The restructured Public Enterprise Holding and Administration Agency (PEHAA) is floating the first privatization bid this fiscal year.
The agency, which is responsible for managing public enterprises and undertaking the privatization process, is currently preparing to oversee the partial privatization of mega public enterprises only a few months after going through a overhaul and name change.
Previously there was a push to privatize many government owned businesses or return them to their original owner before the communist era of the Derg.
However in the current budget year PEHAA has not transferred anything despite plans s to do so.
Wondafrash Assefa, Public Relations head of PEHAA, told Capital that the restructuring work and preparation for privatizing enterprises is getting priority.
“While we are in process of massive privatization, we have floated the first privatization bid for the BM Ethiopia Garment and Textile SC,” he said.
The agency has announced the share sales of BM Ethiopia, the former Adey Abeba Yarn Factory II, in the fourth week of January and the bid will be opened March 26.
In 2011 the former Privatization and Public Enterprises Supervising Agency, which was changed to the Ministry of Public Enterprises about three years ago, transferred more than 51 percent of the enterprise share for the foreign company called BM and the factory name has been changed to BM Ethiopia Garment and Textile SC, which is mainly engaged in the export market.
Yirgalem Addis Textile Factory PLC the then Adey Abeba Yarn Factory I, which is one of the oldest factories in the country at almost 50 years, was transferred to a private company about eight years ago.
Both factories are located in south west Addis Ababa in Nifasilk Lafto Sub City.
Wondafrash stated that the government plans to sell its entire 48.6 percent share of BM Ethiopia.
BM Ethiopia was floated over the past few years unsuccessfully.
“Based on our five year plan we also have a plan to float other public enterprises in the budget year,” he added.
One of the upcoming public enterprises that would be up for sale is Hilton Addis Hotel, a historical and international brand hotel located in the heart of Addis Ababa.
The hotel was opened by Haile Selassie in 1969 and has a 50-year management contract between Hilton Worldwide and the Ethiopian government that will end this year.
Yarn factory first up for privatization this year
Some pensive over Skylight Hotel’s impact
Some hotel owners have expressed concern over the attention being given to Ethiopian Airlines’ Skylight Hotel.
Walking distance from Bole Airport, the state of the art hotel cost USD 65 million.
Some hotel owners and others in hospitality related businesses argue that government owned businesses like Ethiopian Airlines, shouldn’t get involved in hotels because the private sector is capable of excelling in the sector and small and medium sized hotels could suffer.
At a meeting organized by the International Finance Corporation, a private wing of the World Bank participants said the Airlines’ involvement in hospitality would negatively impact the industry.
However, a prominent hotel owner with experience during the previous hotel boom said that their claim is baseless.
He said that there are 11,000 hotels rooms in the country. “I do not understand why the private sector is anxious about the Ethiopian Skylight Hotel when it only has 373 rooms,” he told Capital.
“We have bigger things to worry about than the new state owned hospitality facility,”
The pomp and circumstance surrounding the Ethiopian Skylight Hotel, managed by Chinese hospitality players is unprecedented in Ethiopia. The closest thing is the luxurious Sheraton Addis which was built two decades earlier.
“I have worked in hotels for close to 13 years but I couldn’t build a hotel that large and fancy. This creates a positive image of Ethiopia and benefits our hotels as well,” he argued.
“In the past two decades and particularly in the past ten years many hotels and international brands opened their doors but there has not been this much investment in a facility since Sheraton Addis which was built at a cost of USD 200 million in 1998 and is owned by Sheik Mohammed Ali Al Amoudi,” an expert said.
“The new ET hotel has enhanced the image and the capacity of the city to handle the hospitality business more than before,” the expert added.
Ethiopian Airlines is using the local hotel for its travelers’ transit. Some in the hospitality industry argue that if ET operates its own luxury hotel that travelers may not stay at their hotels. However, others say that the Skylight Hotel is one among many hotels available in Addis Ababa.
“The hotels wont lose business because the number of rooms at Skylight is limited,” a hotel owner said.
According a two-year-old survey from the Addis Ababa Hotel Owners Association occupancy rates in the capital are about 67 percent.
The association says finding skilled labor continues to be a major challenge for the nation’s hotels.
Benyam Bisrat, the owner of Jupiter Hotels and leader of the association, said that the sector needs a facility to train professionals. He said that when new facilities join the hospitality business they take professionals from other hotels because there are not enough skilled workers. He said that the hotel owners need to focus on producing professionals rather than worrying about new hotels. “I have spoken with Tewolde Gebremariam, CEO of ET Group, about training professional hotel staff,” he told Capital.
“During the inaugural ceremony Prime Minister Abiy Ahmed said Ethiopian Airlines must improve their aviation training center to meet university level standards and this would be a good opportunity to include training for hospitality professionals so I have raised this issue to the CEO,” Benyam said.
City makes public attempt to better tax collection
The Addis Ababa Revenue Bureau has launched a tax campaign. The ceremony at the Intercontinental Hotel featured Deputy Mayor Takele Uma, federal and city officials, private businesses and the general public. The goal of the campaign is to increase revenue collection.
The Mayor announced that after discussions with the city administration and the Addis Ababa Chamber of Commerce and Sectoral Association, they decided to lift half tax they were asking from 4,040 tax payers who were undergoing arbitration. This was due to claims that the tax imposed was exaggerated. During the 2016/17 budget year tens of thousands of level C tax payers had their taxes revised.
According to the Addis Ababa Revenue Bureau, about four thousand tax payers, owed half of the estimated tax dues. They were undergoing arbitration. However, now the city is considering exempting the balance and letting businesses pay half of their estimated dues.
Another 1,070 businesses are either being sued or investigated by police for tax fraud. Now the city is working to annul their charges and get them to settle the expected tax in an amicable manner.
Still another group of businesses say they are unable to pay any tax. In this case the city will evaluate their activity and revise their tax.
Thirteen thousand businesses in the city filed tax claims during the past budget year and 82 percent of those have been resolved.
Ethiopia to dramatically expand coffee production
The Ethiopian Coffee and Tea Authority (ECTA) announced that there are 5.4 million hectares of suitable land available for growing coffee.
Currently coffee is cultivated in Oromia and SNNP regions but plans are in the works to expand coffee plantations throughout Ethiopia, according to a statement the Authority sent to Capital.
Birhanu Tsegaye, who leads the nation’s coffee, tea and spice development, said there are 5.4 million hectares of land usable for high level coffee cultivation and 17.7 hectares of land ripe for medium level coffee cultivation.
“In total the country has an additional 23.1 million hectares of high and medium level of land suitable for coffee,” he said.
In addition to Oromia and SNNP; Amhara, Gambella, Benishangul Gumuz and Tigrai are potential areas for growing coffee beans.
He said that if this land is used, the government will be able to reach their coffee production goals.
Currently there are about 2.52 million hectares of land covered by coffee plantations. From this, about 1.129 million hectares are being used for harvesting coffee.
“The country can benefit from its natural gifts,” Birhanu said.
The Authority is working closely with stakeholders to increase coffee production. There are two other areas where some coffee is grown in addition to Oromia and SNNP, these are Benishangual and Gambella. However, soon coffee will be growing throughout Ethiopia if the government’s plans become a reality.
The Coffee Authority was re-established three years ago after previously being placed under the Ministry of Agriculture. During the last twenty years there has been much tinkering with coffee administration. The current government created an exclusive entity for coffee and tea and their recent policy has focused on improvements in agriculture, mainly cereals and other cash crops.
Until recently, several ministries, including the Ministry of Trade and the Ministry of Agriculture, managed Ethiopia’s coffee industry. Coffee cultivation was run under the Ministry of Agriculture, and the marketing was carried out by the Ministry of Trade.
Before being administered under the agriculture ministry, it was governed through the Coffee and Tea Authority. It developed coffee plant nurseries and distribution for farmers. It also engaged in developing selected seeds to boost coffee development.
The Coffee and Tea Authority was also responsible for monitoring the production and exportation of all types of coffee through an auction system. It was later replaced by the Ethiopian Commodity Exchange, which commenced coffee trading in 2008.
The first body responsible for coffee was the National Coffee Board of Ethiopia (NCBE) which pioneered coffee certification when established in 1957. The NCBE’s aims were to control and coordinate coffee production, traders and exporters and to improve the quality of Ethiopian coffee.
Coffee experts supported the re-formation of an independent office for coffee to ensure the sector’s development. They said that the coffee industry was hindered by being attached to MoA.
“The coffee sector needs very close attention and the formation of the new entity will be advantageous for its development,” experts said.
Agrer Consortium’s, the US consultancy firm, recommended improving the sector by establishing an independent office at the ministerial level to focus more on coffee.
Even though the Ethiopian coffee bean is flavorful and has different varieties, it has not been able to fetch the proper premium on the international market.
Various studies indicate that Ethiopia is the primary center of origin and that the Arabica coffee plant is genetically diverse.
The labor-intensive tree crop also provides much employment in rural areas and is the means of livelihood for over 25 million people in Ethiopia. It also retains the major share of the GDP.
In the stated regions there are 181 woredas dedicated to coffee production. This harvest season 786,766 tons of coffee are expected to be collected. The Agrer Consortium study recommended that a meaningful and effective strategy involve increasing quantity, quality, sustainability, consistency of supply and the geographic identity of Arabica coffee.
