Doing business in Addis

When EPRDF took power in 1991, the number of licensed businesses operating in Addis Ababa were no more than 3,500, but now exceed 247,000. The Addis Ababa Trade Bureau is responsible for regulating the proliferation of businesses, for giving licenses and for revoking these licenses when businesses misstep. The Bureau, which is in charge of overlooking businesses in 116 Woredas of Addis has been working to create conducive environment for legal businesses, with significant progress towards its goal. Some problems, however, still persist. There are shortages of subsidized goods that many depend on to survive, often due to crook merchants hoarding goods, taking advantage of bureaucratic loopholes, and evading taxes.  In an attempt to address oil shortages, the Bureau have entered into an agreement with five companies to distribute Palm Oil, in what has been praised a great step towards a solution. The Bureau’s request that live stock be traded with receipts, on the other hand, has not been as popular.  Abreham Mio, Addis Ababa Trade Bureau’s Legal Officer sat down with Capital’s Tesfaye Getnet to talk the bureau’s recent triumphs and challenges. Excerpts:

Capital: Is the concept of ethical business well understood, and practiced in the business community?
Abreham Mio:
We cannot say that all businesses are unethical or that all are ethical. But we have seen the rise of a new business culture, where only profit matters.  Many simply want to make big money by gaining high profits on a single product. Such practices can most often be seen on products subsidized by the government, such as sugar, palm oil and wheat. For example, in Merkato, there are many small shops, which are in fact fronts for merchants with large amounts of products stored somewhere in the city. This happens because people want to evade taxes, and make big profits at the expense of the public. To ensure fair transactions that benefit customers and businesses, we have made several reforms and penalized those trying to harm our society by suspending or revoking their licenses. We have made progress with a number of proclamations that have resulted in better business practices. For many years people had been participating in whole sale trade and in retail trade with a single license, we have been doing fantastic work to sort out these gaps, and ensure that businesses are licensed according to their product and service.
Capital: The bureau has recently ordered butcheries to ensure that their oxen come with a receipt, causing confusion among business owners. What exactly is this about?
Abreham:
At some point, we have to see every business transaction. How can the government know a company’s real expense if procurement is not supported by evidence? When it comes to the livestock market, butchers have been buying animals for many years without receipts and so the government has found it difficult to levy the right tax.
We revised the proclamation in 2014 and told the butchers to make sure the livestock they buy come with receipts, and they asked us how they’re supposed to transact with farmers with receipts. The government came up with two solutions to this question. The first was that butchers should buy their animals from a licensed Live Animal Trader who would have receipts. The second solution was to have paper voucher receipts, which show the real amount paid to the farmers. The farmers can put their name and signatures on the voucher receipts to ensure the transaction is real. Before applying the revised proclamation we called many meetings in an attempt to create awareness among the butchers. But some are not willing to transact in the new receipt system to hide the real cost of their transactions. So there has been confusion due to such incidents but we are working aggressively to ensure compliance and to punish butchers working out of the new system.
Capital: You recently entered into an agreement with   five companies, allowing them to distribute palm oil in Addis Ababa. Do you think this will curb the distribution problem?
Abreham:
Yes, currently the distribution of oil is done by five companies namely: AHFA P.L.C., Al-Sam International, Belayneh Kindie Import and Export (BKIE), Guna Trading House P.L.C., and Alle Bejemla Enterprise. These companies have agreed to distribute 7.2 million liters of palm oil per month. Previously the work was done by the Merchandise Wholesale and Import Trade Enterprise (MEWIT) alone. We strongly believe that these companies will address distribution well and we are making sure that they act within bounds of the agreement.
Capital: Some argue that starting a business in Addis is difficult, and especially so because business is monopolized by a few people. Do you agree with such statements?
Abreham:
No, let’s look at the facts. For example, in 1991 there were no more than 3500 business in the Addis Ababa, and now there are more than 247,000 businesses actively working, creating jobs for hundreds of thousands of Ethiopians. When we narrate these figures we find that the government is creating conducive environment for businesses to flourish. Unlike in the old times, we are not letting any business operate without a license and address. And we have been working with stakeholders to assist new entrepreneurs gain financial resources and working spaces to start their business. But it does not mean that we no longer face challenges. We do have challenges but we will work to solve them, day by day, brick by brick. To adequately answer your question about business in Addis Ababa being  monopolized by a few people, I’ll need to do more research.
Capital: There have been shortages of sugar and palm oil in Addis. Some say that it poor communication between the Trade Bureau and Consumer Associations is to blame, what do you say about that?
Abreham:
Shortages occur because of greedy merchants who receive the product and hoard it to profit when prices rise, and over reliance of retailers on Consumer Associations to supply them. It is right to criticize the Bureau and the Consumer Association when shortages occur, but it doesn’t mean that poor communication between us is to blame. For example we work hard to control price hikes on palm oil and sugar and we have succeed. But what I believe that we have to do more of is, controlling the distribution of subsidized products to ensure that shortages don’t occur.
Capital: What is the bureau focusing on in the second GTP period?
Abreham:
In the next five years, we plan to see Addis Ababa flourish with modern businesses, with transactions carried out by receipts, and every business operating according to regulations. In General, we will work aggressively to make Addis Ababa the business hub of Africa. And we call on business people, Consumer Associations and other stakeholders to work with us, hand in hand, to achieve this.