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Revised excise tax turns the sweets industry bitter

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Sugar and sweets producers’ blasts the Ministry of Finance (MoF) on the revised excise tax that is gravely damaging their business.
In the meeting that was organized by their association, Ethiopian Sugar and Sweets Producers Association in collaboration with Alela Promotion Service members have expressed their frustration on MoF, which is responsible for the revision of the proclamation that has become effective as of February.
They said that they have filed their claim with well-developed independent survey that assesses the effect of the revised rate on the sector. “Since August we have been approaching MoF and relevant officers at the ministry while tangible and proper response was not given,” one of the participants at the meeting held at Harmony Hotel said.
The tariff that revised the sugar excise rate has affected their business, according to the participants. The rate has surged up to 50 percent on their cost thus making them uncompetitive in the sector and the sweets that they imports.
They argued that they have created huge job and import substitution besides adding value on the supply chain of agro processing sector and other benefits for the government. “The government has totally forgotten the sector,” they claimed.
They have also criticized the decision of the government on making the proclamation effective without consulting them.
“If the government understands the sector properly, the country shall be one of the major confectionary exporters since the sugar sector is on the good process of expansion. But on the current stage the levy imposed on the sector makes the producers uncompetitive in the global market since its huge compared with other including the regional countries,” Elias Teshome, General Manger of Nib Candy Factory, which is one of the oldest and biggest in the sector, said.
Elias added that some countries who lead the confectionary industry are not necessarily producers of sugar, “For instance Kenya is the lead exporter of confectionary in the region but it is importing sugar for its industries.”
Gezahegn Gebremedhin, an independent consultant who contributed on the survey, told Capital that the excise tax that was revised about ten months has imposed a massive rate on the sweets industry.
The new rate that revised the levy from production to sales has imposed 30 percent, while sugar, which is major ingredient for sweet production, is 20 percent in excise tax. “In general up to a 50 percent price hike on their products has occurred due to the new tax that significantly discourages consumers,” Gezahegn said.
He added that on their survey they identified clearly the effect of the new levy on the market.
“These products are not basic commodity like bread or medicine that buyers would not hesitate to pay if the rate is increased, while sweet product are secondary for the society and therefore can be abandoned unlike primary goods,” he says, “due to this effect the sector production has been affected because the market is not as per the previous trend.”
“According to our sample survey on some manufacturers, their sales have declined by up to 62 percent compared with the period before the revision of excise tax. At the same time they have reduced the volume of raw material by 75 percent due to the market drop,” Gezahegn explained.
He added that the effect shall transfer to the labour that they hired but because of COVID 19 it did not happen. It was recalled that the government imposed that companies should keep their employees in the pandemic situation.
“The effect would have a wide circle that connects from the input producer to retailer,” he added.
He recommended the government to look into the case and protect them that are about 150 industries, which are also contributing to import substitution and some of them are engaged on the confection export.
The country had allocated USD 210 million in 2017 to import sugar and sweet products.
Gezahegn recommended the MoF should revise the levy for the sector since they are engaged in the manufacturing industry, job creation and even a potential to widen the hard currency earning besides substituting the import.
Manufacturers claimed that the government considered them as if they are engaged in luxury business but they argued that it is an absolute misunderstanding.
Gossa Tefera, Tax Directorate Director at MoF, promised that his office will see the case.
But experts from different institutions like Ministry of Trade and Industry said that the sector actors should also work tirelessly to elevate challenges and recommend improving their quality production and capacity.
Mulugeta Yemer, a consultant at LM Group, a consultancy form focused on food and related sector, underlined the idea of boosting their capacity and filling the unnecessary gaps like quality issues that also occur from the sector actors itself.

UNHEALTHY DIET

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When it comes to fighting naturally occurring diseases, modernity’s achievement is nothing short of miraculous! Small pox, polio, typhoid, typhus, tuberculosis, cholera, yellow fever, leprosy, tetanus, diphtheria, etc. are some of the devastating pestilences humanity had to endure and survive just to make it up to this point in space-time. The discovery of antibiotics, like penicillin, transformed human life from a short highly sufferable episode to a prolonged and rather fulfilling one, all things considered. The once deadly afflictions of the above types are now relegated to the category of ‘preventable diseases.’ At the same time, humanity has also managed to exasperate other deadly internal diseases (cardiovascular and metabolic) because of its modern ways that might not be all that compatible with our inherent make up. Diabetes, cancer, heart disease, hypertension, obesity, autism, etc. have now become the new epidemics, which for the most part are aggressively enhanced by the self-assured ‘too clever by half’ Homo sapiens itself!
For the past fifty years conscious souls have been advocating for a more tempered non-indulgent life style, but to no avail. The market, which is blindly oriented to only making profit, (at whatever cost) has unleashed products that are systemically/scientifically undermining human lives on the planet. Today one out of every three Americans (USA) is expected to develop some form of cancer during his/her lifetime! Voluminous researches have shown that processed food which require plenty of chemical additives, (preservatives, coloring etc.) are difficult for our naturally evolved body to deal with. Nonetheless, such abominations are currently and comprehensively incorporated into the food chain. From the chemical fertilizers to the seeds used in agriculture and to the application of herbicides and pesticides continuing all the way to food processing, both in the factory and the kitchen, the whole malady has become decidedly suicidal. Given all the available scientific evidences, one would think sanity will prevail and concerted efforts will be made (by collective humanity) to abandon all such extreme nonsense. Sadly, adhering to the basics that assured our survival has become anathema to so-called progress!
Misinformation sugar-coated by advertisement is ruining the lives of both young and old across the world. Recall that a can of soft drink contains an equivalent of ten spoons of sugar, to say nothing about other dangerous chemicals. Sugar remains one of the white evils. Traditionally there were three white poisons; sugar, salt and fat. Today another two are added, wheat and milk! Because of the intertwining of big pharma with big science it has become very difficult to tell the truth (scientific truth), even by not-for-profit researchers. These days the public research institutions (run by the states) get plenty of money from industries; big pharma, big auto, big oil, big finance, etc. These once prestigious and kosher institutions of learning and reflections have become mere in-house research labs for the big boys. This is not very surprising as these institutions’ boards of governors are, by and large, mini politicos appointed by big politicos, who are usually dumb and clueless about scientific research, to say nothing about their subservience to big business. As a result, these institutions that were once centers of enlightenments are increasingly finding themselves at the mercy of the greedy foxes (corporations) for research grants!
Here is a case in point; the sitting conservative governor of Wisconsin, who is contending for the US presidency (GOP ticket), easily qualifies as an anti-science religious zealot. This anti-abortionist cut USD 200 million (on yearly basis) from the budget of one of America’s premiere research universities, without batting an eye! Unfortunately, this seems to be the template envisioned by the .01% for the whole nation. Only those who know the value and benefits of research, driven by pure intellectual passion, can imagine what such devastation can bring to knowledge production. Don’t forget, almost all major discoveries in their raw forms (basic research) come from institutions within the public domain, mostly universities. Unfortunately, the new survival policy of these public institutions seems to have become, depressingly; ‘discover and push the discovery’s profit angle to outside entities, such as biotech startups and big corporations and leave the humdrum operations and expenses (overhead, etc.,) to the tax payers!
In the modern world system, knowledge is being used, not to necessarily enhance the wellbeing of the sheeple (human mass) but rather to make money, whatever the consequences. Countries like ours must be very, very careful in dealing with the whole cycle of food/drink production and processing. From the current rage about GMO, (particularly in Ethiopia) which is frantically/financially supported/promoted by the likes of the Gates foundation, to the imports of carcinogenic stuff that permeates the local market, strict regulatory regime must be imposed to protect the unsuspecting sheeple. For instance, the meat/raw meat culture that is being abused on a daily basis (in this country) must be tempered in favor of public health and sustainable development. We don’t need to be learned to realize excessive consumption of anything is imprudent and dangerous. Factory processed food/drinks that are becoming quite conspicuous in our society do not measure up to our traditional diets. The fashion of poisoning natural juices (from local produces) with colorized chemicals should not be promoted as healthy drinks and goad our largely stupid youth to obesity and more. Artificially enhanced food/snacks are found to be much more carcinogenic than natural ones, by many folds!
The government must institute a curriculum that incorporates nutrition education, arguments against hazardous market operations, etc. starting at the lower level. General awareness and new developments in the investigative sciences must be disseminated amongst the sheeple, without the unwarranted fear of discouraging the market and its operators. GDP growth must not be promoted as if it is a panacea for all and sundry! Most importantly and in the long run, state policies must focus on the general wellbeing of the sheeple; everything else should be secondary. As the astute analyst and nutritionist observed: “In a world besotted with the artifice of consumerism, what matters is not what can be commodified and bought but what can’t be commodified and bought.” Charles Hugh Smith. Good Day!

Prominent business individuals’ saga continues

The Federal Attorney General (FAG) filed another separate criminal charge on prominent business individuals.
The Federal First Instant Court has issued a court order on Temesgen Yilma, a prominent personality in the luxury butchery industry in the country, to appear at the Kirkose Criminal 5th Bench in relation to the FAG charge. The order claimed that Temesgen and Bezawit Legesse assaulted Haileyesus Mengistu, who is well known for his firm Cosmo Trading PLC and New York Café business, on August 24 at Kessem Trading office located at Wollo Sefer.
It is recalled that the FAG filed another case on Temesgen and other nine individuals and companies at the Federal High Court- Lideta Criminal Bench of which the case is currently ongoing.
The previous criminal case that was filed late September is also in relation with Haileyesus and his company, and it is also related on the allegation of involvement with eight criminal acts including money laundering, financing of terrorism, illegally confiscating others property and illegal money transfer.
The latest criminal charge the Attorney General filed for the Federal First Instant Court claimed that the two individuals assaulted the victim at the office, but did not indicated whose office it is.
According to the court order the case hearing will happen at Kirkose Criminal 5th Bench on December 22.
The individuals that were sued in the previous charge are Haregewoyne Tedla, Azeb Miretab, Efrem Mulatu, Temesgen Yilma, Adefres Habte, Daniel Tibebu and Mesfin Asmamaw. The companies included on the charge file are; JJ Properties Management PLC, TTH Trading PLC and Boston Real-estate.
The file indicated that the individuals were involved in an illegal act that entailed forceful confiscation of a seven floor hotel property owned by Cosmo Trading PLC. The property is located at Wolo Sefer, Bole and was confiscated as collateral for the compensation of a loan.

Bunna Insurance still strong despite slip in profit

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Bunna insurance has shown a performance decline contrary to the past seven years.
During 2019/20 budget year bottom line result of the company shows a profit of Birr 20.05 million which is only 68% of the planned Birr 29.62 million and it is 28.21% below last year profit of Birr 27.92 million. This under target profit is registered mainly because of under target underwriting result achievement and high interest expense paid because of interest paid for loan taken to acquire head quarter building.
However surplus and profit shows continuous growth for four consecutive years from 2015/16 to 2018/19 and decreases on 2019/20 budget year.
During the budget year the Company has underwritten a Gross Written Premium (GWP) of Birr 249.35 million which is 8% above the targeted Birr 230.52 million GWP and it shows 22% growth from last year 204.08 million birr.
While looking at our twelve months performance in terms of classes of businesses, over target achievement is registered on Political Violence and Terrorism (PVT), Liability, fire and Lightning, Engineering, Marine and Motor classes of businesses by performing 131%, 36%, 21%, 14%, 11%, and 3% over the target, respectively. On the other hand under target achievement is registered by Pecuniary, W/C, GPA and Travel classes of businesses by performing 6%, 16%, 22% and 27% below the target respectively due to slow economic performance, travel restriction due to Covid-19, failure of clients to renew their policies, etc.
While looking at Portfolio mix of annual production, motor class of business takes the lion share with 56.31% contribution followed by Liability (11.34%) and Pecuniary (9.48%). The remaining classes of business together contribute 22.87% of the Annual production.
During 2019/20 budget year the Company has paid a gross of Birr 127.64 million claims which is 7% over the planned Birr 119.42 million claims payment. As at June 30, 2020, outstanding claims of the company reached Birr 90.93 million which is 73% over the planned Birr 57.76 million outstanding claims. At the end of the budgeted year, actual gross claim incurred was Birr 142.83 million which is 8% over the planned incurred claim of Birr 131.70 million.
The company has utilized 100% of its budget held for general and administration expense during 2019/20 budget year. Total incurred expense is Birr 65.72 million while the budget is Birr 65.61 million.
Underwriting surplus of Birr 27.85 million is registered during 2019/20 budgeted year which is only 66% of the targeted Birr 41.83 million surpluses.
During 2019/20 budget year, Birr 34.48 million has been collected as other Income which is 22% over the planned Birr 28.30 million. Main sources of other income are Interest income on time deposit and government bond, interest on saving deposit, dividend income, rent income, and other miscellaneous incomes.
However, for emphasis, surplus and profit shows continuous growth for four consecutive years from 2015/16 to 2018/19 and decreases on 2019/20 budget year.
As at June 30, 2020 total assets and total liability of the Company reached to Birr 562.72 million and Birr 393.21 million, respectively. Total liability of the company primarily includes outstanding claims, provision for unearned premium, payables due to re-insurers, reserves for unexpired risk and other Technical Reserves.
The company’s paid up capital has increased to Birr 145.14 million as at June 30, 2020 from last year’s paid up capital of Birr 112.61 million. The company has in-vested additional short term investment of Birr 63.3 million on time deposit and investment on share of Birr 32.53 million during the budget year which makes total time deposit balance of the company Birr 167 million and total investment on share of Birr 94.90 million.
The company as per plan has opened three branches One in Addis Ababa [Aratkilo] and Two in regional cities of Jimma and Debirebirhan- which brings the total branch network of the company to twenty four and two contact offices.