Episode 143

ETHIOPIA: Disruptions over Canceled Flight & more – 29th Aug 2024

Six passengers detained over a canceled flight, the US ambassador in Tigray, Ethio-Somali tensions brewing, the National Bank amending gold regulations, the quality of education, and much more!

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Transcript

Salaam salaam from BA! This is the Rorshok Ethiopia Update from the 29th of August twenty twenty-four. A quick summary of what's going down in Ethiopia.

Thursday the 22nd was a very foggy day in and around the capital, Addis, and a lot of flights were delayed or canceled due to the weather, some of them after passengers had boarded the planes. On one of these flights, six passengers, social media influencers among them, refused to exit the aircraft and caused disturbances when they were told that the flight had been canceled. They strongly refused to leave and commanded that the plane take off, saying that they didn’t care if it crashed. They also live-streamed the altercation through their social media handles. They were shortly detained and were brought before federal court on charges of disturbances and terrorism. The suspects were denied bail and were told to appear before court on Monday the 9th of September. Police later revealed that one of the suspects was a recidivist who was previously sentenced to death, but the penalty was commuted and, in the end, he served seventeen years in jail.

These passengers were headed to Mekelle, the Tigray region’s capital, where there’s political tension. The feud between the heads of the Tigray People’s Liberation Front (or TPLF), which is the region’s dominant party, and the interim administration has grown over the past few weeks.

In the midst of this quarrel, on Monday the 26th, Ervin Massinga, the US ambassador to Ethiopia, went to the region. Getachew Reda, the region’s interim president, welcomed him and sat down to discuss various issues, including the implementation of the Pretoria agreement (which ended the war between the TPLF and the federal government). They also talked about the elephant in the room — the rift between the TPLF and the current administration. The ambassador stressed the importance of resolving disputes through dialogue. The TPLF recently announced that those involved in the interim administration do not represent the party, while the interim administration removed zonal administrators loyal to the TPLF, a move the party strongly criticized.

In business news, there’s panic in the horticulture sector as the EU (a major export destination for flowers grown in Ethiopia) is deliberating on a law that bans imports from countries where workers are being exploited because of extremely low wages. There are currently over seventy exporting companies that employ about a hundred and thirty thousand people. However, only six companies have gotten recognition from Fair Trade, an international organization that monitors compensation for workers and advocates for a fair trade system.

Currently, most of the companies are paying far less than what the organization says should be the minimum wage. The organization is also lobbying the government to fix the minimum wage. The horticulture sector isn’t the only one that could lose its European customers because the EU is also set to enact a law that bans the import of goods produced on deforested land. This rule has coffee exporters worrying and looking for other export destinations, mainly in Asia.

More about business as the Ethiopian Securities Exchange, the country’s first–ever formally organized stock exchange, announced that it is closing its capital raise. The Exchange far exceeded its expectations. The capital raise began in November last year with the goal of bringing in six hundred million birr, which is over ten million US dollars, taking into account the exchange rate back then, that is fifty-six birr per dollar, while now it’s 105 birr. Not only has the Exchange sold this much in shares, but also brought in over twice what it had projected at one and a half billion birr, which is more than twenty-six million US dollars. The Ethiopian Investment Holdings, the country’s sovereign fund, owns a quarter of the shares of the Exchange, while domestic and foreign investors copped the remaining seventy-five percent. The Exchange’s CEO and other officers say it is edging ever closer to launch and will play an essential role in developing the economy.

There are a lot of major companies that the government owns and operates in Ethiopia. One of them is the Ethio-Djibouti Railway. Last month, Prime Minister Abiy Ahmed appointed Takele Uma, the former Minister of Mines and former Addis mayor, to serve as the company’s CEO. On Wednesday the 29th, at a consultation with employees in Dire Dawa, Takele announced that he would turn over a profit in three years to this company that has been unsuccessful so far. He pointed out that the six-year-old company has been reporting significant losses and is drowning in debt.

Recently, Ethiopia and Somalia have not been seeing eye-to-eye because of an agreement between Ethiopia and Somaliland, which grants Ethiopia access to the Red Sea in exchange for statehood recognition. Recall that Somalia considers Somaliland part of its own territory. Last Wednesday the 21st, the Somali Civil Aviation Authority warned Ethiopian Airlines that unless it responds to accusations saying that it is encroaching on Somalia’s sovereignty and mistreating Somali passengers, it will ban the company from flying in Somalia.

A few days later, media outlets revealed that officials from the Ethiopian Civil Aviation Authority had met with their Somali counterparts in both Addis and Mogadishu, Somalia’s capital. They had reached an agreement allowing the carrier to continue flying to destinations in Somalia.

However, this does not mean that tensions between the two countries have de-escalated. In fact, Somalia has been reaching out to allies to get support. One of them is Egypt, which is a country that has seen its relationship with Ethiopia deteriorate over the years, protesting the construction of the Grand Ethiopian Renaissance Dam.

This week, news outlets reported that up to ten thousand Egyptian soldiers and military equipment have arrived in Somalia. Even though the military support was granted as part of the African Union Support and Stabilization Mission in Somalia, the move has raised eyebrows. Ethiopia’s Ministry of Foreign Affairs released a statement shortly after, saying that Ethiopia will not tolerate forces that will destabilize the Horn of Africa to pursue their senseless, short-term goals.

Next up, on Monday the 26th, The Orthopedics and Emergency Treatment Specialists’ National Association reminded the public in a press release that attempting to cure joint and bone damages using traditional means may cause health complications, more severe injuries, and even death. The Association revealed the result of a study that same day indicating that simple cases are leading to complications because patients are opting for traditional treatment. The Association said that although care for bone and joint injuries has become more available, the number of people seeking old, outdated solutions has increased.

Also on Monday, Berhanu Nega, the Minister of Education, said at the Addis Ababa Education Bureau’s meeting that his office is working to have the quality of education in public schools reach — if not exceed — the standards of private schools in ten years. He also said there are talks to establish a teachers’ bank to ensure that educators will benefit fairly from the economy. The education bureau head focused on disciplinary transgressions by both students and teachers as a challenge to the education system and also talked about the refusal of some private schools to accept the government-issued curriculum.

The education system is highly regulated in Ethiopia, like the banking industry. The National Bank regulates it; and also plays a huge role in the gold market. On Tuesday the 27th, the Bank announced that it is changing its gold pricing policy, ending the fixed premium system, which gives better prices to sellers based on quantity. Additionally, the Bank introduced incentives for sellers, offering more gold, which allows them to hold half of what they exported in foreign currency for three months. Previously, these sellers were allowed to keep less and only for one month.

Aaand that’s it for this week! Thank you for joining us!

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