The financial and insurance supervisory body, National Bank of Ethiopia (NBE), asked the Ethiopian Revenue and Customs Authority (ERCA) to unblock bank accounts of insurance companies that were blocked in relation to a dispute over customs guaranteed bond settlements.
The insurance companies and the revenue authority have been in disagreement since ERCA requested one billion birr from insurance firms who sold a customs guarantee bond to clients for the import of duty free equipment, mostly vehicles and construction machines, over the past decade.
Reliable sources operating in the sector told Capital that the NBE governor Teklewold Atnafu wrote a letter to the Authority asking ERCA to lift its account freeze at banks until an amicable understanding could occur on the issue through the government’s involvement.
Experts said that the central bank does not have the right to order or become involved in the Authority’s operation but it has asked ERCA to diffuse the situation until a solution can be given by the relevant government agency.
“The disagreement intensified over the past few months and we have talked to NBE,” Hadush Hintsay, secretary general of the Ethiopian Insurance Association (EIA), told Capital.
“A few weeks ago, through the involvement of NBE we met with officials from ERCA and an agreement was reached to alleviate the problem. However, ERCA has continued confiscating equipment, blocking accounts and taking money from insurer’s accounts,” Hadush claimed.
He argued that the authority is undertaking the action based on invalid documents, settled issues and on bonds that closed many years ago.
The solution may not come from ERCA because it is the body that is asking for the funds at the same it is a judge for the case, according to the expert at the insurance industry. “They are using their power,” Hadush claimed.
Experts in the insurance industry who requested anonymity told Capital that some of the payments demanded from ERCA goes back over 15 years. For example, it has asked an insurance firm to settle a customs guarantee bond issued about 19 years ago.
The issue has now affected the insurance business and pushed them to run under liquidity. Some of the insurance leaders told Capital that they are now having difficulty conducting business as usual because the Authority froze their finance at banks.
“We have to settle the claim and at the same time collect premiums from clients but we have not been able to run these operations,” a leader of one of the pioneer insurance companies told Capital.
A customer at another insurance company told Capital that he cannot access his claim, even though the insurance company gave him a cheque to settle it. “I have tried to go to the bank to secure finance for the insurance claim but the bank told me that the account of the client’s insurance company was blocked by ERCA,” an insurance customer who demanded anonymity added.
Hadush agreed with the insurance customer, he said that some of the insurance companies are unable to operate as usual.
He added that the money insurers hold is not their money. “ERCA should understand that it is the assets of the public that insurance companies use,” the association head said.
In its letter NBE said that despite the fact that an agreement was reached during a meeting held 4 weeks ago ERCA is continuing to take action against the insurers. The central bank has expressed its concerns that the action of ERCA may affect the activity of the insurance industry.
The central bank insisted that the authority halt its measures until the government hands down a final decision about the issue.
Even though Capital got confirmation from the association and insurers that NBE wrote a letter to ERCA, it is unable to confirm this from ERCA.
Ephrem Mekonnen, Public Relations Head of ERCA, told Capital the letter was not received by relevant offices at ERCA, but he did confirm that one of the insurance firms sued ERCA in relation to the issue.
Insurers claimed the actions of ERCA are completely unacceptable since most of the cases have expired.
Experts said that ERCA can claim bonds within a specified period, but it is now is requesting expired bonds. In addition, some of the claims have already cleared and the companies who got the guarantee left the country.
Asseged Gebremedhin, expert on the insurance industry and deputy CEO of operations at the National Insurance Company of Ethiopia, told Capital that the current actions taken by ERCA may affect investment and development in the country. He said that a time bar is given for all bonds, while ERCA is requesting claims that have already passed their statute of limitations. “These actions also impact the country’s hard currency generation since investment and business are affected,” he argued.
According to the procedure, the equipment or machines, which are mainly imported by multinational companies with projects in the country, are imported duty free via a customs guarantee bond where they have to re-export within 180 days after the end of the statute of limitations of the bond. Experts said that ERCA is responsible for following the process and making claims on time and ensuring that the imported equipment was not re-exported within 180 days after the end of the guarantee.
However, if the importer sold the equipment here before the expiration of the agreement, then the customs duty has to be settled. According to the usual trend the maximum customs guarantee bond time bar is less than 10 years.
The customs proclamation issued in 2014 in its article 117, sub article 2 stated that the authority shall demand a security bond ‘to ensure the re-exportation of goods imported on a temporary basis without payment of duties and taxes or, in case of default, to ensure the payment of the duties and taxes’.
The proclamation article 119 sub article 3 indicates that where the debtor fails to discharge his or her obligations the guarantor shall immediately effect the payment.
“We claimed that we are not liable for the claims when time frame has expired,” Asseged told Capital.
“The authority is responsible for making claims legally through the courts as opposed to confiscating the property of individuals and blocking bank accounts,” according to Zafu Eyessueswork, a prominent expert on the insurance and finance industry.
He says that the current operation is illegal since they haven’t followed appropriate legal procedures. He agreed that some members of the private sector are involved in illegal activities, but at the same time the bond is crucial for the development of the country.
“As far I know most equipment is re-exported during the allowed time frame, and bonds are usually given during the appropriate time frame,” he added.
Some of the insurance leaders claimed that the operation of ERCA goes against Customs Proclamation no. 859/2014 issued four years ago. “According to the proclamation ERCA is only able to block the bank account for ten days and it must obtain court authorization but now this is not happening,” a CEO of an insurance company told Capital.
“Before their claim they have to come up with their proof that the debtors have not settled the duty or re-exported or damaged the products,” he added.
NBE asks ERCA to unblock insurance firms bank accounts
Egg, milk prices increase dramatically
One egg which was sold for 3.50 birr a month ago now has gone up to five birr at local markets. Milk prices have also increased by 5 birr to 21 birr. The price increase is being blamed on the rising price of animal and chicken feed, the gap between supply and demand and the many ‘middlemen’ eggs go through before reaching customers. According to poultry farmers maize, one of the ingredients of chicken feed increased more than 40 percent from 800 birr per quintal to 1,100 birr, and a similar price increase has occurred with soy beans, which are imported from abroad. One bundle of dry grass, which is consumed by cows and ox, has jumped from 60 to 85 birr. Restaurants have also responded by increasing their prices.
Tsegerada Fikadu, Poultry Development Director at the Ministry of Agriculture said modern poultry practice should expand to supplying large volumes.
“We have nearly 60 million chickens that travel in and out of this place but only two million are raised on modern farms. There are only 18 modern poultry farms in Ethiopia. So we cannot escape high price variation every year unless we move toward modern farming. As a government we are developing a new poultry policy to raise chickens properly.’’
She added that the brokers are also causing problems by taking huge and unnecessary profit margins.
“There are groups who buy eggs at a low price and sell it to the market at a high price so we should all work to tackle this problem.’’
Ethiopia is the 14th most populous country in the world. However, according to the Food and Agriculture Organization of the United Nations (FAO), it produced only 60,000 tons of poultry meat in 2012. Annual per capita poultry meat consumption stands at only 0.6 kg, while annual per capita egg consumption is 0.40 kg.
From the total of 60 million chickens only 18 million hatch eggs and 94 percent of Ethiopian poultry is farmed traditionally. Last fiscal year the nation produced 1.4 billion eggs.
The Ministry of Agriculture says it is working on artificial insemination to develop a better breed of chicken.
Currently, in Ethiopia, the demand for dairy products is met through domestic production and through imports. The growing population, expansion of urbanization and urbanized lifestyles, as well as the income growth in Ethiopia are expected to increase the demand for dairy products.
Ethiopian, French Korean War patriots to meet in Addis
The 65th anniversary of the armistice of the Korean War will be commemorated in Addis from June 4-7th 2018 by bringing together both Ethiopian and French patriots who fought in support of South Korea during the Korean war.
Thirteen French veterans of this multinational operation will be welcomed in Addis Ababa and will meet with their Ethiopian brothers in arms, members of the Kagnew Battalion, which was sent to Korea in 1951 by the Emperor Haile Selassie said Col S. Richou, Defense Attaché at the French Embassy.
The French Embassy in Addis Ababa in collaboration with the Ethiopian section of the Legion d’Honneur society and the associations of Korean War Veterans of both France and Ethiopia will commemorate the French and Ethiopian joint involvement in the first United Nations peacekeeping operation in Korea.
Next Tuesday both patriots will visit the Korean Patriot Memorial near Afencho Ber.
A military ceremony at the Peace-Keeping Main Department, a conference at the Alliance ethio-francaise to share experiences and to talk with students and researchers are scheduled as part of the commemoration.
The Korean War started in 1950 when North Korea invaded South Korea. A multinational force was deployed with a United Nations Security Council mandate to provide assistance to the Republic of Korea to repel the armed attack and to restore international peace and security to the area. Due to the alphabetic order of their country name, French and Ethiopian battalions often replaced each other on the battlefield, as during the famous battle of Crèvecoeur (summer 1951).
The division of Korea occurred at the end of World War II in 1945, and tensions erupted into the Korean War in 1950. During the Cold War, North Korea was backed by the Soviet Union, China, and other communist states, and South Korea was backed by the United States and its allies.
“Many French and Ethiopian companies have partnered to strengthen the memory of our heroes engaged for peace and freedom in Korea. They have joined their effort with the French Ministry of National Defence, the Ethiopian Section of Legion d’Honneur Society and both war veteran associations. This event must be seen as another building block in the fantastic work done by Seongchan Do for many years to pay tribute to the Ethiopian War veterans,” said Col S. Richou, at a press conference held on Tuesday May 29.
“This commemoration also underlines the significant commitment of Ethiopia in peacekeeping operations together with other countries all around the world; Ethiopia is indeed one of the first countries in the world to provide peacekeepers,” he noted.
Today, the 188 veterans of the Kagnew Battalion are grouped in an association, headed by Colonel Melesse Tessema.
Women and media in Ethiopia
The Swedish embassy in Addis Ababa held a seminar focusing on “Women and Media in Ethiopia” in the presence of prominent media professionals, students, academia and activists.
Speaking at the opening of the seminar, Torbjörn Pettersson, ambassador of Sweden in Ethiopia, said as Sweden was one of the leading countries in the world in promoting women empowerment in media and other sectors it was important to share that experience with Ethiopia.
“Here in Ethiopia we are particularly committed to make our feminist foreign policy a reality and contribute to improved gender equality in Ethiopia, be it in our political work, in our development cooperation programs, in consular matters or internally here at our Embassy,” the ambassador said.
“Swedes are strong believers in that gender equality is not only a goal in itself but essential for deepening of democracy and for a sustainable economic growth.”
“We have formed a gender equality network that will act as our advisors when it comes to gender equality and women’s rights. And we want to create opportunities for organizations and individuals promoting gender equality in Ethiopia,” he further said.
State Minister of Women and Children Affairs, Aster Dawit, on her part said that the ministry is working towards promoting gender issues in collaboration with other institutions.
A research paper presented by Enguday Alemayehu, researcher on gender studies at the Addis Ababa University (AAU), entitled “Women and Media in Ethiopia” covered a wide-range issues including women’s participation in media and media production, women’s portrayal in TV commercials, television and radio series dramas, in entertainment and Sunday television programs as well as women’s portrayal in Ethiopian songs. Her research was one of the focal discussion points during the seminar. Participants have also debated the overall gaps in gender and the media in Ethiopian context.
Another report presented by Meron Aregaw, executive director of Ethiopian Women Lawyers Association (EWLA), revealed the gap in Ethiopian constitution and different proclamations regarding gender and women’s right.
Bethlehem Negash, media professional and member of the Ethiopian Media Women Association (EMWA) on her part focused her presentation on women in media practice in Ethiopia and the challenges. Among the barriers hindering women’s participation in media, Bethlehem raised the 2008 mass media and the 2009 anti-terrorism proclamations as the main ones.
Lars Tallert of the Swedish Fojo Media Institute also shared his experience from the region and other countries so as to give perspectives and lessons to learn.
Representatives from the Ethiopian Broadcasting Authority suggested in the formation of a task group from all stakeholders to continue addressing the challenges of women and media in Ethiopia, starting by working on a databank.
The program was expertly moderated by Blen Sahilu, Legal Professional, women rights activist and Co-Founder of the Yellow Movement.
