Effort to Cut Government Red Tape Underway

Businesses currently face a phalanx of government agencies when seeking trade licences

The number of professional competence certificate issuing government offices that have signed a cooperation pact with the Ministry of Trade (MoT) has reached 29, with nine of them coming on board on Thursday, October, 24, 2013, at a ceremony held at the Ministry’s office on Yohannes Street.

The Ministry signed the pact with the 20 three weeks ago. The government agencies at the signing on Thursday included the Ministry of Industry (MOI), Food Medicine & Health Care Administration and Control Authority (FMHACA), Ministry of Mines (MoM) and Ethiopian Electric Agency (EEA).

The agreement is based on the 2009/10 trade proclamation, which requires tax identification numbers (TIN), address, capital confirmation document and competence certification from all businesses and persons applying for trade licenses.

“For example, a small barbershop could be required to have four toilets in order to get a trade license,” said Nuredin Mohammed, advisor on trade practice and regulatory affairs for the state minster at MoT. “This and other kinds of barriers put by offices could harm the development of businesses and could cause illegal trade.”

Additionally, the proclamation aims to minimise waste of time and money due to information backlogs. Before its adoption, each sector office had the right to evaluate competencies on its own and this caused a lack of information, according to Nuredin. This resulted in a lack of coordination that hampered market information, as was seen when foreign investors expressed interest in opening cement factories while the market was saturated a few years ago, he explained.

“We want to sign this pact with 36 government offices,” he said. “Among these offices, 30 have prepared the cooperation document, but the remaining six are not yet done.”

Two years ago, MoT allowed trade license-holders to renew licenses after deadlines if the delays were caused by the state agencies. Last fiscal year, however, they were not shown any leniency and were instead fined even though the delays were still caused by the government agencies.

MoT blames the Federal Transport Authority (FTA) and the Ministry of Culture and Tourism (MoCT) for sending a lot of trade license-holders who sought renewal after the deadline passed.

“We have to receive confirmation for the tour companies’ cars from the FTA and that took us so long,” said Tewodros Deribew, MoCT’s representative. “Some corrections that we suggested are still on the document. This kind of lack of coordination causes problems.”

The lack of coordination was inadvertently on display the day of the signing ceremony, when some office representatives arrived under the assumption they were attending a discussion, and not a signing ceremony.

“I was not informed we were going to sign a deal with MoT today,” stated a surprised Temesgen Tesfaye, representative for the Ministry of Urban Development & Construction (MoUDC), to the meeting attendees. “I thought we were here to have some talks on the issue.”

The Federal Police Commission (FPC), on the other hand, put forward that some of the duties that it is entitled with are not feasible. In particular, the document discusses private firearm manufacturers, according to Habtamu Kassa, plan and budget director at the Commission. There are no private firearm manufacturers in the country.

But officials from MoT justified the inclusion of the item by claiming the country’s move to join the World Trade Organization (WTO) necessitates thinking ahead of possible future changes.

The MoT plans to sign the cooperation agreement with all offices by the end of this Ethiopian budget year.

If the offices fail to comply according to MoT’s demand, Nuredin said, the Ministry could take over the competence assessment functions delegated to them.


Published on October 27, 2013 [ Vol 14 ,No 704]



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