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Month: October 2023

THE MENTAL CARE DEFICIT

Posted on by Tizita S.

Amanuel Mental Specialised Hospital is more than a medical facility; it embodies Ethiopia’s turbulent past and the ongoing trauma it faces in addressing mental health issues. In the busy area of Merkato, near Congo Street, the Hospital’s history is intricately tied to the country’s journey, bearing witness to the resilience of its patients and the persistent gaps in mental healthcare. Initially established as a general hospital, Amanuel transformed into a mental health facility following the Italian occupation, which left a lasting impact on the collective psyche. With a budget of 198 million Br, it now serves over 60,000 patients annually, operating at capacity with 240 beds spread across 11 wards. However, despite this substantial patient load, the facility has seen little expansion since its inception, reflecting broader issues within the mental health industry.

The mental health landscape is dire, with only a fraction of health facilities offering mental health services. Urban centres like Addis Abeba may fare slightly better, but rural areas remain critically underserved. With a health worker-to-patient ratio well below the continental average and the targets set by the United Nations Sustainable Development Goals, Ethiopia faces a long road to achieving universal healthcare.

Stories of resilience within Amanuel’s walls abound. Their journey to the Hospital follows a complex interplay between personal strife and limited access to mental health resources. The stories shed light on the vital role Amanuel plays in providing respite and care to those fighting mental health issues. The Hospital, however, is a microcosm of Ethiopia’s broader mental health crisis. With only 46 general practitioners and 13 psychiatrists, the facility is significantly understaffed, and many seeking treatment are turned away. The recent road expansion plan by the city administration further threatens to encroach on the Hospital’s already limited space, deepening the strain on resources.

Despite these challenges, there are glimmers of hope. From grassroots community movements to initiatives like the Mental Health Users Association, collective efforts are underway to break the stigma around mental health and provide support to those in need. The involvement of religious leaders and traditional healers in mental health dialogues reflects a refreshed approach, integrating cultural practices with modern therapeutic methods.

Ethiopia’s Economy Eyes Digital Horizon Under Political, Security Upheaval

Posted on by Tizita S.

In the corridors of global geopolitics, where military and political turbulence often makes headlines, Ethiopia’s quieter march on the roads of digital finance appears to have gained momentum. Prime Minister Abiy Ahmed’s (PhD) Administration recently demonstrated its intent to modernise with the Council of Ministers, giving the nod to a pivotal personal data security bill. It signals that Ethiopia seeks a stake in the budding global digital economy.

Historically, policymakers’ attempts at constructing a data privacy framework have been more piecemeal than cohesive. A scattering of legislations sporadically advocated for personal data protection. But the most promising of them all – a draft crafted by the Ministry of Innovation & Technology experts – remains in the legislative purgatory, awaiting ratification. Notably, a directive mandating financial protection for consumers, issued four years ago, has been a sole sentinel, demanding financial institutions uphold data confidentiality.

Against this backdrop, Ministry of Finance officials proposed revisions to the value-added tax (VAT) proclamation, foretelling a tax on digital transactions. Their goal appears to be enforcing an alignment, bringing digital business models into the fold of broader financial inclusion. However, such fiscal changes tread a thin line, potentially, if not arguably, disincentivising businesses from embracing digital platforms.

With a populace exceeding 100 million, Ethiopia’s economy had been a poster child for growth, during the decade and a half beginning in the mid-2010s. Yet, its headways have been punctuated with slowdown, affected by domestic and external headwinds from global pandemics and droughts to civil wars and volatile commodity markets.

Peeling back the layers of the financial fabric reveals a rather conventional story. Approximately 30pc of the adult population remains tethered to traditional banking systems, while a mere 32pc have the luxury of internet access. For Ethiopians’ digital finance dreams to thrive, creating a regulatory framework that marries protection with transparency should be central.

Recent data does suggest some optimism.

Financial inclusion has seen a modest jump from 22pc in 2014 to 46pc six years later. However, these figures pale in comparison to regional counterparts. The urban-rural divide is particularly pronounced, with city dwellers thrice as likely to own a bank account. Adding to this disparity is the gender divide, with men often leading the charge in account ownership. The federal government’s audacious financial inclusion strategy, which aspires for a 70pc inclusion rate, can be seen as a beacon of hope. A particular spotlight stands on bridging the gender disparity.

Community-centric initiatives, such as savings and credit cooperative organisations, are making valiant efforts. The entry of Safaricom, a telecom behemoth, post-liberalisation after over a century of monopoly by the state-owned Ethio telecom, has given the mobile banking sector a shot in the arm.

Mobile banking, long viewed as a panacea for the financial sector’s woes, remained an elusive dream, shackled by regulations that barred non-bank entities from offering such services until 2020. Even now, with the second permit granted to Safaricom going live and operational, the public is waiting with its boundless patience for optimal services.

With the promise of growing mobile phone usage and a subpar 46pc financial inclusion rate, the mobile banking realm stands on the cusp of a transformative era. But realising this potential demands a harmonious evolution of policy, digital literacy, and trust. Interestingly, the Administration’s blueprint reveals its commitment to this digital dream. The financial inclusion strategy projects a staggering 150pc surge in digital payments by 2025. Barely two years remaining, policymakers can ensure that the digital payments strategy offers specifics, emphasising infrastructural fortitude, innovation, and rigorous regulation.

However, foundational challenges persist as the Prime Minister and his ministers appear to be readying themselves to lead the digital charge. Tech affordability, for one, remains a hurdle. The Administration would do well to reexamine its position on mobile phone import taxation, push for low-cost localised smart feature phones, and negotiate with tech companies for device financing. They can push the industry for USSD service enhancements to lower data costs.

Another imperative is quality networks, especially for communities in far-flung regional states. While market assessments will undoubtedly influence investments, the onus is on mobile service providers to widen their reach.

A symbiotic effort from policymakers, development partners, and service providers can uplift digital literacy. The endgame should be services that are intuitive, convenient, and available in vernacular languages or with visual aids, making mobile money platforms widely accessible. Empowering agents to provide basic digital training can further boost this task.

While promising, Africa’s tryst with digital finance has been marred by hiccups. Redressal mechanisms, particularly in the event of network failures, have often been woefully inadequate. Ethiopia, for instance, wrestles with issues where a flawed ATM transaction can spiral into a week-long bureaucratic nonsense for trivial cash amounts. While the current Administration’s strides towards digitisation are commendable, a multi-pronged, inclusive, and customer-centric approach will determine Ethiopia’s place in the global digital ecosystem.

A dual focus is critical as the country embarks on its digital voyage. While bolstering its digital arsenal is vital, crafting a customer-centric legal framework to address the myriad challenges in the digital domain is equally crucial. Lessons from neighbours, like Tanzania’s sharp decline in person-to-person digital transfers post hefty VAT impositions, should serve as cautionary tales.

Mental Health Crisis Shrouded in Shadows

Posted on by Tizita S.

In the tangled corridors of Amanuel Mental Specialised Hospital, 29-year-old Wondwessen Belete’s footsteps echo stories of trauma and resilience. The Hospital, in the busy vicinity of Congo Street, is a reminder of Ethiopia’s troubled past and a symbol of its mental health challenges today. It is the oldest facility in the country.

Amanuel’s history is intertwined with the country’s turbulent past.

Initially a general hospital built on a 1.4hct plot, its purpose shifted post-1941, after the traumatic Italian occupation, addressing the mental health impacts of the Rodolfo Graziani-induced three-day massacre in Addis Abeba. Now, under the aegis of the Ministry of Health, the facility juggles a budget of 198 million Br, with an influx of over 60,000 patients annually. Close to 33 million Br is sourced from its services, having 240 beds distributed across 11 wards.

Wondwessen was one of these patients admitted after experiencing a severe episode of alcohol-induced self-harm. He partially severed his two fingers in an alcohol-fueled rage following disagreements with his sister.

“I was heaving in rage,” he told Fortune.

His family refused to give him a portion of the revenues from selling his minibus, worrying that he would spend it on drinks. He recalled spending three weeks on the streets of Kolfe Qeranyo District before family members took him to a facility. He voluntarily sought refuge in the Hospital’s substance abuse ward, where he stayed for 10 days. The Hospital, according to Wondwossen, provides much-needed relief from outside stresses while easing family’s concerns. The once-energetic taxi driver now finds solace in strolling the compound grounds, attempting to steer clear of the afflictions that haunted him.

“I need a few sober days,” Wondwossen confided, a fresh bandage on his left hand visible, which has yet to recover from the damage. “I’ll relapse if I leave now.”

His words resonate with the silent pleas of many like him, seeking a haven in one of the country’s two public psychiatry hospitals.

Yet, Amanuel’s story is not one of unbridled success. As Gezahegn Gamo, the hospital’s head of public relations, somberly puts it, “No significant expansion has occurred since its foundation.”

The 46 general practitioners and 13 psychiatrists are far from adequate in addressing the growing demand, while many arriving for inpatient treatments were returned from the doors. A recent road expansion plan by the City Administration was no good news for staffers like Gezahegn. They fear it will slice a piece from the compound.

“It [the premises] would have benefited from trees and a greener atmosphere instead,” he told Fortune.

The Hospital is not alone in this languishing state; the broader mental health landscape reflects a similar picture of unmet needs and resource scarcity. The statistics paint a daunting picture, although a mere five percent of studies focus on mental health in Ethiopia. There is a glaring gap in comprehensive data, even as indicators point towards a surge in self-harm over the past two decades.

A study Getachew Mullu and Amanuel Lemu conducted in 2018 revealed approximately 21.5pc of the population struggles with common mental health issues. Yet, mental health services are conspicuous by their absence. Only a quarter of health facilities out of the 400 hospitals and 3,706 health centres provide mental health services. Urban centres like Addis Abeba might fare slightly better, but regional states such as Benishangul Gumuz and Gambela remain direly underserved.

With a health worker-to-patient ratio half the continental average and a fourth of the number recommended by the Sustainable Development Goals (SDG), Ethiopia has a long road before realising universal healthcare.

Wude Shiferaw, a focal point person on mental health at the Disease Prevention & Health Promotion Directorate of the Addis Abeba Health Bureau, disclosed that the best way to address mental health concerns is by deploying professionals at every health service provider in the city. This is part of the decentralisation strategy the Ministry of Health laid out in successive national plans.

“We’re continuously training and assigning new staff at every health centre,” she told Fortune.

With around 120 specialised psychiatric doctors vying to provide services for over 100 million people, a troubling fact looms as the percentage of mental health professionals stands at less than one per cent of the total workforce.

The third-year psychiatry resident from Dila University, Bezawit Mandifraw, has had a lifelong dream of working in the mental health sector, coming close to completion as she approaches her final year. While she has had experience at her University’s psychiatric wing, the scale of Amanuel has reinvigorated her desire to pursue further studies.

“I want to be able to do more,” she told Fortune.

Within the walls of Amanuel, Endale Mamo, one of the 372 professionals, has been a beacon of hope for many. As a psychologist and counsellor for six years, he curates the art therapy centre – a space filled with profound artworks, each echoing the turbulent journey of its creator. Endale astutely observes the unaddressed traumas manifesting as substance abuse and suicidal tendencies.

“A teenager is less likely to handle the impact of stressors,” he told Fortune, pointing to the alarming university entrance results.

Addressing this underlying trauma is at the heart of a pilot project helmed by Tigist Waltenigus, co-founder of Erq Ma’ed Psychosocial Support Service. Her initiative aims to provide psychological support to students, often an overlooked demographic.

“Teenagers barely get psychological support from their schools,” she said.

In a country daunted by myriad challenges, including a prolonged civil war, droughts, inflation, and regional conflicts, the burden of mental health often remains unaddressed.

“Therapy is too expensive,” Tigist candidly admitted.

The cost barriers are significant. With a single session at a private clinic, patients are billed around 1,000 Br.

A few establishments like Kotebe General Hospital, Gefersa Rehabilitation Centre, and Sitota Psychiatric Centre are trying to bridge the gap.

Yonas Bahiretibeb (PhD), founder of the 14-year-old Sitota Psychiatric Centre and one of the six such facilities in Addis Abeba, offers a nuanced perspective on the cultural underpinnings of mental health. A considerable number of mental health disorders are wrongly attributed to supernatural causes. This cultural framing sometimes undermines recovery, even though nuanced interventions could weave cultural and religious aspects into therapeutic approaches.

“Ethiopians have difficulty expressing their psychic pain,” Yonas said, “rendering symptoms to appear in bodily sensations.”

Once a resident in Toronto, Canada, Yonas emphasised weaving local resources from religion and culture with the emergence of superficial knowledge absorbed through social media in the urban landscape. While he recognised the traumatising impact of conflict on mental health, he noted the country had coped with a history filled with war through the strength of social institutions in previous centuries.

“People are losing their moral base with nothing to replace it with,” he told Fortune.

He noticed a rise in recreational drug use in the capital, fueling a crisis of purposeful life in the privileged urban class.

“Drug-induced psychosis is all too common,” he told Fortune.

Data from the Ministry of Health reveals that five per cent of mental, neurological and substance disorders arise from the consumption of “Khat”, a widely used plant in the narcotic family. The prevalence of common mental illness stood at 21.6pc and 36.4pc in the general population and among patients with co-morbid conditions two years ago. The latest mental health atlas by the World Health Organisation (WHO) on Ethiopia revealed a 9.45pc suicide mortality rate out of 100,000 people, notwithstanding an under-reporting due to social stigma.

Policy interventions have, thus far, appeared limited. Even as national strategic plans on mental health are rolled out, tangible results remain sparse.

Jemal Teshome, senior expert on mental health at the Ministry, blamed funding squeezes due to the pandemic and conflicts for significant roadblocks.

“We recognise that trauma will become a public health issue in a few years,” he told Fortune.

However, he remains hopeful, aiming to standardise access in 70pc of health centres across the country.

However, in a sector where professionals are often deterred by stigma and a lack of resources, Azeb Asaminew’s story stands out. Choosing to specialise in psychiatry, she faced scepticism from her peers. The clinical leader at Zewditu Hospital Psychiatry Department believes in integrating services into existing hospitals rather than constructing specialised ones.

Experts like Solomon Tefera (PhD) emphasised the urgency, noting the traumatic impact of conflicts and the rising tide of substance abuse like cocaine and LSD, insisting on its harmlessness. However, Solomon contested this view based on the growing number of patients he has treated.

“Conflicts lead to psychological trauma,” said the revered psychiatrist and the founder of Renascent Rehabilitation Center. “I see several young adults with drug-induced psychosis.”

However, as stories like Wondwossen’s show, there is “resilience” despite the despair, signalling hope for the future. Resilience is a term that has been thrown around for years, but in Ethiopia, its depth and resonance hold a unique texture.

Grassroots community movements are slowly taking shape. The Ethiopian diaspora, many of whom have had firsthand exposure to more established mental health facilities overseas, are now crucial in bridging knowledge gaps.

Religious leaders and traditional healers are now being engaged in dialogues about mental health. Recognising their influential position in the community, NGOs and international partners offer training to integrate their services with modern therapeutic methods, encouraging a harmonious blend of the old and new.

Mental Health Users Association was founded five years ago by five individuals who have suffered from mental health issues. One of the co-founders is Eleni Misganaw, who has battled bipolar personality disorder for most of her life. Funded by members and philanthropists, Eleni believes in creating meaningful engagement on the issue. She said they strive to provide peer support for people shying away from medication or any intervention by showing them they are not alone.

“We wanted to remove the stigma,” she told Fortune.

The journey, however, is not without its roadblocks. It is not just about building state-of-the-art hospitals or crafting well-researched policies, vital though they are. Ethiopia’s mental health renaissance lies in its communal spirit, shared stories, and the collective belief in a better tomorrow.

As dusk settled over Amanuel, there was an unmistakable sense of optimism in the air, a silent acknowledgement that change was on the horizon. Once shrouded in whispers and hushed conversations, mental health is slowly stepping into the spotlight. Amanuel may reveal a country on the brink – one teetering between historical baggage and the promise of a better tomorrow. However, patients like Wondwossen show a newfound determination in their eyes.

Ministry Slashes Subsidies as Global Fertiliser Price Slumps

Posted on by Tizita S.

Officials of the Ministry of Agriculture are poised to make a considerable reduction in fertiliser subsidies, potentially by over 50pc this year, in response to the shifting global fertiliser markets and evolving procurement protocols.

The officials’ plan, disclosed during a quarterly report released last week, signals an adjustment in subsidies from 1,560 Br for a quintal to 600 Br. The Minister of Agriculture, Girma Amentie (PhD), and his senior officials appeared before Parliament’s Agricultural Affairs Standing Committee, chaired by Solomon Lale.

The move authorities considered strategic arrived on the backdrop of significant reductions in global prices for primary fertiliser components such as urea, previously pegged at 497 dollars a ton. It has witnessed a price plummet by over half, and liquid nitrogen, selling at 536 dollars a ton, observed a decline of nearly 22pc.

Sofia Kassa (PhD), state minister for Agriculture, linked the revised subsidies to a two-pronged strategy: the early procurement of a voluminous 1.3 million tonnes and the implementation of an automated tracking system for each shipment. She stressed her government’s position in the global market.

“International markets dictate us,” she told Fortune. “We’re price takers, not setters.”

This decision’s backdrop also includes joint initiatives aiming to streamline and strengthen the integrity of the fertiliser supply chain. Joint ventures with Ethio telecom, the Ministry of Innovation & Technology, and the Information Network Security Administration (INSA) have been established, primarily to address concerns about the potential influx of fertilisers through unregulated avenues. Such an initiative, as emphasised by Minister Girma, could bring considerable savings for the government.

Last year, fertiliser subsidies amounted to a hefty 21 billion Br, compelling the federal government to allocate significant budgetary resources. The federal government spent 263.1 million dollars to buy fertiliser during the five months of 2022, a 134pc jump from the same period in the previous year.

“We hope to maintain prices while reducing the subsidised amount,” Sofia told Fortune, providing a window into the Ministry’s forward-thinking approach.

The authorities believe recent shifts in procurement procedures have borne fruit, with the Agricultural Works Corporation continuing to supervise the purchases. Improved market identification and timelines for procurement have been realised, following a substantive reshuffling of the board overseeing procurement. This is of particular significance, given the forex crunch, where supply-demand equilibrium was disrupted, with only half of the required 24 letters of credit opened by May, while it was late for the farming season.

However, with Sofia crediting the role of the revised procurement directive, which introduced a one-month international tendering process and laid down specific restrictions, there is optimism in the official corridor for a more streamlined procurement process.

“Efficient and timely procurement was essential,” she noted.

The state-owned Commercial Bank of Ethiopia (CBE) has opened five letters of credit for the current fiscal year.

Under Girma’s chairmanship, the procurement board, including senior officials such as Mamo Mehretu, central bank governor, Alemu Sime (PhD), minister of Transport & Logistics, Alemtsehay Pawlos, chief of Cabinet, Semereta Sewasew, state minister for Finance, and Abie Sano, president of the CBE appear determined to see the overall procurement process simplified.

Despite the subsidy realignment and procurement reforms, a recent report by Global Market Insight revealed the mounting demand for fertilisers, projecting a 2.3pc annual increase over the next eight years. While global demand shoots up, fertiliser use by Ethiopia’s farmers hovers around a modest 34kg for a hectare. The Oromia Regional State is home to 4.2 million farmers using fertilisers, 95pc channelled through cooperative unions.

Beriso Feyissa, deputy head of the Oromia Agricultural Bureau, drew attention to the current demand-supply disparity in the regional state. Fertiliser requirements are projected at 1.4 million tonnes, but the Ministry’s procurement inches a little over half this. To offset such disparities, the Ministry has advocated a strategic shift towards natural composting.

Close to 1.6pc of Ethiopia’s 15 million hectares of cultivated land has embraced this method. The federal authorities’ push toward alternative solutions, like composting, could indicate a commitment to sustainable and environmentally friendly farming practices.

“We’ve been substituting compost for fertiliser, not alternating it,” Beriso told Fortune.

For experts like Ketema Bekele (PhD), an agricultural economist with a 15-year tenure, the inherent limitations of natural compost have prolonged production time, with the need to gradually adapt arable land to chemical fertilisers. The transition could see a yield dip, at least in the short run.

“Farmers need to be made aware,” he said.

Yet, such responses, while seemingly sustainable, are not free from disorders.

The parallel market’s emergence, where a quintal of fertiliser was reportedly traded at 15,000 Br compared to the formal channels, which ranged around 4,200 Br, signified the crisis in managing price volatility and ensuring efficient distribution. Mismanagement in distribution was also acknowledged as a significant concern from the previous year, signalling the importance of tightening supply chain logistics.

An incident in Minjar-Shenkora Wereda in Amhara Regional State last season, where unidentified individuals impounded 1,300qtl of fertiliser, remains a sober reminder of the infrastructural limitations and security risks the industry faced.

Agricultural experts appear divided on the Ministry’s approach.

Ketema believes establishing fertiliser processing plants would present a more sustainable and long-term solution.

One crucial aspect the Ministry could navigate is the seasonal ebb and flow of fertiliser demand. According to people familiar with the industry, there is a spike during the Belg season, when wheat is predominantly farmed. This compels farmers’ unions to tap into the previous year’s reserves as they anticipate fresh procurement, a cycle that demands meticulous planning and forecasting.

In the words of Tesfaye Belayhun, a procurement expert at the Minjar-Shenkora Wereda, who witnessed firsthand the challenges of distribution and supply chain security, “We can’t say there is currently enough stock.”

It is a candid acknowledgement of the concerns ahead but also a call to action for the authorities. This year, the regional state’s Agriculture Bureau allotted farmers who primarily produce teff and wheat 1,000qtl for the current cultivation season despite demand being around eight-fold higher.

Floriculture Investors Navigate Oromia Region’s Murky Landholding Waters

Posted on by Tizita S.

For the past 15 years, horticulture farmers in the thriving towns have lived through a paradox – booming business with no solid footing on the land they operate upon. Investors have long navigated the convoluted maze of the land policy – or the lack of it – giving rise to a web of competing rights.

A missing piece in the puzzle is the absence of legislation which governs urban agriculture that would provide investors leasing plots the right to secure their holding. This has left them high and dry when it comes to essential business activities like securing tenders, expansion projects, accessing credit, or even simple license renewals.

Consider the 10 companies in horticulture farming nestled between Bishoftu (Debreziet) and Batu (Zeway), in Oromia Regional State. They saw their businesses blossom for over a decade and a half, leasing land predominantly through high-priced rent agreements and contracts from local farmers. Such arrangements seemed workable until the maturity time approached, and the original landholders had to be compensated-a process involving regional officials and investors.

Seven years ago, a clock began ticking in these agreements when the renewal rate came to the fore. While the ongoing rate was 25 Br for a square meter, officials argued that this was no longer tenable, suggesting an alignment with the residential rate of 470 Br. The investors found this proposal exorbitant. Seeking a middle ground, both parties agreed to peg the rate to an impending study’s results. But like many bureaucratic processes, the study has been slow to conclude.

Solomon Abebe, the deputy head of the Oromia Land Bureau, acknowledged the delay but stressed the necessity of “thoroughness,” especially given this is a pioneering effort. He is optimistic about the study’s outcomes, though.

“We believe the results will lay a credible foundation for the urban agricultural land lease system,” he told Fortune.

The delay, however, has its cost. Companies like Zeway Rose Plc, which sprawls over 42hct in Batu, have found their hands tied due to the policy vacuum. Incorporated in 2006 with a capital of 114 million Br, the majority owned by a Dutch family, Zeway Rose has had to put its ambitious expansion plans by an additional 100hct on the back burner. The company exports 100 million flower stems annually to international markets.

Says Ermias Solomon, the operational manager: “The lack of urban tenure security has inhibited our growth, preventing us from leveraging title deeds to secure finance for expansion.”

Such troubles are not unique to Zeway Rose. Six other flower farmers in Bishouftu and four in Batu share a similar experience. According to reports, these delays have given rise to myriad investment issues, which have persisted and may impact Ethiopia’s position as the fifth-largest flower producer globally. It earned over 600 million dollars from flower exports last year, claiming a minuscule 1.65pc of the global cut-flower turnover of 36.4 billion dollars in 2022. The Netherlands, Colombia, Ecuador, and Kenya are the largest exporters; the primary export destinations for Ethiopia include the Netherlands, Saudi Arabia, and the United Kingdom (UK).

The Ethiopian Horticulture Producers & Exporters Association has not been a silent spectator. Close to 70pc of the Association’s 126 members operate in the Oromia Regional State.

Tewodros Zewde, the Association’s general manager, expressed his concerns, pointing out the undue delays in the much-awaited study.

“While the government’s efforts to streamline urban farmland ownership are commendable, the protracted delays have curtailed the industry’s output potential,” he said in a letter he issued to the authorities.

As the World Bank discovered, sub-Saharan African countries have weak land property rights, leading to heightened disputes and high registration costs. According to agricultural economist Shimelis Araya (PhD), such ambiguities around land rights often deter private sector investments, restricting them from making significant advances into land or transferring it for productive use.

“Clear landholding rights inspire investor confidence, encouraging them to make valuable, long-term investments,” noted Shimelis.

Floriculture is an input-intensive business, where up to 90pc of expenditures are reported on raw materials imports. The United States and China are the major sourcing countries for raw materials.

The industry, predominantly focusing on roses, summer flowers, and cut flowers, has blossomed as a significant industry in Ethiopia, particularly in towns like Batu, Bishoftu, Holeta, and Sululta. Over 57,000 people find employment in this industry. It is a policy-induced sector in which the authorities often take pride in their keenness to woo foreign direct investment after 2009. However, the process was riddled with ambiguities.

The rising foreign investments, coupled with a booming population and economic growth, have escalated land values and the demand for communal lands.

However, recent initiatives indicate a shift.

Officials of the Ministry of Urban & Infrastructure appear to be leaning towards an integrated approach, focusing on land tenure regularisation and registration. Minister Chaltu Sani’s recent announcement, disclosing plans to recognise 25,000 land rights across various urban centres, may have come as positive news for the investors in the Oromia region. The implications of her announcement could be significant in a country where land disputes have long caused impediments to large-scale agricultural investment.

With 1,800hct under flower farming – the industry with 18pc average growth in the past five years – the move may give the required momentum to investors sitting on the fence.

Yet, the past offers a note of caution. Before 2009, despite an open-arm policy towards foreign direct investment, the unclear procedures to obtain land led to uncertainties. The need to attract foreign investments had to be balanced with the intrinsic duty to protect the rights and livelihoods of farmers.

Ermias Deneke, deputy head of the Oromia Investment Bureau, shed light on the intricacies of the permit process.

“It’s not just about land rights,” he recalled. “Our evaluations considered potential employment opportunities, returns on investment, and the likely revenue retention in the region.”

To date, the Bureau has granted 24,000 permits to investors, a figure that might see a sharp rise with more straightforward landholding laws.

But the road ahead is still not without its roughshod. As determining land rates based on the study moves forward, striking a balance between investor expectations and the policymakers’ vision remains crucial. However, for companies like Zeway Rose Plc and numerous others operating in uncertainty, the move, even if incremental, offers hope.

Capital Reforms Poised to Upend the Public Offerings Landscape

Posted on by Tizita S.

As Ethiopia gears up to launch functional capital markets, an impetus to regulate the informal issuance of shares has resulted in a fourth draft directive by the Ethiopian Capital Market Authority (ECMA) to govern the issuance of public offerings and trading securities.

Currently open to public consultation as it makes its way to approval by the board, the directive has put forth a transitional provision for existing public companies to register securities with the Authority within a year of the implementation.

A parallel project to establish the first securities exchange is going through a capital raise scheduled to proceed for at least the coming three months. The government owns 25pc shares while the rest is availed for the private sector.

At a small gathering at the Authority’s headquarters last week, senior staff comprised of Sirak Solomon, Solomon Bekele, and Assefa Sumoro laid out the implications of the new directives to existing and public share companies currently under formation.

Director General of the Authority, Brook Taye (PhD), opened the session with remarks on the importance of close and transparent communication to maintain the integrity of companies set to be traded. He recalled Wirecard, a payment behemoth in Germany that collapsed following an investigative piece in the Financial Times that exposed the country’s largest fraud in its post-Second World War era.

“Collaboration in protecting the public interest is crucial,” Brook noted.

The Director General recognised several share companies with over 350,000 shareholders have become thriving businesses even without a formal capital market framework in Ethiopia in what could be described as “impressive”.

“We will have to balance promoting participation and regulating it,” he underscored.

Consequently, the modalities for registration and the conditions for exemptions from issuing a prospectus were annotated.

According to Solomon, private placements such as less than 50 shareholders and government securities excluding state-owned enterprises and a few others will not be obligated to issue a prospectus.

He indicated that companies will have their registration rejected if any senior issuing group have been convicted of a crime involving fraud, breach of honour or trust and an offence involving dishonesty.

The discovery of companies with questionable finances and high-risk business structures upon registration at the Authority will likely be an uphill battle.

“It will be tough,” Solomon told Fortune.

One of the several conditions for approval of a company under formation is the requirement for a commitment of 10pc core investment, which Solomon noted brings a little “skin in the game”.

The senior legal advisor also noted that the Authority is responsible for protecting investors, mitigating systemic risk, developing and ensuring fairness and orderliness in the market.

He emphasised that advertisements to the public before the approval of a prospectus document are prohibited unless of a looming prospectus.

“All contents in an Ad need to be consistent with the prospectus,” he underscored.

Advertisements that suggest a rapid or guaranteed increase in profits and those containing misleading terms like ‘top offer’ or ‘superior offer’ will be absent under the pending reforms.

The directive set to be approved within a month has rigorous conditions for registering securities and issuing a prospectus, which Sirak noted will help weed out companies contrary to investor interest or the public in general.

Observers of the business landscape are looking forward to the varied implications of looming capital markets, further enthused by the improved access to finance.

Million Kibret, managing partner of BDO Ethiopia consulting, considers the transitional provisions under the proposed directive generous.

He believes large share companies should have already subscribed to most of the requirements while the International Financial Reporting Standards requirement should have been a no-brainer as previous regulations also clearly stated its necessity.

“Businesses relying on informality should prepare themselves,” he told Fortune.

The managing partner indicated that the ability to mobilise finance from financial markets will be a crucial factor in the competition between businesses, as those that fail to keep up will be left behind.

He noted the role of improved access to finance through venture capital investments to budding start-ups as instrumental in fueling a thriving entrepreneurial ecosystem. Although tax services by the authorities in the past few years have improved, Million suggests: “Further adoption of technology will be needed.”

Local Companies Reel In Maritime Bid

Posted on by Tizita S.

Companies interested in multimodal transportation have a rare opportunity that opened after the Ethiopian Maritime Authority decided to onboard capital and enhance logistics capabilities across the eight dry ports.

About 13 local companies have shown interest in the second bid, with notable names like the Ethiopian Railways Corporation, Maccfa Freight Logistics, Panafric Global and National Transport Plc making the list.

With only a month left, officials believe the move will allow private companies to share in the logistics business monopolised by state-owned Ethiopian Shipping & Logistics.

Yalew Tesfaye, CEO of the logistics administration at the Authority, indicates that extensive reforms have been tabled as part of a national strategy to improve Ethiopia’s trade potential by including multi-use logistics modalities.

He revealed that four operational licences will be given to the private sector over the coming five years, with capable companies providing a diverse alternative, hopefully resulting in private operators shipping containerised cargo.

While joint ventures between local and foreign investors are allowed, the selected companies are subject to a rigorous set of requirements, including a board of directors with a minimum of five years of experience. Companies are required to lease five hectares of land at the ports and have 30 trucks with the capacity to acquire 40 more with 400qtl carrying capacity.

Logistics companies recognise the lucrative business opportunity, although it is too early to comment on the arrangement.

Maccfa Freight Logistics has been operating in a joint venture with Siva Shipping & Transport for nearly three decades.

Although Board Chairman Mulugeta Assefa applauds the attempt after half-hearted efforts in the past 15 years, he believes the bid requirements are exaggerated and exclusionary to local companies.

“It’s unlikely that anyone makes the cut,” he told Fortune.

Maccfa has seven offices across the country and provides services through its own 15 trucks. While Mulugeta said they lease more when necessary he disclosed the company primarily relies on providing “soft skills” for its revenues.

Mulgueta indicates that multimodal transport will significantly help decrease waiting times and document authentication backlogs. However, he emphasised that the requirements need adjustment to factor in skills, network, knowledge and experience.

“This is what matters more,” he said.

The inclusion of multimodal transport into the logistics sector a decade ago has heralded improved timeliness and better tracking and tracing capabilities. At the same time, it has been dominated by the six-decade-old state-owned behemoth Ethiopian Shipping & Logistics which amassed 42.7 billion Br in revenues last year.

Communication Director Demsew Benti said the inclusion of the private sector will bring options for customers and compete for their company.

“We are already improving our organisational structure and expanding our transit corridor,” he said.

The Mojo dry port dominates the multimodal sector with 90pc of the market share at 100 million dollars of annual cargo. According to the 10-year strategy by the Ministry of Transport & Logistics, three others will be developed at Jimma, Hawassa and Asosa towns.

Poor existing infrastructure and lack of basic infrastructures, congestion of dry ports, inefficient freight vehicles, lengthy and inefficient custom clearance process, and lack of competition in multimodal transport service have long been a complaint of importers.

Israel Taye, general manager of Elay Trading Plc, said rising shipment costs and tedious customs procedures are consistent challenges for the company that has been importing laboratory, scientific and agricultural equipment for the past seven years.

He welcomes the inclusion of alternatives for his logistics needs as haphazard labelling of chemicals and the requirement to separate them into different containers is subject to sixfold increases in shipping costs.

“It will be good to have options,” he said.

As Ethiopia relies on Djibouti for 90pc of its imports logistics experts such as Matios Ensermu (PhD) who have long called for diversification in the sector welcomed the recent shift towards private sector involvement.

Matios observes the stride towards liberalisation is a positive step to make way for inland water transport and improved services at dry ports. The logistics expert underscored that investments will be required in expanding road infrastructures, amplifying the rail network and improving urban transport infrastructure.

“Most of the infrastructure has remained monopolised,” he said.

Matios did not shy away from mentioning the importance of restoring diplomatic relations with Eritrea to expand logistics operations. But he recommends the revitalisation of internal infrastructures be given priority.

“It all starts from the inside,” he told Fortune.

 

Editors’ Note: This article was updated from its original version on October 30, 2023.

City Officials Bet on Trading Enterprise as Pundits Warn Dubious Priority

Posted on by Tizita S.

In an ambitious attempt to grip the galloping inflation rates sweeping across commodity goods, the Addis Abeba City Administration is establishing a three billion Birr trading enterprise for the first time.

The two billion Birr paid-up capital was appropriated from the 144 billion Br budget of Addis Abeba for the year, according to officials who believe it will provide household commodities to middle and low-income residents by sourcing directly from plants and farmer cooperatives.

Mayor Adanech Abiebe is set to appoint a board to head the Enterprise following a regulation put forth by the Addis Abeba Trade Bureau two months ago that was approved by the City Cabinet.

Meles Tegenu, legal affairs head at the Bureau, indicated the current endeavour referenced experiences of the Ethiopian Trading Corporation and the Ethiopian Industrial Inputs Developments Enterprise (EIIDE) in bringing price stability.

“It is our duty to contain inflation,” he told Fortune.

While board approval is pending, head of Trade Bureau Biniam Mikru told Fortune the enterprise will hold a profit margin to maintain consistent supply while the finance and trade bureaus will supervise all its activities.

“We are designing the structure,” he told Fortune.

The Enterprise will mobilise funds by selling bonds and obtaining loans through the City Cabinet to find means of sourcing finance autonomously.

For Atlaw Alemu (Prof), an economist and researcher at Addis Abeba University, it is a matter of cart before the horse as a more ‘practical’ set is necessary for battling inflation instead of forming a trading enterprise.

He recommends tight fiscal and monetary policies to reduce the price surge across consumer goods.

“They are missing the priorities of inflation management,” the economist told Fortune.

The National Bank of Ethiopia launched an inflation-targeting monetary policy in August that capped credit growth and direct advances to the central government. However, the price of household items has only seen an upward trajectory.

Consumer associations supply sugar, edible oil, eggs and the occasional chicken during holidays. The intermittent supply has remained a source of frustration for consumers.

Management at the Addis Abeba Consumer Association believes the budding Enterprise will provide an alternative source once it becomes fully operational.

Gebretenasi Kassu, manager of the Berhan Consumers Association located in Kolfe Qeranyo District acknowledges the inconsistency of sugar supply which saw a decline from 869qtl to 240qtl in the past year. He recalls Wereda eight, which has 40,000 residents, is currently piloting a digital system to address the inconsistency of supply.

Meanwhile, he is looking forward to the Enterprise to complement their services.

The Head of the 4,000-member Association revealed that they source their goods from unions and maintain a profit margin to cover operating costs. They profit 100 Br from every quintal of Teff and two Birr from each kilogram of sugar.

“We pay salaries with the profit,” said Gebretensai.

Residents on the lower economic curve weigh in.

“Anything that will get prices down,” said Alemnesh Mohammed. The widow and breadwinner for a family of four barely uses edible oil and sugar in her diet while she struggles to spread the 3,000 Br on commodities from the consumer association near her.

She longs to get subsidised prices on other commodities as well.

The price of Teff had witnessed a surge of at least 25pc after the outburst of conflict in the Amhara Regional State which produces up to 40pc of the national supply. Consequently, Alemnesh had to settle for daily loaves of bread and pieces of Injera depending on her income through washing clothes and cleaning homes.

“Each day is a struggle,” she told Fortune.

Authority Tightens Grip on Addis Abeba Outdoor Advertising

Posted on by Tizita S.

Addis Abeba City officials have taken it upon themselves to implement the year-long directive banning outdoor advertisement of alcohol along with weapons and explicit graphics while a permit from the Addis Abeba Construction Permit & Control Authority is required to put up any billboards and walls on public spaces.

Signed off by the previous head of the Authority Sitotaw Akele, the directive seeks to monitor Addis Abeba’s visual landscape and control illegal advertisements, paintings and posters.

The new batch of reforms introduces zonal aesthetic standards compatible with city landmarks and infrastructure developments while entailing fees for damages and the cost of removal for advertisements posted without obtaining permits.

“They have to measure up to the city’s aesthetics,” said Addisu Melese, outdoor advertising director at the Authority.

He remarked that the un-coordination of efforts between different bureaus had made the implementation lag behind. Addisu revealed that around 10 advertising agents have acquired permits from the Authority so far, while he indicated that several stakeholders need to participate to enable proper control.

“It is becoming difficult to monitor every site on our own,” he underscored. He said the new directive expects transport, tourism and beautification bureaus to uphold some degree of oversight over public advertisements.

Addisu believes several public spaces have been stormed with “unethical” images plastered in highly visible spaces while bringing down the capita’s appeal.

Under the new reforms, outdoor art and advertisements displayed without approval from the Authority will be in direct violation of the law. Permits will be given through floated bids for main roads and roundabouts or through allotments for parks and railway ridges owned by the City Administration.

Abiy Ahmed’s (PhD) Administration has been eyeing tourism as one of the major sectors in recent years as it has ramped up efforts to beautify the capital by building new attractions like museums and parks while demolishing shops made of tents under the guise of substandard aesthetics.

Senior Expert at the Addis Abeba Tourism Bureau, Memher Mekbeb, indicated that most advertisements had not taken the aesthetics of neighbouring structures or zonal standards into account.

He argues that advertisers should manage their competitive urges to outshine one another. While they are marking features of the urban landscape, Memher suggests visual contours of the city should be considered.

“The sizes are getting larger while colours are bolder,”  he told Fortune.

The Urban Beautification & Green Development Bureau has received a 1.4 billion Br budget for the year. Its officials embarked on the spirited adventure two months into the fiscal year, removing 1,000 advertisements.

Almaz Kebede, head of the urban beautification development monitoring directorate, insisted that advertisements need to meet the Green Development Goal of the government amidst the expansion of the urban population size.

“We are removing ads that clash with the green spaces,” she said.

There are over 300 advertising agents licensed to operate in the capital by the Addis Abeba Trade Bureau, with most having expressed confusion over the regulatory framework for public ads in the past.

Esayas Gashaw, vice president of the Ethiopian Advertisement Association with 150 members, welcomes formalising procedures for public advertisements. The manager of Esayas Advertising with a yearly coverage of 4,000sqm applauds the current orientation to changing the landscape.

“It has no structure,” he told Fortune, recalling his confusion on where to go to obtain permits or who the responsible authorities were.

“Nobody took responsibility,” he said.

Conversely, the general manager of decade-old Berry Advertising, Melaku Beharu, points to the possible adverse outcomes of the new procedures as it could serve as a new bottleneck in a struggling industry.

Melaku has worked on promoting several brewery companies like Dashen Beer but has shifted towards less strict industries like banking and real estate over the past few years. “More than a dozen brewery advertisers have left the business,” he told Fortune in a defeated tone.

While Melaku welcomes the creation of proper channels to obtain permits, he fears that even more advertisers will be pushed out of the business. He lamented that the government has failed to consider the role of street art in creating visually vibrant urban landscapes.

“It will crumple creativity if not kill it,” he said.

Legal professionals point out that the absence of a proper regulatory framework has allowed unlicensed and illegal actors to operate in the sector.

Samuel Girma, a corporate lawyer, affirms it is within the Authority’s mandate to regulate public spaces flooded by invasive images and advertisements. He emphasised that the lack of regulation had resulted in a chaotic and random atmosphere.

Samuel observes lack of coordination between several government bureaus has historically impeded regulating the urban advertisement landscape. He recommends increasing the manpower of the City Administration and improving integration between responsible bureaus to handle the problem in the long run.

Why the World Not as Bleak as the Headlines Suggest

Posted on by Tizita S.

It is easy to believe that the world is falling apart while watching the news. Climate change, political division, coups d’état, the global pandemic, Russia’s ruthless war on Ukraine, Hamas’ unjustifiable killings, and the Middle East careering toward widespread violence.

Before panicking, it may be worth stepping back to get some perspective.

Media-driven fear demoralises us – particularly when young – and engenders terrible political decisions by crippling our ability to do better. War is endlessly and eternally horrific. It is understandable and even necessary that the media spotlights today’s conflicts. But this can make us believe that we are living through unprecedented violence. Russia’s war meant that battle deaths last year reached a high for this century; but, they are still very low historically. Last year, 3.5 in 100,000 people died as a consequence of war, below even the 1980s and far below the 20th-century average of 30 per 100,000.

The world has, in fact, become much more peaceful.

This is little consolation to those living amidst the world’s conflicts. But the data speaks to the problem with the constant barrage of contextless catastrophe and doom. Media content analysis across 130 countries from 1970 to 2010 indicates that the emotional tone has dramatically and consistently become more negative. Negativity sells, but it informs badly.

The same pattern characterises climate change reporting. A pervasive and false apocalyptic narrative draws together every adverse event – almost entirely ignoring the bigger picture. For example, fires have been highlighted in recent months without indication that the annual burned global area has been declining for decades, reaching the lowest ever last year. Likewise, deaths from droughts and floods make headlines, but we don’t hear that deaths from such climate-related disasters have declined 50-fold over the past century.

The data show what we all know: The world has improved dramatically. Life expectancy has more than doubled since 1900. Two centuries ago, almost everyone was illiterate. Now, almost everyone can read. In 1820, nearly 90pc of people lived in extreme poverty. Now it is less than 10pc. Indoor air pollution has declined dramatically, and its outdoor equivalent has also done so in rich countries. If we could choose when to be born, having all the facts at hand, few would choose any time before today.

Ethical and responsible conduct, trust, well-functioning markets, the rule of law, scientific innovation and political stability have driven this incontrovertible progress. We have to recognise, appreciate and proclaim the value and comparative rarity of each of these.

The constant barrage of negative stories may lead us to imagine that our forward progress is about to end. However, the evidence at hand does not support this conclusion. The latest UN Climate Panel scenarios indicate that the average person will be 4.5 times richer by the end of the century than today. Climate change will merely slow progress, such that the average person will be ‘only’ 4.34 times as rich – by no means the end of the world.

Yet, fear pushes many to demand an inefficient diversion of hundreds of trillions of dollars to steer the global economy abruptly towards zero carbon emissions.

We must foster an environment that challenges fearmongering and promotes optimistic yet critical thinking and constructive discussion about the future. We hope that our new Alliances for Responsible Citizenship (ARC), which will host its first international conference in London this week, will be of aid in this regard, bringing people of goodwill and good sense together from around the world to formulate and communicate a positive vision of the future.

To drive progress for the world’s poorest, we should similarly focus on efficient, well-documented policies with enormous benefits. Working with more than a hundred of the world’s top economists, one of us has helped identify the best solutions to many of the world’s most insidious problems, including essential tuberculosis treatment that will save a million people a year, land tenure reform that lets poorer people reap the benefits, and education technology that can deliver three-times better learning outcomes.

These policies do not make for catchy headlines, but they can do immense good: for a cost of 35 billion dollars annually, they would save an astounding 4.2 million lives and make the poorer half of the world 1.1 trillion dollars richer every year.

If we stop being fear-driven and instead look at the data and the bigger picture, we can see that the world is better than it was and is likely to get better. We have a responsibility to adopt the very best policies to move ahead.

The Phantom Menace of Online Fraud

Posted on by Tizita S.

I recently experienced a double payment fiasco due to a banking system glitch.

I paid for a domestic repair service through a mobile bank transfer which was indicated as a failed transaction. After I repeated the attempt, it was confirmed successful.

The error went unnoticed until I chanced upon a discrepancy in my account statement. Meanwhile, the recipient, who used a hard copy bank account book and rarely visited the bank, remained unaware of the double payment.

Luckily, the person was willing to check and reimburse me. But this may not always be the case.

The problem of online banking glitches and network issues is pervasive, causing significant inconvenience and financial losses for customers. Despite being mandated to provide reliable virtual services, banks and telecom service providers often fall short, forcing customers to navigate a bureaucratic labyrinth to reclaim their lost funds.

The onus is on the customer to prove beyond a reasonable doubt that they are entitled to a refund, even if the glitch was clearly not their fault. This can be daunting, especially considering the endless formalities involved.

The issues related to ATM services are no less dire, if not worse.

The odds of finding a working ATM are unpredictable, with long queues defeating their purpose of saving time waiting in line at bank counters. It can sometimes be faster to receive service from the counter than to search for a working machine. Even during the weekend and evening hours, I brace myself for the bank security guards to inform me verbally or gesturally that it does not work.

It is perplexing why most banks settle for mediocre machines for their valued customers after spending significant hard currency on procurement and installation costs.

I worry that as the payment transaction is increasingly transforming to digital, the capacity to regulate glitches and fraud has not kept up.

While I acknowledge the convenience, particularly at petrol stations, I maintain that cash should remain a viable option. It is somewhat unsettling to be forced into something without being given the option to choose.

The debate over cash has been going on for several years in Austria as the country lagged behind other European countries on digital payments, with people clinging to coins and bills, particularly for everyday items. However, the crux of the argument for the “Right to Cash” emanates from the need to keep transactional anonymity and entitlement to privacy.

Legislation is in the pipeline to make paying in cash a constitutional right for Austrians. Austrian Chancellor Karl Nehammer was quoted in an article published in Politico Magazine indicating that people are increasingly worried that cash would be restricted.

Availing of online banking and its associated services without affording a robust and foolproof glitch-free and secure system creates a quagmire where the service receivers take the brunt of risks and inconveniences.

Another concern is the creeping issue of online fraud that seems to sweep like a Tsunami on a global scale. Online banking transactions are the major platforms in which an army of hackers and fraudsters use their knowledge and access to stripe unsuspecting victims of their hard-earned cash.

While people are concerned with visible robbers and pickpockets in the street who are out for a much smaller amount in their wallet or purse, white-collar crimes lurk unseen in the background.

But even with fraud cases, it is quite ironic that customers are held accountable for neglecting due diligence.

A friend’s experience with online fraud is a cautionary tale of how easily even the most savvy individuals can be deceived. The fraudster manipulated her through a carefully crafted ruse that coincided with a legitimate shipment she was expecting.

The seemingly benign text message requesting her to transfer funds to a local bank account, justified under the guise of covering unforeseen expenses, was a classic ploy to exploit her sense of altruism and urgency.

The process was time-consuming and frustrating, with slim chances of success and no positive outcome to date. The legal and financial complexities of the situation, along with the cheater’s anonymity and lack of accountability, left her with limited recourse.

Despite the overwhelming evidence, her attempts to retrieve the funds were met with significant challenges.

She had willingly transferred her money to another person, which technically meant she no longer owned the cash, and the account belonged to someone else who was the only one authorised to transfer funds.

Although she made numerous applications that even involved law enforcement to verify the fraud, no one was held accountable for the crime, and the retrieval claim became complicated since the culprit had used a fake identity.

Such experiences echo the systemic vulnerabilities that can enable online fraudsters to prey on innocent victims, leaving them with devastating consequences.

While the digital age offers many benefits, it also raises concerns about privacy and anonymity.

If someone makes a payment for a medical service they want to keep private, the fact that someone else can view this information can be unsettling. Similarly, people may not want their spending habits for shopping, entertainment, or dining to be known to strangers with access to their financial data.

The digital footprint we leave behind can reveal our spending habits, whereabouts, and corresponding times. Others can use this information to target us with personalised advertising or even to commit fraud.

Online fraudsters are technological savants, often surpassing their victims and in some cases insider collaborators with intimate knowledge of the systems they exploit, hampering safeguarding efforts and complicating matters by disappearing leads and covering their tracks.

In our society, awareness and technical know-how of online fraud lag far behind the realities of the world. We are still in a benign era where transactions predominantly occur in hard cash and end with a face-to-face handshake, but a rude awakening is coming soon.

We are woefully unprepared for the onslaught of online threats, which spare no one and can cause irreversible damage. The rate at which we digitise outpaces our digital awareness and preparedness rate.

The reality is that a myriad of people still have difficulty using smartphones, let alone taking precautions against online fraud. We need to do more to educate the public about online fraud, for forewarned is forearmed.

System security, tracking of suspicious virtual activity and recovery assistance for victims are paramount.

Investing in robust cybersecurity measures and continuously updating systems to stay competitive can ensure the security and trust that customers expect. Failure to do so could result in a significant loss of market share and relevance in the ever-evolving financial landscape.

Unimaginative, Policymakers Brew Billion Dollars Deficit

Posted on by Tizita S.

Ethiopia confronts an intriguing paradox in foreign currency generation policy. It witnessed a sobering 3.2 billion dollar trade deficit in the opening quarter of 2023, a trend no exception for over a decade. Its export potential in primary goods was considered immense, yet it barely scratches the surface of its international trade aspirations, mainly serving domestic consumption.

The populace, approximately 70pc, leans heavily on agriculture for substance, making it the cornerstone of the country’s economic structure. Contributing a significant 34pc to its GDP, this sector beams with potential. The aromatic beans of coffee, the prized export, remain an essential source of foreign currency. A recent study commissioned by USAID revealed an estimated 8.27 million bags of 60Kg were produced, registering a modest growth of 0.2pc year-over-year (YoY).

Globally revered as a staple for productivity, coffee is second only to oil in the trading hierarchy. Birthed in the Ethiopian highlands, coffee and diverse bean varieties like Green Mung Beans and Sesame seeds are central in global trade circles. Yet, challenges abound.

The Ethiopian export mechanism appears to be in a stranglehold of dilemma, leading to a perpetually deepening trade chasm. A laser focus on ramping up foreign currency seems to overshadow other pressing matters.

The National Bank of Ethiopia (NBE) has thrown a series of directives into the mix, with its authorities hoping to recalibrate the foreign currency equilibrium. A quintessential example is the recent directive, where the central bank tweaked the foreign currency usage. Exporters can retain 50pc of forex earnings, a ratio improved from the 30pc imposed much of last year.

The aftermath witnessed a flurry of activities. Exporters offloaded goods in the export market at rock-bottom prices, pinning hopes on future gains through imports. A new cohort thronged the licensing bureaus, causing a surge in coffee exporters. The ripple effect was noticeable – while local coffee prices skyrocketed, the global market declined.

The banking industry, fully aware of the risks tied to the export domain, seems fixated on foreign currency earnings, often at the cost of prudent decision-making. Massive loans, constantly running into billions, are earmarked for the export sector. The unintended consequence is diversion and misappropriation, exacerbating the crisis.

While the coffee export landscape struggles with its inherent limitation, policymakers at the federal government have loftily set their sights on a two-billion-dollar export ambition set for 2022/23.

However, this may be a bridge too far, given the current global prices for coffee. Several factors hobble the coffee momentum – the absence of improved seeds, disease outbreaks and sub-optimal post-harvest practices, and above all, coffee’s uncontrolled local market price. Climate anomalies, in particular, have been a thorn in the side of coffee growers. As erratic rain patterns cause devastation, many farmers are veering towards khat cultivation, lured by its short-term economic perks, albeit with long-term environmental and public health repercussions.

Despite such an intricate backdrop, there is a conspicuous absence of a cohesive long-term vision from policymakers. Their playbook seems overwhelmingly centred on beefing up foreign currency coffers. Regulators at the Coffee & Tea Authority, in partnership with those at the Central Bank, rolled out the “Export Coffee Contract Administration” in early 2020, anchoring a minimum contract entry price. Add to this a directive issued in the same year, clamping down on coffee stockpiling. A relentless chase for foreign currency, often at the expense of durable sectoral growth, becomes the order of the day.

Policymakers are in a reactive mode, constantly responding to foreign currency riddles. The pressing need of the hour should be a paradigm shift – from quick fixes to a comprehensive and long-term strategy. The domestic economy is an inflexion point. The export sector can be a beacon for the broader economy. Policymakers are unlikely to chart a path of economic triumph short of sustainable growth blueprints, encouraging innovation, and promoting collaboration.