About Us - ሪፖርተር - Ethiopian Reporter - #1 Best And Reliable News Source In Ethiopia (2022)

Officials at the Ministry of Agriculture are worried about the global fertilizer scarcity as the nation becomes unable to endure the increase in the price of the agriculture input owing to the conflict between the Ukraine and Russia.

The global fertilizer crunch continued as the country sees a growth in demand for fertilizer due to expansion of irrigation farms and new agriculture projects that prompt farmers to increasingly shift to artificial fertilizer with subsidized price.

“Demand is growing substantially as Meher farms expand and irrigation activities surges across the country,” said Umar Hussein, the Minister of Agriculture, in an event held at Skylight Hotel to honor stakeholders who have been involved in the timely delivery and distribution of fertilizer.

Last year, the price of fertilizer more than doubled in the international market, a situation that have bulged Ethiopia’s annual budget for the commodity from USD 600 million to USD 1.2 billion.

“The last year has been very challenging due to forex shortage and security concerns that have affected distribution,” Umar said.

This week, the World Bank warned that there would a further increase in price of fertilizer, with the rapid increase in gas prices turning into an increase in the cost of the commodity.

“The challenge is meeting the immediate demand for fertilizers to support next season’s crops. Current projections suggest that Africa’s unmet demand could reach four million metric tons this year, with West Africa facing the most acute challenges this growing season,” said World Bank Group President, David Malpass, during the opening of the 77th session of the UN General Assembly (UNGA 77) on Tuesday, 13 September 2022.

Last year, the Ministry had to float a tender more than twice as suppliers failed to fulfill contracts due to the global fertilizer crisis, which was first caused by the coronavirus pandemic and then worsened by the war between Russia and Ukraine, which supply over 50 percent of inputs needed to produce urea.

“Taking a lesson from last year, we are in contact with potential suppliers to avoid delays. Invitations have been already made,” said Sophia Kassa (PhD), State Minister for Investment and Input Sector at the ministry, toldThe Reporter.

During the last fiscal year, almost 13 million quintals of fertilizer was supplied by Fertiglobe, one of the largest producers of the nitrogen fertilizer in the Middle East, and Morroco OCP, a renowned supplier in Ethiopia, where it is currently building a fertilizer plant in partnership with the government.

The government expended a total of 64.5 billion birr for the procurement, shipment and distribution of fertilizer last year. It accounts for 11.4 percent of the budget during the same period.

The government had to allocate another 15 billion birr in subsidy as farmers become unable to withstand the surge in price of fertilize quadrupled in the local market.

Three directives on broadcast media go operational effective this month

The Ethiopian Media Authority enacts three directives to regulate the public, community, and commercial broadcast media. They are part of the eight directives the Authority has been issuing since the ratification of the media proclamation in April 2021.

To be applicable beginning this month, the directives list the rights and responsibilities, and how licenses are granted for the public, community, and commercial broadcasting media. The directives rule on how television and radio media should conduct their reports during national occasions like elections.

Lists of administrative measures by the Authority as well as legal actions have also been stated. Beginning from warnings to suspension of licenses and legal actions, several measures would follow should the media houses engage in illegal activities.

One of the actions, as it was the practice before, was to prohibit the dissemination of a program considered to be a danger to national security before going public on any of the broadcast media.

On the issue of impounding and injunctions, article 45 of the proclamation states that prosecutors might request a court order to stop publication of the programs. In the event of an emergency, the broadcast of the programs will be called off with the order of the Ministry of Justice. This should be notified to the court of law within 48 hours.

The Authority also prepared and approved several other directives to govern the media landscape in Ethiopia. These include directives for religious broadcasting services, online media, and print media.

Following the approval of the religion broadcasting service directive, which forced the registration of religious-based media, several of them have been registered.

Among the 46 media outlets that started the process and are working with the Authority to finalize registration, 23 have received their licenses, according to Dessie Kefale, communications director at the Authority.

“There was a deadline on which all had begun the registration process. Some of them were already operational for a long time, of course,” he said.

Before the ratification of the proclamation, as Dessie explained, there had not been adequate legal frameworks for all kinds of media houses.

All the directives and regulations before last year’s proclamation were based on the Mass Media and Access to Information issued in 2008, and Broadcasting Service Proclamations issued a year before that.

“There are several other laws under discussion and preparation, which includes a directive on hate speech and misinformation,” Dessie toldThe Reporter.

It is the “largest pandemic fraud” in the US

Ethiopians are among 47 people who have been charged in connection with a fraud scheme in the US involving Feeding Our Future. The alleged fraud is said to be the largest pandemic fraud in the country, involving USD 250 million.

The defendants are charged across six separate indictments with charges of conspiracy, wire fraud, money laundering, and bribery. The defendants are suspected of creating dozens of shell companies to enroll in the program as Federal Child Nutrition Program sites, while allegedly creating shell companies to receive and launder the proceeds of their fraudulent scheme.

The defendants submitted false invoices purporting to document the purchase of food to be served to children at the sites and submitted fake attendance rosters purporting to list the names and ages of the children receiving meals at the sites each day, according to the US Department of Justice.

“These indictments, alleging the largest pandemic relief fraud scheme charged to date, underscore the Department of Justice’s sustained commitment to combating pandemic fraud and holding accountable those who perpetrate it,” said Attorney General Merrick B. Garland. “In partnership with agencies across the government, the Justice Department will continue to bring to justice those who have exploited the pandemic for personal gain and stolen from American taxpayers.”

Feeding Our Future’s founder and executive director, Aimee Bock, was among those indicted. She is charged with conspiracy to commit wire fraud, conspiracy to commit federal program bribery, and federal program bribery. She oversaw the USD 240 million fraud scheme carried out by sites under Feeding Our Future’s sponsorship, according to the US Department of Attorney.

An Ethiopian born Abdikerm Abdelahi Eidleh, 39, of Burnsville, Minnesota, is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit federal program bribery, and money laundering. Eidleh was an employee of Feeding Our Future who solicited and allegedly received bribes and kickbacks from individuals and sites under the sponsorship of Feeding Our Future. Eidleh also created his own alleged fraudulent sites.

Ethiopian born-US nationals, Bekam Addissu, 39, Hadith Yusuf, 34, and Hanna Marekegn, 40, are each charged with one count of conspiracy to commit wire fraud. Another six siblings who are originally from Ethiopia have also been charged with wire fraud, federal programs bribery, conspiracy to commit money laundering, and money laundering.

Another Ethiopian-born US national, Liban Yasin Alishire, 42, the president and owner of Community Enhancement Services Inc., a company located in the JigJiga Business Center in Minneapolis, is charged with receiving more than USD 1.6 million in fraudulent Federal Child Nutrition Program funds. Ahmed Yasin and Khedir Jigre have also been charged with conspiracy to commit wire fraud and money laundering in the same center. These three defendants have been accused of buying properties, including beach property, in Kenya.

Another defendant with links to Kenya, Salim Ahmed Said, 33, of Plymouth, Minnesota, is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit federal program bribery, federal program bribery, conspiracy to commit money laundering, and money laundering. Said was the owner and operator of Safari Restaurant, a site that received more than USD 16 million in fraudulent Federal Child Nutrition Program funds, the US Department of Justice said.

“An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law,” the department said.

A startling revelation regarding the war in northern Ethiopia was announced last week by the International Commission of Human Rights Experts on Ethiopia, an independent organization tasked by the UN Human Rights Council with conducting a thorough and impartial investigation in Ethiopia. The stern warning emerged after the organization released a study that stated there are reasonable grounds to believe that parties to the conflict had violated and/or abused human rights since combat began in November 2020.

It was a report that not only angered federal government officials but also countries and experts that had already questioned the mission and real interests of the recently formed committee of experts.

“The report of the commission is prepared in defiance of the UN best practice guidelines such as professional independence, impartiality, and standard of proof,” said Tadesse Kassa (PhD), secretariat of the inter-ministerial taskforce that was formed by Prime Minister Abiy Ahmed, slamming the UN Commission of Human Rights Experts report of human rights violations in the northern Ethiopia war.

At a press conference held on September 21, 2022, he referred to the Commission’s initial report, which was created with only two full-time human rights investigators and remote interviews, as nothing more than mediocre. At the press conference, the Ministry of Justice unveiled the task force’s first phase report, which was prepared by 158 experts deployed in the conflict-affected Amhara and Afar regions.

In its first phase investigation report, which covers violations committed by the Tigray People’s Liberation Front (TPLF), the inter-ministerial taskforce (IMTF), formed to implement the recommendations of a joint investigation by the Ethiopian Human Rights Commission (EHRC) and the UN Office of the High Commissioner for Human Rights (OHCHR), presented its findings.

The Task Force found reasonable grounds to believe the commission’s findings that there were 2212 rapes, 2831 extrajudicial executions of civilians, and other violations during the war. According to its 46-page report, the team came to this conclusion after analyzing the testimonies of 10,000 witnesses and analyzing thousands of videos and material evidence.

For Tadesse, who has been monitoring the task force’s research and report-writing process, the UN Commission of Human Rights Experts’ report on Ethiopia is only a “snippet” of the full extent of the damage that has been inflicted throughout all three regions.

“The report’s conclusions are presented on the basis of either no evidence or evidence whose credibility is highly questionable,” the secretariat told the room full of reporters questioning the report in regard to its standard of proof and data collection. Tadesse even went on to call the report “a political statement” that was prepared to “help implement” the agendas of “some forces.”

This week, the commission accused all combatants in the conflict of committing various human rights crimes. In order to reach the conclusion that there are “reasonable grounds” to suspect that the offenses amounted to war crimes and crimes against humanity, the Commission listed incidents that it employed as a basis.

The selected incidents were the shelling of Mekelle and attacks on civilians and civilian objects; killings in Kobo and Chenna; and a drone strike on an Internally Displaced Persons (IDP) camp in Dedebit. Rape and sexual violence, and denial and obstruction of humanitarian access were also selected themes for the investigation.

The commission’s two-month investigation into selected incidents and themes found “reasonable grounds” to believe the Ethiopian National Defense Force (ENDF), Tigray forces, and Eritrean Defense Force (EDF) committed war crimes, according to the report. In this case, the report accused the ENDF of using “starvation of civilians as a method of warfare.”

It further stated that it found “reasonable grounds” to believe extrajudicial killings, rapes, and sexual violence were committed by ENDF members “as part of a widespread attack” directed against “the civilian population of Tigray.”

The accusations were part of a joint investigation by the Ethiopian Human Rights Commission (EHRC) and the UN Office of the High Commissioner for Human Rights (OHCHR) that was adopted by the federal government.

The federal government, on the other hand, blasted the commission’s report, adding that it had opposed its formation from the start. It described the report as “substandard quality” and its allegations as “unsubstantiated.”

“It makes grave accusations against the government and its armed forces without offering proof, just based on telephone conversations and web-based submissions. This is irresponsible,” Zenebe Kebede (Amb.), the Permanent Representative of Ethiopia, told Federico Villegas, Human Rights Council president, at the Interactive Dialogue with the commission on September 22, 2022, in Geneva, Switzerland.

As the commission was not allowed to go to the war-affected areas of northern Ethiopia to investigate by the federal government, all the 185 interviews with victims, survivors, witnesses, and other key interlocutors were conducted remotely, it said. Even the governments of Sudan and Djibouti haven’t granted the Commission access to interview Ethiopian refugees within their borders.

Authorities in Benishangul Gumuz Region are preparing a conflict recovery project that would need a 38.5 billion birr budget to be implemented. It is an initiative that arose as the security situation improving.

The plan is expected to be implemented in five years in three phases, with execution scheduled to begin next month.

The region’s sectoral bureaus will start adapting the plan and mobilizing resources based on their needs. The region is drafting a directive that will guide resource mobilization.

The required budget for the recovery plan is nearly six times the region’s 6.7 billion birr budget for the 2022/23 fiscal year.

“Non-governmental organizations and UN agencies have already expressed their interest in supporting the initiative,” Tarekegn Tasisa, the region’s disaster risk management commissioner, said.

The recovery and rehabilitation project, based on a study prepared by the region’s disaster risk management commission, will be implemented in the region’s 17 districts in the Metekel, Kamashi, and Asosa zones. The plan outlined a list of main activities that would be carried out in six sectors, including disaster risk management, agriculture and natural resources, health protection, and education.

The study for the plan was conducted using the regional government’s root-level apparatus. They have identified the extent of the damage, and the commission compiled it, according to the Tarekegn.

Besides the study carried out by the commission, another study is also being prepared led by Assosa University. The university’s study estimated that the region sustained 79.4 billion birr damage due to the conflicts in the past years.

The conflict has resulted in the loss of 16 million quintals of crop, valued at 44 billion birr, according to the study.

“The university’s study has already been presented to the regional government, but it’s not finalized yet. That’s why we are using what we studied. Ours is already ratified by the recovery steering committee,” the commissioner said.

Officials say the security situation in the region is improving now. The number of civilians killed in the past five months is at its lowest.

The region has been a place of horrific civilian killings and conflicts between government security forces and Gumuz rebels since 2019. While the Metekel and Kamashi zones are the main fighting grounds for the rebels, Metekel zone has seen killings targeted at ethnic Amharas.

Even though the region is rich in gold and coal mining resources, investors are not able to mine the reserves, especially in the Kamashi zone. The region ranked second in the country in terms of gold production, with artisans producing more than 90 percent of the region’s gold.

475,384 residents are displaced from their villages due to the insecurity in the region, of which 77,500 are children under the age of five, and 20,000 are breastfeeding mothers, according to the conflict impact assessment. The conflict is also a reason for the destruction of 43,640 houses.

The region, which has been witnessing conflict and the killing of innocent people in various places, saw 113,000 students are out of school due to instability. The destruction of schools has created a difficult situation for students to return to school. In the conflict-affected areas of the region, 201 schools were completely destroyed and 86 schools suffered partial damage.

The region’s 142 health facilities, including 126 health posts, have also sustained damage due to conflicts.

Benishangul Gumuz, which provides agricultural land to investors who engage in large scale farms, has had its 109 agricultural institutions’ warehouses looted and partially or completely destroyed.

The study showed that 291 farmer training institutes and 140 animal health facilities met the same fate.

The recovery and rehabilitation plan has prioritized the implementation of the return of internally displaced people and the rehabilitation of those people in their former homes in a sustainable manner. It also focuses on rebuilding social and economic institutions and providing the necessary equipment for the institutions.

The project need assessment showed that 38.5 billion birr will be needed to implement the plan in disaster risk management, agriculture and natural resources, health protection, education, water irrigation and energy resource development, women, children, and youth sectors, as well as peace building and security sectors.

“The cost of the recovery budget is so much higher than the region’s capacity. But we are planning to mobilize resources from diaspora communities that are from the region,” Tarekegn stated.

Funds from donors including the federal government and the World Bank recovery project are expected to be part of this project.

The Benishangul Gumuz region is one of the six regions, including Tigray, Amhara, and Afar, where rehabilitation project was launched by the federal government together with the World Bank this year. In May 2022, the bank signed a USD 300 million grant to assist the reconstruction, and the federal government has allocated 20 billion birr in the current fiscal year for reconstruction.

In areas that have security threats, the project will be implemented by a third party. The Ministry of Finance has delegated United Nations Office for Project Services (UNOPS) to implement the reconstruction in the Tigray region.

The Ministers of Health and Education studied the damage in all six regions and prepared a report detailing the cost of the five-year reconstruction project.

The Ministry of Education stated that USD 96.5 million is needed to recover from the damage to schools in the Benishangul Gumuz region, while the Ministry of Health stated that USD 22.35 million is needed to recover from the damage in the health sector of the region.

However, the question of equitable distribution of wealth is being raised in the reconstruction project of the federal government. The Boro Democratic Party, which shared power in the region’s government, blamed the federal government for not paying enough attention to reconstruction.

In a statement issued by the party a month ago, the party urged the federal government to pay attention and allocate resources to the replanting zone in the same way that attention and resources are allocated to the destruction and displacement of citizens in northern Ethiopia.

Yohannes Tesema, the party’s Political Sector head, believes the government is not giving enough attention to the recovery as much as it gives to the Amhara and Afar regions.

He claims that out of the USD 300 million granted by the World Bank, the amount of funds allocated for the Benishangul Gumuz region is small.

It says there is no military solution to this conflict

The US Department of State called on “Eritrea and others to cease fueling” the conflict in Ethiopia and urged Eritrea to withdraw its forces from Ethiopian borders. The department accused Eritrea of increasing tensions throughout the Horn of Africa region.

The US also called on “both the Government of Ethiopia and the Tigray regional authorities to halt immediately their military offensives and pursue a negotiated settlement through peace talks under the auspices of the African Union.”

At a press briefing on September 15, 2022, Ned Price, spokesperson of the US Department of State, stated that Ethiopia should look for a non-military solution to the conflict.

“We are increasingly concerned by the growing military activity in northern Ethiopia. We strongly condemn the resumption of hostilities. There is no military solution to this conflict. These actions are inconsistent with the government of Ethiopia and Tigrayan regional authorities’ stated willingness to go to talks,” Price said.

The US special envoy to the Horn of Africa, Mike Hammer, who is in Ethiopia over the week and canceled his expected press brief on Friday, is also advancing a similar position to secure a peaceful resolution to the third wave of war that resumed in Ethiopia on August 24, 2022.

The special envoy is reportedly making efforts to bring warring parties to the table, while Olusegun Obasanjo, the designated AU official to broker peace in Ethiopia, has been silent since the third wave of war broke out.

Both optimism and worry dominated the just-ended Ethiopian year. A year that began with aspirations for wider peace and stability in the nation ended with the resumption of another deadly conflict. In a war with no apparent end in sight, thousands of people are still dying in the highlands. The economy is still in a difficult situation after recovering a little in the last Ethiopian year, on the top of the stockpiled macroeconomic problems.

It was such a challenging year. In the last year, more than the year before, the effects of the one-year-old conflict was felt. This is especially true in terms of the economy. The cost of living remains high despite recent indications that inflation is slowing down nationwide.

“The government found it difficult to contain inflation and in the third quarter of the past fiscal year started to slow down the pace of depreciation of the national currency. Maybe this contributed to stabilize the inflation rate somewhat but it may also have contributed to foreign exchange shortage in the economy,” Patrick Heinisch, an economist said.

Some conflict-affected areas are experiencing a more than 1000 percent increase in commodity prices as a result of severe supply shortages. It is still a problem in the country’s north, particularly in Agew Zone, Tigray Region, and parts of Afar Region.

“Up until the resumption of the war, I was sending money to my family living in Tigray, paying 30 birr for every 100 birr I transfer,” said Kirubel, whose last name is withheld for security reasons. “For obvious reason, this is not something normal in a country with a sound economic condition.”

Kirbuel’s story is actually the tip of the iceberg. Just two months after the previous Ethiopian year began, Ahmed Shide, the Minister of Finance, was among the first to voice concerns about the status of the economy. In the same broadcasted speech on the state broadcaster in November 2021, his comrade Yinager Dessie, the governor of the National Bank of Ethiopia (NBE), did not conceal the fact that the economy was poised to collapse because of the war.

It didn’t take long for Prime Minister Abiy Ahmed (PhD) to react. While also paving the way for a negotiated settlement with the warring party in the North, the Tigray People’s Liberation Front (TPLF), which the Parliament designated as a terrorist organization, his administration declared a humanitarian truce. Humanitarian organizations had relatively easier access to provide food supplies to people in the war-torn region.

First, some progress was made in the effort to bring about peace. The economy showed signs of improvement, and the IMF, which had previously included Ethiopia on its list of nations with unpredictable and unstable economies, predicted that it would rebound. Soon after the ceasefire in North Ethiopia, the other Bretton Woods organization, the World Bank, similarly predicted Ethiopia’s economy would revive.

Though such encouraging developments helped the government rebuild its ties with the West and western financial institutions, they did little to prevent the country’s fundamental problem—the shortage of foreign currency. From approximately USD two billion to barely USD 290.7 million in loans, development partners and lenders cut their commitments.

The net inflow of external debt was negative USD 551 million, indicating that the amount of creditor loans disbursed was less than the principal amount of debt the government was servicing.

Businesses have also faced a financial crisis due to the forex shortage, a situation that has plagued them for decades, though some found last year to be their most difficult ever.

More than any other businesses, those involved in the water bottling industry felt the pinch. Twenty water bottlers had to shut down because they were no longer able to run their businesses due to a lack of inputs, and they had even reached a point where they were unable to pay their employees’ salaries.

Overall, access to foreign currency remains challenging for businesses. At the end of 2021, foreign exchange reserves stood at USD 1.6 billion, or 1.3 months’ worth of imports of goods and services.

The authorities tightened foreign exchange regulations numerous times over the previous fiscal year in response to the shortage, upping the percentage of foreign exchange companies’ must surrendered to the government (central bank) to 70 percent. Even exporters had to deal with the shortage because the restriction prevented them from using more than 20 percent of the foreign exchange they had earned.

Another major economic burden that persisted in the country last year was the widening budget deficit, made worse by the war in the North, which increased spending for military. The budget deficit widened and is now expected to exceed 300 billion birr this year, which is more than twice what it was in the just-ended fiscal year. These difficulties compelled the government to take desperate decisions, such as freezing loans or introducing new taxes, in an effort to increase revenue and narrow the mounting deficit.

However, not every problem can be solved.

For many workers in industrial parks, the suspension of Ethiopia from the African Growth Opportunity Act (AGOA), a trade benefit granted by the US to developing countries so they may export their goods without paying an import duty, has been a bad news.

Due to significant layoffs brought on by the suspension, more than five factories have left the park, and over 5,000 workers have lost their jobs as a result.

“The year has been tough for all workers in Ethiopia. From the inflationary pressure to the war that has made many jobless, they have been in a pickle. Some had to live in poverty since their salary is not enough to cover expenses,” said Kasahun Follo, president of Confederation of Ethiopian Trade Union (CETU), urging employers to consider the challenges and make adjustments in the coming New Year.

Although the amount of jobs created by industrial parks is relatively low compared to the agricultural sector, the country had planned to industrialize. For Heinisch, these efforts are now being thwarted.

“Worryingly, since 2019 the share of the industrial sector in GDP has actually decreased. The trend is likely to have continued in the past fiscal year,” he said.

Despite the difficulties last year, industries did well.

The export of industrial items reached a record-high USD 500 million in exports during the previous fiscal year. However, this is negligible in light of the development in the coffee industry, which generated USD 1.4 billion in revenue during the previous fiscal year. It is a success that has helped officials to record the nation’s record-high exports revenue, which exceeded the USD four billion mark during the previous fiscal year.

Despite some progresses, however, the overall economic condition seems to be in worst shape, according to economists.

“We have undertaken a study and discovered that the economy is not in a stable condition, which is indicated by the unpredictability of the exchange market, the fiscal policy and the forex market, adding to global-wide problems,” said Tewodros Mekonnen (PhD), an economist and a policy analyst.

Another economist, Mengistu Ketema (Prof.), also believes the economy had not been in a good condition last year.

“Inflation was growing, above 30 percent throughout the year. External debt are maturing, thus forcing the country to allocate more budget for debt servicing. The drought in the south also worsened the already tense situation. And when you add all these to the global economic challenges, including the war in Ukraine, it indicates the economy is between a rock and a hard place,” Mengistu said.

For Heinisch, who believes Ethiopia did not experience a “post-COVID” recovery in 2021/2022 as many other countries did, the outlook is more benign, assuming that the war that has broken out again will come to an end quickly and the country can focus on its economic reforms again. “Debt restructuring could free up resources that the country needs for reconstruction but also new investment projects. So there is still reason for hope,” Heinisch concluded.

Both optimism and worry dominated the just-ended Ethiopian year. A year that began with aspirations for wider peace and stability in the nation ended with the resumption of another deadly conflict. In a war with no apparent end in sight, thousands of people are still dying in the highlands. The economy is still in a difficult situation after recovering a little in the last Ethiopian year, on the top of the stockpiled macroeconomic problems.

It was such a challenging year. In the last year, more than the year before, the effects of the one-year-old conflict was felt. This is especially true in terms of the economy. The cost of living remains high despite recent indications that inflation is slowing down nationwide.

“The government found it difficult to contain inflation and in the third quarter of the past fiscal year started to slow down the pace of depreciation of the national currency. Maybe this contributed to stabilize the inflation rate somewhat but it may also have contributed to foreign exchange shortage in the economy,” Patrick Heinisch, an economist said.

Some conflict-affected areas are experiencing a more than 1000 percent increase in commodity prices as a result of severe supply shortages. It is still a problem in the country’s north, particularly in Agew Zone, Tigray Region, and parts of Afar Region.

“Up until the resumption of the war, I was sending money to my family living in Tigray, paying 30 birr for every 100 birr I transfer,” said Kirubel, whose last name is withheld for security reasons. “For obvious reason, this is not something normal in a country with a sound economic condition.”

Kirbuel’s story is actually the tip of the iceberg. Just two months after the previous Ethiopian year began, Ahmed Shide, the Minister of Finance, was among the first to voice concerns about the status of the economy. In the same broadcasted speech on the state broadcaster in November 2021, his comrade Yinager Dessie, the governor of the National Bank of Ethiopia (NBE), did not conceal the fact that the economy was poised to collapse because of the war.

It didn’t take long for Prime Minister Abiy Ahmed (PhD) to react. While also paving the way for a negotiated settlement with the warring party in the North, the Tigray People’s Liberation Front (TPLF), which the Parliament designated as a terrorist organization, his administration declared a humanitarian truce. Humanitarian organizations had relatively easier access to provide food supplies to people in the war-torn region.

First, some progress was made in the effort to bring about peace. The economy showed signs of improvement, and the IMF, which had previously included Ethiopia on its list of nations with unpredictable and unstable economies, predicted that it would rebound. Soon after the ceasefire in North Ethiopia, the other Bretton Woods organization, the World Bank, similarly predicted Ethiopia’s economy would revive.

Though such encouraging developments helped the government rebuild its ties with the West and western financial institutions, they did little to prevent the country’s fundamental problem—the shortage of foreign currency. From approximately USD two billion to barely USD 290.7 million in loans, development partners and lenders cut their commitments.

The net inflow of external debt was negative USD 551 million, indicating that the amount of creditor loans disbursed was less than the principal amount of debt the government was servicing.

Businesses have also faced a financial crisis due to the forex shortage, a situation that has plagued them for decades, though some found last year to be their most difficult ever.

More than any other businesses, those involved in the water bottling industry felt the pinch. Twenty water bottlers had to shut down because they were no longer able to run their businesses due to a lack of inputs, and they had even reached a point where they were unable to pay their employees’ salaries.

Overall, access to foreign currency remains challenging for businesses. At the end of 2021, foreign exchange reserves stood at USD 1.6 billion, or 1.3 months’ worth of imports of goods and services.

The authorities tightened foreign exchange regulations numerous times over the previous fiscal year in response to the shortage, upping the percentage of foreign exchange companies’ must surrendered to the government (central bank) to 70 percent. Even exporters had to deal with the shortage because the restriction prevented them from using more than 20 percent of the foreign exchange they had earned.

Another major economic burden that persisted in the country last year was the widening budget deficit, made worse by the war in the North, which increased spending for military. The budget deficit widened and is now expected to exceed 300 billion birr this year, which is more than twice what it was in the just-ended fiscal year. These difficulties compelled the government to take desperate decisions, such as freezing loans or introducing new taxes, in an effort to increase revenue and narrow the mounting deficit.

However, not every problem can be solved.

For many workers in industrial parks, the suspension of Ethiopia from the African Growth Opportunity Act (AGOA), a trade benefit granted by the US to developing countries so they may export their goods without paying an import duty, has been a bad news.

Due to significant layoffs brought on by the suspension, more than five factories have left the park, and over 5,000 workers have lost their jobs as a result.

“The year has been tough for all workers in Ethiopia. From the inflationary pressure to the war that has made many jobless, they have been in a pickle. Some had to live in poverty since their salary is not enough to cover expenses,” said Kasahun Follo, president of Confederation of Ethiopian Trade Union (CETU), urging employers to consider the challenges and make adjustments in the coming New Year.

Although the amount of jobs created by industrial parks is relatively low compared to the agricultural sector, the country had planned to industrialize. For Heinisch, these efforts are now being thwarted.

“Worryingly, since 2019 the share of the industrial sector in GDP has actually decreased. The trend is likely to have continued in the past fiscal year,” he said.

Despite the difficulties last year, industries did well.

The export of industrial items reached a record-high USD 500 million in exports during the previous fiscal year. However, this is negligible in light of the development in the coffee industry, which generated USD 1.4 billion in revenue during the previous fiscal year. It is a success that has helped officials to record the nation’s record-high exports revenue, which exceeded the USD four billion mark during the previous fiscal year.

Despite some progresses, however, the overall economic condition seems to be in worst shape, according to economists.

“We have undertaken a study and discovered that the economy is not in a stable condition, which is indicated by the unpredictability of the exchange market, the fiscal policy and the forex market, adding to global-wide problems,” said Tewodros Mekonnen (PhD), an economist and a policy analyst.

Another economist, Mengistu Ketema (Prof.), also believes the economy had not been in a good condition last year.

“Inflation was growing, above 30 percent throughout the year. External debt are maturing, thus forcing the country to allocate more budget for debt servicing. The drought in the south also worsened the already tense situation. And when you add all these to the global economic challenges, including the war in Ukraine, it indicates the economy is between a rock and a hard place,” Mengistu said.

For Heinisch, who believes Ethiopia did not experience a “post-COVID” recovery in 2021/2022 as many other countries did, the outlook is more benign, assuming that the war that has broken out again will come to an end quickly and the country can focus on its economic reforms again. “Debt restructuring could free up resources that the country needs for reconstruction but also new investment projects. So there is still reason for hope,” Heinisch concluded.

The envoy is wrapping up two weeks in the Horn region.

“He remained actively engaged with the Government of Ethiopia, with the Tigray regional authorities, with the African Union, and with international partners to seek to advance an important effort to bring peace. He met on September 12 with the AU’s high representative, Obasanjo,” stated Price.

On September 16, 2022, the US embassy in Addis Ababa also stated that Hammer held productive meetings with Ethiopian government officials, civil society representatives, the African Union, and international partners.

Moussa Faki, the AUC chairperson, who extended Obasanjo’s mandate on September 10, 2022 to continue engaging with warring parties in Ethiopia, also met with Hammer on the next day. On the other hand, the UN Security Council, which was set to discuss the situation in Ethiopia, was postponed.

The five months of ceasefire and humanitarian assistance to Tigray were shattered when the third wave of war broke out on August 24, 2022. The ongoing peace initiative under the AU umbrella hit a deadlock, which the special envoy is trying to reactivate.

The Tigray regional government, which has been refuting AU-led peace negotiations prior to the latest war, also issued a statement on September 11, 2022, agreeing to negotiate under the AU umbrella.

Nonetheless, reaching a ceasefire agreement and resuming the peace talks remains farfetched, worsening the humanitarian crisis, as Eritrean forces are reportedly drawn into the war and regionalizing the conflict.

“These actions are worsening the humanitarian situation at a time of pronounced drought and food insecurity,” stated Price.

He called on the government of Ethiopia, Tigrayan authorities, and all parties to allow the unhindered delivery of humanitarian relief.

“Humanitarian assistance should not be used for military purposes—it should be used to save lives. And we urge the parties to cease the fighting and to begin talks under the auspices of the AU as soon as possible. Peace needs to be given a chance. Too many people have died, and too many more are suffering,” he added.

“Our region doesn’t have the capacity to mobilize this amount of budget for the recovery. It definitely needs the federal government’s support more than this,” he asserted.

The commission’s requests to various UN entities operating in Ethiopia to share documents and materials of interest were largely deflected, or responded to after an inordinate delay. Its request to access the internal database of the joint investigation team was also delayed.

“Despite these challenges, the Commission is confident that its findings are supported by information that satisfies the standard of proof for UN investigations,” the report reads.

The commission’s recommendation, which asks the UN Security Council (UNSC) to include the war in northern Ethiopia on its agenda for the 14th time since December 2020, worries the Ethiopian government more than the report’s findings and conclusions do.

In order to stop further violations and abuses of international human rights law and humanitarian laws, it also calls on the council to take action targeted at restoring peace, stability, and security in the area. During a session held this week, officials of the federal government have already expressed their resentment at the recommendation of the commission.

“The Commission’s political pronouncements referring to the UN Security Council are ultra-virulent and betray political motivations that go beyond human rights,” Zenebe said.

It is a sentiment shared by countries that are members of the Human Rights Council.

“The Commission went beyond its mandate and made a statement on things that were not in its remit,” said Konan François, a representative of Côte d’Ivoire on behalf of a group of African States.

Wondemagegn Tadesse (PhD), an international human rights lecturer at Addis Ababa University, believes there are three options in which the UN Human Rights Council can decide to approve the commission’s report and recommendations. The first option is to end the matter within the council itself.

“In this case, there will be nothing more to do than call on the warring parties in the country to implement these recommendations,” Wondemagegn explained.

The second option is to refer the matter to the UN General Assembly. “However, since the assembly gathers over a long period of time, it may not have a big impact on Ethiopia,” he added.

Apart from that, even if it is presented to the General Assembly, its voting system does not have veto power, so there is a high possibility that it will not be approved. A large number of developing countries at the General Assembly will not vote in favor of the resolution as they consider such decisions as interference, according to Wondemagegn. Moreover, experience so far shows that if the country in which the decision is made does not accept the decision, the chances of its implementation are low.

However, if issues are referred to the UNSC, the third option may take a different path than the two options.

“The Security Council is the only institution that has the power to take military action among the UN institutions, but as we always see, the proposal to the Council is overturned by the veto power, so it does not make a difference,” Wendmagegn asserted.

In the past two years, the council has not passed any decisions on Ethiopia. The war in northern Ethiopia and the Great Ethiopian Renaissance Dam have been on the agenda tabled before its members for discussion. When a resolution was proposed, China and Russia, who have veto power, supported Ethiopia.

For Wondemagegn, even if the Security Council passes a resolution, it is difficult to implement it. If the Council decides to send troops to stop human rights abuses, there may not be many countries to contribute troops to a country as large as Ethiopia.

“Even if countries contribute soldiers and send them to Ethiopia, they will have to fight a war with Ethiopia because the Ethiopian government will not accept the decision. No one wants this,” he said.

Another human rights expert, who asked not to be named, explained that even if the UN Human Rights Council does not pass any decision as a result of this report, countries that want to take unilateral action can use it as a cause for their measures.

“Those like the US and the EU may use the report to suspend loans and impose sanctions,” the expert said, adding, “but this would only hurt the people affected by the war more.”

The Ethiopian Human Rights Commission also agrees with this idea.

“Decisions should be made to reward the people affected by the war and bring reconciliation, not where parties with differences of opinion are dragged into a corner,” said the Deputy Chief Commissioner for Human Rights, Rakeb Melesel, while underscoring that EHRC is ready to share its database if the Commission is willing to undertake another investigation.

The Ethiopian government is exerting pressure to block any attempts by the Commission to extend its mandate. “The Council should reject the report and oppose any attempt to extend the mandate of this Commission beyond December 2022,” the government emphasized.

Farmers reject the much-anticipated Bt cotton.

Cotton growers in Ethiopia resort to unauthorized GMO cotton illegally smuggled from Sudan. Bt-RR cotton seed is currently being cultivated in Afar, Metema, Benishangul Gumuz and Gambella regions after being smuggled via Metema, Humera and other border areas between Sudan and Ethiopia.

Once the first generation of open-pollinated (OT) is acquired, it can be sown for between three and five years, after which the seed cannot be recycled. Ethiopian cotton farmers are currently buying the smuggled cotton seeds and multiplying them locally at 10,000 birr to 13,000 birr per quintal.

Bt-RR originated in Brazil, and was largely cultivated in Sudan. Most other GM cotton seeds are non-OT, which means they cannot be used after the first year. As a result, the farmer has to buy the seed every year.

The cotton farmersThe Reportertalked to underlined that the smuggled cotton seed is preferred mainly because it resists bollworm, which has been devastating the existing local cotton breeds. This is because a one-time chemical spray on the vegetation is also highly effective in eliminating all weeds except the cotton itself.

The productivity of the Bt-RR is between 10 and 14 quintals per hectare, slightly superior to the local varieties. But the Bt-RR is advantageous mainly because it beats the bollworm, and requires less pesticide.

“A number of farmers are now multiplying the Bt-RR seed and selling it to cotton farmers across the country. The farmer liked the seed, instead of the local existing varieties and the GM cotton approved by the government,” said a manager of a large-scale cotton farming company. He cultivated the new seed on 200 hectares in Amhara regional state.

Melkamu Telake, board chair of the Ethiopian Cotton Producers, Ginners, and Exporters Association, says farmers are resorting to smuggled seed as access to other cotton seeds depletes. “The government failed to provide the type of seed preferred by the farmer.”

After the Parliament legislated the GMO proclamation in 2015, the Biosafety and Invasive Alien Species Follow-up and Control directorate at the Environmental Protection Authority (EPA) and EIAR commercialized Bt cotton for the first time in 2019.

However, a number of commercial cotton farmers in Gambella have tried Bt cotton and lost interest after the first year. The first reason was that the authorized Bt cotton could not effectively resist the bollworm.

The other major reason was that the authorized Bt cotton, which is imported from India, is expensive costing USD 28 per kilo. As a result, the EIAR picked Indian-based JK Agri Genetics Ltd. to open a subsidiary company in Ethiopia and multiply the seeds in Ethiopia to avoid the forex problem required to import the seeds annually. However, this plan also bore no fruit, as the Ethiopian farmers rejected the authorized Bt cotton.

“All the cotton farmers in Ethiopia are boycotting the authorized Bt cotton. It did not effectively resist the bollworm. It necessitates the repeated application of insecticides and pesticides. We have to buy the seeds every year at an expensive price. Plus, our farmers lack the technology required to cultivate the authorized Bt cotton with the right agronomical practices. So the farmers are resorting to the smuggled variety, instead,” said Melkamu.

Mesele Mekuria, Cotton Development Director at the Ethiopian Textile Industry Development Center, also said the authorized Bt cotton did not work.

The productivity of existing cotton seeds in Ethiopia, which are Ggedera and DP90, dropped, especially after the varieties were in use for over 30 years and were unable to resist diseases. Currently, rain-based farming of traditional seeds offer anywhere between eight quintals and 28 quintals per hectare.

However, if irrigation is coupled with precise agronomical practice, the local seeds can offer between 45 quintal and 54 quintals per hectare, according to Melkamu.

“Big cotton farmers like Lucy in Afar, and other farmers in Arbaminch have achieved this level of productivity. But there are certain interest groups who are trying to enforce certain Bt cotton on Ethiopia. We need GMO cotton only after we achieve maximum productivity with the existing local varieties,” Melkamu said.

These interest groups, according to him, do not want the local varieties. “Global GMO patent holders are behind these interest groups. Once we start using such GMO varieties, we will be their slaves because the existing local varieties will be ousted in five years and we have to buy their seed every year.”

Yet, other cotton farmers argue that the EIAR has to take samples of the Bt-RR that are smuggled from Sudan, study them, and approve them for Ethiopian farmers.

The meager productivity of local cotton farming has been the Achilles heel for Ethiopia’s aspirations to become the manufacturing hub of Africa, mainly capitalizing on textiles, garments, and apparel.

Damage to health and education infrastructure in six regions of Ethiopia resulting from conflicts need a USD 3.6 billion recovery budget, according to a new Recovery and Rehabilitation Plan document released by the Ministries of Health and Education.

The ministries outlined an intervention plan for the five-year rehabilitation project that will be implemented in three phases. The recovery intervention plan is part of the “Response – Recovery – Resilience” project launched by the Ministry of Finance in March 2022.

The ministries assessed the damage that occurred in Tigray, Afar, Amhara, Benishangul-Gumuz, Oromia, and Konso zones of the Southern Nations Nationalities and People’s (SNNP) regions. The assessment and recovery plan were prepared by the government, with a technical assistance from the World Bank.

Education suffered the most harm. According to the recovery plan, the sector requires USD 2.2 billion to recoup lost learning and rebuild destroyed facilities.

The Ministry of Health’s plan proposed a USD 1.4 billion intervention.

As the assessment shows, the conflict destroyed 2,681 schools completely and another 4,158 schools partially in these regions. 38 Technical and Vocational Education and Training (TVET) institutions and three universities have also sustained varying levels of damage. The number of destroyed TVETs and universities in the Tigray region is not included due to a lack of data.

This destruction of the education sector has affected more than 4.2 million learners and close to 200,000 teachers and education staff, the report reads.

The number of people affected by the damage to the health sector is estimated to be close to 24 million people. The people in conflict-affected area have been “adversely impacted.”

The assessment showed that 3,217 health posts, 709 health centers, and 76 hospitals were partially or completely damaged in the six conflict-affected regions.

Among the six regions that were affected, the Amhara region suffered the most damage to the sectors. Out of the 3,217 health facilities that sustained damage, 69 percent of them are found in the Amhara region. Furthermore, out of 248 ambulances that were damaged or looted, 50 percent were in the region.

The region’s 4,020 schools have also been destroyed, accounting for 58.7 percent of the total damage across all six areas.

However, given the region’s penetration of health institutions, the damage to health facilities in Tigray is substantially greater. 82.9 percent of the region’s hospitals have been damaged. The same fate has befallen Tigray’s 76 percent of health posts and 50 percent of health centers.

In the health sector, out of the overall estimated recovery cost, USD 1.4 billion, the largest share, USD 501.19 million, is for health centers. General and specialized hospitals follow at a cost of USD 342.54 million.

In the education sector, USD 1.36 billion is planned to recover damaged primary and secondary schools in the six regions.

The recovery and reconstruction program will be implemented for five years in three phases, according to the documents prepared by the ministries. The program’s early recovery phase needs will be met within the first six months. Short-term demands range from six to 24 months, whereas medium-term needs range from three to five years.

According to the ministry’s Stakeholder Engagement Plan document, the implementation of the program will be led by a Federal Project Coordination Unit (FPCU) in the Ministry of Finance. Various sectoral ministries and other mandated offices are responsible for the implementation of the program.

In the Tigray region, where the ministries have no access, the recovery project is planned to be implemented by a third party. The Ministry of Finance signed a third-party implementation agreement with the United Nations Office for Project Services (UNOPS) last month.

The World Bank granted USD 300 million in May for the implementation of this project. While the government, which has just begun its fiscal year, has allocated 20 billion birr.

Abiy Ahmed’s (PhD) time as Ethiopia’s prime minister is not without difficulties. He even called himself “a Prime Minister with no time to even undergo a medical checkup” in front of lawmakers. Since taking over after Hailemariam Desalegn’s departure, Abiy has ruled a nation that has been plagued by economic distress, political unrest, and even a civil war that has lasted for more than a year. On top of the never-ending problems he dealt with, with most of the incidents occurring in the northern part of the country, there was another heavy task that challenged his leadership. Thatis the statehood question brought by ethnic groups living in the south.

A few months after taking office, Abiy was inundated with requests from the leaders of more than a dozen zones and woredas, placing pressure on his government to help them realize their desire for a regional state. Participation in the endeavor to achieve statehood recognition ranged from low-level bureaucrats to zonal leaders and officials in the federal government. Ten zones filed a resolution with the House of Federation (HoF) adopted by their separate councils to hold a referendum on statehood. Abiy was aware right away how urgent it was to fulfill the regions’ desire.

Soon after taking office, Abiy traveled to almost all of the South Region’s ethnically divided zones. It was an attempt to win political support as he rushed to replace the Ethiopian Peoples’ Revolutionary Democratic Front (EPRDF) at the time and establish the ruling Prosperity Party. But his administration’s stance on their desire for statehood was the main topic that dominated the debates at the zones. He promised to respond to their request, which by all legal criteria is legitimate.

However, it was easier said than done to keep the pledge. Sidama was the first regional state to be established following a referendum, with 98 percent of voters supporting the establishment of a new regional state. But civilians paid a price for the government’s efforts to push through Sidama’s desire for statehood, as enraged protesters set fire to the homes of many Hawassa inhabitants and forcibly evicted many others.

In particular, ethnic Amharas were targeted in all incidents involving statehood questions across the South Region. The Attorney General recently released a report that the homes of ethnic Amharas were burned to ashes, which led to the arrest of dozens of people on suspicion of being involved in the violence.

It appears the government understood the consequences of ignoring statehood questions were brought by Ethiopians to the south. Abiy formed a team of experts and high-level government officials two years ago to launch a study on the issue after realizing the consequences of disregarding statehood requests.

The team sent out three recommendations. The first option is to maintain the South Nation, Nationalities and People’s Regional State in its present configuration while making changes to the region’s appropriate number of political seats. The second suggestion was to establish the Sidama region while keeping other ethnic groups as members of the SNNPR. The third involved splitting the region into five, clustering the ethnic groups together.

The third alternative seems to be what the federal administration chose after the first two became unworkable due to rising animosity among ethnic group elites in South Ethiopia.

“I think it’s a step in the right direction, but caution should be exercised to avoid making the same mistake as SNNPR, which is now being dismantled due to growing resentment over resource sharing, political participation, and infrastructure development,” said Keyredin Tezera, assistant professor of Social Anthropology who participated in the study carried out at the request of the federal government.

Following Sidama’s victory for independence from the SNNPR, Kaffa, Sheka, Bench Sheko, Dawuro, and West Omo Zones, as well as the Konta Special District, joined to form the South West Region through a referendum. The local council members of five special Woredas – Amaro, Ale, Basketo, Burji, and Derashe – as well as the Konso, Gedeo, Gamo, Gofa, South Omo, and Wolayta zones voted last week to restructure their administrative units into a newly established regional state.

In a similar fashion, members of the Hadiya, Halaba, Kembata Tmbaro, Silte, and Yem Special Woreda local councils have begun the process of creating a new regional state. However, activists and political organizations active in the zones contested the action.

The Gurghe people, with whom the federal government wants to construct a cluster along with Hadiya, Silte, Kembata, Silte, and Yem, are among those who have objected to the concept of forming regions in clusters. The Guraghe zone has a population of approximately six million people and a land area of approximately 5932 sq.km. Its council was one of the zones that submitted a request to hold a vote on becoming a separate region.

Social activist, Misbah Kedir, is one of the ethnic Guraghes who have contested the federal government’s proposal to partition SNNPR into five cluster areas. He thinks it is wrong for the central government to “forcefully” incorporate the Guraghe Zone into the cluster.

“In addition to Guraghes, other zones that had voted to create a cluster region had also supported the motion after receiving an order from the federal government,” said Misbah.

Wolayita’s opposition wants to be heard too.

“First and foremost, the council, whether in Wolayita or other zones, does not have the power to accept such a resolution on behalf of the people because their term period ended almost seven years ago. Second, this is something that the cadres, not the people, want,” said Amanuel Mogiso, leader of the opposition Wolayita National Movement, which is active in Wolayita Zone.

Amanuel exhorts the federal government to pay attention to what the people want, comparing the situation to sitting on a ticking time bomb. “The Wolayita people have peacefully expressed a desire for their own territory. They need to be heard,” he added.

The politician urges the federal government to avoid meddling and let ethnic communities in SNNPR, including Wolayita, exercise their constitutional rights. “To reject their right to have their own regional state is unlawful,” Amanuel continued.

Jember Abdo, a legal expert, agrees.

“The state is turning into an enabler of violence. In the case of Guraghe, this is what I saw. The people exercised their right to form a region but the federal government’s response was to militarize their hometown,” Jember said urging the federal government to uphold the constitution.

There are economic reasons driving the pursuit of statehood.

“In order to obtain a permit from SNNPR officials, farmers and businessmen must travel hundreds of kilometers from distant areas in the Guraghe zone to Hawassa. And after the cluster region is established, they might be required to follow suit in order to obtain a permit from Hossana, which will likely serve as the cluster region’s capital city,” Misbah said.

Amanuel is worried too.

“The political structure is to blame for the underdevelopment of zones. When you have a significant budget and tax in a region, it is not the same,” Amanuel concluded.

Regardless of the final outcome of the campaign to achieve statehood for Ethiopians in the South, there are still many unknowns about the future of the region, which will depend on the government’s decision on how to manage the grievances of the ethnic groups it intends to organize into a cluster region.

Sergey Lavrov, Russia’s Foreign Minister, affirmed that his country is in favor of giving Africa a permanent seat in the UN Security Council. The Foreign Minister also concurred with Ethiopian officials that the Security Council should undergo reform in a bid to take into account the current state of the world.

Lavrov arrived in Addis Ababa on July 26, 2022 for a two-day trip, where he met President Sahlework Zewde; Demeke Mekonen, deputy prime minister and foreign minister, and other high officials. Lavrov also traveled to Egypt, Congo, and Uganda, before wrapping up his Africa trip by conferring with the diplomatic community at the AU headquarters.

“Ethiopia and Russia share similar stances on issues on the global and regional agenda. These approaches rely on adherence to international law, particularly the tenets of the UN charter and the respect for the sovereign rights of states,” said Lavrov.

During the 35thordinary session of the AU summit in February 2022, PM Abiy Ahmed (PhD) exceptionally raised the urgent topic of reforming the UN and securing a permanent seat for Africa in the UNSC.

As a result, the AU passed a resolution that requests “full representation of Africa in the United Nations Security Council, including not less than two permanent seats in the United Nations Security Council with all the prerogatives and privileges of permanent membership, including the right of veto.

The AU also proceeded to request the Committee of Ten Heads of State and Government to continue to intensify its engagement at the highest level with other interestedand regional groups and key stakeholders, including the five permanent members of the UN Security Council, with a view to building on progress made in advancing, canvassing and promoting the Common African Position.

The AU’s quest for reform of the UN began in 2005 when African states approved the Ezulwini consensus and Sirte Declaration on the Reform of United Nations Security Council.

In 2010, President Goodluck Jonathan of Nigeria, told the UN General Assembly, “The exclusion of Africa from the permanent member category of the Security Council can no longer be justified.We urge the UN to quicken the pace of its reforms. Not only to better reflect the current global realities but also to ensure that it enjoys genuine legitimacy.”

Africa does not have a proportional representation in the global body.However, the consideration has become critical, as Africa is frequently impacted by decisions over which it has no say.

In particular, both Ethiopia and Russia have been haunted by the UNSC particularly since last year. In the past year, the UNSC discussed sanctioning Ethiopia in relation to human rights violations in the Tigray war. However, the considerations were vetoed by Russia and China. Ethiopia also paid back by refraining from voting, when the UNSC introduced emergency voting in March 2022 to condemn Russia’s invasion of Ukraine.

Demeke appreciated Russia’s “unwavering support during difficult times of need, particularly in the recent struggle to safeguard Ethiopia’s sovereignty.’

The major purpose of Lavrov’s trip to Africa, amidst a propaganda war with the west, is also to secure Africa’s support in similar UN voting scenarios in the future.

Gaining a permanent seat on the UN Security Council will position Africa as a balancing force between the power struggles of the east and west, as well as the rapidly changing global geopolitics. However, reforming the western-dominated organization might not be easy, according to scholars. But once the UN begins processing the AU’s request, Russia and China can play a decisive role in making Africa earn its place in the UN structure.

Over 60,000 foreigners have registered so far

Ethiopia’s Ministry of Foreign Affairs urged foreigners with expired visas and resident permits to get registered in 125 selected areas of registration established for this purpose.

Speaking at a press conference on Thursday, Ministry Spokesperson Meles Alem (Ambassador) has urged all foreign nationals living in Ethiopia without proper documents to be registered immediately before authorities start to take legal action as per the international law Ethiopia has signed.

Foreigners without any visa or residence permit, as well as refugees or asylum seekers requesting status and residing in Addis Ababa and its vicinities with or without an urban refugee permit, are also requested to register as of July 25, 2022.

According to Meles, within the last five days of the official announcement for registration, over 60,000 people have registered from countries including Canada, America, Eritrea, Congo, Italy, Syria, China, Turkey, Ghana, Burundi, Liberia, India, Bangladesh, South Sudan, and other countries.

The first phase of registration sites is installed in Addis Ababa and some Oromia administrative zones, and the second round of registration will be opened soon in regional states and the Dire Dawa City administration, the spokesperson told the reporter.

Registration is conducted under the auspices of the Immigration and Citizenship Service, through the Vital Events Registration Offices of all Woredas and the Immigration and Citizenship Service, as per its mandate given by a proclamation to register and administer legal permits for foreign nationals living in Ethiopia.

“We have started this to make sure that immigration work is proceeding as per the legal procedures,” said Meles (Ambassador), adding that there is no further intention of expelling or any other form of stunt.

The spokesperson has further called on foreigners to take advantage of this chance before officials start to take legal measures against those who failed to register as per the rule. However, the formal registration process will not be applied to the diplomatic community.

Over 180,000 foreigners are expected to be registered in Addis Ababa, Meles added.

In a similar presser, the spokesperson announced the cancellation of 162 million US dollars of rolling debt by the Russian government, which Ethiopia has borrowed since the Soviet Union period. According to Meles, Russia has changed the modality from debt to a development grant for purposes of modernizing the Melka Wakana Hydroelectric Power Station and upgrading Balcha Hospital’s technical capabilities.

Over 60,000 foreigners have registered so far

Ethiopia’s Ministry of Foreign Affairs urged foreigners with expired visas and resident permits to get registered in 125 selected areas of registration established for this purpose.

Speaking at a press conference on Thursday, Ministry Spokesperson Meles Alem (Ambassador) has urged all foreign nationals living in Ethiopia without proper documents to be registered immediately before authorities start to take legal action as per the international law Ethiopia has signed.

Foreigners without any visa or residence permit, as well as refugees or asylum seekers requesting status and residing in Addis Ababa and its vicinities with or without an urban refugee permit, are also requested to register as of July 25, 2022.

According to Meles, within the last five days of the official announcement for registration, over 60,000 people have registered from countries including Canada, America, Eritrea, Congo, Italy, Syria, China, Turkey, Ghana, Burundi, Liberia, India, Bangladesh, South Sudan, and other countries.

The first phase of registration sites is installed in Addis Ababa and some Oromia administrative zones, and the second round of registration will be opened soon in regional states and the Dire Dawa City administration, the spokesperson told the reporter.

Registration is conducted under the auspices of the Immigration and Citizenship Service, through the Vital Events Registration Offices of all Woredas and the Immigration and Citizenship Service, as per its mandate given by a proclamation to register and administer legal permits for foreign nationals living in Ethiopia.

“We have started this to make sure that immigration work is proceeding as per the legal procedures,” said Meles (Ambassador), adding that there is no further intention of expelling or any other form of stunt.

The spokesperson has further called on foreigners to take advantage of this chance before officials start to take legal measures against those who failed to register as per the rule. However, the formal registration process will not be applied to the diplomatic community.

Over 180,000 foreigners are expected to be registered in Addis Ababa, Meles added.

In a similar presser, the spokesperson announced the cancellation of 162 million US dollars of rolling debt by the Russian government, which Ethiopia has borrowed since the Soviet Union period. According to Meles, Russia has changed the modality from debt to a development grant for purposes of modernizing the Melka Wakana Hydroelectric Power Station and upgrading Balcha Hospital’s technical capabilities.

Special Forces of Somali regional state and a coalition of other regional and federal security forces have conducted an all-out counter attack to purge Al-shabab fighters that entered Ethiopia’s borders on Friday. The regional government deployed hundreds of Special Forces to conduct the operation.

“A number of Al-shabab fighters entered the Ethiopian border, after they conducted an attack at a time nobody expected. They first engaged with Somali Special Forces. And heavy casualties occurred on both sides. But we are clearing them out,” said an official in the regional government, who spoke toThe Reporterrequesting to remain anonymity since the federal government is also involved and information is to be disseminated from the center.

“We have also captured their fighters, and the operation will continue until they are cleared out from the area,” added the official.

The terror group first attacked two border towns in Somalia’s side on July 20, 2022, on the same day Somali regional state officials convened to evaluate its security forces performance.

After the first clash at Yeed and Aato towns in Ethio-Somalia border, the militants reportedly killed twenty Ethiopian forces including three civilians. The group lost 63 of its own.

The al-Qaeda linked group tried to enter Ethiopia through Afder zone in southern part of Somali region.

Apart from a strong presence by Ethiopian forces in the border areas, Ethiopia also deployed close to 4,000 troops in Somalia under the AU Transition Mission in Somalia (ATMIS), a reconfigured version of the former AU Mission in Somalia (AMISOM). Ethiopian troops maintain a stronghold in Baidowa.

However insiders question why Al-shabab is attacking Ethiopia at this moment.

“The attack is intended to divert the attention of Ethiopia. Al-shabab is conducting the attacks in coordination with the TPLF and other insurgents in Ethiopia,” said a security expert who focuses on Al-shabab.

Other insiders also link the rising Al-shabab attacks with the instability in Ethiopia. The restructuring of AMISOM and controversies shadowing the continuity of ATMIS, is also contributing to Al-shabab’s resurrection.

Over the past few months, Al-shabab’s attacks have evolved from suicide bombings to attacking military bases in Somalia, including an AU military base. Experts stress that the group is gaining momentum as Horn of Africa countries are occupied with domestic conflicts and the EU, the largest financer of AMISOM/ATMIS, is backtracking.

A few weeks ago, the newly elected Somalia President, Hassan Sheikh Mohamud said negotiations should be considered with Al-shabab, a rare gesture, which is becoming almost a shadow state.

However, the militant group in a statement said it fights to establish an Islamic state in the Horn.

In a continued conflict in West Wollega Zone, over 1,105 civilians are killed this year, including 28 officials who were shot in one day. The zone has also lost properties worth over three billion birr to extended conflict during the just ended fiscal year.

Reports of the devastating impact of the conflict presented to the Caffee Oromia, council of the Oromia regional state, which held its annual meeting over the week. Gammachis Dabala, administrator of West Wollega zone, told the council that both ethnic Amhara and Oromo are killed in his zone.

The regional government has repeatedly launched operation to eradicate the Oromo Liberation Front (OLF-Shene) group, which designated terrorist by the House of Peoples Representative (HPR) and still maintaining West Oromia as its stronghold. During the last month alone, the group has killed hundreds of civilians, according to Ethiopian Human Rights Commission (EHRC) reports. PM Abiy Ahmed called it “a massacre.”

Most of the zones of Oromia are currently under threats of the insurgent group, according to official reports. Loss of life, property damages, and closure of schools are also tolling across the regional state. In North Shewa alone, some 195 schools remain closed, while over 75,000 students were out of school, according to the report presented during the Caffee meeting.

Taye Dendea, member of the Oromia Prosperity party and state minister of Peace, was at dismay after attending the Caffee meeting. “Last year, only few woredas of Oromia were affected by conflict. Currently, eight zones of Oromia have security threats. We failed the people that elected us just last year. The Oromia Regional Government failed to fulfill its duty to protect the civilians. The damage up on our people is shocking. Externalizing the problem cannot be a solution,” he wrote on Facebook after the meeting was concluded on Friday.

The state minister also harshly criticized the budget allocation of the just started 2022/23 is not enough to fight the insurgents. Nearly 400 million birr is allocated for the regional security budget, which the state minister argues should be more than one billion birr. This accounts for less than one percent of 158.6 billion birr budget approved by the Caffee.

However, the state minister did not mention shortcomings of his ministry why the insurgent group is remaining at large.

Businesses that are registered in Tigray region as a federal taxpayer but are currently located outside the region will be paying their taxes at the Northwest Branch of the Ministry of Revenue in Addis Ababa.

The federal revenue that should have been collected in the region will be collected directly by the ministry. The tax that should have been collected by the regional government will be deposited in a trust bank account.

The ministries of finance and revenue are implementing this temporary procedure because organizations and individuals registered as taxpayers in Tigray are having a difficulty to continue their business activities in other parts of the country, according to Abaynesh Abate, the ministry’s tax declaration director.

Despite their desire to continue working in their current location, the taxpayers were unable to renew their business licenses, vehicles or construction equipment.

Abaynesh said that they could not obtain loans, bid on contracts or receive other government services. “Some of them even claimed that the house they rented for their business was in trouble since their business license had not been renewed.”

More than 100 complaints from Tigray’s taxpayers have been lodged to the ministry, and the number continues to grow. The majority are taxpayers who must pay taxes to the regional government.

Abaynesh says among the complainants, ten are Tigray registered firms that are managed by Commercial Nominees and pay federal taxes.

She explained that after the ministry informed the Ministry of Finance about the complaint in April, it allowed taxpayers to get a temporary tax clearance through a temporary procedure or register as taxpayers elsewhere.

In a letter written by the Ministry of Finance to the Ministry of Revenue last month, it acknowledged the regional government’s authority to collect the tax revenue in Tigray region.

The minister cited Article 96 of the Constitution to explain saying, “Since the income collected from individual businessmen and regional public enterprises is a regional income, it is clear that it is the regional government that can levy and collect tax.”

On the other hand, the letter explains that the tax collected from private organizations located in the region is the joint income of the federal and state governments, levied and collected by the federal government. But the income collected from federal public enterprises located in the region is the income of the federal government.

Nevertheless, since both taxpayers registered in Tigray are facing difficulties to conduct their activities due to the “emerging security problem,” State Minister, Eyob Tekalegn, in a letter stated that it is necessary to establish a temporary system.

The Ministry of Revenue, which has designated the North West branch in Addis Ababa’s Lideta neighborhood, will ensure that these taxpayers receive their tax clearance.

Abaynesh added that a request has been made to the Ministry of Finance to open a trust bank account where regional taxpayer revenue will be put.

“It will be held in a trust for later transfer to the region,” she explained.

According to Abaynesh, the ministry would only collect the taxes submitted by taxpayers because there is no means to check how much the region’s taxpayers owe.

“We don’t have any information to show how much they should be paying at that point. When the situation in the region stabilizes, it will be thoroughly examined” Abaynesh elaborated.

If taxpayers want to shift their workplace to their current address after receiving their tax clearance, registrations will be completed at the preferred address.

Under typical circumstances, changing a company’s address requires amending the company’s establishment document and submitting meeting minutes. Providing permission to change address is the authority of the regional government. All these requirements are not necessary expected to be meet in the temporary procedure.

However, even though both federal and state taxpayers registered in the state will be issued a tax clearance certificate from the Ministry of Revenue, they cannot sell their property. According to the Ministry of Finance’s letter, it is impossible to verify whether they have tax debt or not in the current situation.

Berhane Mewa is not only the former president of the Ethiopian and Addis Ababa Chamber of Commerce and Sectoral Associations, but is also a lifetime patriot in Ethiopia’s private sector struggles against state domination in the economy. Before he was forced into exile eighteen years ago by the EPRDF regime, he took up the struggle to create an independent chamber system and a real private sector in Ethiopia.

An industrial chemist by profession, Berhane came back to Addis to process a pharmaceutical investment license, to the tune of USD 22 million. He already has a plastic and rubber factory, which he established before his exile to the US.

Despite positive signs in the politics arena, Berhane argues the chambers system is still far from defending the private sector’s interests and contributing to the economy. Ashenafi Endale was granted audience. Excerpts:

The Reporter: What was at the core of your struggle for the Ethiopian private sector?

Birhane Mewa:I was forced to leave Ethiopia eighteen years ago. The government at the time was not happy with struggle in the Chamber, to create a strong private sector. I had no political interests. But after I left Ethiopia, I became a member of Kestedemena and Coalition for Unity and Democracy (Kinijit) political parties in North America. I was the secretary in Kinijit’s international leadership wing.

After Kinijit’s leadership were released from prison, I went back to normal life and started working as a business consultant, and then as a project manager. Of course I traveled to Ethiopia in between to attend my wife’s funeral. But now, I came to Ethiopia to process an investment license.

We are in the process of establishing a pharmaceutical factory in Ethiopia, in cooperation with Ethiopians engaged in the pharmacy business in the US. In general, we are here following PM Abiy Ahmed’s (PhD) call to the diaspora.

What is the kind of Chamber you want to see in Ethiopia?

The Chamber was first established as ‘the Addis Ababa Traders Association,’ during the Emperor’s era. Then it was re-established as Ethiopian Traders Council. It was free and active in advising the government, until Derg completely changed that trend. Derg made memberships mandatory and all businesses had to pay a chamber membership fees after they get their licenses.

Derg also shrunk the number of board members representing the private sector in the council, from eleven to one. At that time, nine of the eleven board members were general managers of state corporations; with only Wubshet Werkalemahu was representing the private sector.

After EPRDF took power, the general managers of state corporations left the chamber. At the time, I was president of the Ethiopian Private Manufacturing Association. So I became vice president of the Chamber to close the vacuum. And when Kebour Gena left, I became president of the chamber, through competition.

The fundamental objective of the Chamber is to advise the government before it introduces polices that affect the private sector and the economy. The second is to provide services for the private sector including trainings, information and arbitration. We were successful on both. Both the Addis and Ethiopian Chambers won various international awards, including the ‘best chamber in Africa’ award.

Nonetheless, the EPRDF was working hard to create divisions amongst, Addis Ababa, regional and sectoral chambers and associations. I worked hard to cut out such divisions and create a stronger chamber. We also managed to get back the chamber’s assets taken by the government. We also managed to access 100,000 sq. m of land for the chamber, on which the Addis-Africa exhibition center is currently being established.

Where is (should be) the exact line between state and private sector roles in the economy?

In principle, the private sector is the backbone of the economy, especially in a free market system. But during the TPLF dominated EPRDF regime; the government tried to replace the private sector by state affiliated endowment companies and state owned enterprises, which are still under party control. They enjoy access to finance, bureaucratic support, information, monopoly and other privileges. This has been stunting the growth of the private sector. I am not sure whether the situation still changed. Party affiliations still control the media, not only businesses and the economy.

Besides those parastatals, there are private businesses parasitic on preferential treatments, provided from the parties. Preferential treatment is still given for businesses, in accessing land, finance, foreign currency, and other privileges. A real private sector, which is self-created and hardworking, is very limited in Ethiopia.

The parties and government affiliated private sectors, still prevail, only changing its face. If you look at past private businesses currently, it is not hard to find a party or state support.

The right private sector should be represented only by the Chamber. It should be free, with no political interests, but defend the interests of the private sector. When we say ‘private sector’, it includes the street vendor andGulit, to the factory and bank owners. The similarity amongst them is that they have a business license, and a common interest. There are various obstacles that hinder the chamber.

Ethiopia’s future depends on the real private sector. Foreign Direct Investments are also necessary but the domestic private sector is critical in terms of self-sufficiency, sovereignty and retention of repatriation. FDI’s can leave anytime.

Even in the USA, the private sector supports either democrats or republicans. Can a real private sector exist without any affiliation with the ruling party?

If you go to Mercato, everyone works for their own interests. They are not paid by the government but they pay taxes to the government. What the government can do is improve and equalize the playing ground.

Of course the private sector in the US supports parties. The difference is corruption is legal in the US. It is called lobbying and it is not a crime. It is also regulated. But in Ethiopia, parties establish affiliated businesses and keep taking money. The biggest problem appears when the parties themselves engage in the business. This is the biggest problem in Ethiopia. Nobody knows where the money from public enterprises goes to.

Political parties must exit from businesses and the economy. In the US, individuals and businesses giving money to parties, is publicly known, and audited. The tax authority also knows it.

Do you think the existing private sector in Ethiopia can be changed into a real private sector, or should we start over?

A real private sector is not something we create. What the government should do is create conducive environment for a ‘real private sector to emerge.’ It is the demand and supply dynamism that creates a real private sector. There are shoe shiners who have become millionaires. Did the government create them? Of course the government can facilitate support, but without political affiliation.

PM Abiy’s administration rolled out privatization and liberalization initiatives in the past three years. Do you think it is sufficient to re-balance the state dominated economy previously under the EPRDF?

There are positive signs but still some individual businesses are close to the government, instead of organized business communities under the Chamber. I do not think this is good. The government must recognize, capacitate and work with the Chamber. There are improvements regarding regulatory issues and public services. But still there is a chain of corruption in the government system. It is related to power and partisanships, which is a big obstacle that must be reduced. The government has good intentions. There are various issues studied and forwarded by the chamber and sectoral associations. Things will improve if the government reacts on those issues. If it does not start punishing corruption and avoid party affiliation and preferential treatments for selected businesses, the problem will get worse. It is the government that creates a corrupt private sector.

Corruption is also unavoidable when the public servants are paid meager salaries. The government must pay public servants sufficiently. So, corruption is high not because people are bad, or the officials are greedy, but the civil servant takes corruption as supplementary revenue.

The government also drafted a new proclamation to re-establish the Chamber. The draft proposes membership as mandatory, among others. How can a strong chamber be established? Recently, two chamber officials also defected to the US. Why is there always an internal feud inside the chambers structure?

There is a structural problem in the Chamber. It is intentionally created. Making memberships mandatory generates revenue for the chamber. But it hinders the chambers from providing quality service for their members. This was seen during the Derg regime. Immediately after the EPRDF came, it worked hard to weaken all institutions, including the chamber, teachers association, and others. The EPRDF made memberships willingly, to shrink the chamber’s revenue and finally close the chamber due to a lack of fund. But we managed to survive, by improving services and generating revenue from creative works.

Especially, the Addis Ababa Chamber became stronger, at the time, while there were some problems in the Ethiopian Chamber of Commerce. When I was about to leave, there were efforts to change the Chamber’s laws and the government wanted to re-design the Chamber, to fit to the politics.

The Chamber serves wherever there are private businesses, not government structures or political leaderships. But the government shadowed and dominated cities’ chambers, by chambers of regional states. These regional state chambers are under the control of party officials. The Ethiopian chamber also fell under the influence of party members. We tried to avoid those influences and somehow succeeded to maintain a Chamber that represents only the interest of businesses.

The proclamation tried to further divide the chamber across sectors, on top of the regional structure, dissecting the interest of the private sector. Kiosk and garage owners have different interests, but also have common interests. These specific interests should be solved under sectoral associations, and their common interest under the chamber. But what the government did is bundle the sectoral associations and the Chamber together. Businesses with different interests sat on the same table, and failed to agree. So, there is still a structural problem.

I have seen the new draft proclamation too. We are unfortunate the draft did not address the problem still. The chambers and the business community still did not reach a consensus on the draft. The Addis Ababa and Ethiopian chambers are in agreement and sectoral associations have also their won perspectives.

Chambers should work only on general issues that represent the common interests of all businesses and the economy at large, aided by sectoral associations formed separately, representing interests of businesses in specific sectors. Thus, the chamber and sectoral associations should be established separately. I do not know the status of the draft proclamation currently, but if it is ratified, it would take another generation to amend.

So, do you believe the Ethiopian chamber should be the all-encompassing strong umbrella?

Not necessarily. My point is the chamber system should be separate from sectoral associations. Whether at local, cities or a national level, chamber must be strong. But they must align. The issue of sectoral associations is completely different. For instance, leather industries have problems that can be solved both through the chamber, and their association platforms. This is the right way.

For instance, there was the Ethiopian Manufacturing Industries Association. It was challenging the government regarding manufacturer’s interests. Its strong momentum even empowered the chamber. Then the EPRDF practically dismantled it. It even prohibited the association from renting an office. The EPRDF regime never wanted such strong associations and chambers. The reason why the government overlapped chambers and sectoral associations is to deny them on common grounds.

If the draft is ratified, it only maintains the problem. Currently, the government’s system prefers individual businesses, than the organized private sector.

So the draft should be revised and discussed again?

The process of crafting the proclamation has problems from its very inception. The chamber members and business communities have no consensus on the draft. The Ethiopian, Addis Ababa, and regional chambers must sit down and discuss on the issue.

The Ethiopian government is trying to allure investments by the diaspora. If the diaspora invest and save in US banks, or in Ethiopia, which return on investment is attractive? Or do you think the government should design incentive packages for the diaspora?

Businesses in Ethiopia are more profitable than other countries. The reason the US government devised AGOA from the beginning, is because African businesses can be profitable. Even in terms of savings, the return in Ethiopia is higher than Europe or elsewhere. The problem in Ethiopia is not on returns, but convertibility. Repatriation might be difficult. Saving in Ethiopia by itself is profitable, let alone investment. There are so many profitable business sectors in Ethiopia. Many sectors are emerging, and not exploited yet.

The other problem is that the Ethiopian diaspora has lost trust in the government back home. So, the current government must reverse that perception, through transparency, commitment and service efficiency.

Thirdly, the diaspora needs information supply on feasible businesses and projects in Ethiopia. Then the diaspora can form share companies, joint ventures, PLC’s or other investment modalities. If the diaspora know feasible businesses and the laws, then they can invest. Currently, the diaspora is placing their money on the stock market and other businesses abroad. They can divert that money to go back home.

Especially, the profitability in the financial industry in Ethiopia is very lucrative; but the government should facilitate currency convertibility. Plus, most diaspora’s in Europe and the US left Ethiopia three to four decades ago. They are at s retirement age now. So if the health system in Ethiopia is improved, most diaspora’s would prefer to go back to Ethiopia.

The diaspora also wants transparent systems to complain in cases of corruption and bad services. There is corruption in Europe and the US. But it is political corruption not work corruption. Political corruption is trying to twist or influence introduction of policies, proclamations or directives. Work corruption is bribing officials, institutions, and public services. There must be a complaint window for this.

The west has been shifting away from Ethiopia and imposed sanctions. Substantial number of Ethiopians vote, especially in the US. Can Ethiopians and black Africans use their voting power to discard unfavorable officials or parties in the US or influence to reverse such sanctions?

The diplomatic system has a more crucial role in this. To be specific, the US faced unprecedented situation in Ethiopia. A government that refuses foreign pressure emerged in Ethiopia.

The US even used the UNSC to pressurize Ethiopia, meeting twelve times within six months. On top of the strong refusal of the Ethiopian government to surrender, the #nomore movement strengthened the support for Ethiopia, rallying Africans behind Ethiopia. The movement is stronger than election powers. The movement eroded US’s credibility in Africa, and in the world.

Even during calls that Addis Ababa will fall to the hands of insurgents, one million diaspora opted to come back home. I believe Ethiopia will regain its rightful place in the international stage.

Unlike any time before, the diaspora is on the same page now, regarding national issues. Before this, the diaspora’s were highly divided and turned against each other. The division created a negative energy. If the diaspora was united before, the EPRDF could have been long gone. The Diaspora and opposition figures abroad were used to strife, not unity.

Can we say that the US’s pressure is normalizing since the tension with China over the horn escalated?

Their strategy differs. The US wants to ensure its interests through political influence, while China does it through investment and economic empowering. The US’s and China’s struggles will continue, whether Ethiopia is there or not. China, Russia, Turkey, Iran and India, to some degree, are joining the friction now. They have certain interests with or against the US.

The US’s fear is not what China will do in Ethiopia, but the kind of measures Ethiopia takes. For instance, Ethiopia’s normalization with Eritrea and the alliance with Somalia is a threat for the US. When the US told Ethiopia to stop the war, Ethiopia rather turned a deaf ear. Ethiopia filled the renaissance dam, when the US opposed it. These are some of the bold moves against US interests.

These moves have nothing to do with China, but they are decisions emanating from the nature of Ethiopians. So, the confrontation between the US and China continues, while Ethiopia strides to protect and implement its national interests fully.

I do not think Ethiopia will completely shift its diplomatic ties towards China. Imperialism is always imperialism, but it changes its face. The US always wants a government that listens to them. If a government refuses to carry out their interest, they depose that government, including assassinations. In cases such as Libya, Iraq and Syria, the US’s footprints in the countries politics can be seen from afar.

The US put the same type of pressures that worked before, and in Ethiopia’s case, it has failed. But the pressure will continue. Ethiopia has passed a major obstacle. Yet, Ethiopia needs to sharpen its diplomacy more.

At what stage is your investment process currently? What are your future plans?

We are establishing the pharmaceutical factory in Ethiopia, in collaboration with highly professional pharmacists, scientists and business people in the Ethiopian diaspora. Finance, knowledge and vision are required to establish a medicine factory. If you have capital, you can buy knowledge, since it is a commodity.

Our vision is to manufacture medicine and medical equipment’s in Ethiopia and provide for Ethiopians. It is not even about profits. We wanted to improve the medicine supply shortages in Ethiopia.

We have been preparing for the past two years. We came to invest in Ethiopia, amidst the rhetoric that Addis Ababa is about to fall. Our team strongly believes in Ethiopia. Currently, we are processing the investment license.

How much is the investment?

The initial investment will take us between USD 20 million to USD 22 million.

What is your conclusion on the soundness of the Ethiopian economy, especially in post-pandemic and post-conflict endeavors?

My first impression when I came to Ethiopia after almost two decades was that all the negative narratives about Ethiopia and Addis Ababa are wrong. There is still an active economy. Across streets of Addis Ababa, day and night, residents are scrambling to buy from street vendors. This indicates to a huge demand in the economy. This is a living economy.

But it does not mean there are no problems in the economy. There is a forex shortage, industrial inputs shortages, logistics problems and others. Yet, the economy has a big potential, especially if public services are improved, corruption is eliminated and bureaucracy is improved.

Do you think the government should maintain protectionism?

The US and Europe are not afraid of protectionism. Why should Ethiopia be afraid of it? Ethiopia is eager to join the WTO. But Europe is still protecting its agriculture. The US is prohibiting import of wood, aluminum and other items, especially trump did everything to protect local industries. So, Ethiopia must also protect its industries.

After America banned Ethiopia from the AGOA, US companies left the Hawassa industrial park. If it is a local factory, they would not do so.

Before, the US’s private sector had no national interest, instead they go for profits. That is why US industries moved factories to China, in search of a cheap labor. But now, the US government is asking them to come back and create jobs in the US.

The country needs a nationalist private sector. The private sector cannot just seek profits and become a pure capitalist. It must contribute to the social wellbeing and development of the country.

Even FDI’s must be undertaken in a joint venture scheme. If it has a local element, the investment can be sustainable.

How can one balance profit seeking versus national interests? Scholars also say the psychological make-up of Ethiopians is not compatible for capitalism.

Corporate governance, labor unions and social responsibility can balance capitalism. National security should be a concern of the private sector. If there is no security, there is no transport, meaning there is no market. Drought should concern the private sector. These make the private sector become a nationalist by default.

One of the major tasks of the Chamber is to make businesses discharge their social responsibility.

Thus, your conclusion is capitalism can work in Ethiopia.

The old way of capitalism, which is seeking only profits, does not exist anymore. Of course, you are responsible for your shareholders and board members. At the same time, you have to be responsible to the society.

Why you are not investing in the banking sector rather than pharmaceuticals?

The government said it opened the banking sector for the diaspora, but still, there are unsettled problems. It said the diaspora had to invest in foreign currency. This is an obstacle.

But the major reason I joined the pharmaceutical project, is because it is a matter of professionalism. Manufacturing is difficult in Ethiopia. We have a big purpose to bring change in the medical supply shortage in Ethiopia. We will produce capsules and tablets. We will also export, once we address the domestic demand. The company will also establish an R&D wing, which will conduct studies for other firms. Most of the founders are also researchers.

Are you a chemical engineer by profession?

I studied chemistry. I also studied industrial chemistry at Bahir Dar polytechnic. I already have a factory in Ethiopia, which produces plastic and rubber. It is expanding now.

Berhane Mewa is not only the former president of the Ethiopian and Addis Ababa Chamber of Commerce and Sectoral Associations, but is also a lifetime patriot in Ethiopia’s private sector struggles against state domination in the economy. Before he was forced into exile eighteen years ago by the EPRDF regime, he took up the struggle to create an independent chamber system and a real private sector in Ethiopia.

An industrial chemist by profession, Berhane came back to Addis to process a pharmaceutical investment license, to the tune of USD 22 million. He already has a plastic and rubber factory, which he established before his exile to the US.

Despite positive signs in the politics arena, Berhane argues the chambers system is still far from defending the private sector’s interests and contributing to the economy. Ashenafi Endale was granted audience. Excerpts:

The Reporter: What was at the core of your struggle for the Ethiopian private sector?

Birhane Mewa:I was forced to leave Ethiopia eighteen years ago. The government at the time was not happy with struggle in the Chamber, to create a strong private sector. I had no political interests. But after I left Ethiopia, I became a member of Kestedemena and Coalition for Unity and Democracy (Kinijit) political parties in North America. I was the secretary in Kinijit’s international leadership wing.

After Kinijit’s leadership were released from prison, I went back to normal life and started working as a business consultant, and then as a project manager. Of course I traveled to Ethiopia in between to attend my wife’s funeral. But now, I came to Ethiopia to process an investment license.

We are in the process of establishing a pharmaceutical factory in Ethiopia, in cooperation with Ethiopians engaged in the pharmacy business in the US. In general, we are here following PM Abiy Ahmed’s (PhD) call to the diaspora.

What is the kind of Chamber you want to see in Ethiopia?

The Chamber was first established as ‘the Addis Ababa Traders Association,’ during the Emperor’s era. Then it was re-established as Ethiopian Traders Council. It was free and active in advising the government, until Derg completely changed that trend. Derg made memberships mandatory and all businesses had to pay a chamber membership fees after they get their licenses.

Derg also shrunk the number of board members representing the private sector in the council, from eleven to one. At that time, nine of the eleven board members were general managers of state corporations; with only Wubshet Werkalemahu was representing the private sector.

After EPRDF took power, the general managers of state corporations left the chamber. At the time, I was president of the Ethiopian Private Manufacturing Association. So I became vice president of the Chamber to close the vacuum. And when Kebour Gena left, I became president of the chamber, through competition.

The fundamental objective of the Chamber is to advise the government before it introduces polices that affect the private sector and the economy. The second is to provide services for the private sector including trainings, information and arbitration. We were successful on both. Both the Addis and Ethiopian Chambers won various international awards, including the ‘best chamber in Africa’ award.

Nonetheless, the EPRDF was working hard to create divisions amongst, Addis Ababa, regional and sectoral chambers and associations. I worked hard to cut out such divisions and create a stronger chamber. We also managed to get back the chamber’s assets taken by the government. We also managed to access 100,000 sq. m of land for the chamber, on which the Addis-Africa exhibition center is currently being established.

Where is (should be) the exact line between state and private sector roles in the economy?

In principle, the private sector is the backbone of the economy, especially in a free market system. But during the TPLF dominated EPRDF regime; the government tried to replace the private sector by state affiliated endowment companies and state owned enterprises, which are still under party control. They enjoy access to finance, bureaucratic support, information, monopoly and other privileges. This has been stunting the growth of the private sector. I am not sure whether the situation still changed. Party affiliations still control the media, not only businesses and the economy.

Besides those parastatals, there are private businesses parasitic on preferential treatments, provided from the parties. Preferential treatment is still given for businesses, in accessing land, finance, foreign currency, and other privileges. A real private sector, which is self-created and hardworking, is very limited in Ethiopia.

The parties and government affiliated private sectors, still prevail, only changing its face. If you look at past private businesses currently, it is not hard to find a party or state support.

The right private sector should be represented only by the Chamber. It should be free, with no political interests, but defend the interests of the private sector. When we say ‘private sector’, it includes the street vendor andGulit, to the factory and bank owners. The similarity amongst them is that they have a business license, and a common interest. There are various obstacles that hinder the chamber.

Ethiopia’s future depends on the real private sector. Foreign Direct Investments are also necessary but the domestic private sector is critical in terms of self-sufficiency, sovereignty and retention of repatriation. FDI’s can leave anytime.

Even in the USA, the private sector supports either democrats or republicans. Can a real private sector exist without any affiliation with the ruling party?

If you go to Mercato, everyone works for their own interests. They are not paid by the government but they pay taxes to the government. What the government can do is improve and equalize the playing ground.

Of course the private sector in the US supports parties. The difference is corruption is legal in the US. It is called lobbying and it is not a crime. It is also regulated. But in Ethiopia, parties establish affiliated businesses and keep taking money. The biggest problem appears when the parties themselves engage in the business. This is the biggest problem in Ethiopia. Nobody knows where the money from public enterprises goes to.

Political parties must exit from businesses and the economy. In the US, individuals and businesses giving money to parties, is publicly known, and audited. The tax authority also knows it.

Do you think the existing private sector in Ethiopia can be changed into a real private sector, or should we start over?

A real private sector is not something we create. What the government should do is create conducive environment for a ‘real private sector to emerge.’ It is the demand and supply dynamism that creates a real private sector. There are shoe shiners who have become millionaires. Did the government create them? Of course the government can facilitate support, but without political affiliation.

PM Abiy’s administration rolled out privatization and liberalization initiatives in the past three years. Do you think it is sufficient to re-balance the state dominated economy previously under the EPRDF?

There are positive signs but still some individual businesses are close to the government, instead of organized business communities under the Chamber. I do not think this is good. The government must recognize, capacitate and work with the Chamber. There are improvements regarding regulatory issues and public services. But still there is a chain of corruption in the government system. It is related to power and partisanships, which is a big obstacle that must be reduced. The government has good intentions. There are various issues studied and forwarded by the chamber and sectoral associations. Things will improve if the government reacts on those issues. If it does not start punishing corruption and avoid party affiliation and preferential treatments for selected businesses, the problem will get worse. It is the government that creates a corrupt private sector.

Corruption is also unavoidable when the public servants are paid meager salaries. The government must pay public servants sufficiently. So, corruption is high not because people are bad, or the officials are greedy, but the civil servant takes corruption as supplementary revenue.

The government also drafted a new proclamation to re-establish the Chamber. The draft proposes membership as mandatory, among others. How can a strong chamber be established? Recently, two chamber officials also defected to the US. Why is there always an internal feud inside the chambers structure?

There is a structural problem in the Chamber. It is intentionally created. Making memberships mandatory generates revenue for the chamber. But it hinders the chambers from providing quality service for their members. This was seen during the Derg regime. Immediately after the EPRDF came, it worked hard to weaken all institutions, including the chamber, teachers association, and others. The EPRDF made memberships willingly, to shrink the chamber’s revenue and finally close the chamber due to a lack of fund. But we managed to survive, by improving services and generating revenue from creative works.

Especially, the Addis Ababa Chamber became stronger, at the time, while there were some problems in the Ethiopian Chamber of Commerce. When I was about to leave, there were efforts to change the Chamber’s laws and the government wanted to re-design the Chamber, to fit to the politics.

The Chamber serves wherever there are private businesses, not government structures or political leaderships. But the government shadowed and dominated cities’ chambers, by chambers of regional states. These regional state chambers are under the control of party officials. The Ethiopian chamber also fell under the influence of party members. We tried to avoid those influences and somehow succeeded to maintain a Chamber that represents only the interest of businesses.

The proclamation tried to further divide the chamber across sectors, on top of the regional structure, dissecting the interest of the private sector. Kiosk and garage owners have different interests, but also have common interests. These specific interests should be solved under sectoral associations, and their common interest under the chamber. But what the government did is bundle the sectoral associations and the Chamber together. Businesses with different interests sat on the same table, and failed to agree. So, there is still a structural problem.

I have seen the new draft proclamation too. We are unfortunate the draft did not address the problem still. The chambers and the business community still did not reach a consensus on the draft. The Addis Ababa and Ethiopian chambers are in agreement and sectoral associations have also their won perspectives.

Chambers should work only on general issues that represent the common interests of all businesses and the economy at large, aided by sectoral associations formed separately, representing interests of businesses in specific sectors. Thus, the chamber and sectoral associations should be established separately. I do not know the status of the draft proclamation currently, but if it is ratified, it would take another generation to amend.

So, do you believe the Ethiopian chamber should be the all-encompassing strong umbrella?

Not necessarily. My point is the chamber system should be separate from sectoral associations. Whether at local, cities or a national level, chamber must be strong. But they must align. The issue of sectoral associations is completely different. For instance, leather industries have problems that can be solved both through the chamber, and their association platforms. This is the right way.

For instance, there was the Ethiopian Manufacturing Industries Association. It was challenging the government regarding manufacturer’s interests. Its strong momentum even empowered the chamber. Then the EPRDF practically dismantled it. It even prohibited the association from renting an office. The EPRDF regime never wanted such strong associations and chambers. The reason why the government overlapped chambers and sectoral associations is to deny them on common grounds.

If the draft is ratified, it only maintains the problem. Currently, the government’s system prefers individual businesses, than the organized private sector.

So the draft should be revised and discussed again?

The process of crafting the proclamation has problems from its very inception. The chamber members and business communities have no consensus on the draft. The Ethiopian, Addis Ababa, and regional chambers must sit down and discuss on the issue.

The Ethiopian government is trying to allure investments by the diaspora. If the diaspora invest and save in US banks, or in Ethiopia, which return on investment is attractive? Or do you think the government should design incentive packages for the diaspora?

Businesses in Ethiopia are more profitable than other countries. The reason the US government devised AGOA from the beginning, is because African businesses can be profitable. Even in terms of savings, the return in Ethiopia is higher than Europe or elsewhere. The problem in Ethiopia is not on returns, but convertibility. Repatriation might be difficult. Saving in Ethiopia by itself is profitable, let alone investment. There are so many profitable business sectors in Ethiopia. Many sectors are emerging, and not exploited yet.

The other problem is that the Ethiopian diaspora has lost trust in the government back home. So, the current government must reverse that perception, through transparency, commitment and service efficiency.

Thirdly, the diaspora needs information supply on feasible businesses and projects in Ethiopia. Then the diaspora can form share companies, joint ventures, PLC’s or other investment modalities. If the diaspora know feasible businesses and the laws, then they can invest. Currently, the diaspora is placing their money on the stock market and other businesses abroad. They can divert that money to go back home.

Especially, the profitability in the financial industry in Ethiopia is very lucrative; but the government should facilitate currency convertibility. Plus, most diaspora’s in Europe and the US left Ethiopia three to four decades ago. They are at s retirement age now. So if the health system in Ethiopia is improved, most diaspora’s would prefer to go back to Ethiopia.

The diaspora also wants transparent systems to complain in cases of corruption and bad services. There is corruption in Europe and the US. But it is political corruption not work corruption. Political corruption is trying to twist or influence introduction of policies, proclamations or directives. Work corruption is bribing officials, institutions, and public services. There must be a complaint window for this.

The west has been shifting away from Ethiopia and imposed sanctions. Substantial number of Ethiopians vote, especially in the US. Can Ethiopians and black Africans use their voting power to discard unfavorable officials or parties in the US or influence to reverse such sanctions?

The diplomatic system has a more crucial role in this. To be specific, the US faced unprecedented situation in Ethiopia. A government that refuses foreign pressure emerged in Ethiopia.

The US even used the UNSC to pressurize Ethiopia, meeting twelve times within six months. On top of the strong refusal of the Ethiopian government to surrender, the #nomore movement strengthened the support for Ethiopia, rallying Africans behind Ethiopia. The movement is stronger than election powers. The movement eroded US’s credibility in Africa, and in the world.

Even during calls that Addis Ababa will fall to the hands of insurgents, one million diaspora opted to come back home. I believe Ethiopia will regain its rightful place in the international stage.

Unlike any time before, the diaspora is on the same page now, regarding national issues. Before this, the diaspora’s were highly divided and turned against each other. The division created a negative energy. If the diaspora was united before, the EPRDF could have been long gone. The Diaspora and opposition figures abroad were used to strife, not unity.

Can we say that the US’s pressure is normalizing since the tension with China over the horn escalated?

Their strategy differs. The US wants to ensure its interests through political influence, while China does it through investment and economic empowering. The US’s and China’s struggles will continue, whether Ethiopia is there or not. China, Russia, Turkey, Iran and India, to some degree, are joining the friction now. They have certain interests with or against the US.

The US’s fear is not what China will do in Ethiopia, but the kind of measures Ethiopia takes. For instance, Ethiopia’s normalization with Eritrea and the alliance with Somalia is a threat for the US. When the US told Ethiopia to stop the war, Ethiopia rather turned a deaf ear. Ethiopia filled the renaissance dam, when the US opposed it. These are some of the bold moves against US interests.

These moves have nothing to do with China, but they are decisions emanating from the nature of Ethiopians. So, the confrontation between the US and China continues, while Ethiopia strides to protect and implement its national interests fully.

I do not think Ethiopia will completely shift its diplomatic ties towards China. Imperialism is always imperialism, but it changes its face. The US always wants a government that listens to them. If a government refuses to carry out their interest, they depose that government, including assassinations. In cases such as Libya, Iraq and Syria, the US’s footprints in the countries politics can be seen from afar.

The US put the same type of pressures that worked before, and in Ethiopia’s case, it has failed. But the pressure will continue. Ethiopia has passed a major obstacle. Yet, Ethiopia needs to sharpen its diplomacy more.

At what stage is your investment process currently? What are your future plans?

We are establishing the pharmaceutical factory in Ethiopia, in collaboration with highly professional pharmacists, scientists and business people in the Ethiopian diaspora. Finance, knowledge and vision are required to establish a medicine factory. If you have capital, you can buy knowledge, since it is a commodity.

Our vision is to manufacture medicine and medical equipment’s in Ethiopia and provide for Ethiopians. It is not even about profits. We wanted to improve the medicine supply shortages in Ethiopia.

We have been preparing for the past two years. We came to invest in Ethiopia, amidst the rhetoric that Addis Ababa is about to fall. Our team strongly believes in Ethiopia. Currently, we are processing the investment license.

How much is the investment?

The initial investment will take us between USD 20 million to USD 22 million.

What is your conclusion on the soundness of the Ethiopian economy, especially in post-pandemic and post-conflict endeavors?

My first impression when I came to Ethiopia after almost two decades was that all the negative narratives about Ethiopia and Addis Ababa are wrong. There is still an active economy. Across streets of Addis Ababa, day and night, residents are scrambling to buy from street vendors. This indicates to a huge demand in the economy. This is a living economy.

But it does not mean there are no problems in the economy. There is a forex shortage, industrial inputs shortages, logistics problems and others. Yet, the economy has a big potential, especially if public services are improved, corruption is eliminated and bureaucracy is improved.

Do you think the government should maintain protectionism?

The US and Europe are not afraid of protectionism. Why should Ethiopia be afraid of it? Ethiopia is eager to join the WTO. But Europe is still protecting its agriculture. The US is prohibiting import of wood, aluminum and other items, especially trump did everything to protect local industries. So, Ethiopia must also protect its industries.

After America banned Ethiopia from the AGOA, US companies left the Hawassa industrial park. If it is a local factory, they would not do so.

Before, the US’s private sector had no national interest, instead they go for profits. That is why US industries moved factories to China, in search of a cheap labor. But now, the US government is asking them to come back and create jobs in the US.

The country needs a nationalist private sector. The private sector cannot just seek profits and become a pure capitalist. It must contribute to the social wellbeing and development of the country.

Even FDI’s must be undertaken in a joint venture scheme. If it has a local element, the investment can be sustainable.

How can one balance profit seeking versus national interests? Scholars also say the psychological make-up of Ethiopians is not compatible for capitalism.

Corporate governance, labor unions and social responsibility can balance capitalism. National security should be a concern of the private sector. If there is no security, there is no transport, meaning there is no market. Drought should concern the private sector. These make the private sector become a nationalist by default.

One of the major tasks of the Chamber is to make businesses discharge their social responsibility.

Thus, your conclusion is capitalism can work in Ethiopia.

The old way of capitalism, which is seeking only profits, does not exist anymore. Of course, you are responsible for your shareholders and board members. At the same time, you have to be responsible to the society.

Why you are not investing in the banking sector rather than pharmaceuticals?

The government said it opened the banking sector for the diaspora, but still, there are unsettled problems. It said the diaspora had to invest in foreign currency. This is an obstacle.

But the major reason I joined the pharmaceutical project, is because it is a matter of professionalism. Manufacturing is difficult in Ethiopia. We have a big purpose to bring change in the medical supply shortage in Ethiopia. We will produce capsules and tablets. We will also export, once we address the domestic demand. The company will also establish an R&D wing, which will conduct studies for other firms. Most of the founders are also researchers.

Are you a chemical engineer by profession?

I studied chemistry. I also studied industrial chemistry at Bahir Dar polytechnic. I already have a factory in Ethiopia, which produces plastic and rubber. It is expanding now.

Aklilu Wubet is a veteran in the banking industry. He joined Wegagen Bank on March 2020 as the Vice President of Corporate Service, having served in different capacities in many financial companies, including the Commercial Bank of Ethiopia, in the last 25 years. He was also the deputy CEO of Nile Insurance, Bank of Abyssinia and Lion Bank, and also served as a lecturer at Addis Ababa University.

The Reporter’s Samson Berhane sat down with Aklilu to reflect on his journey at Wegagen and the challenges ahead, as the acting president attempts to bring the bank back to its usual top status it has held for the last two decades. Excerpts:

The Reporter: You have joined Wegagen during a challenging time, when it faces decline in revenue from different sources particularly due to the tense political situation in the country. How are things going since you joined the Bank?

Aklilu Wubet:Banking is always challenging, especially in a world where resources are limited. And leadership is critical during a challenging time. Leading a company during its challenging moments is a great task and makes me happy. Especially, if you have strong team, challenge is a good thing. One thing you should also understand is that Wegagen is still a very strong bank, despite the challenges it has faced.

When I decided to join the Bank, I was confident that I would overcome all the challenges by working with a strong management and team the Bank has. The conflict has impacted all commercial banks. Peace is very important for the industry than any segment of the economy since banks deal with liquid resources. The impacts of the war, in particular, were severe on us because we are among the financial institutions with large number of branches in the areas affected by conflict.

When I joined Wegagen, my priority was to help the Bank withstand the impacts of the war. That requires being prudent and to closely work with regulatory bodies, investors and other stakeholders.

In the last 25 years, Wegagen was among the most profitable financial institutions in Ethiopia. Why was it not solid enough to withstand the shock brought on by the war in Northern Ethiopia?

To begin with, the Bank has been effective in withstanding the impacts of the war. Even though the profit is low, and has declined drastically, it is still profitable. It still has a large customer base and a huge amount of assets. Thanks to the strong base, which the bank is built on; it has been successfully coping with the conflict, even though more than a third of its branches are closed.

The profitability of the Bank in the last two decades has helped it build its asset base, enabling it to withstand the impacts of the war. The rules of the central bank and its strong regulations have had its contribution in enabling us to remain strong in such a challenging period.

The strong expense management that we have applied and the strong marketing system implemented by our management team has also contributed to the success of the Bank. If it was not due to such factors, the history of the Bank would have been ruined. But thanks to our efforts, we have defied the prediction made by some, who have forecasted that we will face a loss due to the war. But we are still in a good shape.

We have devised a strategy and are also undergoing restructuring, and increasing the number of vice presidents we have. We are still among the big players in the industry, hiring elite bankers.

According to industry insiders, the bottom line in the banking industry is profits and shareholders’ return. How did you come to the conclusion that the Bank is in a good shape, while its profit dwindled from one billion birr to 193 million birr?

Business is not only about making profits. Business is about being sustainable and staying competitive in an industry. The conflicts, coupled with macroeconomic challenges, have impacted the banking industry last year and banks would have profited much higher than they did, if there was peace.

Wegagen has declared a positive profit, while much of its branches are closed, and at a period when it was not able to collect loans given to businesses operating in war-affected areas. We even held a provision in case of loan defaults. We did not use a penny from the capital invested by shareholders, despite being in the midst of series of challenges. Overall, our objective was to make Wegagen the bank of all Ethiopians, by making it solid. I believe we have been successful in doing that.

There are critics that say Wegagen is a victim of an undiversified ownership structure which exists in the banking industry. Even though Wegagen is not the only financial institution established based on affiliation or along ethnic lines, some say its recent underperformance is an outcome of lack of diversification in terms of shareholders and customer base. Do you agree?

There are those that say banks are established based on affiliation.

Is that not the reality?

I cannot be sure because I have not had a chance to look through the list of shareholders of each commercial bank. In case of Wegagen, the story is different. Wegagen is wrongly misunderstood. If you see its shareholders, no bank is as Ethiopian as Wegagen. Its shareholders are highly diversified. Many big investors from different ethnic backgrounds have a stake in Wegagen. Name any investor and they are a shareholder of our bank. If you see the board, it is highly diversified. The same is also true if you see the management.

Did you bring that change?

No. I was the vice president 13 years ago at Wegagen and it was the same back then.

Okay, but in case of customer diversification, the reality is opposite to what you have said since the Bank’s profit declined drastically, when a third of its branches closed in one region. So is it not obvious that your bank did not work on diversifying its customer base?

Not only in Tigray. We also have many branches in Gambella and Somali than any other private banks. Of course, we have many customers in Tigray but that does not mean our customers in other areas like Addis Ababa are from the same region. We have over 2.5 million customers, way higher than the adult population eligible for banking services in Tigray. That shows how diversified our customer base is.

How about loan disbursement?

It is the same. More than 75 percent our loan portfolio is in Addis Ababa. However, in terms of deposits, the northern part of Ethiopia is known for being a big source. If you go to Mekelle, many commercial banks have many branches there. Some have more than seven or eight branches and the reason is obvious. This is because there is a good saving culture there. But that does not mean we have to work on the business mix because it is important to manage risks.

Then how did your non-performing loans surge because of the conflict if your borrowers are diversified?

We have provided five billion birr in loans to our customers in Tigray. We don’t know whether it can be paid or not because of the conflict. But that is enough to increase our non-performing loans. The whole industry faced similar problems because of the same reason. We held provisions in case of defaults. If it was not due to the higher provision we held, our profit would have been over one billion birr. That would be added to our income in the future, if we recover our loans. This means that we are investing in our future and if things go smoother and peace prevails, we hope things change drastically.

How is the liquidity position of Wegagen Bank? How capitalized is the bank?

We have a strong capital base. It used to be one of the largest in the industry, though some overtook us recently. Understanding its importance, our shareholders decided to raise the Bank’s paid-up capital to six billion birr before the end of the new deadline set by the central bank. We are also thankful that we don’t have a major shareholder because that gives us room for the management to do its job.

Regarding liquidity, when the central bank raised the reserve requirement from five to 10 percent, many feared that our bank would be among those that cannot meet the new threshold. But we are among the few banks that have fulfilled the requirement first. Our liquidity is now over 17 percent. However, that does not mean we are not facing liquidity shortages, because the whole industry is experiencing similar problems due to the sluggish growth of deposits.

Shareholders want to know when the bank would reach pre-war levels in terms of profitability. When do you think that would happen?

There are two assumptions. The first assumption is that the war would stop, peace would prevail and the government puts its energy towards the economy, a scenario which would benefit the banking industry. If peace prevails, our closed branches would be opened. We will be fully operational and our deposits would surge.

The second assumption is that if the conflict continues, we will operate with our existing resources and branches that are active. New banks are joining the industry. So I am sure we can perform better even with our active branches. We have already devised a strategy to mobilize more resources. We are hopeful that we will return to pre-war levels by the next general assembly.

Founded in September 2017, Eshi Express is a pioneer and one of the successful startups in tech-based delivery businesses, in an emerging business frontier in Ethiopia. Tigabu Haile, co-founder and CEO of Eshi Express sat with Ashenafi Endale of The Reporter, to talk about his business journey.

Excerpts:

The Reporter: What was the business pitch behind Eshi?

Tigabu Haile:If you buy an avocado in Yirgalem, it is around five birr per kilogram. But in Addis Ababa, it is around35 birr. So, we believed that Ethiopia needs an efficient logistics system in the supply and logistics service. Even in Addis, we do not see companies that provide end-to-end payment systems, sourcing and delivery services.

Sending packages in Addis is expensive. There are players like DHL, the Post Office and individual motorcycle owners. But Eshi can provide the service up to 50 percent cheaper than the market.

Basically, Eshi is a logistics company. So, how do you manage your fleet? What are the types of services you provide?

We have three types of services. We have Express service, in which we deliver any package in Addis within 90 minutes. The second type is delivery in half a day. If you order in the morning, we deliver in the afternoon. We charge 90 birr anywhere in Addis. The third category is delivery in 24 hours, which costs 70 birr anywhere in Addis.

Our main operation is in Addis. We use vans, pickups, motors and other types of vehicles. Most of the Ethiopian population is in the regions. We believe the logistics problem in the supply chain can be best addressed if we expand to regional states. Currently, we have been in the piloting phase in Adama and Hawassa, since last year. We will reach other regions in the next two years.

Do you own the whole fleet of vehicles?

We deployed the hybrid model. Around ten motorcycles and a van are owned by Eshi. But owning many vehicles is not feasible, so we stopped purchasing vehicles. We launched a technology six months ago, that enables any individual vehicle owner to register to our platform and deliver packages. Our model is called ‘from foot to fleet’. People can deliver on foot. Especially when we have big events, mass publications and other large deliveries many individuals deliver on foot.

How can these individuals or private vehicle owners access your platform? Is the technology similar to a taxi hailing platform?

It is almost similar but slightly different regarding registration system and insurance policies. Huge packages might be damaged in transit by individual vehicle owners. So, we always require courier insurance or insurance for goods in transit, for any private vehicle who works with Eshi.

How many vehicles that are not owned by Eshi are working with Eshi?

Right now we have more than 25 vans, pickups and different vehicles. There are also around fifteen motorcycles.

How many packages does Eshi deliver per day? How do you evaluate the demand?

The demand of the service is huge. There are thousands of delivery demands daily in Addis, while it is in the hundreds of thousands in the regions. The hard task is to make people use Eshi just once. Then they cannot stop using it.

Right now, Eshi delivers close to 115 packages per day. In the next three years, we plan to deliver thousands of packages daily.

How do you see the competition from other players in the market?

There is no really established company we see as competitors. There are legacy players like the DHL, Ethiopian Postal service, and individuals who have motorcycles. It is difficult for many startups to emerge and become competitors in this business.

Online payment, e-tax, e-commerce, delivery and packaging are involved in the business. How are these all done as one business?

Right now online transactions can happen but there are no e-receipts. It is impossible to make online transactions now. Payment is possible for internet and mobile banking. But if you cannot provide e-receipts, you cannot have a complete e-commerce transaction. There are shops that have an online presence. They just show their packages on their sites.

Does Eshi own warehouses or source from other suppliers?

Eshi collects the packages from companies who have warehouses. Receipt is issued traditionally. So, e-commerce is a work in progress. Eshi is the instrument that provides the logistics service. We do not sell any stuff online. Shopping happens between the customer and e-commerce companies. Once the order is placed and shopping done, either the customer or the e-commerce company orders Eshi to deliver the goods.

The number of e-commerce companies has increased since the COVID-19 pandemic. Has online delivery orders increased too?

E-commerce is taking off in Ethiopia and the government is also nearing to ratify the e-transaction law. All Shops will have an online presence. The outsourcing culture in Ethiopia is immature. Most companies want to do the e-commerce and delivery businesses by themselves. One company, especially startups, cannot handle both at the same time. So, after trying both for a year or two, they fail or specialize only in one.

Currently, big global e-commerce players are coming to Ethiopia. Probably they will launch in the next six months. Eshi has entered agreements with these global players, to do the delivery part. E-commerce companies should focus on what they can do best, because they cannot do it all, with limited time, energy and resources. We want to support their job, from the delivery side.

We will have many package drop-off points soon. If the customer is not at home when the delivery arrives, the drivers can place the packages at those points and the client can take it at anytime. This way, we are planning to drop many deliveries within one kilometer radius. This reduces our cost. That is why we charge 50 percent cheaper than the market. One delivery vehicle can cover many shops, pharmacies and supermarkets within an area.

Does Eshi plan to deliver beyond Ethiopia?

Ethiopia will operationalize the Africa Free Trade Agreement (AfCFTA) soon. Intra-Africa trade will boom in the near future. Eshi plans to become a Pan-African Delivery Company within the next three years.

Lack of automated addressing is a major bottleneck to delivery businesses in Addis. How are you solving it?

Absence of digital address system is a major problem for social services, health, banking, census, elections, apart from delivery business. Address is critical. If you do not have an address, you do not exist. Due to the lengthy communication between our delivery dispatches and clients, and usually missing locations, Eshi is losing resources, time and energy. The customer experience is also bad, because it is annoying when delivery personnel call repeatedly to find the address.

Currently, we have a project in the pipeline, named Eshi Locator, with our technology partner. It gives a code to each house’s. The codes are regenerated, when our partner localize using Google technology. We will imbed Google generated codes into our technology. It will take some time. Right now we are using Google maps, to locate the customer. But this has accuracy problems. Many things should improve to solve the location issue. Eshi Locator will be the solution.

What about using GPS locations or networks, if the customer uses a smart phone?

There are four mechanisms to order on Eshi Express. Customers can order on our website, use an application in Play Store, or call on one of our call centers. For Customers who have mass orders, like event organizers, big corporate or ecommerce companies, we have a separate technology platform, which can receive bulk orders and integrate it to our fleet system.

How much is the profit?

We cannot say it is profitable, even after staying four years in the business. At least we have survived, because we could also fail. The global data shows, less than two of ten startups celebrate their fifth year of establishment. Initiating and running a startup is very difficult. Access to capital is one of the biggest problems.

Was Eshi an angel investment?

Initially, Eshi was founded by me and my partner, who has similar business ideas with me. Eshi started with 1.3 million birr. We saved up the capital. We have also advisors. Last year, the Addis Ababa Angel Investors Network invested in Eshi. Delivery business is a capital, technology and skill intensive venture. You need to hire highly talented people. You have to scale-up fast. We hope the profit will come soon, once our delivery capacity grows.

So the angel investors are shareholders now. How much did they inject in the company?

We have an agreement not to disclose the amount. They injected the capital and immediately became shareholders. We gave them equity share worth their capital injection.

So return on investments has not come to fruition yet?

It will take time, especially with startups like us, in which you have to hire huge staff. No question, we are solving one of the top five challenges in Ethiopia. Lack of efficient logistics in the system is a major reason behind the rising inflation in Ethiopia. Food is being wasted because it cannot reach the market. For instance, there is surplus in the southern part of Ethiopia, while it is extremely scarce in the northern part of the country. That is because we do not have a robust logistics system.

Eshi still needs more cash injections to scale-up its capacity. Delivery is not only about packages, it is about the stories behind the packages. For instance the national blood bank of Ethiopia is one of our customers. We deliver blood every day. We collect blood from donation centers to the national blood bank. People are living because of that. NEBE is also among our customers. We did almost all deliveries in the past national election. We are behind the success of many big achievements. We are becoming instrumental in delivery in Ethiopia.

How many institutional customers do you have?

Currently it is close to 35. For instance, we deliver laboratory results for hospitals, on a daily basis. Embassies, hotels, optical shops, are some of them.

What are the incentives provided by the government for delivery companies, such as allowing duty free import of vehicles?

The government is not providing any support or incentive for delivery companies. There were no private courier service providers in Ethiopia, for long. So, only the Post Office and the DHL were known in this business.

For instance, driving motorcycles has been banned under the State of Emergency since some individuals might use motorcycles for crime. But Eshi had hired many staff, branded the motorcycles and there is no way motorcycles registered under delivery companies can be used for crimes. After all, we are delivering critical packages like blood and other essential services.

Secondly, there is an extreme lack of clarity among government institutions, regarding delivery businesses. Especially, the tax authorities are creating major obstacles to delivery companies. The government has no clear policy on delivery businesses, let alone support incentives. The delivery sector could not grow in Ethiopia, because the government has failed to understand it as a newly emerging sector.

There is the Ethiopian Couriers Association, to which Eshi Express is the board president. The association is trying to change the grim fate of the sector. We have submitted a letter to the government, asking the ban on motorcycles of delivery companies to be lifted. But the response from the government is slow.

Motor cycles cannot move after 6PM. So, we are forced to stop taking orders after 4PM. Otherwise, we cannot deliver last minute orders until the next day. This is especially affecting food delivery courier companies, because there orders are largely during dinner times.

What is the government’s response to the associations’ letter?

It has been three weeks since the association submitted the letter. But the government says it is still being considered. The letter was submitted to the Addis Ababa traffic management office. The city transport bureau has also failed to respond.

A new logistics regulation allows up to 49/51 partnership with foreign logistics companies. Is Eshi considering a joint venture with foreign companies?

JV is allowed for logistics companies engaged in sea, air and land transport. Ours is light package and fast delivery logistics. So JV is not allowed for us.

How much does the absence of e-receipts affect your business? How does Eshi cover the costs, if delivery is defaulted?

Online ordering, online payment, and e-receipts are not active at a national level in Ethiopia. Ethiopians consider online shopping, or e-commerce, as a luxury service reserved only for developed countries. That is acutely wrong. Delivery services extremely benefit developing countries. The purpose of e-commerce is to cut expenses and reduce prices. Companies do not have to open shops everywhere. So, it cuts out rental costs. End user customers also usually visit as many shops, to find a reasonably priced good. With e-commerce, you can find any items at your fingertip. You can order a delivery company, saving your time, energy and money.

The progress slows in Ethiopia, because the digitization pace is slow. But the Parliament is currently working on the e-transaction proclamation. The draft document has been under review for a year now. The Ministry of Science and Technology crafted the document and the Council of Ministers has passed it on to the Parliament. It was said that it would be ratified before the current Ethiopian year enters. But I think it is delayed because the government is busy due to the war.

But even after the proclamation is ratified, is there the technology that interfaces with the payment facilitator, end user, delivery companies, shops, tax authority and other regulators?

Eshi has end-to-end technology that enables the ordering and tracking of goods. The technology also enables us to publish the transactions in excel or PDF file formats.

E-commerce companies also have a similar technology. Ethiopia has all the basic ingredients to kick start e-commerce. We have the laws, graduates, and emerging e-commerce companies. The service quality will improve gradually.

Does Eshi use other payment mechanism like mobile money, tele birr and others, apart from e-commerce companies?

So far, our transaction is largely cash-based. But we are integrating with Fintechs like tele birr, CBE birr and others.

The starting price for delivery of a kilogram of package is 20 birr. It increases by12 birr per additional kilometer and three birr per additional kilogram.

How do you evaluate the competition with other emerging delivery companies?

It is difficult to say there is stiff competition. There are delivery companies that participate in bids with us. A lot of institutions like banks float bids for their bulk delivery contracts. There are only close to six active players.

The DHL, the Ethiopian Postal Service and Balderasu are active in Addis, while there are other startups emerging in regional delivery services. The DHL has no interest in the domestic delivery business in Ethiopia, leaving the market in Addis for us. Even in Europe, DHL works with local companies, specializing on the international market rather.

Close to 100,000 packages are delivered in Addis Ababa every day. Eshi, which delivers 115 packages per day, is comparatively better performing, than other players. Yet, the share of delivery companies is completely insignificant, relative to the demand.

All of close to six delivery companies in Ethiopia, including DHL and the Post office, are delivering less than 6,000 packages per day. The market is untapped.

The delivery demand in regional states is much higher than Addis. We have assessed the demand and mapped delivery services in 100 cities in Ethiopia. There is close to 200,000 package delivery demands in these cities.

Who is filling this demand now?

This demand is bridged traditionally. The Postal Service has some market share, but mostly; people send packages via cross-country buses. But this method of delivery has two major problems. First, it has no insurance if the package is damaged and second, the bus owners charge as they wish. Cross-country busses have no standard pricing for delivering packages.

Eshi is 100percent insured. When a client orders Eshi to deliver a package, the customer declares the value of the package. If it is damaged, Eshi refunds 100percent of the value stated.

Do you work with all insurance companies?

The local insurance industry is underdeveloped, thus, local insurance companies usually do not accommodate our insurance packages. So, we cover the insurance fund by ourselves. Eshi has been incurring cost due tothis. But now, we are communicating with insurance companies. All other delivery companies operating in Ethiopia do not have such insurance coverage, except for Eshi.

Is Eshi using its own vehicles for the piloting phase in Adama and Hawassa?

We deploy our own vehicles to deliver high risk packages. But usually, we use private vehicles which have insurance coverage.

Which sectors have high demand for delivery services, is it exporters, households, or wholesalers? And Ethiopia is ranked low on the logistics index. How can delivery companies improve this?

Our business is last mile delivery. We deliver from shops to end users, or consumers. Last mile delivery is the most difficult business in a given economy. One is due to a lack of precise addressing technology. It is also the most expensive logistics system. So the demand could be consumer goods, medication, and invitation or gift cards.

Last mile delivery also creates job opportunities. Millions of youth can deliver goods door to door. So, it is the best logistics sector for job creation. If we could make the delivery price cheaper, it can activate the economy, and affect millions of lives positively. It is a phenomenal sector.

By how much rate is Eshi growing from a startup to a large enterprise?

Our package delivery business size is growing at close to 10percentper month. It is not an impressive growth but we are making good progress.

We plan to grow by 15 percent on a monthly basis. Comparatively, Eshi is growing faster, because most of the delivery companies operating in regional states are highly affected by the conflict in Ethiopia.

How much does Eshi deliver in Adma and Hawassa?

Our delivery in these towns is just a couple of packages per day, for now.

But Blood Bank, the NEBE, Goh Betoch, Nile Insurance, Ramada hotel, hello market, and Ethswitch are some of our major institutional clients across the country. We do cash-up-on-delivery for our customers. We also provide full insurance coverage, which no delivery company does in Ethiopia. We also have warehouse for e-commerce companies.

Does Eshi directly buy goods and deliver?

Usually customers order e-commerce companies to supply the good. Then the e-commerce company orders us to deliver the packages to the customer who has placed the order. Hence,Eshi does not purchase the packages. The package is purchased by the e-commerce company. Since the customer cannot pay online, we collect the payments and give it to the companies, usually on a weekly basis.

If we directly engage in buying and delivering, it will take a huge capital. The e-commerce companies have the packages and the digital presence. I believe e-commerce should be much cheaper. Some e-commerce service providers give up to 15 percent discount, but the business is just taking up in Ethiopia. It is at very early stage.

Eshi does not want to play the role of e-commerce companies. If there are 40 e-commerce companies in Ethiopia, we do not want to become their competitors. Rather, we want to deliver their packages. But if there are packages not found in e-commerce warehouses and if Eshi can find those goods, we can supply it directly to the customer. Under this circumstance, we receive orders of packages worth less than 2,000 birr.

Top Articles

Latest Posts

Article information

Author: Kelle Weber

Last Updated: 01/21/2023

Views: 6730

Rating: 4.2 / 5 (53 voted)

Reviews: 84% of readers found this page helpful

Author information

Name: Kelle Weber

Birthday: 2000-08-05

Address: 6796 Juan Square, Markfort, MN 58988

Phone: +8215934114615

Job: Hospitality Director

Hobby: tabletop games, Foreign language learning, Leather crafting, Horseback riding, Swimming, Knapping, Handball

Introduction: My name is Kelle Weber, I am a magnificent, enchanting, fair, joyous, light, determined, joyous person who loves writing and wants to share my knowledge and understanding with you.