Ninety percent of the 50 currently operating grade one contractors are not paying salaries to their employees on time according to the information that Capital obtained from contractors.
The recent devaluation of the birr, the small number of new projects commissioned by the government, delays on receiving Letters of Credit from banks, and a slowing down economy are the reasons contractors have contributing for the difficulties of paying salaries.
A source from the Construction Contractors Association of Ethiopia (CCAE) told Capital that majority of the contractors are functioning below 50 percent performance. Some of them have not been able to pay salaries for the last two months.
“Except for the Ethiopian Roads Authority, other government bodies are not making payments appropriately. There are projects in universities, hospitals, federal and regional government offices but sadly, contractors are struggling to get payments from the clients.
“We have observed some contactors closing their businesses or renting out their machines to survive while others are declaring bankruptcy. If this continues many construction companies will close and unemployment will rise. In addition high operating costs in the construction industry which result in low profit margins has also created tax challenges for the companies as they have been unable to fully utilize opportunities for relief available under the provisions of the tax law,” the source observed.
The source added that their company’s performance in 2018 and the first half of 2019 has been trending downward.
“The construction industry should be a major contributor to the GDP and national development, but the reverse is the case in Ethiopia as the sector contributes less than 11 percent to the GDP.
The Ministry of Urban Development and Construction (MUDC) said that it has restructured its staff and re-written its policies to improve construction production.
Ethiopia has been allocating more than 60 percent of its federal budget to construction. Most of the imported construction input is finishing material. In 2016 the Ethiopian construction industry imported 82 percent of its ceramic worth 113.5 million USD, 95 percent of clear and tinted glass worth USD 95.4 million, metal work such as Aluminum profile, reinforcement bar wire and nails and related products worth USD 750.5 million, 10 percent of marble stone worth USD 7 million. Seventy percent of elevators and escalators are imported and 30 percent are supplied by the sole manufacturer DAN Lift Technology.
Moreover, the modular building construction in Ethiopia consumes 80 percent on site and 20 percent of factory products.
Most grade one contractors can’t make payroll
Illegal trading quashes gold supply
The Attorney General has been looking into the cause of the decreasing gold supply on the legal market and has found that around 40 gold extractors have not been selling gold despite obtaining a gold detector machine, in Gambela.
Furthermore, gold and other minerals are being used to smuggle illegal items or obtain foreign currency. Because minerals are transported easily, they are often used for illegal activities. According to the research, Piassa, 22 Mazoriya, Merkato and some international hotels are places where minerals are illegally traded.
Some retail shops obtain minerals illegally as they are not obligated to declare their sources. These shops often don’t use VAT receipts, to avoid taxes.
There is also an issue of armed groups from neighboring countries who are part of the illicit transactions. This usually occurs in regional states close to the border areas. For example, Dima Woreda in Gambela regional state is mentioned as a place where outside groups sell gold illegally.
The machine which is used to indicate where potential gold accumulations exist is often smuggled into the country. Most of the time this machine and other contraband enters through the Togochale Custom Gate and Moyale.
Mines are being used to accumulate wealth, or move it around as well as a means to obtain foreign exchange, according to the research. Starting in 2013/14, illegal transactions increased dramatically in six regional states which extract gold. In 2010/11 Oromiya extracted 2411.124 Kg gold, 3327 in 2012/13, and 21.57 in 2017/18. The SNNP which collected the latest amount the past fiscal year which is 270.861 kg collected 877.8822kg in 2010/11 and 546.987kg in 2012/13. Tigray extracted 1918.913kg gold in 2010/11, 2298.5278 in 2012/13 and 201.5789 in 2017/18.
The main reasons illegal transaction occur are: weak monitoring and security measures taken by the government in all levels of the administration, a high retention rate for successful investors,and that retailers can obtain and renew licenses without obtaining a competency certificate. This has encouraged them to operate unethically. There is a law regulating the source of gold retailers but it is not being used and so the opposite is happening. There are no follow-ups on their sources and the administration doesn’t know where they obtain the gold which has led to large losses of government revenue.
The recent law forbids individuals from extracting gold and commands them to form a small and micro-enterprises but the Tigray regional state was seen giving licenses to extractors and traders without following regulations.
Licensed miners bring international buyers and conduct commission works with them to supply the mined minerals to the international market, overpassing the legal chain drawn by the government. The unfair price of the National Bank to purchase gold encourages miners to sell on the black market, according to the research.
Using Bole International Airport gold is being transported to the UAE, China, and India. There are also those that smuggle gold by land conspiring with check point and border customs employees.
The paper finally recommends that the Custom Commission, Ministry of Revenue, Police, Ministry of Mines and other stakeholders to work together and propose a sustainable way to solve the problem.
The National Bank of Ethiopia(NBE) which has branches in Gold Mining regions, now receives less than 50 grams of gold per day. That amount was 10 to 25kg a year ago. The bank also received less than USD 90 million in the last fiscal year but some years ago that figure was USD 600 million.
The Bank’s gold buying branches in Shire, Dema, Gambela, Mizan Tepi, Pawi, Assosa, Hawassa, and Shakiso sometimes go two or three days a week without a transaction.
As major gold supplying companies including MIDROC have stopped extracting gold because of political instability, the sector has begun being led by traditional miners.
The gold was extracted and explored for by 170 small companies. They were PLC licensed and around 50 percent of these firms are foreign companies, while 25 percent of them are joint ventures between local and foreign businesses and the remaining are local enterprises.
According to Ministry of Mines and Energy illegal gold trading helps some businesspeople move their money out of the country and some government employees are also collaborating with these illegal actors.
The ministry wrote a letter to the Prime Minister asking for solutions; they want to host a meeting and discuss the matter with gold and petroleum stakeholders.
Ethio-telecom rebrands service centers, introduces new channels
The sole telecom service provider, ethio telecom, began rebranding its service centers around the country this month for the first time in nine years. The telecom, which had 6 million active subscribers in 2010 is planning to implement a customer visit management system to improve performance and resolve previous complaints. The telecom also announced that it will pilot new shops to be opened at hotels and malls which have a high customer flow. The telecom have 41 41 million active subscriber.
A new brand positioning was also introduced as “potential enablers” replacing the previous one “sharing”, and new tagline called: “bringing new possibilities”. 
In February 2012 the new logo that replaced the lion, a drum and sticks, was introduced upon the departure of the French telecom as the company transformed from ETC to the current structure. The new logo raised controversy as it was similar to one European company. The telecom removed the black background replaced it with lemon green.
“We now have white, blue and lemon as our brand colors and now we are injecting red and yellow to allow our brand evolvement,” said Worku Mulualem, director of trade and marketing at the telecom said. “We are implementing these new brand colors at our renovation projects. The black background of the telecom logo was replaced immediately based on the feedback which reflects it as depressing and controversial with our culture.”
The telecom recently removed the 3D effects of its brand icon because it was difficult to print or use in promotional materials.
The telecom has shops in many locations with varying degree of services. They are studying the current capacity of shops and plan to make changes. For example some should be able to handle more traffic. The Telecom will upgrade or down grade shops alongside with renovating the service centers. Medium, high, grand, grand plus are the status of the shops.
After rebranding its shops, the telecom will replace its existing furniture and add new brand colors. Many employees have complained of things like back pain or discomfort, according to Ephrem. The renovation of the service centers will take into account the opinions of employees and the customers.
The marketing department has conducted a survey all over the country sampling shops and recommending solutions. 
The working hours of the service centers will be extended until 7 o’clock in the evening on weekdays and until 5:30 on Saturdays. The service centers will begin working over lunchtime at all Addis Abeba branches. The new Customer Management System which is going to replace the traditional queue will have a machine supported schedule for customers which report to one centralized system in the head office to control if the tailors are handling customers properly or not, according to the Chief Marketing & Communications Officer (CMCO) Ephrem Arefaine.
Currently, ethio telecom has 367 service centers all over the country where 116 are owned shops, 103 franchises, 42 were installed this fiscal year and six will be opened at hotels and malls. The telecom has 56 business enterprise shops, which give service only to companies with the additional 23 opened recently. The telecom had 272 service centers in the past fiscal year and reached 446 with the addition of 174 shops this year.
A delegate traveled to Dubai to survey state-of-the-art service centers of international operators and came back with ideas for shops with showroom service. The shops to be opened in the malls and hotels will have platforms for customers to experience new products other than using the previous traditional service, according to the CMCO.
“In the global expertise, service centers are not installed only to sell a few products but to represent the company’s image and to promote new products,” he said. “We will make our service centers provide satisfactory services by selling our image at its best.”
Authority bans over 80 coffee exporters from trading with ECX
The Ethiopian Coffee and Tea Authority banned 81 coffee exporters from trading with the Ethiopian Commodity Exchange (ECX) because they failed to export coffee in a timely manner and thus were in breech of their contracts.
During an audit, the Authority found that nearly 200 exporters did not sell their coffee to the international market.
“The action is being taken as part of the Authority’s reform to maintain the quality of Ethiopian coffee by establishing a sustainable and traceable coffee market globally,” said Shafi Umer vice General Director of the authority.
More than half of the exporters brought their case to the authority after a short notice.
Some of the reasons are connected with the recipient companies who refused to govern in accordance with their agreement to receive the coffee. The authority is strictly working with The Ministry of Foreign Affairs to deal with these cases, according to the vice general director.
The ban on the 81 coffee exporters was issued a week ago. Individual exporters, cooperative unions and state owned business enterprises are on the list.
“The ban will be effective until the exporters are able to justify why they did not export their product last fiscal year,” Shafi added.
For the last eight months, Ethiopia earned over 607 million USD by exporting nearly 169 tons of coffee which is 77 percent of the targeted amount.
Ethiopian Arabica coffee exports account for 25-30 percent of the region’s total export revenue. Ethiopia accounts for 29 percent of the African coffee trade. Arabica coffee is a high-quality coffee in the world and developed countries are regular importers. Germany, Italy, Saudi Arabia, the United Kingdom, the United States of America, Belgium, Spain, France and Sudan are the major importers of the Ethiopian Arabica coffee.
