The Council of Ministers reacted to the formation of the National Reconciliation Commission which has been advocated for by several politicians and civic society groups recently.
The council met on Wednesday November 14 and approved the draft proclamation to form a reconciliation commission and send it to the parliament for ratification.
Since the coming of EPRDF after the fall of the Derg regime in 1991 several political activists and individuals who have followed the country’s political system have said the EPRDF led government should come up with a reconciliation and national consensus to halt public grievances and establish a smooth and democratic political platform in the country. Even though political elites asked for reconciliation, the ruling party refused it, claiming that there were no grievances in the country.
The sector actors have also claimed that ignoring the reconciliation issue has accelerated the grievances and increased political instability in the country.
The current response of the council is an answer to close to three decades of requests from opposition parties and other political elites.
The reconciliation commission may facilitate the platform to stabilize the peace process in the country and accelerate the reform introduced since the coming of PM Abiy Ahmed (PhD).
The commission will come up with solutions to political, social and economic differences.
In its latest meeting the council also approved the draft proclamation for the formation of an identity and administrational border commission. Since the country was divided by an ethnic based federation of the constitution drafted and ratified by the EPRDF led council, identity based conflict and inter border disagreement has been observed. For instance the identity claim in SNNP, Amhara and the border claim in Somali, Oromia, Gambella and Benshangul Gumuz has occurred over the past 30 years.
The identity commission is expected to come up with independent and scientific based solutions, according to statement of the Council of Ministers. The proclamation is expected to be ratified by the parliament.
Besides the two proclamations the council has also evaluated draft regulations for the formation of different federal offices in relation to the current restructure of ministry offices. Some of the new offices include: a water development commission, irrigation commission, drainage development authority, technology and innovation authority, geo spatial information institute.
In an unrelated development the Office of the Prime Minister has announced that the current campaign against corruption and human right abuse crackdown will continue. In the statement the PM described individuals who engage in illegal activity as a cancer to the country. It said that these individuals are not representative of any group or ethnicity.
Reconciliation Commission comes out the birth canal
More companies to face audits this year
The Ministry of Revenue (MoR) announced that it would conduct a risk-based audit of over 3,089 business during the current fiscal year. About 2,179 companies will undergo a risk-based tax audit which is a significant increase from previous years.
“Because there are many uncollected taxes in Ethiopia the audit gap is expected to rise parallel to our auditing capacity,” said Zeru Gebru a director at the Ministry. “We have about 450 auditors and based on our performance audits are going to increase.”
The Ministry uses 22 parameters to determine risk. Some major red flags that will bring about an audit include consistently declaring loss or an ongoing loss or listing many unnecessary expenses. Known as cost aggravation, this is many done by construction contractors who often have declared purchases that do not actually exist.
Another huge red flag is when the assets and debts are out of proportion. If debts keep increasing and assets keep declining the Ministry is likely to investigate for illicit activities.
Desk audits will be conducted on companies listed as medium risks. These are conducted over a few days by going through documents published by the taxpayer.
Another problem frequently found in the construction sector is bulging costs, when companies who frequently make large profits make many purchases which can then be inflated illegally.
“We will trace if the cost is real or not only by conducting the appropriate audits,” said Zeru.
The large taxpayers’ office (LTO) is conducting its risk-based audit of its 272 taxpayers who have entered into a high-risk zone based on the 22 parameters. The branch office currently has 770 taxpayers after the government decided to take the public enterprises out of the branch office last year.
Among the total risk-based audits plan by the LTO 46 of them are companies working in the import and export area. The Office which consults the companies on the high-risk existence in the sector the 172 Importers and exporters participated and raised their issues to the ministry. ERCA faced 10billion birr revenue gap for the quarter
In its quarterly report, the ministry announced that the collected revenue was 3.21 billion birr lower than planned. Revenue to be collected from the inland tax was aimed to be 28.8 billion birr. However, this was declared to be 7 billion birr, compared to collectable customs duties which raised the total revenue uncollected to 10.72 billion birr, according to Netsanet Abera, Deputy Director at the Authority.
“The decline in revenue is lower than the same period last fiscal year,” Netsanet told Journalists. “We are hoping the gap will be filled with the current month’s revenue collection when 90percent of the tax payers will pay their annual taxes.”
Berhan Bank profit slightly declines
Even though they are a new player in the financial industry young Berhan Bank (BB) has continued growing despite a slight reduction in profits. BB has amassed 1.5 billion birr total income for the year which is an increase of 36 percent. As usual interest is responsible for most of their income. The financial statement indicated that the interest income has expanded by 60.5 percent compared with a similar period a year ago reaching 1.1 billion birr.
BB claimed that their profits had gone down somewhat because of the country’s socio-economic situation which has put pressure on the entire banking industry. According BB’s statement in the 2017/18 financial year the bank earned 410 million birr profit before tax, which is a slight decrease from last period’s 428 million birr.
The profit without tax and other expenses stands at 311 million which was 316 million birr a year ago. The earnings per share also declined decrement compared with the 2016/17 performance. According to the annual report the earnings per share was 20.4 percent, which means it was 30 percent per 1,000 birr share.
On the other hand the bank’s assets reached 14.1 billion birr, which is an increase of 33.5 percent compared with the preceding year’s 20.5 billion birr.
For the year Berhan’s capital strength continued significantly. In 2017/18 the total capital increased nearly 20 percent or one fifth compared with the 2016/17 fiscal year.
According to the report, the bank’s total capital has reached 2.2 billion birr with a paid up capital of 1.7 billion birr, which is an increase of 22.4 percent.
In terms of deposit mobilization the bank was able to collect almost 11 billion birr which is a growth of 41.6 percent compared with a year ago.
From the deposit mobilization, savings took a share of 53.1 percent followed by demand deposits. One of the achievements for deposit mobilization is the expansion of branches and services which has led to a 43 percent increase of depositors that has reached 523 thousand.
The bank’s outstanding loan performance has been stood at 7.2 billion birr and grown by 33 percent. The weak economic condition and export performance has affected the bank’s international banking activity.
With regards to international banking BB mobilized USD 108.5 million, which is a 13 percent decrease compared with the 2016/17 financial year.
Bank of Abyssinia reaches one million depositors
The Bank of Abyssinia (BoA), one of the first two private banks since the free market was reintroduced in the early 1990s, has continued with several achievements in the sector in addition to surpassing the one million mark in their number of depositors.
In the fiscal year that ended on June 30 BoA amassed a total income of 3.3 million birr which is a growth of 37.8 percent. Expenses grew significantly at 47 percent. Because of the increase of depositors interest took 42 percent of the total expenses.
During the year the bank registered nearly 766 million birr in gross profits before tax. Gross profits increased by 89 million birr which is a 13 percent increase from 201/17. Accordingly profits after tax reached 563 million birr which is a 52 million birr increased compared with the preceding year.
The bank that has 2.56 billion birr paid up capital has registered assets of 31.9 billion birr for the year, which was 25.8 billion birr a year ago, while the capital has also stood at 4.3 billion birr which is a 27 percent increase.
The number of depositors at the bank has dramatically increased. The statement of BoA indicated that in the 2016 /2017 fiscal year the number of depositors stood at 750,000, while it has now increased by 35 percent and reached more than one million.
Besides the growth of the number of customers the bank’s deposit mobilization went up by five billion birr within a single year.
The report indicated that the total deposit mobilization at the end of June reached 26 billion birr that was about 21 billion birr a year ago. The growth of deposit mobilization has placed the bank as one of the most competitive banks and a key factor in the sector.
In terms of advances and loans BoA has facilitated close to 4 billion birr for the fiscal year amounting to a total of 18 billion birr.
Loans and advances grew by 28 percent compared with the preceding year. For the year term loans and over drafts grew by 35 percent. According to BoA’s financial report, the proportion of loans indicated that term loans took the lion’s share by 66 percent and over draft and advances stood at 21.3 and 12 percent respectively. From the total loan’s domestic trade took the highest portion followed by exports, construction and industry.
The year saw a record shortage of hard currency but BoA was to mobilize USD 382 million which is a decline of 10 percent compared with the performance in 2016/17 financial year. Declines were in incoming transfers, money transfers, and interest on corresponding banks but other factors exhibited positive performance, according to the report.
Last fiscal year the bank has opened an additional 53 branches increasing the number of branches to 286. In terms of the modern IT banking sector development the bank has registered marvelous performance in mobile and card banking. The report stated that mobile banking users doubled and the card banking service grew by 83 percent.
