As the government continues its efforts to squeeze the trade deficit, a new law limiting the forex available to importers is now in effect. Like all the other countermeasures post the devaluation, it has come as a blow to importers. Some claim it would only backfire and fuel the parallel market, while banks seem hopeful, writes SAMSON BERHANE, FORTUNE STAFF WRITER.
It took a day for the price of re-bar to show a spike by more than a third of its value following the devaluation of the Birr by 15pc against a basket of major currencies, coinciding with the rise of scrap metal. Allegations of hoarding by retailers were next to follow, where the Trade Practises & Consumer Protection Agency temporarily shut down 21 businesses. And given that imports of re-bar are complicated with the shortage of hard currency, the market is now suffering from a scarcity of rebar, reports SAMSON BERHANE & YIBELTAL GEBREGZIABHER, FORTUNE STAFF WRITERS.
The economy has been expanding for over a decade. Real GDP grew by eight folds since 2008, reaching 827.6 billion Br in last fiscal year. Such an achievement though seems uncanny in an economy characterised by high unemployment rate, massive external debt, widening trade deficit and lack of access to finance, coupled with severe forex shortage. Exacerbating these are shortage of cash and double-digit inflation after devaluation. Nonetheless, analysts, World Bank and the IMF forecast a positive growth prospect, writes FASIKA TADESSE, FORTUNE STAFF WRITER.
As holidays approach, members of the family become eager handing out wish lists of presents and more importantly traditional Ethiopian delicacies they wish to be prepared by the homemaker. Granted holidays bring joy and happiness, but shopping during such festivals is never easy on the pockets. This year, to the surprise of many, the market was reasonably stable with only slight price increments, despite the high food inflation rate. For consumers it is indeed a reason to rejoice, but retailers have mixed feelings about it, writes SAMSON BERHANE, FORTUNE STAFF WRITER.
Ethiopia hosts the fifth largest refugee population in the world. For a developing country, recurrent droughts and conflicts put a massive economic strain. But more worrying is the internal displacement of people caused by inter-regional disputes; the nation’s capacity is bursting at the seams. What started as a dispute among few individuals took a turn for the worst forcing people to flee their hometown and seek refuge in camps. SAMSON BERHANE, FORTUNE STAFF WRITER, delves into the lives of the internally displaced people.
Ethiopia’s universities host over half a million students from different regions across the country. And when inter-regional conflicts, like the one along the Oromia and Somali borders, erupt, these universities are not spared from its effect. Of particular concern was the recent outbreak in Adama Science & Technology University where a row between students of different factions intensified and spread like wildfire to other universities in the country. The government’s failure to contain these riots has raised questions whether stability can sustain, writes SAMSON BERHANE, FORTUNE STAFF WRITER.
This past year, the banking industry has seen itself fettered in the vortex of obstacles from the forex crunch to the political unrests engulfing the country. The crisis, though, did not hold the banks back from breaking the shackles and coming out looking good. They have registered a record high growth rate in six years coupled with accelerated branch expansions. SAMSON BERHANE, FORTUNE STAFF WRITER, gives an insight into the private banking sector which is gearing up for a fuzzy future with the government’s latest regulations.
Access to safe, potable water has lately become a luxury in the capital. It is obvious that residents would be irked when subjected to frequent and tenacious interruptions in supply only to then find dirty water flowing through their taps. The chronic shortage has now festered and spread to businesses pushing them to the point of shutting down. The city administration, notorious for its failure to address issues like transportation and sewage, puts “rationing” as the short-term solution, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
Gone are the days when tourists and businessmen were limited to a choice of only three international franchise hotels in the country. In a bid to boost their customer base, thriving international franchises are now eyeing the untapped hotel industry in Ethiopia for expansion opportunities with 30 new franchise hotels in the pipeline over the next five years. Local developers are collaborating with these foreign companies, but if the sector is to prosper, many underlying issues need to be attended to, reports FASIKA TADESSE, FORTUNE STAFF WRITER.
Rural-urban migration has strained Addis Abeba for long. From unemployment to lack of basic facilities, urbanisation brings with it many problems; yet, one that surfaces time and again stirring public discontent is inadequate transportation. The launching of the Light Rail Transit brought a glimmer of hope with it. Albeit, this relief was shortlived. Stuffed to the brim, boarding these trains has now become a matter of luck. The addition of more vehicles for public transport only aggravates the existing traffic menace the capital is struggling with, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
Recent land lease auctions saw skyrocketing offers for just a square metre of land, indicating that it is indeed becoming a rare commodity in the capital. The City Administration earns in millions during these auctions, yet no effective system has been in place to govern land transfers and construction permits. It is all about to change as the Prime Minister’s Office has implemented a new system- Deliverology- with a plethora of regulations under it to take over the reins, reports FASIKA TADESSE, FORTUNE STAFF WRITER.
Addis Abeba’s streets and neighbourhoods have, yet again, been invaded by heaps of rubbish, trash bins filled to the brim, and the grisly, lingering stench emanating from them. Passers-by hold their breaths and those responsible for managing the city’s waste try to camouflage their culpability behind corruption controversies sweeping the nation. The municipality expends millions to keep the city clean. Hence, there must be other underlying problems causing the mess. SAMSON BERHANE and YIBELTAL GEBREGZABHER, FORTUNE STAFF WRITERS, probe further into the matter.
The recent devaluation has brought with it complimentary reforms to restrain its repercussions. A new law imposed on the banking industry to limit the amount of credit extended to a debtor caught the eye of many. Loan Dependent small scale industries are feeling the burn the most, while the banks are also baffled with central bank’s reform. For some, more problems are on the cards but others can see the light at the end of the tunnel, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
A recent overhaul in the nation’s labour proclamation faces disapproval from the labour unions and workforce. While the amendment aims to provide a framework to equally benefit both the employers and employees, the Union, representing over half a million labourers across the country, claims it undermines their rights. Putting forward a slew of points it disagrees with in the new reform, the Union plans to demonstrate against the changes peacefully and will resort to a nationwide strike if their trepidations are not heeded to, reports SAMSON BERHANE, FORTUNE STAFF WRITER
Debate continues to rage over the future of accounting in Ethiopia. After Ethiopia proclaimed the adoption of Integrated Financial Reporting Standard (IFRS) till 2020, many big companies and corporations are on the way to adopt the standard in a bid to reform their auditing methods and to easily function in the global economy. But, none of the companies have implemented IFRS so far, except the Commercial Bank of Ethiopia (CBE)- although some are progressing towards its application. Insufficient skilled labour, radical changes from current practices and under-resourced institutions to enforce standards are the major challenges that deter organisations to go in line with the scheduled period, as SAMSON BERHANE, FORTUNE STAFF WRITER, reports.
Ethiopia had made at least five devaluations since the introduction of a mixed economy in the country, 27 years ago. The intention was to make the overvalued currency competitive, aiming to overcome the scarcity of foreign exchange by promoting export and discouraging import. The gain, however, from all the devaluations has always been questioned. Now, even though Hailemariam Desalgen’s Administration is confident that the devaluation will bring a positive change to the economy, the move seems to have brought the shock before the reap, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
Since the introduction of a new system by the telecom giant, some industry players in the mobile market expressed grief against the applicability of the new system, while others commented that it will make the telecom provider bigger than ever. On the other hand, local assemblers are hoping to benefit from the directive as it will wipe out smuggled phones out of the market. This, however, is no good news for businesses depending on contraband phones. To make it worse, over the past three weeks, following the shortage of mobile supply, the consumers’ pockets were hit by a drastic price upsurge, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
Although holidays have common features, they each still have unique traditions and rituals that give them a character of their own. Such characteristics define them in a way that leaves a permanent impression in the minds of the society. In Ethiopia, each holiday is associated with a particular character, Easter marks the end of fasting while New year brings the sunny season, and Mesqel is known for journeys made internationally and domestically. Such a holiday also paves the way for businesses that flourish with the voyages people take for the celebration, reports
A rift is emerging between the Ethiopian Sugar Corporation and sugar-dependent businesses such as candy, juice and biscuit factories since last month. It is due to the chronic high shortage of sugar in the domestic market. Currently, there are five state-owned sugar factories in Ethiopia, producing over 3.5 million quintals of sugar every year twice of what it was five years ago. Nevertheless, the boom does not help the government to give a long lasting solution for the shortage recurring for decades, reports BERHANE HAILEMARIAM and SAMSON BERHANE, FORTUNE STAFF WRITERS.
Residents in Addis Abeba are fed up with the shortage of transportation facilities every morning while commuting to work. Although the city got additional Alliance buses, meter taxis and Sheger buses in the past year, the long queues for transportation in Addis Abeba showed almost no improvement. Adding to that, the City’s Transport Authority has also allowed over 7,000 Code three taxis to operate in the city. Nevertheless, despite these blossoming figures, the problem has not been solved yet as ABIY SOLOMON, FORTUNE STAFF WRITER reports.
Ethiopian holidays are highly referred as food festivals and that is why many families set off to the markets to buy food items and of course livestock was on top of their list, whether sheep, goat or oxen. For this New Year the cattle markets in the city offered almost enough livestock despite the drought which killed about two million cattle, but the price for this livestock showed an increase this year, reports FASIKA TADESSE, FORTUNE STAFF WRITER.
Following a new regulation approved by the Ministry of Finance & Economic Cooperation (MoFEC), all federal government institutions were directed to cut spending made for the procurement of books, calendars, post cards as well as expenses made for over time payments. The widening of the budget deficit, which stood at 53.8 billion Br for the coming fiscal year – 2.5pc of the GDP – is said to be the major reason for the sudden direction the government took to cut spending, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
A growing middle-class population and rising disposable incomes appear to be driving the country’s car market. Vehicle imports in the past fiscal year reached 117,032, the highest amount for the car industry. Despite the drastic vehicular growth rate, the import duty continues to be a major challenge for consumers and businesses. In a country where used cars dominate 80pc of the total car population, affordability of vehicles is complicated by heavy taxes, reaching as high as 300pc. This, however, does not seem to hinder consumers from buying vehicles with some help from auto loans, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
Teff is the preferred grain for most residents in the country. It is important for the country’s economy, both in terms of production and consumption. In a nation that has a population of 100 million, seven million households grow teff. But over the past three weeks, food prices have soared throughout the country and now the beloved Ethiopian staple, Teff, is becoming too expensive for many working-class people. It has gone through the roof, selling for as high as 30 Br in a Kg depending on the area, report HAWI ABDISA and SAMSON BERHANE, FORTUNE STAFF WRITERS.
The Development Bank of Ethiopia (DBE) has been announcing many auctions in the past five months, from the one billion worth textile company, Elsie Addis, to the 15 million Br leather processing company put on sale last week. The auctions, however, were not as fruitful as expected since no bidder was interested in buying these properties. Realising the problem, in a bid to administer the unsold properties, DBE has already received the green light from the Central Bank to establish a new company with a capital of 10 million Br, reports SAMSON BERHANE, FORTUNE STAFF WRITER.
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