Taxi owners' associations in Addis Abeba are on the cusp of realising dreams of replacing aged vehicles with new models imported duty-free.

Owners of blue-and-white (Lada) taxis have been waiting years for a duty-free import scheme of knocked-down vehicles to be assembled domestically. Officials of the Ministry of Justice, a federal agency tasked to verify the harmonisation of bills for consolidation and codification, ruled a directive void six months ago, introduced by the Ministry of Finance. It allowed the imports of knocked down parts duty-free.

They argued that although the Finance Ministry has the mandate to grant duty-free privileges on imported goods, only the Council of Ministers has the authority to decide on the conditions under which the privileges are granted.

There are 45 taxi associations registered by the Addis Abeba Transport Bureau, each comprising 55 vehicle owners.

These associations were required to acquire permits from the Finance Ministry, letting domestic assemblers import the parts. They were expected to present letters of recommendation from the Ministry of Transport & Logistics to apply for the permits. Once approved, the Finance Ministry would notify the Customs Commission of the volume and types of vehicle parts to be shipped. Nonetheless, little has come of the scheme since the directive was introduced last May.

Taxi owners breathed a sigh of relief last week as Eyob Tekalign (PhD), a state minister for Finance, gave the go-ahead for the duty-free import of semi- and fully-knocked down vehicle parts. The privilege includes only the associations whose members own taxis of Lada make, a Russian car manufacturer. Of the 10,000 taxis operating with ‘Code 1’ plates in the capital, 4,000 are Lada.

Last year, the initiative expanded to include newly-formed taxi associations, granting them the same privilege to buy domestically assembled cars with parts imported free of duty.

“The decision will have a profound impact on the transport sector,” said Bekele Abebe, general manager of Elauto Engineering Plc.

His company agreed to assemble and deliver four types of vehicles to taxi association members with prices from 650,000 Br to 720,000 Br. Several taxi owners have already paid 130,000 Br in down payments upfront.

Incorporated four years ago, Elauto Engineering Plc, a vehicle assembler, has shown interest in entering a deal with nearly two dozen taxi associations. However, other associations, including minibus taxi owners, have to wait after the Council of Ministers passes a regulation outlining the conditions in which duty-free rights are granted, according to Eyob.

The decision comes a month after Dawit Yeshitela, head of the city's Transport Bureau, pleaded with officials of the Finance Ministry to allow Lada taxi associations to take part in the scheme.

"We'll start re-registering taxi associations," said Tsegenet Abebe, head of communications. "Only registered owners will benefit from the privileges."

The privileges are part of a programme launched three years ago by the Addis Abeba City Administration and the former Federal Transport Authority to replace aged blue-and-white taxis with new vehicles, facilitating loans from commercial banks.

Yonas Bayesa, a father of two, is one of the taxi owners who has taken a loan. He bought an old Lada 11 years ago, making close to 1,000 Br a day when business was good. The good times are gone with the proliferation of the taxi-hailing industry. Once a hallmark of the capital's roads, Lada taxis have been experiencing a decline in business, challenged by the popularity of digital platforms such as Ride and Feres.

“I can’t even cover the cost of gas,” Yonas told Fortune.

It is challenging for taxi owners to compete with taxi-hailing services and repay loans taken from banks, says Engida Tadie, who lectures urban planning and transportation management at Kotebe Metropolitan University.

The drop in income pushed Gofere Lada Taxi Association leaders, where Yonas and 67 are members, to send a letter to the Office of the Prime Minister.

“We've been waiting a long time,” said Yonas.

Experts doubt how effectively taxi owners will use the Ministry's new gesture.

The taxi owners, on their part, are unsure of local assemblers' ability to meet the terms of their agreements.

“I'm not sure the company can deliver the vehicles on time,” said Yonas.

Bekele, the general manager, says Elauto has already started the process. He disclosed the company had opened a letter of credit at the Bank of Abyssinia to import parts sufficient to assemble 3,000 vehicles. Two weeks ago, federal authorities granted Elauto an indefinite grace period before the seizure of knocked-down parts that have been stored at three customs bonded warehouses for four months. The grace period was given for parts for 270 vehicles.

PUBLISHED ON Jun 11,2022 [ VOL 23 , NO 1154]

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