Required foreign currency and tax and customs issues hamper the country in meeting the National Electrification Program (NEP) 2.0 target that is to be attained by 2025.
In an event organized by the Ethiopian Solar Energy Development Association and Precise Consult, in partnership with the Ministry of Water and Energy, and Ministry of Irrigation and Lowlands with regards to the status of solar appliance manufacturing in Ethiopia, it has been stated that there is a huge alternative to filling the electrification gap through solar energy. However, as cited in the discussions, there were several hurdles on the sector which hinder the set goals by the government in achieving universal electricity access nationwide in the coming two years’ time. In retrospect, the NEP 2.0 became effective in 2019.
At the meeting, a detailed study carried out by Precise was presented which indicated that Ethiopia still had the third largest access to electricity deficit in sub-Saharan Africa with only 45 percent of the population having been connected.
As it stands, by 2025, the plan is for 65 percent of the population to have electricity through the grid, and the other 35 percent through off-grid technologies – stand-alone solar (SAS) systems and mini-grids.
The 35 percent of the population that is expected to be covered by the off grid system is determined as over nine million households.
Through his study presentation, Abel Endrias, Off-grid Energy Innovation Program Manager at Precise, said that if the NEP 2.0 targets are to be met, annual supplies of solar home systems (SHS) products will have to rise significantly over the next few years by an average of 12 percent.
“There exists a significant gap between projected demand for SAS and the supply. The projected demand is unlikely to be met without a commensurate increase in the amount of forex available to the sector,” he added.
USD 1.4 billion in foreign currency is needed to meet the NEP target with only USD 150 million unlocked up until 2022, “This shows that there is still a long way to go to achieve government’s universal electrification plan.”
Due to lack of possible conducive environment for the sector, the current assemblers are forced to operate below 20 percent of their capacity, according to Precise Consult’s study.
Besides the foreign currency challenge for local manufacturers or assemblers to import their inputs, the implementation of tax incentives targeting the sector as a whole or to specific local assemblers and manufacturers is not consistent due to frequent policy amendments.
Tsehaye Yenus, Electrical and Electronics Desk Head at the Ministry of Industry, said that local industrialists should have better advantage on the market, “To alleviate the problems regarding the electrification issue, we are working with the Ministry of Finance in terms of customs duty and other issues.”
“Regarding electronics and the electrical sector, there is a gap on customs issues that must be solved. Main components on the sector should be free from customs duties to benefit manufacturers and we are working with relevant government offices to come to similar understanding,” he added.
Tsehaye expressed that companies which are interested in investing on the sector is increasing, which in the long haul reduces the foreign currency demand.
“If big companies that start production from scratch are coming, the foreign currency demand may reduce and the industry linkage will improve,”he told Capital.
Regarding the quality issues, there was also a challenge that the study cited, which was that the market share of quality non-certified products was on the rise, while quality assurance procedures were not in favor of quality products.
“For this, the Ethiopian Conformity Assessment Enterprise’s solar laboratory testing is used for market assessment certification. This verification process does not grant local manufactures complete authorization to export their products,” Tsehaye pointed out.
The study underscored that if barriers were to be lifted, the local sector suppliers like assemblers and manufacturers would bring comparative advantage for the economy and users at large.
“Local manufacturers and assemblers are more likely to have a better understanding of the local market and customer needs. Thus creation of specialized technicians and engineers who can provide high-quality after-sales services, including troubleshooting, repairs, and maintenance, and SHS products tailored to the specific needs and conditions of the Ethiopian market are stated as an advantage if the local expertise stand on its strength,” the expert highlighted the path to success.
The study also indicated that increased availability of spare parts, make it easier to replace faulty components and reduce the time needed for repairs. “As a result, improved maintenance and repair services can result in more reliable SHS products, ensuring that rural households have consistent access to electricity, and likewise the growth of the domestic solar industry can create jobs and stimulate economic development in rural areas,” the research analysis read.
According to the study, solar PV systems manufacturing alone could potentially create 50,000 full time skilled jobs.
“The overall cost needed to connect the yearly targets of NEP 2.0 including the net forex need, operational costs and capital investment, can be reduced by USD 151 million within the coming three years if some portions of the targets are replaced by locally value added SHS. This amount is the total cost needed to achieve more than 560,000 connections,” Abel said on his presentation.
In its finding the study indicated that the forex saving achieved through local assembly can go as high as 24 percent per unit, if locally available components such as plastic molds, cables, and packaging materials, are sourced from local manufacturers and locally assembled products can be sold at a price 13 percent less than imported products.
“If the products were manufactured locally, then it has a potential of cost saving up to 38 percent with about 50 percent reduction in product cost for the end user,” the research highlighted.
Currently, there are four SHS assemblers in the market with a total capacity of 80,000 units annually and additional 6 assemblers are finalizing their entry to the market with a total capacity of 413,000 units.
Abramba Technologies is the only SHS manufacturing firm in Ethiopia with the capacity to manufacture up to 100,000 units annually, while it is yet to become operational.
The NEP is an action plan launched in 2017 for achieving universal electricity access nationwide by 2025.
Inconsistent tax incentives, forex shortage derail Ethiopia’s electrification ambitions, reveal experts
Greek Community School in uphill discord with Gov’t
The Greek Community School accuses the government of trying to illegally seize its property.
As the situation heats ups, the school’s board of directors has now resorted to taking matters to its own hand by filing a lawsuit against the government, claiming that it had no legal right to take possession of the property.
In a press conference given by the school on Wednesday, June 7, 2023, regarding the current situation, the school’s lawyer, Zenebe Fikre stated that, “Our right to be heard has been denied, and our property has been confiscated by the government without our knowledge.”
As the lawyer indicated, the issue, which started three years ago in relation to taxation, has now reached a stage where the government has decided to take over the school illegally.
On March 20, 2015, the Ministry of Justice, based on the letter sent by the Ministry of Education (MoE), in a letter written to the Civil Society Organization Authority (ACSO) stated that the Hellenic Greek Community, which manages the Greek school, is not properly managing the school, and further requested the authority to establish a temporary board. Following the statement, the authority established a board which had 6 members from 4 ministerial offices, and one from the school’s parent committee and one from Olopikos Hellenic Athletic Association Greek Club to administer the school until it registered its endowment property.
The school lawyer now claims that despite the community’s great management of the school, the government has seen it otherwise, “On April 24, 2023, the court issued an injunction to stop the Ministry of Education and ACSO from setting up a new board to take over the school, for further investigation. The court is now considering the ownership and legitimacy of the school thoroughly.”
“Whilst this was pending, on last Friday June 2, 2023, the prosecutor filed a lawsuit and when we were appearing at the high court for a scheduled hearing; the court passed a decision without hearing our answer. The court ultimately ruled in favor of the government. As a result, those who claim to be the administration, we do not know where they are from have since been in the compound since Saturday,” the lawyer expressed, puzzled by the decision made.
Over the years, there have been multiple allegations against the school over corruption for close to 30 years.
“We had two appointments in court; no one was able to present any evidence. As a community school, the school exercises its right to write about taxes. However, the school uses collected funds for operations and is prepared to accept responsibility for any unlawful actions,” the lawyer underlined.
“Currently, the aim of these parties is to take over the land under the disguise of an endowment; this action was forced upon the school administration by MoE, ACSO, and others for their personal gain,” Zenebe pointed out.
The lawyer also alarmed that the school license which expired as of March 2023, has not been renewed by MoE, “On the other hand, when accusations arose, the school made the decision to change by becoming an international school and did everything required of it. However, the Ministry still didn’t approve our request.”
The doors of the Greek community school have been opened since 1985 and are in the community premises located around Olompiya. Currently, the school has more than 1100 students, who are mainly foreigners. The school has been well-known to the Ethiopian government, Greek Embassy, and MoE.
Capital’s efforts to contact the Ministry of Justice for an exclusive were unfruitful.
Cyber attacks bombard Ethiopia
Kaspersky Global Research and Analysis Team indicate Ethiopia is becoming a hotbed for cyber attackers.
According to Amin Hasbini, Head of META Research Center –Kaspersky Global Research and Analysis Team, exploits on abuse of software vulnerabilities or weaknesses that are leveraged by attackers to gain unauthorized access, control systems, or execute malicious code are on a rise, through ransomware, a malicious software that encrypts victims’ files or systems, demanding a ransom payment in exchange for the decryption key.
As the analyst enlightened, specifically in April and May 2023, traces from Kaspersky Global Research underground monitoring, pointed out a hacker team called Mysterious Team Bangladesh (MTB) which targeted the online services of at least 10 Ethiopian governmental, energy and banking institutions which distributed denial of service attacks.
Amin indicated that different and varied cyber-attacks have been witnessed in Ethiopia, from traditional cybercriminal gangs, to advanced attacker groups through cloud computing which has targeted the country multiple times in the past few years.
“Some of these attacks were found to be sourced from the region while some were global,” stated Amin.
A data conducted by Kaspersky Global Research showed in 2023 alone, Ethiopia witnessed about 18,000 attacks and 30,000 ransomware.
“These attacks can take down the online services of entities, blocking users and clients from accessing them, sometimes for hours and up to days or week,” Amin elaborated.
Other underground traces pointing to Ethiopian organizations and users being targeted with different kinds of cyber threats, such as ransomware, personal data theft or data leaks, have also been seen.
“Many cyber-attacks stay hidden or go unnoticed, it’s hard to estimate the cost incurred. Every institution can estimate the cost as a result of being cut out of service and/or having data stolen or leaked. The damage is not limited to financial losses, but extends to reputation and impact on critical infrastructure or national security as well,” opined Amin while speaking about Ethiopia’s losses to the ruthless cyber attacks.
Despite the Information Network Security Administration (INSA) indicating that it had responded to 4422 cyber-attacks and attempted attacks in the country during the last nine months of the 2022/23 budget year; gaps were seen as 4,272 were accordingly responded to, while 150 caused damage.
Kaspersky is a Russian multinational cyber-security and anti-virus provider headquartered in Moscow, Russia, and operated by a holding company in the United Kingdom.
Djibouti’s new port scheme excludes Ethiopia from the mix
Authorities in Djibouti alert Ethiopian customers that the latest new scheme that will be introduced on June 15, will not include them.
Recently, the Djibouti Ports and Free Zones Authority (DPFZA) announced that it will apply the Electronic Cargo Tracking Note (ECTN) for incoming cargos on to the ports in Djibouti as from the middle of June.
From the announcement sent to Capital, the DPFZA informed all importers, exporters, shipping lines, customs authority, freight forwarders and logistics companies, that the electronic information system, ECTN, will officially be launched soon.
As per the scheme, exporters must obtain an ECTN from the platform, which was developed for the new system, when loading containers destined for all Djibouti ports. It added that the ECTN document should be obtained from the port of loading by the shippers, exporters, or freight forwarders and the ECTN number must be written on the bill of loading.
“To obtain an electronic tracking document ECTN: bill of loading, commercial invoice and freight invoice is required,” read the announcement issued on May 31.
It added that the purpose of the implantation of ECTN system is for the security and safety of the infrastructure, assets and cargo in the ports facilities.
According to the information that was posted on ctndjibouti.com ECTN has a fee of USD 100 for a twenty feet container and USD 150 for a forty feet box.
As sources explain, this has led to confusion amongst Ethiopian customers, who are the major clients for ports in Djibouti.
However, sources in Djibouti told Capital that the latest announcement does not include customers in Ethiopia. They added that the relevant body in Djibouti sent an official email for Ethiopian logistics representatives in Djibouti on Monday June 5, which was prior to the trip taken by logistics sector leaders from Ethiopia to Djibouti.
Accordingly, sources told Capital that a delegation led by Abdulber Shemsu, Director General of Ethiopian Maritime Authority, a regulatory body in the logistics sector, and Berisso Amallo, CEO of ESL, a state owned logistics giant with the control of multimodal, travelled to Djibouti on Tuesday, June 6 and stayed there for four days.
Sources could however not confirm that the issue was raised by officials on the visit at the Ethiopian port hub.
Referenced from the company’s twitter, DPFZA on June 7, through the Chairman of the Authority, Aboubaker Omar Hadi, met with the Ethiopian delegation at Djibouti International Tower.
The tweet cited discussions focused on establishing the corridor management between the two countries and extending it across other countries in the region, “Experts from both sides were present to conduct joint inspection missions.”
“The Chairman emphasized on Ethiopia to increase the movement of imports and exports of goods. He reiterated that Djibouti will invest even more in its infrastructure in order to adapt to Ethiopia’s economic growth,” it added.
Logistics leaders at ESL, who take about the highest percent as a client in Djibouti as well as other private actors expressed that they don’t expect the scheme to be applied for Ethiopian customers.
“Now we have confirmed that the new system does not include us,” a top leader at ESL told Capital.
In light of the announcement, ESL had conducted a study regarding the new scheme, on the feasibility and plausible effect on its customers. As per the study, the new scheme may have additional expenses up to USD 36 million per annum.
However, experts in the logistics sector including ESL told Capital that ECTN is not new as it is an initiative supported by the Common Market for Eastern and Southern Africa (COMESA) on the aim to boost the logistics sector and its facilities.
As a pilot, it was tested in a single shipment about ten years ago between Djibouti and Ethiopia.
Several African countries require the official loading documentation known as the ECTN. Port authorities claim that the aim of the ECTN is to contribute to the substantial reduction of risk, real-time monitoring and reliable assessments of import goods, their shippers, importers, and other details.
Many countries in the African continent require exporters to notify Custom Authorities about the shipment details before they arrive. The Cargo Tracking Note system facilitates this requirement.
The ECTN certificate contains in-depth information about products, how they were transported between ports, and how long it took. This document is mandatory for all shipments that will be unloaded regardless of final destination.
Before arrival at the port, every shipment to a country requiring an ECTN must be accompanied by the ECTN certificate. With this certification, destination port authorities receive all necessary information prior to the shipment’s arrival, facilitating customs clearance for your products.
