seized last year.

Sewnet Ayele, a communications officer for the Bureau, claims that the Associations frequently fail to match the amount of sugar delivered with the number of people in the area. He stated that a one-month trial with the digital delivery system has earned them an extra 60qtl from one district, with plans to implement it across the city.

“It is a good relief,” said Sewnet.

However, consumer associations are having trouble adjusting to the system.

Berhan Consumers Association has six outlets across the Kolfe Keranio District Wereda 08 area. Gebretinsay Kassu, head of the Association said they were forced to give 202qtl of sugar to Agelgil Delivery for 6,325 Br a quintal with up to 300 Br profit margin.

“We have lost our customers,” Gebretinsay told Fortune.

The remaining 47qtl was distributed among school feeding centres, Association employees, and public servants at the request of Wereda’s Trade Bureau.

According to Gebretinsay, consumers who are unaware of the system still go to the store, but their walk-in customer base who would buy other commodities while visiting the stores has plummeted insurmountable.

“We were ordered to do so,” he told Fortune.

Consumers register for digital delivery through a mobile application and get cards to scan.

“The priority is to eliminate inefficient distribution system,” said Gizachew Ali, former head of Addis Abeba Cooperatives Agency responsible for the Consumer Associations around the city.

Gizachew recommends that Associations take a proactive approach during the digitisation process. He believes that recognising limitations and involving the private sector is essential for significant progress.

Residents familiar with the process gather around when the delivery van arrives even before the knock on their door. One of them is Zebiba Fedlu, a mother of three who lives around the Wereda 8 area.

As she lives in a rented house with the possibility of changing location anytime, having a digital permanent coupon has been a relief for Zebiba.

She uses sugar with her tea and coffee at least two times a day. She claims the text message she received on the day of the delivery prevented her from helplessly wandering around the association shops.

“I’m glad I don’t have to queue for hours.,” she said.

Sustainability is what worries Zebiba. She is afraid the delivery will be discontinued following the pilot program.

“It doesn’t matter who brings it,” She told Fortune. “As long as I get sugar.”

Although it is recommended to simplify the delivery process by reducing the number of intermediaries, economists such as Atlaw Alemu (PhD), a lecturer at Addis Abeba University, suggest that the feasibility should be thoroughly examined before ultimately transferring the service.

Atlaw believes that the Bureau should take responsibility for delivering services accurately and punctually rather than pointing fingers at Consumer Associations. He is concerned that privatising the service could lead to a monopoly.

“The intention of service over profit is required,” he said.

Mayor’s Office Proposes Mandatory Daycare in Condominiums

Posted on by Tizita S.

As the Addis Abeba City Administration takes a leap to early childhood development programs, upcoming real estate and condominium houses are compelled to include daycares in their design while the existing ones are required to make room for accommodation.

The project early childhood development program which makes childcare institutions around home areas mandatory is closely monitored by the Mayor’s Office Strategic Programs Bureau officials partnering with the city Women Children & Social Affairs, Public Service, Finance, Transport and Culture Arts & Tourism bureaus.

Although he did not disclose the amount, a significant financial investment was put forth to map out the program, according to Eshetayehu Kinfu (PhD), head of the strategic programs bureau at the Mayor’s Office.

Meanwhile, the Women Children & Social Affairs Bureau took on the task of pushing up to 1,000 public offices to preserve room for childcare services.

For two years Eshetayehu and his team tried to identify the specific areas that should be addressed for the overall development of children under the age of six, will hold meetings at condominium sites with hopes to garner constructive feedback from residents.

“The plan is to make childcare accessible at a reasonable price,” he told Fortune.

Over 600 condominium sites with residents that were relocated for development projects foresee daycare centres and playgrounds with the regulations getting the green light from the City Cabinet in mid-March. The City Administration built a daycare at the Ayat 49 condominium site and handed it over to the community in June as a pilot program.

The Addis Abeba Food Medicine & Health Care Administration & Control Authority previously used to inspect close to 130 licensed daycare centres four times a year through its Wereda branches. However, with the new restructuring that shut down several branches, the checkup duration was cut by half and transferred to the central office.

According to Getachew Abebe, head of the licensing directorate, although the requirements are compounded to educational background and facility equipment, the inspection serves the best interest of the children and keeps them from being exposed to actual harm.

Sebelework Assefa is one of the administrative staff at the Mekanisa condominium site which houses 660 residents. She is ecstatic about the plan to begin a daycare facility with hopes that it will allow mothers to be able to go back to work.

Seblework recalls the homeowners’ committee planned to offer the service through a licensed facility with a relatively lower offer a few years ago. However, the construction was put off by the Wereda administrators for lack of proper citation.

“They failed to understand the point,” she said.

Although their idea was discarded back then, Seblework is pleased to witness it is revived again. Any approach that may provide parents relief while going back to work is endorsed, she said.

While the owners of private daycare facilities such as Happy Daycare echo the sentiment, they argue the business requires financial fluidity and constant regulation. The monthly rent for a villa house costs 60,000 Br while installations and operational costs round up to over half a billion Birr.

Children less than a year old are taken care of with a 5,500 Br monthly fee while the price decreases by 500 Br as they get older.

The owner Mahlet Wondimu decided to take it on as a business after experiencing unfortunate circumstances with her own child when she planned to go back to work after giving birth. Contrary to her expectations of flooding customers, the daycare only received 10 children in the past two months.

“I hope the new year brings better opportunities,” she said.

Although the advantage of affordable daycares cannot be denied by working parents, experts like Mohammed Abdo, a social work instructor at Jimma University, indicate the benefits extend to the upbringing of children who adapt to the behaviour of their surroundings.

“It’s better for children to be surrounded by people the same age,” he said.

However, the lack of inspection, inadequate training of caretakers and the unventilated room he observed upon research have him worried. He urges authorities to double up on the uninformed inspection and enforce regulations in all sincerity.

Lawyers’ Burdens Lifted as Ministry Approves New Tax Decree

Posted on by Tizita S.

Lawyers are receiving the budget year with a sigh of relief as they are met with a notice that recognises their expenses incurred for generating income to be curtailed from income tax as they submit their annual accounting costs to tax authorities.

The letter signed by the State Minister for Finance Eyob Tekalign (PhD) allows them to present the miscellaneous costs while they are on duty to be deducted from the probable income tax.

It is a response to the Ethiopian Federal Advocates’ Association’s plea that had been a concern for several years.

A year ago, the Association submitted the 87-page recommendation while a couple of workshops with policymakers unfolded before the decision.

“We’ve pleaded with officials at the Ministry several times to end the decade-long controversy,” said Tewodros Getachew, acting president of the Association.

Although he is hopeful, Tewodros disclosed the reverberations will be highlighted in the coming tax period.

Under the City Administration Revenue Bureau, over 400,000 taxpayers with categories A, B, and C based on their annual turnover, declare taxes from July to October.

With 5,200 members under its fleet, the Association requested a meeting after the decision to go over its implementation. But the Bureau Communications Head Endale Kebede confirmed that they have started to apply the rule.

Lawyers are apprehensive over the accounting costs as they claim to have high costs for fuel, telephone, parking and travel due to the nature of their work which requires a commute to several places.

Fikadu Petros, co-founder of Fikadu Petros & Partners LLP has mixed feelings about the decision.

He applauded the officials for recognising a significant problem for taxpaying lawyers. However, he believes the unique features of law firms co-founded by multiple partners and how their income tax is treated remain unaddressed.

“Partners are both employers and employees,” he told Fortune.

He established the firm on one million Birr capital with two partners two months ago. Fikadu indicated that the letter falls short in addressing the ended-year taxes where several lawyers were met with rejection while submitting their costs.

“They may not have kept their records,” he said, suggesting treatment on presumptive cost calculation for the ended year and beginning the implementation for the next tax season.

The Association has been working jointly with the Ministry of Finance to draft regulations and directives for sustainable changes during the tax declaration period.

According to Habtamu Mensha, a legal advisor at the Ministry, the lawyer’s overhead costs were not considered as expenses for lack of a trade license. He said that Category A and B taxpayers are legally required to keep their costs which now apply to lawyers.

However, he observed that in the last couple of years, they were not keeping their accounts properly.

“A sizeable portion was left undeclared,” said Habtamu.

With the intention of vying for the law as an absolute rule, lawyers were not treated as business entities and operated with a license issued by the Ministry of Justice.

This does not roll off the tongue for Araba Beyene who formerly served as a tax law expert at the Ministry of Revenues. He indicated that people who make money out of a business should be treated similarly while avoiding confusion on the tax declaration.

“It’s the feasible approach,” he said.

Ethiopia’s BRICS Induction: Economic Promise or Geopolitical Strategy?

Posted on by Tizita S.

The BRICS bloc – comprising Brazil, Russia, India, China, and South Africa – recently welcomed its latest member: Ethiopia. The addition has raised eyebrows, given its recent economic challenges compounded by civil strife.

Ethiopia’s integration comes amidst claims by its leadership of burgeoning economic growth. Still, analysts suggest that Ethiopia’s induction might reflect a broader geopolitical strategy by the bloc, particularly by dominant players like China and Russia.

Is this an economic decision grounded in Ethiopia’s prospect for development, or a strategic move by BRICS to counter Western influence in Africa?

Prime Minister Abiy Ahmed (PhD) recently lauded Ethiopia’s rapid economic development as a cornerstone for its BRICS entry. However, such claims seem to run counter to the realities on the ground. Despite its immense potential, Ethiopia has grappled with a civil war that has, by conservative estimates, inflicted billions of dollars in economic damage. With a population struggling with essential needs, they are not to take blame if this announcement leaves many to be sceptical.

More seasoned observers suggest Ethiopia’s BRICS entry is less about its economic performance and more a geopolitical manoeuvre by powerhouse countries, primarily China and Russia. The strategic significance of the Horn of Africa, notably its proximity to the Red Sea and the Gulf of Aden, makes it a jewel for global powers.

China’s deep pockets in Ethiopia are hard to ignore. With investments surpassing four billion dollars and accounting for over 60pc of foreign direct investments, Beijing wields substantial influence over Addis Abeba. The 13.7 billion dollar debt Ethiopia owes to China further complicates matters.

But beyond the financial metrics, China’s forays into Ethiopia, particularly in manufacturing and services, suggest that Beijing sees Addis Abeba as more than just a debtor — it is a strategic partner.

Similarly, the Russian interest lies in the broader stability and influence of the region. A stable alliance between Ethiopia and its former foe, Eritrea, potentially creates a bulwark against Western interests.

Despite its recent challenges, Ethiopia’s large population and untapped natural resources present an attractive proposition for the BRICS bloc, primarily focused on an alternative economic vision to the West. Membership in the BRICS bloc requires alignment with its policy stances, a challenge the Ethiopian leadership must navigate adeptly.

Four of the BRICS founders have already shown a tendency to move away from a US-dollar-dominated system. While strategic in the broader game of economic chess, such a policy position presents challenges for Ethiopia. Plagued by a foreign currency shortage and still significantly integrated into the dollar system, any abrupt moves could unsettle its fragile economy.

For Prime Minister Abiy, this induction should not just be about international prestige — it should be about striking a careful balance between global alignments. While the BRICS nations offer an alternative to Western influences, their economic and strategic collective power is vast. China, India, and Russia possess economic and military capabilities that rival the West. While not always cohesive, their collective voice in global affairs signals a bloc that is hard to counteract.

As Ethiopia integrates more into this bloc, it will need to recalibrate its policies, ensuring they are in sync with BRICS while safeguarding its interests. This recalibration will mean rethinking trade, monetary policies, and even foreign policy priorities.

Ethiopia’s BRICS entry heralds a new chapter in its international engagements. The move symbolises a country looking to break free from the traditional Western-dominated structures. Yet, such decisions come with their set of challenges and obligations.

The BRICS bloc, with its collective might, can be a formidable ally. Its members’ focus on breaking the Dollar’s supremacy in global trade, if successful, could reshape the contours of international economics. But for Ethiopia, the challenges are immediate. Its economic fragility means it must approach BRICS-led initiatives with caution. Abrupt shifts could exacerbate its economic woes.

Prime Minister Abiy’s leadership will be put to the test. His administration will need to prove its mettle, demonstrating that it can tread the fine line between aligning with BRICS while ensuring Ethiopia’s national interests remain uncompromised.

Public sentiment oscillates between cautious optimism and scepticism. While respecting the government’s autonomy in policy decisions, Ethiopians yearn for a leadership that places national interests above all. They envision an Ethiopia free from external impositions, from the West or the BRICS bloc.

As the dust settles on this announcement in the coming months, all eyes will be on Ethiopia. Its leadership’s decisions will not only shape the country’s future trajectory but could also signal the evolving dynamics in global geopolitics.

Community Schools Chart a Bold New Era in Education

Posted on by Tizita S.

In a twist of academic fate, community schools in Ethiopia are now at the forefront of the country’s educational metamorphosis, overshadowing their public and private counterparts in recent school leaving examinations. The data from the last assessment indicates a near-zero failure rate among these community institutions — starkly contrasting with the alarming failure statistics from public establishments.

Even private institutions, despite their steep tuition fees, lag behind this new wave of community-centric education.

Surprisingly, university-affiliated community schools stand at the pinnacle of this success, demonstrating the potential benefits of a symbiotic relationship between higher education and primary schooling. For instance, universities in Gondar and Jimma founded affiliated community schools to retain staff who otherwise might have relocated to the capital for their children’s education.

These innovative establishments not only ascertain the success of the community school model but also signify its potential for broader academic, research, and entrepreneurial collaborations.

While still relatively sparse in number and predominantly located in Addis Abeba, the impact of the community schools goes beyond mere academic scores. Their core ethos—the seamless integration between schools, students, and parents—promises a generation of well-rounded, responsible citizens. They are strengthening the bond between parents and their children’s education while extending their reach to offer essential services in health and welfare.

The holistic offerings are not merely to satisfy academic curiosities but to foster a new breed of citizens—well-educated, community-minded, and proactive. The potential is evident. Ethiopia has a golden opportunity to revolutionise its educational landscape, propelling students, families, and communities into a better future.

These community-focused establishments provide a unique blend of affordability and immersive engagement. Rooted deeply within their local communities, they prioritise a student-centric education model. Their curriculum not only caters to academic prowess; it nurtures every aspect of the student—mental, social, and physical.

The communal involvement results in an ecosystem that transcends the traditional confines of classrooms, instilling a profound sense of belonging and mutual responsibility among its stakeholders.

However, the success of these community schools is not an invitation to hastily replicate the model across Ethiopia. The establishment, let alone expansion, of this innovative approach is a complex undertaking. It demands a combination of open conversations, intricate examination of the strategy, and an adaptive approach that respects each community’s unique requirements.

Herein lies a pivotal role for the Ministry of Education and regional education bureaus. Their collaborative response is essential in devising a clear, actionable blueprint for the nationwide adoption of the community-centric educational philosophy.

The sustainable growth of community schools hinges on three foundational pillars: a unified vision, cross-sector collaboration, and supportive government policies. The Ministry and other entities must formulate a collective mission prioritising student achievement, educator job prospects, and overall community upgrade.

This collaborative spirit should extend into policy-making. Land allocation for school infrastructure, accessible financial schemes, proficient technical backing, and streamlined establishment procedures are crucial areas that demand re-evaluation.

To fuel the dynamic engine of community schools, the authorities must consider a mix of innovative financial mechanisms. Whether through parent contributions, proactive community engagements, or the entrepreneurial ventures of auxiliary businesses, each penny funnelled into the community school system amplifies its transformative power.

Every change requires catalysts—individuals who challenge the status quo, innovate, and collaborate effectively. Community schools are no different. Their success and the broader adoption of their model rests on the shoulders of transformative leaders—within the educational institutions and the community at large.

For those of us in the arena of education advocacy, the onus is on us. We must champion these community schools, advocating for a detailed blueprint, growth-friendly policies, innovative financing, and, most importantly, the cultivation of visionary leadership.

As we rally behind this cause, we do not just advance education; we uplift entire communities and sculpt the future of Ethiopia. The promise of community schools is expansive; however, the potential is boundless.

Does an Expanded BRICS Mean Anything?

Posted on by Tizita S.

When I coined the BRIC acronym back in 2001, my primary point was that global governance would need to adjust to incorporate the world’s largest emerging economies. Not only did Brazil, Russia, India, and China top the list of that cohort; they also were collectively responsible for governing close to half of the world’s population. It stood to reason that they should be represented accordingly.

Over the past two decades, some have misread my initial paper as a kind of investment thesis, while others have interpreted it as an endorsement of the BRICS (South Africa was added in 2010) as a political grouping. But I never intended any such thing. On the contrary, ever since the Brazilian and Russian foreign ministers proposed the idea of creating a formal BRIC political grouping in 2009, I have questioned the organisation’s purpose, beyond serving as a symbolic gesture.

Now that the BRICS has announced that it will add six more countries – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates – I pose the question again. The decision, after all, does not appear to have been decided on any clear objective, much less economic, criteria.

Why, for example, was Indonesia not asked? Why Argentina and not Mexico, or Ethiopia and not Nigeria?

Clearly, the BRICS’ symbolic power will grow. The group has been able to tap into the broader Global South’s suspicion that post-World War II global governance organisations are too Western. It has occasionally been able to present itself as the voice of the emerging and developing world – a category that, of course, excludes the United States and other advanced economies. Insofar as it has reminded everyone that the structure of international institutions does not reflect the global economic shifts over the past three decades, it has succeeded.

It is true that in terms of purchasing power parity, the BRICS are slightly larger than the G7. But, because their currencies trade at prices far below their PPP-implied levels, the group remains significantly smaller than its advanced-economy counterpart when measured in current nominal US dollars.

It is also true that China has firmly established itself as the world’s second-largest economy. In nominal terms, its GDP is more than three times larger than Japan and Germany, and around 75pc the size of the US. Meanwhile, India has been growing fast and seeks to become the third-largest economy by the end of this decade. But none of the other BRICS has performed anywhere near as well as these two. Brazil and Russia account for around the same share of global GDP as they did in 2001, and South Africa is not even the largest economy in Africa (Nigeria has surpassed it).

Of course, some G7 members are in the same boat. Italy and Japan have registered hardly any growth for many years, and the United Kingdom, too, has been struggling. Just as China dominates the BRICS by dint of being twice the size of all the others combined, so is the US now bigger than the rest of the G7 combined. America and China dominate their respective groups even more than they did in the past. These dynamics suggest that neither the G7 nor the BRICS (expanded or otherwise) makes much sense for tackling today’s global challenges. Neither can do much without the direct, equal involvement of the other.

What the world needs is a resurrected G20, which already includes all the same key players, plus others. It remains the best forum for addressing global issues such as economic growth, international trade, climate change, and pandemic prevention. Though it now faces significant challenges, it still can reclaim the spirit of 2008-10, when it coordinated the international response to the global financial crisis. At some point, the US and China will have to overcome their differences and allow the G20 to return to its central position.

As for the BRICS, the group could be more effective, on the margins, if key members were earnest about pursuing shared goals. But China and India rarely agree on anything, and given their current bilateral relationship, neither is likely to be enthusiastic about the other gaining more influence in key global institutions (unless they are equally balanced). That said, if China and India could resolve their border disputes and develop a closer constructive relationship, both countries would benefit, as would world trade, global economic growth, and the BRICS’ effectiveness.

China and India could cooperate in many areas, and in ways that would influence the other BRICS and many others throughout the Global South.

One big issue is the dominance of the US Dollar. It is not especially healthy for the world to depend on the Dollar and, as a corollary, on the US Federal Reserve’s monetary policy. The introduction of the euro could have diminished the Dollar’s dominance if eurozone member states had agreed to allow their financial instruments to be liquid and large enough to appeal to the rest of the world. Similarly, if any of the BRICS – especially China and India – undertook significant financial reforms to achieve that goal, their currencies would almost certainly become more widely used.

But if they continue to limit themselves to complaining about the Dollar and musing in the abstract about a shared BRICS currency, they are unlikely to achieve much.

 

This article is provided by Project Syndicate (PS).