Too late in to the latest players’ transfer market and short of addressing players already under contract, Ethiopian Football Federation announced a salary cap effective immediately. Despite being an issue concerning all footballers, the meeting was only among Premier League clubs. “The move is a typical example of divide and rule,” one participant suggested after the meeting. “The 1,600 USD before tax is the cap for an Ethiopian player while 2000 USD for a foreigner, appears the hasty decision is about nationality rather than capacity,” he added.
The argument is since clubs’ are the one directly responsible for financing the sport, it is none of the federation’s business, to set salary cap. Since the federation was not the one that set players’ staggering wage, it was not supposed to take such unreasonable major that could rock all parties involving around the sport. It appears a showoff of the federation that is under heavy pressure from Addis Ababa teams plotting to form their own league.
The least the federation should have done was that of calling the National General Assembly emergency meeting ahead of the new season players’ transfer window. Two weeks in to the window opening, it is too late to apply the new ruling for the clubs as they have already signed most of the players in their shopping list. The Federation also appears to forget players that are already under contract.
EFF president Essays Jirra and his vice president Colonel Awol (who single handedly sky rocketed players’ salary when he was Dedebit President) told participants the contract agreements are no more valid in the eye of the federation. What they forgot or willing to forget is that of the governing law in the country concerning Employment is that of Ethiopian Labor Law. Those who already have contracts are not in obligation to comply and those who signed before the federation’s bravado are simply to go to court and present their contract agreements.
Calling a meeting excluding footballers to set salary cap is not a solution to help the sport survive or it is not about fair distribution of the country’s wealth as the only five speakers that dominated the stage suggested. The problem is the management and unless professionals take over the leadership, nothing could be done except watching Ethiopian Football die. Those in charge of club administration would have their way to exploit the latest situation which is pushing under the table deal to backdate already signed contracts.
EFF’s newly set salary cap turned controversial
We can create jobs like we plant trees PM says
The current budget year’s economic growth will be indicated by the rate of job creation.
The recently formed National Investment and Employment Opportunity Lead Committee which was chaired by Prime Minister Abiy Ahmed met this week.
During his opening address the PM stated that for the budget year the economic growth indicators will focus on job creation which is a major challenge for the country.
The ruling party says the country has experienced massive economic changes and development with double digit growth rates but some economic experts argue that the economic growth has not been accompanied by job creation and poverty reduction. Some experts counter that the growth figures are exaggerated and do not reflect reality on the ground.
A year ago Abiy, said every year 3 million youth start looking for jobs and this needs to be addressed by any means necessary.
For the past budget year there were 1.3 million sustainable jobs. This year the plan is to create over 3 million. The PM said that the top agenda is how many people are engaged in work and able to live a decent life. This is the measurement’s priority.
According to the plan during the budget year the government wants create 3.09 sustainable and decent jobs, not including temporary jobs, to solve a short term problem, according to Abebe Abebayehu, Commissioner of the Ethiopian Investment Commission (EIC), and the co-coordinator of the committee “Our target is to create a decent way of living for the society,” he added.
The investment must create jobs for the society and be part of the development cycle. Under the lead committee there are three sub committees including the ease of doing business initiative, job creation committee and priority investment sectors. The priority investment sectors are tourism, mining, ICT and agriculture. The plan projects to create jobs in these major areas.
The agricultural sector is a major area expected to employ many. The plan shows that the agriculture sector will create over 1.03 million decent jobs for the year, while irrigation and horticulture are expected to create jobs for over 568,000. Then hopes are that more investment will lead to 414,000 jobs, in aquaculture and forestry.
For the year the government has given attention to expanding irrigation based agriculture that will include educated youth.
Industry will focus on micro level manufacturing, manufacturing, construction, and mining.
In the industry sub sector 1.11 million jobs are expected to be created for youth and the construction manufacturing, and mining sectors are the major areas that would absorb a significant number of job seekers.
In the service sector ICT has gotten prior attention by the government to include skilled young citizens, while overseas jobs will be created for over 333 thousand youth.
According to Ephrame Tekle (MD), Commissioner of the recently formed Employment Opportunity Commission, the plan is to create jobs in various percentages during the four quarters of the budget year, which has already consumed one month.
In the first quarter 15 percent of the targeted jobs should be achieved and 35 percent each in the second and third quarter and 15 percent in the last three months.
The improvement of the business climate is also the other target. Even though the country attracts investors it is not as much as expected, but the country has several investment potentials, according to the PM.
Attracting investment from abroad and local companies is expected and identifies key challenges for the sector and supports the investors to register tangible success.
Improving the finance and foreign currency accessibility, improve the bureaucracy practically, and accessibility for land would be improved. This would lead to increased investment and employment expansion.
Abiy has also added that the rule of law and reducing risks are crucial for the sector improvement. Due to that security and support from the bureaucracy by tackling corruption are vital, he amplified.
He stressed that regions should cooperate each other for positive results. Abebe said that institutional public dialogue mechanisms should be formed to solve problems in an organized manner and investors shall come up with concrete and digested proposals. Their problems would be discussed and sustainably solved.
The lead committee members come from leaders of regions and ministers.
The committee would have sub-committees from the bottom at the kebele level in all regions. The national committee meets every two months. The sub-committees will meet investors and relevant bodies directly to evaluate and solve problems.
Abiy said that the job creation endeavor shall be run as the cooperation observed in the tree planting.
Currently the share of the society engaged in agriculture has declined to 68 percent that was about 80 percent a decade ago. Jobs in the service and industrial sectors are 22 and 9 percent respectively.
From the total created jobs civil service takes six percent, the private sector absorbs 5 percent and the self employment share is 40 percent. The society engaged in non-monetary work, like individuals supporting a family, is 47 percent.
According to the study presented in the committee meeting, There are 53 million people seeking jobs and 11 million are unemployed (from the age 15 to 64). Ephrem said that from the total employees the majority are not paid. He said from 18pct of the potential workforce is unemployed.
According to the plan after this year 14 million and 20 million jobs should be created by 2025 and 2030.
In the first quarter of the budget year that ends on October 10, 464 thousand jobs will be created.
Ephrem said that the four billion trees that were planted shall create over one million jobs for those who take care of the trees.
He said that several improvements should be implemented in different sectors like ICT, mining and tourism that would accommodate many people looking for work.
The PM said that in the stated four sectors the government has been engaged in massive preparation.
For instance in the ICT sector start up businesses 3 billion birr was secured from aboard, national data mining is another ICT sector that shall grab huge attention and new jobs, according to the PM.
He said in the mining sector massive preparation has been done and if the committee can solve problems the sector shall register tangible results.
Economic reform which was recently approved by the Council of Ministers will be tabled for discussion within a week, according Abiy. He said that the reform looks at several areas to create more jobs.
Economic council should be formed expert says
An economic council made up of experts from different corners could be formed by the constitution.
At an event organized by the Forum for Social Studies (FSS) under the title ‘Macroeconomic Policy and The Government’s Role in the Economy’, experts in the economic sector talked about the government’s economic policies.
At the event Alemayehu Geda (Prof), macroeconomics professor at Addis Ababa University and one of the two experts presented a paper on Thursday August 8 at Sapphire Hotel, saying that the government should form an economic council to lead economic policy professionally.
He recommended that the constitution mention the formation of the council based on the experience of other countries.
“The economic council has to be formed under the constitution as the experience of the US,” he said.
He hinted that the proposal regarding providing support in the sector and formation of the council has been sent by some experts to the Office of the Prime Minister about a year ago.
However the proposal did not get a response from the PM’s office.
Alemayehu recommended that several sub sector expert groups be formed under the council comprised from various experts in the sector from different areas and provide policy recommendations of the government.
The economic gurus who gathered during the day also recommended the creation of a structural policy to harmonize the economy as opposed to short insight measures like the devaluation, which almost all paper presenters and participants criticized.
Alemayehu argued that the ten year growth that the government mentioned as double digit is not more than 6 percent, while it is good achievement compared with continental performance stated as five percent from 2002-2013.
He said that the government has pumped huge capital into the developmental projects which shakes the macroeconomic performance.
Even though it has registered significant growth in infrastructure for instance on roads and education, lack of understanding of the developmental state theory the expenditure was not healthy and unable to come up with structural changes, according to him.
He argued that the national saving stood at 22 percent according to the government figure, while the investment is 40 percent of the GDP. “To fill the gap the country took huge foreign and local debt. On the other hand the government engaged in printing money which expanded the broad money that was 68 billion birr in 2006 to 740 billion in 2018 that means it has increased by 27 percent every year, which is about five fold of my expectation of the incremental rate on the broad money,” he said. 
This situation has created inflation, and the loan that transferred to government and its supporters’ elites created inequality and capital flight, according to Alemayehu.
The investment that is more than the savings has expanded the difference of balance of payment and created the hard currency shortage. To solve the macroeconomic imbalance and expand the export the monetary policy should not be a solution, according to Alemayehu.
He argued that as per his communication with investors the challenge is not devaluation but access to land, finance, customs, infrastructure, power outage. “So if we want to expand the export we have to focus on the structural policy change as opposed to monetary policy,” he explained.
He also argued that the economic growth has not achieved structural change due that poverty and unemployment are not reduced.
He recommended knowledge based technical and political intervention besides professional bureaucracy is required for further achievement and stated the experience of Ethiopian Airlines. “The role of the private sector should continue. Apply democratic developmental state and use all different interest on the international ideology to grab the benefit from all sides, and technical and institutional development and political consensus should be built,” the economic guru recommended.
He criticized the ruling party EPRDF saying it is using developmental state ideology without skilled and knowledge based labour.
Banks want NBE bill lifted
Many private banks are not comfortable with the National Bank of Ethiopia’s (NBE) five percent interest rates on deposits and the requirement that they purchase 27 percent of NBE bills every time they pay out a loan. Now they are asking for the requirement to be dropped or interest rates to be raised.
The banks also are giving the option to NBE to use the Development Bank of Ethiopia’s loan service if the NBE lifts its mandate that NBE bills be purchased.
The Ethiopian Bankers Association says interest rates should be two percent higher than they are.
“Honestly speaking NBE is changing a lot of regulations quickly, but I hope they see that the deposit amount really needs to be increased,” an association representative said.
Private bank representatives say they could handle financial services more efficiently if they were allowed to perform the tasks currently being handled by the Development Bank of Ethiopia.
Solomon Assefa, Vice President of Birhan Bank said, “DBE’s nonperforming loans (NPLs) were near 40 percent last year as opposed to three percent for private banks. Now our deposits go to DBE but they are having problem with large projects they financed because of defaulted loans. If the government regulates the interest rates for mega projects in manufacturing, agriculture or construction we can provide good service.
Economist Derje Degfew says changing the rule or dissolving DBE may damage the country’s economy.
“Private banks are more oriented to profit. If they conduct the work of DBE they may not give priority to financing agriculture or other sectors which the country needs so it is better to have a strict policy.”
In 2011 NBE mandated that all banks except the Commercial Bank and Development Bank, both of which are state owned, buy 27 percent of NBE bills for every loan disbursement at a three percent interest rate with a five year maturity period.
Banks have claimed that the NBE bills shrink their liquidity and smash their capacity to provide loans for clients. They have also argued that the three percent interest rate goes against the minimum market rate that NBE itself imposed. When the directive, ‘MFA/ NBE BILLS/001/2011’, became effective the minimum interest rate was five percent it then increased to seven percent when the birr devalued by 15 percent along with other major hard currencies.
