Content: Commentary

Some nine years ago, Eleni Gabre-Medhin (PhD) founded the Ethiopian Commodity Exchange (ECX), which was the first of its kind in Ethiopia. The initiative was born out of the need to minimise the risk to small-holder farmers and to modernise trading in commodities. But while this is commendable, argues Esayas B. Gebre-Meskel (mysoulqueen@gmail.com), the ECX is stuck trading in agricultural commodities, like coffee or sesame, while it should work to diversify into different sectors.

The fifth year death anniversary of Meles Zenawi was roughly three week’s ago. In light of this, while state-owned media and supporters have been lobbying for the continuation of his policies and ideals, others have been asking for change. But, opines Habtamu Girma (ruhe215@gmail.com), a lecturer in the Department of Economics at Jigjiga University, it is important to understand the man before judging his leadership style or success. 

In March 2011, the government issued a directive that required private commercial banks to purchase National Bank of Ethiopia (NBE) bills equal to 27pc of all new loans they disburse. The aim of the directive was to help fund long term state infrastructure projects by way of the Development Bank of Ethiopia (DBE). Abdulmenan Mohammed (abham2010@yahoo.co.uk), an expert with over 15 years of experience in auditing and finance in Ethiopia and the United Kingdom, argues that the bonds are being used just as much to fund the federal government as the original aim of financing projects.

As the National Bank of Ethiopia (NBE) contemplates a new capital base, the mid and small-sized banks are struggling to grow their capitals to two billion Birr, which is the current required amount. Some small-cap banks, and even certain mid-sized banks, may not fulfil this capital base, at which point they will have to consider mergers as an only alternative. But – argues this writer with a solid background in finance and whose identity Fortune withheld upon request – it may not be all bad news as, taking Nigeria’s banks’ consolidation in the mid-2000’s into consideration, mergers could end up making the banking system more efficient.

Consolidations in both the private and public sectors have become something of a trend around the world, whether be it in developed countries or emerging markets. So, opines this writer with a solid background in finance and whose identity Fortune withheld upon request, a discourse on the major issues that should be pondered in pursuing a merger or acquisition in firms or financial-services is long overdue.

There is not a day that passes without a news anchor on the Ethiopian Broadcasting Corporation (EBC) mentioning the nation’s double-digit growth. Subsequently, the term has become household. But are people feeling the effects, and if they are – contemplates Solomon Debebe (solethn@gmail.com), who works as a youth and adolescent development specialist – do they see it in a positive light?

Private Banks in Ethiopia are at the grassroots level compared to international, or even certain African, giants. Their predicament does not end here. Some face the possibility of acquisitions and mergers as the central bank has rightly – opines this writer with a solid background in finance and whose identity Fortune withheld upon request – raised the capital base to two billion to be met by 2020.

Trump, it seems, is all everyone ever talks about. But for good reason. There is a certain strain the leader of the so-called free world can exert all over the world, even on countries that are usually inconspicuous to international politics such as Ethiopia, probably by way of the Middle East, suggests Habtamu Girma (ruhe215@gmail.com), a lecturer in the Department of Economics at Jigjiga University.

For years, civil servants have had to grapple with the phenomenon that employees in similar positions and job grades, but different institutions, are salaried divergently. The JEG reform that has been introduced to combat this shortcoming is no legitimate solution argues Desalegn Birara (abalomender@gmail.com), a sociologist and ethnographic heritage curator at the Authority for Research & Conservation of Cultural Heritage (ARCCH). 

The World Health Organization (WHO) has stipulated that tobacco is the world’s number one cause of preventable deaths. But tobacco still continues to be smoked around the world. In Ethiopia, tobacco is increasingly being used in the form of flavoured hookah (shisha). Wondu Bekele Woldemariam (wondu@mathycancersoc.org), general manager of Mathiwos Wondu Ye-Ethiopia Cancer Society, asserts it has become a worrying trend in that flavouring masks the ills of tobacco by making it appealing and decreasing its harshness when inhaled.

Taxation by estimation of businesses that do not keep account books has been much debated, with many taxpayers suggesting that the assessments are unfair. Although the tax paying culture of small business leaves much to be desired, Abdulmena Mohammed Hamza argues that there are more effective, less painful means of encouraging the public to contribute to state coffers.

The role of the military and its institution in the economy and effecting development, all with the declared intent of helping the national aspiration to overcome poverty, has been a subject of intense debate in Ethiopia since the emergence of MetEC. Nonetheless, this writer, whose identity we held upon request, argues that the issue should be viewed away from the neoclassical liberal world view of the military as an institution to secure borders.

The term “deliverology” may be relatively new to some but the ruling party’s policymakers are fairly acquainted with the word. Getachew T. Alemu (getupfront@gmail.com), a business development consultant and former OP-ED Editor at Fortune, proposes that it is all for nothing if theory is not backed by sincere commitment.

The estimates to the daily income of the recently reassessed category “c” taxpayers has become a point of contention for the entire town. While some suggest that small businesses are not being levied as much as government or private employees, Berhanu Tsegay (berha2020@yahoo.com), who has a Master of Arts in Development Studies, indicates that the estimates are too unfair.   

The past few weeks have put the Addis Ababa City Administration in the spotlight among local and foreign media. Businesses that are paying taxes on the basis of presumptive taxation were served with improvised assessment notices that demanded an unprecedentedly high proportion of tax payment, embroiling the metropolitan low-level taxpaying community. Yohannes Woldegebriel (johnwaa@hotmail.com), a lawyer who has served as a public prosecutor in four different institutions, sheds some light on the issue.  

Social Healthcare is rarely discussed in the media, though it is of grave concern to the public. There have been debates on how to go about implementing healthcare – Desalegn Birara (abalomender@gmail.com), a sociologist and ethnographic heritage curator at the Authority for Research & Conservation of Cultural Heritage (ARCCH), adds a fresh perspective.

Drought has remained a major challenge not only to Ethiopia but also many countries in the Horn. Governments of these countries are being pushed to fill the gaps in humanitarian assistance because the international support is falling far short of the past. It seems the option left for them is to work on climate change adaptation beyond their current focus on increasing yields or diversifying incomes in the hard-hit rural areas, writes John Graham, a Canadian veteran aid worker and specialist in humanitarian emergency response. 

While the trend and the proclamation are calling for regulators to keep updating themselves to the ever changing financial reporting and prepare the tax environment for a smooth transition to International Financial Reporting Standards (IFRS), many companies and the Ethiopian Revenues & Customs Authority (ERCA) are still comfortable in using the Generally Accepted Accounting Principles (GAAP), writes Dawit Tadesse (dawittadesse9053@yahoo.com). He suggests the Authority publish specific guidelines on tax treatments in line with each IFRS standard based on research that aims at understanding the impact of IFRS on taxpayers and the tax administration involving all stakeholders.

For the first time in its history, Ethiopia overcame a recurring challenge of famine. In 2015, the worst drought in 50 years came and went, but without transforming itself into a national catastrophe of famine, notes John Graham, a veteran of the aid community in Ethiopia, before he left for his homeland Canada, after two decades of dedicated service in saving lives.

If business associations could transform themselves to represent and give voice to the network of stakeholders on which businesses are built, they could contribute enormously to the creation of a much more collaborative and inclusive society, writes Ricardo Hausmann, a former minister of planning of Venezuela and former chief economist of the Inter-American Development Bank, is director of the Center for International Development at Harvard University.

The Global Goals for Sustainable Development seek to boost incomes for the bottom 40pc by eradicating extreme poverty and creating job-rich growth that raises revenues across the board in 2030. However, attaining these goals will significantly depend on micro, small and medium-sized enterprises (MSMEs), writes Arancha Gonzalez, executive director of the International Trade Centre (ITC).

For the fact that the concept of IT innovation and entrepreneurship has proved to work now more than ever, and there is a huge population and growing economy in Ethiopia, it only asks the public and private sectors of the country to join forces to provide a supportive environment for software engineers and developers to thrive and create solutions that positively impact society and the economy at large, writes Amadou Daffe (merkeb@gebeya.com), chief executive officer of Gebeya, an IT training academy based in Ethiopia and other African countries.

Unlike the East Asian experience, which was industrialisation without enlightenment and technique stripped away from Weltanschauung, the developmental state theory and practice of Meles Zenawi is a consistent reading of global experience and inventing the Weltanschauung, argues Merkeb Negash (elroenegash@gmail.com). Merkeb is an analyst based in Addis. His areas of interest include Development Economics, Foreign Policy and Grand Strategy.

Economic stagnation and widening inequality have contributed to a surge in xenophobia and nationalism in the advanced countries. But while such turbulence is likely to continue for the near future, there is little consensus on what lies beyond that. In 50 years, the world economy is likely to be thriving, with global GDP growth by as much as 20pc a year, and income and consumption doubling every four years or so, predicts Kaushik Basu, a former chief economist of the World Bank and currently a professor of economics at Cornell University.

Rent-seeking behaviour is rational. Since the inherent rationality of individuals cannot be changed by preaching and singing that rent-seeking behaviour is fatally and destructively malicious, changing the incentive structure would be of great help to reduce it, argues Aman T. Hailu (amanthinkth@gmail.com).