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Author: Web Master

SINO SANDWICH

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A multiple-vehicle traffic accident around “Temenja Yazh,” on A1 St, formerly Debre Zeit St, damages railway infrastructure alongside two cars and two dump trucks. Officially named the China National Heavy Duty Truck Group Co., Ltd. (CNHTC), the ubiquitous red trucks are commonly known as Sinotruk. Headquartered in Shandong province, the major Chinese state-owned truck manufacturer produced its first heavy-duty truck in 1960. While Sinotruk trucks are widely used in Ethiopia and generally considered reliable, there have been concerns raised about their safety record, particularly regarding brake systems with some studies suggesting that brake failures have contributed to accidents involving Sinotruk trucks, though driver behavior and road conditions also contribute.

Digital Heights for Coop Bank, Profits Dip

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The Cooperative Bank of Oromia (CBO) announced that a total transaction volume of 1.36 trillion Br was made through 489.5 million transactions on its digital platform, Coopay E-Birr. Fuel payment transactions alone reached 1.15 billion Br across 105,500 transactions. The platform added 8,959 agents, 32,840 merchants, and 3.85 million new subscribers in the year.

However, at 2.51 billion Br, the Bank’s gross profit before tax declined by 26pc from last year’s 3.39 billion Br.

Board Chairman Fikru Deksisa (PhD) described the year as a year of innovation, citing the platform’s growth as a high example. The Bank looks to stay in the forefront of digital innovation with the introduction of DX Valley 2.0, an incubation hub focused on nurturing start-ups and developing advanced digital solutions through mentorship, digital infrastructure, and key resources.

In addition to its digital advances, CBO achieved a substantial increase in deposits, rising by 903 million Br to reach 117.15 billion Br. The Bank disbursed 2.3 billion Br in new loans, bringing its total loan portfolio to 99.40 billion Br. Total revenue reached 19.03 billion Br, reflecting a 7.5pc growth from the previous year, while total expenses rose by a moderate 15.35pc to 16.52 billion Br.

Despite industry-wide obstacles in export earnings and limited access to foreign exchange, CBO earned 258.35 million dollars in forex inflows. The Bank’s deposit growth included the addition of 2.21 million new accounts, raising the total to 13.34 million, a notable 19.6pc increase. During the year, CBO opened 20 new branches, increasing its total to 758 branches.

AI-Powered, Sharia-compliant Digital Financing for MSMEs, Consumers Debuts

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ZamZam Bank, in partnership with Kifiya Financial Technology, has launched a Sharia-compliant digital financing service, “Ansar Digital Financing”. The service, which the Bank asserts is Ethiopia’s first, aims to transform access to financial services for micro, small, and medium enterprises (MSMEs), particularly women and informal sector workers. The announcement was made during a formal launch event held at the Haile Grand Hotel last week.

Melika Bedri, president of ZamZam Bank, stated that Ansar represents a milestone towards an inclusive and ethical financial ecosystem while Hayat Abdulmalik, deputy CEO of Kifiya Financial Technologies, added that the service is a paradigm shift as it harnesses AI and alternative data to serve under-served communities.

The service integrates artificial intelligence and alternative data to deliver a fully digital access to Sharia-compliant financing, eliminating collateral requirements and simplifying the application process.

Customers would also be able to access financing and make purchases from their preferred vendors through Halalgebeya, a Sharia-compliant e-commerce service, which is connected to Ansar. The latter will begin with different financing product offerings ranging from 2,000 Br to 100,000 Br and will be available to all account holders.

Local, International Firms Cooperate to Bridge Skill Mismatch

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In a bid to address the pervasive skill mismatch, Geez Education & Training Plc (GET) has allied with International financial and management institutions to bridge the gap.

Three international institutions, the Global Academy of Finance & Management (GAFM), the American Academy of Project Management (AAPM), and California State University, Dominguez Hills (CSUDH), have entered into a cooperation with GET at an event held last week at Skylight Hotel. Officials believe the move will contribute to human resource capacity and address critical skill gaps in the finance, management, and STEM sectors.

The agreement will provide access to over 275 globally recognized courses in fields such as finance, data science, and cybersecurity with degree programs tailored to stock exchange and finance programs.

With a population of approximately 120 million people, Ethiopia faces substantial obstacles in creating decent job opportunities. Despite experiencing decent annual economic growth, the country has struggled to match this progress with job creation, according to an International Growth Centre (IGC) report. Unemployment rates, particularly among women and youth, remain high, with nearly a quarter of young people and a third of young women in urban areas unemployed.

BYD Launches with Vehicle, Battery Warranty

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Moenco, the official distributor of BYD in Ethiopia officially launched its showroom offering a six-year or 150,000km vehicle warranty and an eight-year battery warranty. Located around Megenagna, Moenco launched a variety of electric and hybrid vehicles alongside maintenance services by BYD-trained technicians and spare parts supply.

Ramy Yao, BYD Africa Sales Director, stated that Ethiopia’s electrification goals and Moenco’s expertise align perfectly with BYD’s vision for electric mobility leadership in the country.

Inchcape Africa’s, the parent company of Moenco, Managing Director, Francis Agbonlahor added that his company has entered into a strategic brand partnership with BYD with the new showroom. Inchcape’s partnership with BYD extends to Belgium and Luxembourg, Estonia, and Singapore, making this their fourth agreement.

Local Vaccine Production Secures Feasibility Study

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A Memorandum of Understanding (MoU) was signed between the Ministry of Health and Tech Invention Lifecare, an Indian company, to conduct a feasibility study for vaccine production in Ethiopia. Minister of Health Mekdes Daba (MD) asserted that producing vaccines locally is a key priority for ensuring the health of the population and for pandemic preparedness. She stated that the MoU signifies a major step for Ethiopia to produce vaccines locally.

Mekdes also noted Ethiopia’s aim to not only meet international vaccine quality standards but also to supply vaccines to Africa and other countries, going beyond domestic consumption. She pointed to preparations which are underway to begin construction and manufacturing in the coming months.

Tech Invention Lifecare will conduct the consultation and design study. Seid S. Ahmed, director and CEO of the company, stated confidence that Ethiopia would soon become a vaccine-producing country while committing to work closely with the Ministry’s technical team. The biotechnology company based in Mumbai, India specializes in the development and manufacturing of vaccines, diagnostics, and biotherapeutics.

Amigos Saving & Credit Climbs Profit Heights, Aims for Expansion

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Amigos Saving & Credit Cooperative Society Ltd. took in 145 million Br in net profit during the last fiscal year, with an increase of 112pc from the preceding year. Its revenue also soared to 306 million Br, an increase of 164pc.

Total assets grew by 123pc to reach 1.91 billion Br while it managed to disburse five billion Birr in loans, a surge of one billion Birr. Executives of Amigos presented the financial statement report at their 11th general assembly held at Interluxury Hotel on Tito St last week.

Dawit W.Michael, board chairman, noted that notable performances have been registered with the Society expanding its capital base and loan portfolio through different financing strategies.

Incorporated in 2013, the Society began its business in Arada district, expanding its wings thereafter to different regional states. The institution plans to double the number of branches to 10 in the fiscal year.

Shiferaw Shigute, commissioner of the Ethiopian Cooperative Commission, acknowledged cooperatives’ contribution to the financial landscape. However, limited capital capacity, leadership problems, and policy gaps remain persistent challenges. He urged cooperatives to expand their financial services and modernise their services through technology and good governance.

Editor’s Note: This article was updated from its original form on December 31, 2024.

Authorities Suspend Property, Title Transfers in Six Districts

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Addis Abeba has suspended property and title transfers in selected subdistricts across six districts to address land ownership issues and implement a modern cadastre system, according to the city’s Landholding Registration & Information Agency.

The agency told Fortune that the ongoing landholding registration and certification process will focus on specific subdistricts in Yeka, Lemi Kura, Aqaqi Qaliti, Nefas Silk Lafto, Bole, and Kolfe Keranio districts over the next five months.

Property transfers in these areas will remain suspended until the end of April 2025. The Agency announced that landowners can submit applications for ownership certification from December 29, 2024, for a 10-day period.

According to the agency, 54pc of Addis Abeba’s total area has undergone landholding certification, with efforts underway to finish registration in 136 subdistricts by the end of the fiscal year.

Banks Scramble to Reopen After Harer City Shuts Over Forty Branches

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The Harer city administration has shut down 43 bank branches, including those of Commercial Bank of Ethiopia (CBE), Awash, Dashen, Zemen, and Berhan banks. The city administration attributed the closure to safety risks as the branches were operating in unfinished buildings.

However, bank executives state the closure stemmed from the fact that banks refused to make corridor development contributions demanded by the city government.

The closures, which began on December 13, targeted 15 banks operating in the city. As of December 21, at least 43 branches have been shut down. The Ethiopian Bankers’ Association (EBA) claims the action followed the city administration’s request for two million Birr per branch to support local corridor development projects. Banks that delayed payments faced immediate shutdowns, according to EBA.

“This is completely against banking law,” said Demissew Kassa, secretary general of the EBA. “Closing branches without warning disrupts financial services and violates regulatory procedures.”

Berhan Bank had two branches shut down, leaving 15 employees without work. The Bank’s president Ermias Tefera said the closures were unjustified, as the bank had permission to operate in two of the buildings cited as unfinished. “We weren’t given time to make decisions through the board,” he stated.

Gadaa Bank also reported branch closure, with president Wolde Bulto insisting that development contributions should not be forced. Banks should not be obliged to commit contributions, he argues.

The action has sparked uproar among bankers. The Ethiopian Bankers’ Association (EBA), led by Abie Sano, who also heads the CBE, has appealed to the NBE, the Ministry of Finance, and Harer Regional State President Ordin Bedri for a solution.

The National Bank of Ethiopia (NBE) is now stepping in. “We will take action to reopen the branches,” said Frezer Ayalew, head of banking supervision at NBE. He argued that only NBE is mandated to shut down branches and authorize branch operations. “The city administration has no legal basis to take such actions,” he said. “Opening and closing branches is only within the authority of the National Bank.”

The NBE is currently assessing what actions they can take in response.

The regional state’s Bureau of Finance & Economic Cooperation recently requested banks for financial support for corridor development projects in the city with contributions of two million Birr per branch. Shortly, the bank branches in Harer began to be shut down by the Urban Development & Construction Bureau and  Investment Office.

Demissew stated that the closure will have impacts as the branches make daily transactions of hundreds of millions of Birr. “This is completely against the banking business law,” he argued. The recently ratified banking business law grants only the NBE the authoritative power to close, open, and relocate branches.

The Association stated only bank branches have been targeted for closure, while other businesses in the same buildings remain open.

Worku Lemma, a financial consultant, says that corporate entities have faced persistent pressure to make contributions. He recommends banks balance their corporate social responsibility (CSR) initiatives with their financial obligations.

“They should not be forced to make contributions,” he said, stressing the potential for overburdening banks, which could lead to decreased profits, reduced dividends, and this in return could impede growth.

The closure of branches means banks could not mobilize deposits from the region, and forex dealings have stopped.

The incident followed a recent request by the Ministry of Finance (MoF) for financial institutions to support corridor developments. Four months ago, Eyob Tekalign (PhD), a state minister for Finance, called on banks to support projects in four zones in Wollega. The development projects are a part of Prime Minister Abiy Ahmed’s (PhD) second phase of the corridor development initiative.

Financial institutions have often been called upon to support national initiatives. They have been required to engage in CSR activities in war-affected areas. In December 2020, banks contributed nearly 200 million Br through the EBA, just a month into the civil war in northern Ethiopia. They were also required to donate over 800 million Br to the Ethiopian National Defence Forces (ENDF), with half of that amount coming from the state-owned CBE.

Henok Muluneh, the city’s communications head at Harer city administration denies the closures were related to contributions. He stated that the measures were taken against building owners and renters occupying semi-finished buildings, which pose safety risks.

However, experts disagree. Abebe Dinku (Prof), a civil engineer, says that the recently ratified building proclamation allows semi-finished buildings to be occupied if there is no ongoing construction. Occupants will need to vacate should construction restart.

 

 

Tax Bureau’s Salary Standard Triggers Dispute Over Hidden Minimum Wage

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The Addis Abeba Revenue Bureau’s new salary standards for tax purposes have caused backlash from manufactures, service providers, and industry leaders. Businesses opposed the move stating the decision enforces a hidden minimum wage.

The Bureau set salary ranges for employees across five sectors including the hospitality and manufacturing industries. The Bureau says that it conducted a study regarding the average wages of employees in five sectors to set the recent salary standards.

Mohammed Abdurahman, deputy head of the Bureau in charge of modernization, signed off on the wage standard for employees’ income tax calculation.

However, employers say the salary standard amounts to indirect wage control.

The Ethiopian Textile & Garment Manufacturers Association (ETGAMA), representing 200 manufacturers, criticized the Bureau for mandating a 5,000 Br minimum wage for employees. ETGAMA called the action which was taken without amendments to the labor law illegal. ETGAMA wrote a letter to the Industry, Finance, and Revenues ministries arguing that the directive bypasses legal processes and jeopardizes industries relying on productivity-based pay mechanisms.

Goshu Negash, president of the Association and owner of Vitcon Plc, stated that there are employees earning below and above the set ranges. Some manufacturers have refused to pay because of the “absurdity of the rule”, according to him. He argues the salary standard will weaken the competitiveness of garment manufacturers.

He stated he has no knowledge of the study the Bureau claims to have been conducted across industries.

The Bureau set the minimum salary in the hospitality industry at 2,000 Br, and 18,000 Br, the highest for managerial positions. The standard also specifies the expected number of employees for each type of establishment.

“The standard was set without our consultation and we were caught by surprise,” said Feteh Woldesenbet (PhD), president of the Ethiopian Hotels & Related Service Providers Employers’ Association. He argued that the standard is not applicable and will discourage new businesses because the new regulation demands businesses to have a high number of employees.

He fears the Bureau will force businesses to pay income taxes of non-existent employees as the standard sets an average headcount in specific industries.

The Bureau insists the new standard is not minimum wage but a mechanism to combat tax evasion, citing falsified salary declarations from businesses. “Senior staff being paid 800 Br or 2,000 Br is simply not true,” said Sewenet Ayele, head of communications at the Bureau.

He says that his office found out many businesses under-reporting the salaries of their employees to evade tax obligations. Sewnet says the new standards intend to ensure a fair tax system.

He says businesses can put in complaints to the Bureau for corrections if the number of employees and their salaries fall outside of set ranges.

The Federal Tax Administration Proclamation empowers tax authorities to conduct price studies on taxpayers, which can be used to assess taxes and identify tax concealment.

Sewnet stated that some restaurants pay butchers 30,000 Br to 40,000 Br but under-report it as 1,000 Br to 2,000 Br.

Sewenet also disclosed that the Bureau is planning to implement minimum thresholds for rentals and other employee tax filings outside of the hospitality and garment industry. They have begun estimating the value of rented houses based on their location and market value to ensure correct tax application.

The Bureau’s study indicates that 64pc of the approximate total of 123,000 Category A and B taxpayers either do not pay any payroll tax or under-report it. The study also revealed that 44pc of private limited company employees were reported to not be paying any payroll tax, with businesses claiming that they did not have any employees. This directive does not include Category C employers and employees, who have an annual gross profit of less than 500,000 Br.

Ayalew Ahmed, communication head of the Confederation of Ethiopian Trade Unions (CETU), believes that the standard indirectly sets minimum wage rates, even though the Bureau denies it. “The set wages are still not sufficient for employees to earn livelihoods,” he said.

The Bureau targets to collect 230.4 billion Br from taxes in the 2024/25 fiscal year. It has collected 75.42 billion Br in the first five months.

Sewenet disclosed that the wage standards will be applied in all industries beginning next month.

Yohannes Woldegebriel, director of the Addis Ababa Chamber of Commerce & Sectoral Associations Arbitration Institute (AACCSA Al), criticised the wage and headcount standard stating it lacks a rational basis. He argued that income tax is levied through self-declaration by the employer and that this new regulation defies this principle.

Kaleb Wendu, a tax law lecturer at Dilla University, also agrees that the new standard defies many principles of legal certainty, a principle that demands the law to be clear, precise, and unambiguous. He says this principle is fundamental to the rule of law. He believes the principle of certainty will be undermined because the standard is thought to be arbitrarily made without consulting the concerned parties.

Kaleb fears the standard could encourage informal employment and might reduce the allowances and incentives that workers receive from their employers. He stated that the standard informally sets a minimum wage rate, a mandate the Bureau does not have. The new regulation contradicts contract law, which is solely between employers and employees, representing a third-party interference, according to him.

Abdurazak Nesro, a legal consultant, argues that the Bureau’s mandate, as defined by the Proclamation for the Reestablishment of the Executive Organs of the Addis Abeba City Administration, does not authorize such actions.

He argues the law limits the Bureau’s authority to reporting and determining taxes, not issuing standards to collect them. Because the standard also includes the number of employees in addition to their salary, Abdurazak believes that it interferes with the autonomy of the companies.

 

 

 

 

 

Police University, Immigration Services Caught with Financial Mismanagement

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An audit report presented to Parliament last week revealed financial irregularities at the Ethiopian Police University, including 86 million Br deposited into two accounts unauthorised by the Ministry of Finance (MoF).

The Public Expenditure Administration & Control Affairs demanded the closure of these accounts. The management of the University stated that they have already requested permission from MoF. The audit report disclosed that 136,000 Br was paid to senior management as per diem for trips that did not occur.

The University also faced scrutiny regarding its purchasing practices. Sixteen million Birr was spent on food through direct purchasing, violating regulations that mandate open tenders to ensure transparency and accountability. University president Mesfin Abebe claimed that prices could increase by as much as 50pc through tenders. This did not convince the MPs, who insisted that purchases should be made via open tenders and in bulk.

The University procured 38-million-Br worth of products from companies without competitive bids. This drew backlash from MPs who vehemently criticised the University officials saying it contradicts the purchasing regulations.

The MPs also questioned the University’s purchase of two million Birr in vehicle tires through price comparison methodology at various intervals. Although Mesfin stated that the equipment was for emergency use, MPs argued that such purchases should have been approved by MoF and purchased in a planned bulk tender.

MPs stated that fuel might have been used for personal purposes pointing to the failure of the University to accurately track fuel usage for its vehicles and generators. Mesfin said that the exact amount of fuel for generators was not consistent due to unpredictable power outages. He claimed the University has a fuel quota for vehicles.

The University’s practices were highly susceptible to corruption due to a lack of checks and balances, according to Tesfaye Shime, head of the anti-corruption department at Federal Ethics & Anti-Corruption Commission (FEACC). He said the audit report only examined samples and that a full audit would likely reveal even more serious problems.

Etagegn Mengeste, a representative from the Public Procurement & Property Authority (PPPA), criticised the University for “deliberately bypassing government purchasing procedures”.

Abaynesh Teshome, a representative from MoF, argued that the University officials responsible for the mismanagement should be brought before the law.

Parliament ordered the University to present audit reports to auditors and MoF every three months and to submit an action plan to the Public Expenditure Administration & Control Affairs Standing Committee within 15 days.

At the end of last month, the Ethiopian Immigration & Citizenship Service faced backlash from the same Committee during an audit report for similar mismanagement problems including collecting penalty fees without MoF’s knowledge. The Service was found to be utilizing personal accounts to accept various penalties regarding passport applications.

Arare Mosisa, deputy head of the Committee, stated that these funds were supposed to be deposited to a MoF-approved account, and that the institution was not authorized to use those funds without the Ministry’s permission.

Fitsum Getahun, an accounting expert, recommends MoF simplifying the process of opening accounts by public institutions. He argues that the Ministry should allow flexible procedures for institutions to easily collect incomes. He says the extended periods of time and complex procedures for getting approval from the Ministry may affect government institutions’ ability to fulfill their operational obligations.

High-Stakes Ownership Dispute Pits Property Against Contract Law

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The legal battle between BGI Ethiopia, a leading brewery, and Zewdnesh G. Asrat has centred on a debate whether the case should be treated as a property rights or a contractual dispute.

In the opening hearing of the high-profile case which took place on December 10, before Federal First Instance Court Judge Girawork Yitbarek, Zewdnesh’s team argued that the case is about ownership rights over her alleged 27pc stake in BGI Ethiopia which is worth 8.28 million Br, framing it as a proprietorship claim under property law. Since property claims are not bound by strict time limits, the plaintiff argued that the issue is who owns the shares and whether her ownership rights were violated, not whether a contract was violated.

Zewdnesh legal team from Ethio-Alliance Advocates LLP, including Yehualashet Tamiru, Kaleegziabher Gossaye, Ketema Adane, and Yigremachew Kefelegn claimed that her alleged shares were transferred without her knowledge and consent.

On the other hand, BGI Ethiopia’s legal team contended that the dispute is contractual and the share transfer which was decided  in a special meeting of shareholders was legal and transparent. BGI says the plaintiff consented to the share transfer by her signature on the meeting’s minute.

BGI’s defense, led by Million Assefa and Solomon Emeru, argued that since contract law imposes a two-year statute of limitations, Zewdnesh’s case should be dismissed for exceeding the legal time frame.

The plaintiff countered arguing presenting meeting minutes as evidence of contractual agreements is not admissible as they are simply administrative records.

The dispute originates from Brasseries International Holding Limited’s (BIH) acquisition of all shares in BGI Ethiopia Plc in February 1999. In May 2024, Zewdnesh started a legal action against BGI Ethiopia; Jean P. Blavier, BGI’s then manager; BIH; and Hebu Properties Limited, claiming her shares were transferred unlawfully using fraudulent documents.

The plaintiff claimed Hebu Properties Limited received a total of 6,067 of her shares in BGI Ethiopia through a fraudulent transfer. Hebu was represented by Mieraf Gezai, who was also a general manager of one of Zewdnesh’s companies that was contracted to distribute BGI Ethiopia’s products. She claims no payment was made to her for the transfer of her shares to either Hebu or BIH.

Her team contended that she learned of the wrongdoing after she heard of a proposed property sale related to BGI and Purpose Black a year ago.

BGI claims that the plaintiff was aware of the share transfer 23 years ago. The defendant says that even if her knowledge of the proposed property sale dates back to the initiations of the Purpose Black and BGI deal in 2022, the claim would still be time-barred.

Zewdnesh argued that the relevant date for legal purposes is when she discovered the alleged wrongdoing, which she claimed was approximately a year ago. Last year, BGI planned to close its plant in Addis Abeba and negotiated with Purpose Black to sell the site which later failed. Subsequently, BGI announced its intention to sell the site to other buyers.

The plaintiff secured an injunction from First Instance Court on the sale of the same 30,000sqm property owned by BGI Ethiopia near Mexico roundabout. The injunction prevented both the sale of BGI’s headquarters and the transfer of BGI shares held by Brasseries International Holding Limited (BIH).

Zewdnesh claims her involvement was crucial when BIH, representing French interests through the Castel Group, successfully bid 10 million dollars to acquire St. George Brewery from the government in 1998.

She alleges she became a victim of a power struggle within the Tigray People’s Liberation Front (TPLF) in 2001. She claimed to have been subjected to intense political pressure because the then-board chairman of the Privatization Agency, Asefa Abreha, was under investigation for corruption.

The plaintiff stated that investigations into brothers Asefa and Siye Abraha, also targeted Zewdnesh’s daughter due to her daughter’s perceived close ties to Siye’s family. Zewdnesh believes this intimidation created the conditions that allowed the fraudulent transfer of her BGI Ethiopia shares to occur.

The defence team of BGI argued that any political pressure her daughter faced are irrelevant to the plaintiff’s situation and should not be considered by the court.

In the continuing battle, Zewdnesh’s legal team requested the appearance of around 15 witnesses, including prominent figures such as Siye Abreha and Girma Waqe. Conversely, BGI’s defence planned to call Hagos Debesu, Mieraf Gezai, Tilahun Teshome, and Zenebech Shiferaw to provide testimony before the federal court judge.