At the opening of parliament the president promised several economic changes would be taken by the government in the budget year.
President Mulatu Teshome (PhD), who recalled the challenges that the country faced in the political, social and economic sphere in the past few years, stated that several improvements will take place in the remaining period of the GTP II and this budget year.
The president said that the situation in the past frustrated the private sector. “The revitalization policy is expected to be in place to back the economic development and we should grow as we did in the past,” Mulatu said in his opening speech on Monday October 8.
In his speech that expressed the government’s plan for the year he indicated that under the development of a democratic developmental free market the government will work to stabilize the macroeconomic condition and improve of socio economic development.
“We will work to improve the implementation of the free market and expand the country’s process in international economic integration based on fair competition and clarity,” he said.
The monetary and fiscal policy will be strongly followed to normalize the macroeconomic condition, according to the plan for the year.
Government revenue and expenditures are the other priority areas for the year. In the past two years the government worked to minimize expenditures in federal offices and implement tight budget controlling mechanisms. However, tax collection also significantly declined in the past budget year. According to the communiqué of the congress of the ruling party that concluded a week ago tax collection will be one of their top priorities for the year.
Last year the government was able to collect 200 billion birr from the target of 250 billion. The country’s tax to GDP ratio is one of the poorest in the region, according to international financial organizations. Based on last year’s report the country’s tax to GDP ratio is less than 13 percent, which is lower than the regional average. The government is looking to improve it to 17 percent in 2020.
Debt management is the other priority area for the year. The country has been stressed from debt because of some projects that are lagging or are running below expectation. This has forced the government to suspend most foreign commercial loans for the past two years. Mismanagement of finance was also stated as one of the major challenges which has caused the country to be unable to perform well in terms of foreign loans.
According to the government’s plan, the loan management will be undertaken as per the expected limit, although the limit was not directly stated. The government guarantee would be also minimized in the coming periods, according to the president’s speech.
In addition, non public sectors or the private sector will also be included in the public financial scheme, which would be a new thing for the country.
The capital market is also stated as one of the new operations for the year, while details were not given. The president’s speech directly mentioned the insurance sector saying that they will improve their operation and insurance coverage. The non performing loans (NPL) of the banks was also covered by the president’s speech as he said it would be improved under international standards.
Except for the Development Bank of Ethiopia the Ethiopian banking sector was run on its good NPL standard at a level of 5 percent but experts stated the past year’s performance was not like the previous trend.
Capital reported that over the past few months that the highest NPL ever occurred during the previous fiscal year since the economic condition was very poor during that budget year.
Experts argued that the last year’s hard currency shortage and instability has forced the business community mainly manufacturers to run under their regular performance causing them to have difficulty settling their debts on time. “The effect on the private sector is directly seen in the financial industries since they are working together,” experts told Capital in the past few months.
In his speech which mostly covered economic issues the president hinted that several economic policies and laws would be ratified or amended in the budget year.
In addition several restructures at the federal level are expected to take place in the coming few weeks when the PM comes to the parliament.
About two months ago Capital reported that the number of ministries and cabinet members would be slashed. In its latest meeting the council of ministers announced that the number of cabinet members would be reduced to 20 from 28.
President discusses economic issues
Total awards youth with new ideas
To promote young business entrepreneurs Total Ethiopia has launched the registration which will award top three entrepreneurs a total of USD 50,000.
The 2018-19 startupper of the year award by TOTAL challenge will support and reward young local entrepreneurs in any business sector who have a project or business less than two years old.
Registration is open and applications are being accepted until 13 November.
This challenge targets young local entrepreneurs who have an innovative project or idea that could make a change in their country. After several selection steps, a local jury will nominate three winners and the top female entrepreneur award.
The three winners will get the 2019 STARTUPPER OF THE YEAR Award, along with financial support, exposure and coaching for their project.
A local jury comprised of experts from Total, specialists from incubators and business leaders and local community stakeholders will select the winners.
The project will be passed on the entrepreneurs: innovation nature, social and community impact, feasibility and development potential.
Athlete Haile Gebrselassie, Ambassador of Total said at the registration launching ceremony the program is a good motivation for young entrepreneurs.
“We must create something to develop, we must change our idea into action to grow and such kind of program is the key tool to support people who have ideas but no money,” he said.
Total was established in Ethiopia in 1950 as a petroleum product distribution company, developed its activities by merging with Mobil Oil East Africa in 2006. Today, the company has 148 operational service stations and four operational depots with one new depot being constructed in Dukam town and two more aviation depots under construction in Lalibela and Shire.
Detergent factory shut for health, environmental concerns
A Chinese detergent factory in Alme Gena has been shut down after the Ministry of Trade found that the company produced low quality products and distributed it to the market without obtaining the proper license.
The company which produced soap and powder detergent under the brand name Lavi and Panda was closed last week. Depending on laboratory studies further legal action may be taken.
Earlier this month the Ministry of Trade began an investigation after receiving complaints that people using the detergent were having health problems and that it could cause environmental damage. Inspection officers for the Ministry told Capital that the company sold the product without getting approval from the appropriate government body.
“Results showed that the samples were sub-standard and taken from Mercato. When we first went to the company some employees tried to prevent us from entering but we finally moved inside the company and found that there were unlawful activities occurring.”
The inspectors would not reveal the name of the company.
In related news the inspectors added that road sheet products coming from the eastern part of the country are being distributed improperly.
The sheets are lower quality and below standard. They are being sold to rural farmers at a very low price and coming from unknown suppliers.
“The products are very thin and are not coated with proper painting we have found several sheets in the market and we will work to stop this.’’
“The bad part of using the product is they are easily pierced by small objects and which leads to additional cost for the customers. The reflection that comes off the sheet could cause additional problems as well.”
