The organizers of the high level conference on taxation issues are disappointed by the absence of relevant government representatives in what is a priority agenda for the country.
The conference with the title: ‘challenges and solutions of taxation for promoting business related investment and four national building in Ethiopia: politics, law and practices’ held on Friday January 25 at Sapphire Addis Hotel organized by Afro-Global Consultancy Services (AGS), a recently formed organization to work on tax, finance and related issues, in collaboration with public and private organizations including the International Bureau of Fiscal Documentation (IBFD), based in Amsterdam.
During the full day event several papers focused on laws and policies of the taxation system, macro economics, fiscal, monetary policy, and identifying and tackling challenges that the country faces regarding taxes. It also featured inclusive panel discussions.
Even though the high level event attracted several participants the organizers expressed their disappointment because of the absence of several top government officials.
Fisseha-Tsion Menghistu (Prof), President and CEO of AGS, said that the expected individuals did not appear at the event, but the event is crucial and timely for the country.
Fisseha-Tsion, who has a half a century of experience in tax, investment and finance, said that the government should consider these kinds of issues to be a priority;
“I don’t want to accuse them for now but they need to give attention and support the sector for the future,” he told Capital.
“The government needs to consult from Ethiopian scholars with wide expertise, who are independent and working for their country. The government is expected to work closely with us,” he claimed.
He complained that the top officials at the government apparatuses do not know their future agenda. “Some of them were willing to participate at our event but they have gone on other sudden meetings,” he added.
“The meeting that the Prime Minister strongly stated does not interfere with relevant day to day office work is not respected,” he criticized.
The conference mainly targeted to strengthen the effort and campaign of the Ministry of Finance and Ministry of Revenue to expand the tax collection.
During the last decade the country has registered double digit growth, but the tax to GDP ratio is still very low.
“The conference targets to discuss and analyze if tax collection challenges are related with political, policy, administration, law or implementation,” the founder of AGC said.
“The aim of our consultancy firm is to give more support and to render high quality professional services to the government, the business communities, the NGOs; finance and development institutions as well as to the general public,” the founder said. AGS has ten PhD level highly experienced professionals on micro economic policy, good governance, corporate responsibility, finance and other sectors.
“We organized this event not for profit, but with a goal of contributing to our country,” Fisseha-Tsion said.
“We did not get financial support from the government to host this event, which is supposed to be the responsibility of the government,” he added.
The country has a goal of expanding the tax to GDP ratio to reach 17 percent by the end of the coming fiscal year, while the actual achievement is very poor.
Figures indicated that the country’s tax GDP ratio is lower than other regional countries and stands at about 12 percent and went down to 10.7 percent in the past year compared with the preceding year, which was below 13 percent.
The paper was presented on the day by Dr. Lemma Gudissa stated that the reduction may be related with poor collection, updating the tax policy or the private sector.
“Comparing to inflation the tax collection growth rate it is negative,” Lemma said.
Major tax conference not attended by govt
Supreme Court reverses decision granting bail for Esayas Dagnew
The Federal Supreme Court has reversed the Federal High court’s ruling to grant bail for Essays Dagnew on January 22, 2019. Police were also granted ten more days to investigate the former Ethio Telecom high ranking official.
Essayas was accused of causing damage to the public interest by awarding a purchase for the military complex, Metals and Engineering Corporation (MeTEC), using his affiliation with his brother who was the former CEO of the MeTEC, Major General Kinfe Dagnew.
After the Adjudicative Court the High Court granted bail for the suspect at 200,000-birr police appealed to the Appellate Court.
Re-do of BPR for Addis Ababa City Administration employees
A 109 member team is in Adama restructuring the position of city workers in the new Business Process Reengineering (BPR) management project geared towards instituting a better work culture, greater productivity and improved customer service delivery.
The re-do is being conducted after city departments were cut from 117 to 68.
Under BPR 109,000 city workers will be assigned jobs according to their education and work experience. A source in the Administration told Capital that the Adama team will deliver their findings to the Vice Mayor, Takele Uma and the Addis Ababa City Public Service and Human Resource Development Bureau in order to implement BPR.
“The city is folding some of its institutions so there is overlapping of positions and duplication of work so rearranging positions is vital,” a city employee said.
The city has instituted a hiring freeze for the last four months, but the Vice Mayor said no one would lose their job. Instead they will be reassigned to positions they are qualified for. After BPR is implemented the hiring freeze will be lifted.
Under former Mayor Kuma Demksa the city implemented BPR and restructured many positions.
Since 1994, the government of Ethiopia has embarked on reforming its civil service organizations with the objective of improving the public sector service delivery system. The government sponsored many management training programs to enhance the capacities of civil service employees and to implement Result Based Performance Management System in all of its civil service organizations. Though this brought some improvements in the performance of some civil service organizations, it required great effort to achieve the benefits obtained. Since 2004, the government has also endorsed Business Process Reengineering (BPR) as a foundation for strengthening Result Based Performance Management System in the Civil Service. Scientific Management, Systems Theory and Operations Management are the theoretical and methodological foundations of BPR. For this reason, most corporations used BPR as a transformation tool during the 1980s and 1990s. However, the characteristics of government organizations are different from corporate organizations. These distinguishing features constrain government organizations from emulating the BPR experiences of corporate ones.
Coffee Break Export value, volume of Ethiopia’s cash crop declines
Coffee, Ethiopia’s leading export earning commodity, saw its export volume and value decline during the first half of the fiscal year. This reverses a trend that has taken place over the past few years.
The Ethiopian Coffee and Tea Authority’s (ECTA) report indicated that the exported volume of coffee in the first six months of the budget year, which runs from July 8 to January 8, stood at 103,445 tons.
This is a decrease of over 28 thousand tons compared with the target. In terms of percentage the performance is about 78 percent of the target.
The report indicated that the volume has also shrunk by 4,194 tons or close to four percentage points when compared with the similar period of the 2017/18 budget year. During the stated period the authority planned for coffee exports to earn USD 475 million. Instead they only brought in 70 percent of that amount or USD 334 million.
The revenue also declined when compared with the first six months of last year by USD 49 million or 12.5 percent.
In recent history, export earnings and volume would grow every year so this is unexpected.
November is part of the bean harvest season but that month experienced the lowest performance in both value and volume.
The authority’s six-month report which was 31 pages long indicated that the value earned in August met 87.5 percent of the target. During that same month, the volume was the highest, meeting 93 percent of the target. The November performance was 62 and 51 percentage points of the target by volume and value respectively.
Saudi has stood as the top destination taking 21 percent of the total volume and 18 percent of the revenue, while Germany followed at 16 and 14 percent of the shares by volume and value in the stated six months. Japan took third place at 12 percent and the US, Belgium, South Korea, Italy, Sudan, Australia and France were four through ten respectively.
The stated ten countries consumed 84 percent of Ethiopian coffee in the past six months and contributed to 81 percent of the revenue from USD 334 million of total earnings. The report indicated that in the top ten destinations consumption has declined by four percent compared with a year ago and the revenue went down by 14 percent.
The US purchased 31 percent less coffee during this period which contributed to a decline in revenue by 29 percent.
The consumption of Germany, which is also a hub of Ethiopian coffee for the region and one of the top buyers of Ethiopian coffee, went down by 25 percent of volume and 29 percent by revenue. Volume exported to France has also declined by 18 percent which contributed to a value drop of 34 percent, while Italy’s consumption also was reduced by three percent of volume and 17 percent in value.
The consumption of the other major destinations Japan and Saudi Arabia, Sudan, Australia has increased significantly despite the revenue from Saudi declining by four percent.
Kerchanshe Trading Plc, Tracon Trading Plc and Adem Kedir Haji (Hora Trading) were the three top exporting companies respectively during the stated period. Mulege, a prominent coffee exporter, Abbahawa Trading Plc, Oromia Coffee Farmers Cooperative, Sidama, Coffee Farmers Union, Arfasa Trading, SA Bageresh, and Ethiopian Trading Business Corporate ranked four through ten respectively on the top exporter’s list. In the past six months, 278 coffee exporters were engaged in the coffee export business, according to the report.
The ten exporters exported 40 thousand tons of coffee in total and earned USD 126 million which took up 39 percent and 38 percent of the share respectively from the total export and earnings for the period, while top 20 exporters have exported and earned over half of the total trading.
The report indicated that the top 20 exporters have contributed 54 percent of the value and volume of the total coffee business.
The minority, 64 percent or 178 exporters, took only 9 percent in volume and 8 percent of value. One of the challenges coffee is facing is the growing number of new exporters, attempting to get hard currency as opposed to trading it for traditional business reasons.
The new exporters have created confusion in the coffee sector and escalated the price of the product locally while exporting it at a lower price just to get foreign currency to feed their original importing business.
The well organized report of ECTA has also compared the international coffee price with the first six months of the current budget year with the same period of the last budget year.
The table contrasts the half year monthly trading of the New York Coffee Exchange with the past budget year and it showed that the price has declined for the current budget year significantly.
For instance, in July 2017 a ton of coffee was traded at USD 4,199, while it was USD 3,664 in July 2018 which is a 16 percent decrease.
On the international market on average in the last six months the price of coffee has declined from 24 percent to 9 percent compared with the six months of the past budget year.
The authority, which also follows the spice sector also stated that in the first six months close to USD five million was secured from export which is half of the target.
The other product that ECTA follows is tea. During the stated period, 984 tons of tea was exported and earned USD 1.6 million which is about half of the target.
