The incumbent Ethiopian Football Federation’s executive body is the worst ever cabinet to lead the country’s football according to NAHOO TV Sport talk show anchorman Ashenafi Zelele. “I have never come across such a do-nothing EFF governing body,” Ashenafi remarked in his show.
Lack of transparency and unnecessary spending for procuring a building, little or no effort to fix a sponsorship deal, a controversial deal with Sport Kits producing company UMBRO, a 15,000 birr per day car rental for EFF President Ato Essayas Jirra, a shocking 26 occasions of back and forth travel out of the country in the name of Ethiopian Football, are of the few sins mentioned by Ashenafi and his colleagues on the show.
“Why is a federation that boasts an empty coffer and cancels international fixtures for lack of funding in such haste to procure a 95 Million Birr building,” asked one of the talk show participants while the other enquired if the frequent travel profited Ethiopian Football.
The press conference given by Ato Essayas and his vice Colonel Awol Abdulrakim was also mentioned in the show where the couple gave a statement focused on illustrating how a profitable contract was signed with UMBRO. It is 420 national jerseys a year free of charge with UMBRO to benefit from shirts to be on sale for tens of millions of Ethiopian Football fans. The President and his Vice President were steeping the issue questionably, after all EREA Sport got away with a USD one million, claim despite supplying inferior quality shirts. How, they asked, did UMBRO come into the picture before the dispute was settled. EFF Executive Ato Yosef Tesfaye was also mentioned as the person who approached the federation in the name of UMBRO, the very company that gave the local distribution rights to Josambin Sport owned by Ato Tesfaye. The USD one million, deal appeared to be washed, dried and ironed among the country’s football governing body.
Nahoo Sport stated that all credit went to Walya Birra’s sponsorship deal, to the former EFF President Juneidin Basha yet Issayas and his cabinet were unlikely to find a new source of finance. A huge future development plan without financial resources means nothing other than report consumption.
The new deal with UMBRO seems to blindfold the public. Over two million jerseys were sold out to Ethiopian Football fans at the South African Cup final where Ethiopia returned to the stage after three decades of absence. What a mouth watering deal any one in business would jump into with no life belt.
NAHOO Sport declares incumbent EFF cabinet worst ever
Sugar rises 2.60 birr per KG in Capital
Sugar prices are becoming bitter as they rise to 21 birr per kilo in a move to help mills cover production costs.
It’s a significant jump from the current 18.40 per kilo price that has been in effect for the last four years. This will likely affect drink and food prices as they include the sweet.
The City of Addis Ababa gets 120,000 quintals of sugar from the Sugar Corporation. They then distribute it to consumer’s associations and EtFruit, which in turn serves the end user. Previously the Sugar Corporation sold sugar at 1,400 birr per quintal but they have raised the price to 1,641 birr per quintal. Regional states will likely increase sugar prices as well although the exact amount will vary.
Sources close to the issue told Capital that a price hike has been in the pipeline but that they wanted to wait until the old stock was sold.
“We didn’t want to mix the old stock with the new stock so we held off on the price hike but now it will go into effect. Even though cane is planted here companies are experiencing trouble due to the high raw material cost because they import from abroad.’’
The Corporation imports over three million quintals of sugar annually to fill the supply gaps that occur due to the recurring shortage.
According to the public relations head of the Sugar Corp; sugar factories in Metehara, Wonji, Fincha, Kesem, Arjo, Tendaho and Kuraz 2, and Kuraz have a sugarcane crushing capacity of 5,000, 6,250, 12,000, 6,000, 8,000, 13,000 and 12,000 tons per day respectively. But this does not indicate the current actual production, only their capacity.
Even though the government had plans to construct and commence production of ten new sugar factories during the first GTP (2010-2015), almost all of its projections failed.
In the past year Tendaho and Kesem which commenced over a decade ago and Kuraz 2, which was constructed by the Chinese company have been finished.
Most of the others were managed by MetEC a state industry developer. Some of these have been delayed of have performed weakly. The government has stated that sugar would be a major source of hard currency, but that has failed to materialize.
Globally the sugar industry has been in turmoil since the EU scrapped production and export quotas in 2017, prompting many producers to boost output just as sugar prices collapsed under pressure from large world stocks.
Macron’s visit brings big deals
The visit of President Emmanuel Macron flourished with penned business, military and economic cooperation between the public sector and private partnerships.
During his two-day visit to Ethiopia, starting March 12, the president toured Lalibela and promised to provide assistance for the restoration work of rock-hewn monolithic 12th century churches.
Macron also praised the changes led by Prime Minister Abiy Ahmed. He appreciated the moves that the country has followed up with in economic, social and political spheres. He expressed his government’s and his full pledged support to extend the change strongly.
“We are highly eager to provide support for your changes in whole aspects but the Ethiopian public should give time for the PM to achieve the desired changes. Political reforms and democracy needs time,” he said to the general public at a joint press conference at the Office of the Prime Minister, held on March 12. 
The two leaders met in Paris late last year and the PM invited the president of France to visit Ethiopia.
During the same day the president met President Sahilework Zewde, who studied in France. The two presidents met in a closed door session after the President’s dinner at the National Place. The two president’s talks focused on cementing the discussion and future cooperation that the PM and the French president agreed on before.
France is a historic ally of Ethiopia. It has played a role in modernizing Ethiopia by introducing new technology. It built a railway connecting Djibouti with Addis Ababa over a century ago.
PM Abiy recalled the cooperation of the two countries by mentioning the railway line. In the latest period, France, the second biggest economy in the euro zone has provided several means of support mainly in the economic area.
The French Development Agency (AFD) has been engaged in the support of urbanization programs, aviation energy and other areas, while the private sector also has a major role in Ethiopian investment. Currently there are about 50 French and affiliated FDIs in the country.
During the current visit by the president, which is the first since 2013, the two countries agreed to cooperate in various fields.
Before the joint press conference there were already signed agreements. These included: defense cooperation, sharing experience, improving the capacity of the Ethiopian military, supporting the formation of a navy, enhancing the defense and air force. PM Abiy said that the military cooperation has a holistic approach, from military officer training to supporting nuclear technology. The PM said that he knows the French military and its capacity since he was in Rwanda on a peace keeping mission.
Macron said that French forces will be here to support the Ethiopian military in terms of training besides sending Ethiopian officers to enhance military skills. Security is also the other area that the countries will collaborate on, according to the leaders.
The other agreement signed by Ahmed Shide, Minister of Finance and Jean-Yves Le Drian, Minister of European and Foreign Affairs of France, is made up of two points focusing on finance and economic reforms, and heritage protection.
Ahmed Shide also signed an agreement with Rémy Rioux, Director General of the France Development Agency to enhance French investment in Ethiopia.
At the press conference, Macron said that the Meridiam, French investment fund, has allocated 500 million euro for geothermal investment in Ethiopia. Macron’s government via AFD also gave another 100 million euros. Of this 15 percent is a donation to support the reform that PM Abiy is leading.
Macron started his part of the press conference by offering condolences for the recent Ethiopian Airlines Boeing 737 Max 8 plane crash. PM Abiy also stated that the French president has expressed his interest to provide support regarding the crash. Macron also met Tewolde Gebremariam, CEO of Ethiopian Airlines Group before his departure to Nairobi.
Supporting agricultural transformation is another area of cooperation, according to Macron.
Public and Private Deals
In relation with the coming of the president several and influential French companies also visited Ethiopia. On Wednesday at the event held at Hilton Hotel seven agreements in business and space science cooperation were signed.
At the event, a memorandum of understanding between the Ethiopian Space Science and Technology Institute and the National Centre for Space Studies of France was signed to support the space sector of Ethiopia.
The other agreement that was also sealed was between the Ethiopian Investment Commission and Castel Group to realize the company’s SOMDIAA, which is a major player in the agro-food industry in Africa, in maize processing plant. Castel via BGI is a pioneer Franco firm that has invested in Ethiopia since the free market was introduced about a quarter of a century ago. The target of SOMDIAA is to invest USD 15 million in the first phase with 60,000 tons of maize processing capacity per annum.
At the event, MACCFA Freight Logistics, a local major freight forwarder, agreed with the French CMA CGM, one of the top three logistics actors in Ethiopia to get a share of the local company.
The global vessel mover CMA CGM has been working with MACCFA, who was a local agent of the French firm, for the past 14 years, according to Mulugeta Assefa, CEO of MACCFA.
Recently the government of Ethiopia has allowed foreign firms to engage in the logistics sector, which was only allowed for Ethiopians, on up to a 49 percent share.
According to the CEO of MACCFA, the government’s decision has helped them to give a share of one of the global logistics giants.
CMA CGM has also agreed with the Ethiopian Shipping and Logistics Services Enterprise (ESLSE), the sole vessel mover and logistics public firm in the country, to work together on Mojo Dry Port. Roba Megersa, CEO of ESLSE, told Capital that the agreement will allow the public enterprise to get knowhow on port handling and sharing experiences from CMA CGM. He said that the French firm has business relations with ESLSE to move cargo. “They are highly interested in obtaining a share of the public enterprise and the current deal that allows cooperation shall show them their future decision,” Roba said.
A letter of intent between Meridiam, Global Infrastructure Hub and the Ethiopian Ministry of Finance’s Public Private Partnership Directorate for the implementation of the Africa Infrastructure Fellowship Program (AIFP) was also signed.
A Memorandum of Understanding between the Canal + Group and Tewodros Abraham was also signed for the implementation of a distribution agreement for the commercialization of a pay-TV offer.
Tewodros told Capital he has formed a TV company about a year ago that shall boost the sector business. “We have agreed on representing the company here in Ethiopia, besides this company is targeted to transmit different programs like history or kids shows in Amharic,” Tewodros said. He said that the agreement is part of the cultural exchange between the two countries.
CLS Logistics, which is owned by Tewodros Abraham, has also agreed with the continental giant logistics actor Bolloré Africa Logistics to provide shares in the local company. “Previously we have been working under agency agreement. In the agreement, which has been extended for 12 years we have represented them here but now we agreed to the joint venture agreement that shall give the local company access to transferring technology, transferring finance and other areas in addition to an actual management share,” Tewodros said.
CLS’s and Bolloré agreement aims to offer their customers dedicated services meeting the highest international standards and mainly targets to improve the supply chain of strategic sectors in the country such as textile and coffee.
The two bodies have also targeted to invest in modern logistics hubs like big warehouses in dry ports.
Tax Addition
Once you tax you never go back
It was on May 17, 2007, that the Council of Ministers issued a regulation to levy surtax on imported items after the last surtax was lifted in 2002. The directive, which was signed by the late Prime Minister Meles Zenawi, excluded items exempted from customs duty.
The surtax is an additional tax on something already taxed, especially a higher rate of tax on incomes above a certain level. Surtax which is also referred to as a provisionary tax is a temporary tax that is to be used both for monitory or fiscal reasons.
The government levied a surtax on imports during the Ethio-Eritrean war in 2000, to subsidize the war. Two years later, when the war was over, the tax was lifted.
Sufiyan Ahmed, who was the then Minister of Finance and Economic Development, rationalized the imposition of the new tax as a fiscal measure to combat inflation.
“The imposition of the tax was necessitated with a view to building the financial capacity of the government needed for the intervention programmed to solve the rise in the cost of living, which is particularly affecting urban residents at a low and medium income level,” he was quoted as saying.
After Ethiopia got out of a significant drought-related contraction economy in 2002/03 its economy began rebounding at a rate of 10.7 percent for the next three years until 2006, which was above sub-Sharan average of 5.8 percent. Also, real per capita income also increased to an average of seven percent. This is why inflation increased from single digit figures before 2005 and skyrocketed to 18.5 percent at the end of 2006. Non-food inflation was as high as 17.3 in the same period of 2006.
Non-food inflation hiked because of large scale public investments, a rapid expansion of domestic credit and upward adjustments in controlled fuel prices in May 2006. The annual national inflation for 2017 was 18 percent and in February it was one percent higher.
In hopes of discouraging consumer demand, the government took monitory and fiscal measures, including introducing surtax on imports. Tadesse Lencho (PhD), a prominent tax lawyer and Assistant Professor of Law, agreed with imposing an additional 10 percent tax at the time to combat inflation.
“Demand for goods goes down when the price goes up,” he said. “As the regulation excluded capital goods the intention is clear that the government wanted to control consumption at the time.”
In addition, international organizations like the IMF and the World Bank recommended that the government take fiscal and monitory measures to combat inflation the year the tax was levied.
The IMF Staff Report for the 2007 Article IV Consultation encouraged the authorities to make forceful fiscal adjustments (some new revenue measures and cuts in nonpriority expenditures) and support them with a tighter monetary policy and greater exchange rate flexibility to ease demand pressures and start to push inflation downward. The same report also stated that official reserves decline mainly because disbursements of external assistance have been delayed.
However, after 12 years, inflation remained double-digit and the surtax remained part of the government’s sources of revenue.
Tadesse argues that in comparison with the nature of the surtax, having it intact for the past 12 years is extraordinary. The government should have lifted the tax early after meeting its goals.
In June 2010 country’s level overall inflation rate (annual change based on 12 month moving average) stood at 2.8 percent which was 33.6 percentage points lower than the corresponding annual average rate of 36.4 percent in June 2009. In this regard, the general moving average inflation rate was 46.1 in February 2009 and consequently declined to 2.8 percent in June 2010. In a similar way, the food moving average inflation rate has declined from 61.1 percent in February 2009 to -5.4 percent in June 2010. The Moving Average Inflation rate of non-food components decreased by 5.5 percentage points as compared to the one observed in June 2009.
“One can’t suggest the government lift the10 percent as inflation is still high and double-digit,” he said. “However, the tax is no longer a means to regulate the inflation and the government should come up with other interventions to combat or raise it significantly as this one is already blunted.”
The renowned tax and business law specialist associates the issue with antibiotics which have been taken longer than ordered by a doctor.
“The knife can no more cut and the tax history of our country shows addictive nature,” said Tadesse.
He recalled the existing tax called Ashura, which was levied on the immovable transaction in the late1940s. Tadesse could even find the proclamation suggesting four percent taxation on the transaction for research purposes, but the tax is still collectible. The purpose of the Ashura tax was used as a title deed. Now, however there is such a deed and the government still collects the Ashura tax.
“The fact that the government didn’t lift this tax on time will prove costly, and this instrument is already blunted. There are many excise taxes” he added.
