ETHIOPIA: Resignations & more – 27th Jun 2024

Salaam salaam from BA! This is the Rorshok Ethiopia Update from the 27th of June twenty twenty-four. A quick summary of what's going down in Ethiopia.

The President and Vice President of the Supreme Court of the Tigray Region submitted their letters of resignation on Monday the 24th. Both of them were appointed nine months ago and they stated in their resignation letter that they have been working to improve the region’s justice system, which has been at serious risk and that they have been taking steps to reform the system. They added that they haven’t been able to duly carry out their functions because of various reasons including increased intervention from government officials. Anonymous sources told news outlets that until Getachew Reda, the Region’s interim president, accepts their resignation, they are legally bound to work.

Still in Tigray, on Tuesday the 25th, many women held a large demonstration in the region’s capital Mekelle, calling for an end to sexual violence against women and justice for victims. They marched to the interim president’s office and met with the region’s justice bureau head. He said that the march shows the need for change, condemned violence against women and expressed the government’s commitment to work towards maintaining law and order and bringing perpetrators to justice.

That same day, there was a similar protest about violence against women in the town Adigrat, in the Tigray region. Protesters garnered support from government officials, including the city’s mayor, who said the executive is working on holding criminals accountable.

In financial news, the federal government is working on amending the Value Added Tax (or VAT) bill. Now, commodities and services previously exempt will be subject to tax. For instance, Telecom, water, and electricity services have been exempted but with the proposed bill, that will come to an end.

Last week, the House of People’s Representatives Plan, Budget, and Finance Affairs Standing Committee had a stakeholder meeting with Ethio Telecom, Safaricom, and the Ethiopian Electric Utility. Representatives from Ethio Telecom and Safaricom shared their concern that levying the VAT now might stunt the transition towards a digital economy and might affect low-income consumers. Generally, the stakeholders believe these essential services should remain exempt from the VAT, but government officials seem adamant that they want to increase revenue through the tax.

More about taxes as the government is planning to decrease the tax rate with a bid to support low-income households. The Ministry of Finance is conducting a study to determine a lower rate. Currently, if a worker earns more than six hundred birr or ten US dollars, they have to pay an income tax at a rate of ten percent and if they earn more than ten thousand birr or a hundred and seventy US dollars, the tax rate jumps to thirty-five percent. The Ministry is planning on increasing the lowest eligible taxable income and the threshold of the thirty-five percent tax rate taking into account inflation.

The House of People’s Representatives is also deliberating over another bill but this one is about the banking sector. Even though members of the House welcomed the draft, they expressed concern over the capacity of local companies to compete with foreign banks and the National Bank’s ability to regulate and monitor the banks’ activities. Despite such concerns, the House decided to refer the draft to the Plan, Budget and Finance Standing may not be as controversial as the previous one. On Tuesday the 25th, offices from the executive branch presented the Banking Business Proclamation draft before the House. As we mentioned in previous shows, this bill will allow foreigners to engage in Ethiopia’s Committee for further scrutiny.

The House approved this bill this week, and it’s now a law that will compel regions to compensate the federal government for large projects implemented in the regions. During the session in which house members approved the draft, they said that this law would help narrow the gap between the cost of projects and the compensation asked for them. The compensation would be determined by taking into account the budget that the federal government allocated to the regions.

There was a rare win for Ethiopia as the country topped the list of East African countries that brought in the most foreign direct investment in the fiscal year of twenty twenty-three/twenty twenty-four. The country attracted almost two hundred billion birr or three point three billion US dollars in the fiscal year, surpassing heavy-hitting neighbors such as Kenya and Uganda by a significant margin. Ethiopia’s Investment Commission says it plans to close the fiscal year by reaching the three point five billion US dollars mark. China remains a strong partner in the investment front as well. The Far East Asian country accounts for half of the foreign direct investment that Ethiopia has managed to attract this fiscal year.

In some news on education, there was a shortage of textbooks in Ethiopia last year. To solve this, the government decided to commission foreign companies to print the books because local companies’ print quality is below standard.

Now, the executive has commissioned a Japanese company to publish about twenty million textbooks. Recently, The Ministry of Education announced that it is planning to bring in and distribute these books to regions in the upcoming academic year. This past year, the government brought in over twenty million books and distributed twenty million to public schools and two million to private schools — there was no shortage as this amount was enough. Reporters asked officials at the Ministry about remarks, saying that the books had defects in their print and had quality issues, which the officials denied.

Moving on, The Ethiopian Capital Market Authority has issued its first-ever individual securities investment advisor license to veteran Habtamu Eshetu who has twenty-five years of experience in the business investment scene teaching, consulting and researching. According to the Authority, Habtamu has the needed educational background. The Director General of the Authority said he’s happy with this development and hopes more professionals will apply and obtain licenses and ultimately contribute to the market's growth. Recall that the Authority had issued its first-ever advisors license to reputed international consulting firm Deloitte.

Next up, there’s been long lines at retail gas stations all over the capital, Addis, because of shortages. At first, people didn’t know the reason behind the shortage but the confusion was laid to rest when the Ethiopian Fuel Suppliers Enterprise Director said that transporters didn’t dispatch gas from Djibouti last week due to the Eid Al-Adha holiday. They said that gas would be brought in soon and there would be enough supply. However, some people allege that retail stations are only selling the gas that they have to third-party vendors using plastic bottles. Even though the Petrol and Energy Authority has repeatedly said that it will take measures against retailers, consumers say these people are still engaged in these malpractices.

And to close this edition, more energy news. There are a lot of electric vehicles (or EVs) roaming around in the streets of Addis but it might surprise you that until last week, there wasn’t a single EV fast charging public station. EV users were charging their vehicles at home. However, late last week, Total Energies unveiled the first fast-charging EV station at its service center, which is located at the heart of Addis. The Company’s managing director said that access to charging infrastructure is a major concern in Ethiopia and that’s what motivated the company to build the station.

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

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Ciao!