Welcome to Addis Fortune's weekly roundup of the most important economic and business news. This week's headlines feature a European lobby group appraising tax auditors, parliamentary scrutiny of seed corporation, government blames on road safety, private sector involvement in water management, and the introduction of e-passports by immigration services.
The European Chamber of Commerce in Ethiopia issued a review of the tax system on deficiencies that drive out some companies from the country. The report criticised the lack of transparency, unpredictability, and bureaucratic inefficiencies in the tax environment, which hinder business operations and investment. Chairman Ben Depraetere attributed the departure of European companies to tax-related issues, comparing it to "killing the goose that lays the golden egg." Concerns were raised about the unclear powers granted to tax auditors and a cumbersome appeal process requiring a 50 percent advance payment. Foreign direct investment declined despite recent initiatives to attract more investments. The broad discretion granted to auditors was deemed to potentially lead to personal bias and corrupt practices. The Chamber proposed reforms to enhance efficiency and transparency, including mandatory annual training for tax auditors, establishing technical committees to review audit findings, and communicating new tax regulations.
The surge in traffic accidents has prompted transport authorities to blame driving schools and vehicle inspection centres. The CEO of the Road Safety & Insurance Fund Service accused these institutions of issuing permits without proper training and calibration, leading to poor driving habits and accidents. The increased penalties, totalling over 1.1 billion birr in nine months, were attributed to stricter enforcement measures and digitisation of procedures. Nearly two million drivers were penalised for over nine million traffic violations. Despite a decrease in accidents, property damages, and fatalities, concerns were raised about the reliability of national data. The crackdown on driving schools and inspection centres led to the cancellation of permits for several institutions. Driving schools contest the accusations, citing progress in reducing traffic fatalities over the years. They argue that blaming them for accidents overlooks the authorities' role in testing and licensing.
A four-year performance audit has revealed persistent failures in delivering essential agricultural supplies by the Agricultural Business Corporation. Shortages of vegetable and fruit seeds, agrochemicals, and machinery, along with mismanagement of inventory, were marked as major issues. The Public Expenditure Administration & Control Affairs Standing Committee scrutinised the Corporation's management based on shortcomings and accountability. A critical issue was identified at the Asela Branch in Oromia Regional State, where poorly handled expired seed stock worth 4.7 million birr posed potential health risks and could have contaminated the remaining seeds. The audit also exposed struggles in securing essential supplies, including liquid and powdered agrochemicals, veterinary medicine, and horticulture seeds. Limited access to foreign currency and insufficient capital were cited as reasons for supply problems.
The Addis Abeba Water & Sewage Authority is opening up groundwater extraction to private companies for the first time, faced with a rapidly growing population and limited resources. Under the leadership of director Zerihun Abate, the Authority is implementing a new regulatory framework to address the city's water crisis. With 5.2 million residents requiring 1.3 million cubic meters of water daily while the Authority is only able to provide around 800,000 cubic meters, the initiative aims to encourage responsible private sector involvement in water management. The new regulations mandate a minimum well depth of 250 meters and require companies seeking permits to demonstrate a minimum demand of 100 cubic meters a month. Larger institutions like real estate developers, hotels, breweries, and the Federal Housing Corporation are prioritised. Permit applications must include a comprehensive plan outlining the water source location, intended usage, and installation of a meter.
Ethiopian Immigration & Citizenship Service is set to introduce electronic passports within the next six months, aiming to reduce reliance on foreign currency and enhance security with microchip-embedded biometrics. Selamawit Dawit, the director general of Ethiopian Immigration & Citizenship Service, has spearheaded efforts to tackle passport application backlogs and streamline communication channels to prevent future delays, with a commitment to becoming self-sufficient in passport production. The e-passport initiative is part of a joint venture with Toppan Gravity, a subsidiary of the Japanese printing giant Toppan Inc. The partnership established Toppan Gravity Ethiopia, responsible for the e-passport program. According to CEO Kalkidan Arega, e-passports will initially be imported, with local production planned at Bole Lemi Industrial Park. While some experts have raised concerns about the long-term cost-effectiveness of local production, officials anticipate a major boost in efficiency.
that’s all for today. We’ll be back with more updates next week.
May good luck and fortune always be with you.