Smuggled tablets unaffordable for poor patients

Shortage of essential medicine supply including that of diabetes, TB and cancer hits the market hard due to lack of foreign currency as patients who suffer from the same lay in anguish.
Sources from the agency indicated that due to lack of foreign currency is challenging to supply medicine continuously
“The availability and affordability of medicine has reached a critical point. Following this scarcity of medicine in the formal market, people are forced to take smuggled tablets which are unaffordable especially to the low income consumers.” Sources from the pharmaceutical government agency that Capital spoke to said, adding, “The situation is worse in areas outside of Addis Ababa.”
The forex crunch has been the major challenge of the nation for the past couple of years, but in recent times it has become chronic. The depreciation of the Birr against the major foreign currencies has resulted in significant price increases for domestic users.
“As there is huge shortage of foreign currency in the country most of the importers are turning their face on engaging the export sector and also local producers are cutting their production due to shortage of input supply,” Sources say, adding, “Even Kenema pharmacies which are consider to be affordable with high availability of medicines, also suffering with the shortage.”
On October, in a letter to Ethiopia’s central bank, the Ministry of Finance said it had become necessary to restrict the use of foreign currency to importing food, medicine and medical equipment, and raw materials for manufacturing and ordered banks to deny foreign currency to businesses importing non-priority goods, in an effort to shore up dwindling foreign reserves.
The annual pharmaceutical market in Ethiopia is estimated to be worth of 1.1 billion birr, according to the national bank in the first 4 months of the current fiscal year, the bank has allocated 300 million dollars. Through there is a growing demand with the supply of pharmaceutical products.
Speaking to the parliament on December, former governor of the national bank of Ethiopia, Yinager Dessie said that, medicines are usually supplied in two ways, one is by the governmental agency, Ethiopian pharmaceutical supply agency and the other is by private suppliers.
As Yinager indicated, medicine and medicine related inputs are priorities in forex allocation in both private and the government. However banks are faced with the shortage of currency. He said that in order to solve this, there is need to facilitate the suppliers credit option for both local and foreign importers indicating that the issue of getting forex for private suppliers is not weighty as the governmental agency is the most supplier, “With all the situation that the bank has, it will be difficult for the national bank to allocate forex for the private importers and suppliers.”
More than 80 percent of the annual demand for the pharmaceutical products is satisfied through imports and around 70 percent of imported medicines enter the country through the state owned pharmaceutical supply agency.
In recent times, due to the increased demand for foreign currencies, the dollar exchange rate at the parallel market skyrocketed making the official and parallel markets to drift exponentially apart.
In some parts of the city where parallel market trading takes place, during the week, one US Dollar was selling between 103 to 107 birr.
Also the commission demanded from private banks a forex of 55 to 60 birr for one US dollar, which is greater than the exchange rate making the total selling price of one US dollar to 110 to 115 birr greater than the parallel market.
Additionally, there are several reasons for the medicine shortages. COVID-19 lockdowns limited the normal circulation of seasonal bugs. This then weakened our immune systems and led to higher-than-normal outbreaks of seasonal illnesses, which has increased the annual average demand for medicines that should alleviate them. Pharmaceutical companies could not quickly meet these unexpected demands, as excess capacity is limited to control costs.
Meanwhile, the war in Ukraine continues to impact supply chains and the knock-on effect of high inflation and energy prices have hit generic drug manufacturers, who are sometimes subjected to pricing regulations, particularly hard.
Furthermore, to protect their limited medicine supplies, some countries have temporarily blocked the parallel trade of medicines to other countries. And, once an over-the-counter drug shortage is announced on the news, consumers begin stockpiling.
It has well been noted that increasing disease prevalence, lack of dependable healthcare financing, weak local manufacturing, heavy reliance on import with inefficient logistics management system still create demand-supply imbalances that restrict access to essential medicines in Ethiopia.

A draft proclamation which is under circulation for fine tuning raises eye brows of some financial experts as the potential law seeks to switch the two-decade old value added tax (VAT) law to now suggest for government entities to withhold 50 percent of the VAT from suppliers. Experts pointed out that this presents a massive capability of eroding the working capital of the private sector.
In spite of such views, the draft proclamation that has been under discussion with pertinent stakeholders before being tabled to the Council of Ministers in the coming few weeks, is stated to introduce an easy and cushioning element to the blurry articles in the current proclamation that has loopholes.
The draft has also added some sectors to be included on the VAT regime on the aim to expand the tax base and collection, which is very poor compared with the tax GDP ratio and with other peer countries.
One of the key changes on the draft proclamation is that it will force government entities, which are the major high buyers in the country, to withhold half of the VAT amount that is supposed to be transferred for service or goods suppliers on the current proclamation.
Article 64, sub-article 1, states that if a taxable supply is made by a registered person to a government entity, the government entity shall withhold 50 percent of the VAT payable in respect of the supply.
It added that the VAT pay will be withheld to the Tax Authority in accordance with the procedures specified in a Directive issued by the Minister of Finance, while the remaining half of the VAT was payable in respect to the supply of the registered person making the supply.
However, some experts argue that the proposed withholding amount will highly affect the working capital of suppliers, “Particularly on the transaction of huge amounts.”
As a tax expert, who demanded anonymity, told Capital, the existed experience is of the government entity withholding only 2 percent for transactions more than 10,000 birr of service and for goods supply for more than 3,000 birr.
He recalled that on the industrial purchase it may expand to 35 percent. He said that the draft rate is very high that may affect the suppliers’ working capital.
Even though there is practice to withhold some portion of the VAT on the purchase at the government offices, the current proclamation doesn’t directly state it, like the draft law.
“If they get the amount it shall be a resource until they settle the payment for the tax authority. It is acceptable if concerns rose regarding the issue,” he added.
“The figure has been one of the discussed points on the latest consultation with stakeholders,” the tax expert expressed his hope citing that the rate will be reviewed before it is tabled to parliament for ratification.
Regarding the draft proclamation, other tax experts who have been well informed on the draft from its preparation, told Capital that the new proclamation will ease some of the unclear parts of the current law. They said that some of the areas that were covered by the VAT regime will be excluded when the new regulation is followed by the proclamation issue.
The other area that is expected to be included on the upcoming proclamation is the implantation of multiple VAT ratings.
“The current VAT law has a flat rate that is 15 percent, but it has been recommended for government to apply multiple VAT regimes. For instance the rate of getting service at restaurants and buying cars or jewelry should not be charged at similar rates,” the tax experts said.
Although not being included on the draft proclamation, the tax guru opines that the idea will be absorbed in the final draft for consideration, since it may ease the burden of the public and provide sustainable solutions to price hikes in the market.
Experts said that the experience of multiple VAT rate is applied in other countries, “For instance, in Kenya there is a triple VAT rate.”
The government is highly interested to expand its tax base and revenue collected from the public but to do that, several reforms in the tax system must be applied.
In one of the best performing years a decade ago, the tax GDP ratio was near 13 percent that is now back to a single digit.
The tax GDP ratio in Ethiopia is one of the lowest in the sub-Saharan countries to which international partners have been urging the government to improve its fiscal policy since it is crucial to give a room for the government to narrow the budget deficit and cover its expenditure from the resource secured from the tax revenue.

Ethiopia loses 146 million dollars in 2022 due to internet interruption. According to tech company Top 10 VPN, Ethiopia last year saw long shutdowns of almost 9,000 hours as authorities were targeting the civil war-ridden Tigray region, with more than 1 million people being affected.
With 11 occurrences apiece, Ethiopia is now one of the two most heavily affected nations in Africa by internet outages. Facebook, Telegram, and TikTok have been blocked in Ethiopia as from February 9, 2023 as a result of protests over the breakup of the Ethiopian Orthodox Tewahedo Church (EOTC). This is Ethiopia’s eleventh forced internet outage since 2015, according to Surfshark’s Internet Shutdown Tracker.
The communications blackout in the northern region of Tigray continued throughout yet another full year in 2022. There has been an internet blackout in civil war-torn Tigray since late 2020. Since 2015, Ethiopia has shut down internet access a total of 11 times. Six of these cases involved other forms of political unrest, while five of them involved protests.
Wider anti-government sentiment has been created by protests related to the EOTC split. Even though the government typically doesn’t make the restriction public, Ethiopia has a history of limiting social media during protests.
In 2022, internet outages afflicted 1 in 4 Africans. Internet outages impacted more than 300 million Africans in 2022, according to Surfshark’s annual report on internet censorship.
After Asia, Africa has the second-highest level of internet censorship; in addition to long-term limitations, five African nations filtered the internet 13 times in 2022.
Globally, mass internet filtering had an impact on 4.2 billion people in 2022, according to Surfshark’s internet censorship yearly report. In 2022, Asia accounted for almost half of all new cases, with Africa coming in second. Autocratic countries continue to utilize internet censorship as a popular tactic to cut off its citizens from the outside world.
Following Russia, Iran, Kazakhstan, Myanmar, Uzbekistan and India, Ethiopia is the 7th in the world by losing the highest and the first in Africa followed by Nigeria.
Facebook is the social media site most despised by despotic countries and was still heavily censored in 2022. In reality, since 2015, a startling 46% of the world’s population has been impacted by by Facebook bans in some form.
In 2017, Burkina Faso’s ban on Facebook was the longest in the world, lasting longer than those in Russia and Azerbaijan. The prohibition was in place until 2023. Following its invasion of Ukraine, Russia has continued to cause disruptions on Twitter, Facebook, and Instagram. Access to important international news websites has also been banned by the nation. TikTok was censored in Azerbaijan in September. Even now, access to the platform is still limited.
By the number of internet disruptions, Asia continues to be ahead of Africa. In 2022, 58 occurrences of new internet outages were imposed by 11 Asian nations. The world’s greatest disruption total (24), followed by Iran (11) and India, in the Jammu & Kashmir area (10).
With five nations adopting 13 limitations in 2022, Africa became the second most disruptive area behind Asia. By the number of disruptions, Sudan leads all of Africa with four, followed by Burkina Faso (3), Zimbabwe (3), Sierra Leone (2), and Somalia (1)
By first throttling and then blocking access to social media sites and news outlets, Russia has caused the most expensive internet blockage of 2022. The service puts the economic cost at $21.6 billion in the country between the invasion of Ukraine in February and the end of the year. Since the blockages are country-wide, the large number of people affected causes the high price tag.