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Ministry of Finance finalizes preparations for a new incentive regulation to be applied in free trade zones as the country inaugurates the first free trade zone in Dire Dawa.
Similarly, the Council of Ministers ratify the first national special economic zone policy on its 11th extraordinary meeting aimed to expand free trade zones in the country.
Dire Dawa Industrial Park has now been re-established to be the first free trade zone under the name Dire Dawa Free Trade Zone with the official opening ceremony of Dire Dawa free trade zone expected to be held on Sunday August 14, 2022 in the presence of Prime Minister Abiy Ahmed and other senior government officials.
“The Corporation has finalized necessary preparations to establish the zone including legal frameworks, working systems, and infrastructure in collaborating with the different governmental stakeholders,” said Kiyya Tekalign, Strategy Advisor at Industrial Parks Development Corporation (IPDC).
As he said, the Ministry of Finance has finalized preparing the free trade zone incentive regulations which is expected to be ratified soon. To benefit from the scheme, the corporation calls the private sector to invest in the free trade zone. In addition, the free trade zone would offer customs duties privileges and play a significant part in reducing the cost of logistics, as he explained.
Dire Dawa was selected to be the first free trade zone due to its proximity to ports, market potentials and huge cargo gravity as well as suitability for multimodal transport and logistics operation. The free trade zone is 300 km far from Djibouti port, 500 km from Berbera port and 2.5 km from Dire Dawa dry port. FTZ is integrated with the dry port and various service providing institutions such as customs during operation, the Minister added.
As indicate by Kiyya, in the free zone, the country’s customs system and general laws are applied in a way that facilitates the development, and investors, importers and exporters and organizations that work in this free trade zone will benefit from various incentives and manufacturers entering a free trade zone can obtain production inputs without leaving the free trade zone in addition to the duties and taxes imposed on unfinished products not being implemented.
“The Free Trade Zone will be used as an export processing zone where goods can be unloaded, handled, produced and assembled as well as re-sent to the industrial park as a free trade park and export processing zone,” Kiyya Explained.
The zone is expected to provide support for the manufacturing, importing, and exporting procedures by increase efficiency, trade competitiveness, FDI, urbanization, industrialization to the economy. It is also expected to decrease inflation and reduce logistics time and cost while increasing import substitution and export revenue, job creation, and skill transfer which are among the goals of the free trade zone.
The corporation has prepared 15 sheds for production and warehouses, 4 hectare of open storage ward, and also 48 hectares for private sectors who want to build their production facility.
Since the goal of establishing a free trade zone has been included in the logistics strategy, extensive research has been carried out, especially in the last two years, and the research found to be convincing has led to the establishment of the special economic zones by the National Logistics Council as a policy program, and the Dire Dawa Free Trade Zone has been working as a pilot project. By watching the need to strengthen and expand the free trade areas and learning the best experiences of successful countries, the government has planned to establish more Free Trade Zones in other regions and Special Economic Zones as well.
Based on detailed criteria, Modjo, Adama and Semera areas are among those considered for free trade zones.
The FTZs will enable Ethiopia to become a significant land-linked trade, investment, industrialization, and logistics hub in Africa.
Establishing free trade zone is one of the initiatives set in the 10-year perspective development plan of the country.
Dire Dawa Industrial Park is located in Dire Dawa on 150 hectares of land 445 km from Addis Ababa. The park specializes in garment, apparel, and textile and commenced operation in 2018, with 15 factory sheds which has necessities such as electricity supply, telecom services, feeder roads, water supply and other related services.
It can be recalled that many of the 15 sheds in Dire-Dawa Industrial Park are not occupied by investors.
As Shiferau Solomon vice CEO of IPDC explained, the outbreak of the pandemic took over as soon as the park was inaugurated and also the instability of the country were the main reasons for under operation.
In 2019, Ethiopia agreed with Kenya to establish a free trade zone and enhance infrastructural development. Ethiopia has also ratified the African Continental Free Trade Area (AfCFTA) in March 2019 and is also is going through the WTO accession process. The FTZ aligns with AfCFTA and plans to realize regional integration, and is part of Ethiopia’s initiatives in the 10-year perspective development plan.
As Ethiopia is a landlocked country, it is known that it imports goods mainly using the port of Djibouti. Similarly, the country’s exports are also transported to destination markets using this port of Djibouti. Dire Dawa is not only close to Djibouti, but also has a convenient road for cargo vehicles leading to the port of Djibouti and the Ethio-Djibouti railway line passing through it, making it convenient for logistics services.

New proclamation to pave way for foreign fintechs

Feature
News

August 14, 2022

Foreign fintechs are soon to be allowed entry following the newly tabled proclamation which revises a decade old national payment system proclamation.
During the latest session held on Saturday August 6, the Council of Ministers approved the amendment for the national payment system proclamation no 718/2011 that was first issued in 2011.
When the proclamation is ratified by the parliament it will pave a way for foreign investors to get involved on the country financial systems at least this time around as payment operators.
So far there are two companies which venture in Ethiopia as fintech operators; Ethio Telecom’s Telebirr and Kacha Digital Financial Services, which recently introduced its operation.
Early this week, Solomon Damtew, Acting Director of Payment and Settlement System Directorate at National Bank of Ethiopia (NBE), said that the proclamation amendment will be a game changer since it allows well known and experienced foreign companies to invest on the market.
“Following the amendment of the proclamation, the ecosystem will be opened which means that highly experienced foreign companies will enter into the Ethiopian payment system,” he said.
“The move will uplift the success that we have so far achieved on the sector and will foster the use of a cashless economy in addition to ensuring financial inclusion besides strengthening the digital payment ecosystem,” he added.
According to Solomon, NBE, a financial sector regulatory body, is developing detailed directives that will allow providing a license for the incoming operators.
Despite being about 14 months in, the state owned telecom provider, Ethio Telecom’s Telebirr has been able over half of its subscriber to mobile money users. The number of agents that are hired by fintech or financial firms has also shot up by 800 percent to reach 156, 876 in just a single year’s time from about 15,000 agents in the 2020/21 financial year.
According to Solomon, most of the new agents are aligned with Telebirr.
Solomon told Capital that the proclamation revision has taken about three months of prudent work.
According to the proclamation, national payment system consist sending, receiving and processing of orders of payment or transfers of money in domestic or foreign currencies, and issuance and management of payment instruments and payment, clearing and settlement systems.
It added that payment service providers, including operators, participants, issuers of payment instruments and any third party acting on behalf of them, either as an agent or by way of outsourcing agreements, may entirely or partially operate in the country.
On its entry as a first private and foreign investor to the telecommunication industry, Safaricom has expressed its interest to be a mobile money player in the country to which the government has finally given a green light to its demand. As a result, the Kenyan telecom brand is expected to be one of the pioneer foreign companies to invest as a fintech. The company is popular for its revolutionary M-Pesa mobile money service.

Tech gurus to converge in Addis, this September

Local News

August 14, 2022

Jorka Events prepares for the Africa Tech Expo to be held on September 7-9 in Addis Ababa Skylight hotel, which is a first event of its kind in Ethiopia.
Ambassador Dina Mufti, Director General of Public Diplomacy at the Ministry of Foreign Affairs and Samson Haileyesus, Director of Jorka Events Communication both gave a joint statement during a recent press briefing.
As indicated on the press briefing, the fair will focus on solar technology, electric vehicles, digital payment systems, telecommunication, and banking, gathering hundreds of customers, tech entrepreneurs, and vendors at the African Tech Expo (ATX) in the capital of Africa, Addis Ababa. Similarly, the ATX is expected to enhance economic diplomacy and bring suitable technologies to Ethiopia.
It is reported that exhibitors are registering to attend the technology fair. Among other companies, it is expected that internationally known firms such as Jumia, Amazon, Microsoft, Meta, Oracle, Siemens, Access, and China Unicom will be present at the exhibition.
More than 250 exhibitors including more than 50 startups are expected to participate on the trade fair.

Worku Aytenew buys Kuriftu-Bahir Dar

Feature
News

Metasebia Teshome

August 14, 2022

Kuriftu Resort and Spa-Lake Tana in Bahir Dar gets a new owner as Tadiwos Belete transfers ownership to Worku Aytenew.
Inaugurated in 2014, the 4 star resort lays down on a 5,000sqm of land near its existing property on the shores of Lake Tana. Boston Partners PLC, which owns Kuriftu Resort and Spa built Kuriftu resort at Bahir Dar with 15 million birr.
Sources indicate, the process is being finalized; however they refused to comment on the transaction amount.
Tadiwos Belete, founder of Boston Partners PLC, a company which owns a chain of hotels and spas under the brand name of Kuriftu in various parts of the country, also owns the resort in Bahir Dar.
Except indicating that the resort will not change its name, Tadiwos refused to Capital’s request to provide further comments on the issue.
Bahir Dar admittedly houses several hotels and restaurants. However, this is not enough to cope with the growing demand of visitors and customers.
In related news, Kuriftu Resort has also started operations of its newest resort at the Awash Falls. The firm has also diversified and taken its operations brand abroad after Boston Partners opened a restaurant in Djibouti.
Kuriftu is expected to be the first hospitality industry led business for Worku Aytenew who is a newly emerging business tycoon owning many huge companies in different parts of Ethiopia. The business magnate has invested in the palm oil importation business, commercial farming, mining, aviation, and real estate.