Ethiopian Business Review

Debt stress has always been a contentious matter in Ethiopia. As the country pursues billions of dollars worth of infrastructural development projects, external debt stock has been growing proportionally, now accounting for almost 30Pct of the GDP. While the risk to debt sustainability escalates, several challenges limit the prospects for bucking this trend. This includes the wide gap between investment and savings, and the underperformance of the export sector. With such factors in mind, the International Monetary Fund (IMF), changed the debt stress rating of Ethiopia from moderate to high recently, hinting that the chance of defaulting on loans is increasing. Although the government is able to take corrective measures such as refraining from taking commercial loans, experts say that is too late. EBR’s Samson Berhane spoke to government officials, macroeconomists and financial analysts to probe into the matter.

Saturday, 07 July 2018 08:54
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As housing affordability in the capital becomes a hot issue, the twin problems of ‘asset bubbles’ and housing affordability have challenged the minds of policy-makers, experts and the general public. The demand for housing has kept increasing in urban areas like Addis Ababa, whereas the supply of land has remained unchanged, leading to inflated prices. This, in turn, diminishes the affordability of houses for residents.  Worryingly, any low and average income earners are unable to construct or buy their own houses due to the skyrocketing lease prices. While experts attribute the problem to the law governing urban land distribution, the government remains firm in its position that there is no shortage, Samson Berhane, EBR’s staff writer, reports.

Monday, 11 June 2018 19:25
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The Dilemma Behind Investment Incentives

Many emerging economies like Ethiopia use tax incentives to offset hindrances in the general tax system and as a counterbalance to disadvantages that investors may face. This includes bureaucracies, a weak administration and lack of infrastructure. However, the benefits of such a system have always been questioned by scholars. In Ethiopia’s case, many organizations, including the IMF, have indicated that generous tax exemptions and incentive packages for local and foreign investors present a major challenge to the country’s tax administration system. Just in the first half of the current financial year, over ETB34.2 billion was relinquished to beneficiaries under the duty free scheme, accounting for 37Pct of the nation’s tax revenues. While the figure is mounting year after year, various institutions such as the Federal Ethics and Anti Corruption Commission are signaling incentives’ exposure to misappropriation and corruption. Meanwhile, the government is attempting to enforce proper usage of incentives, and has established a separate office to handle such privileges and prevent abuses, as Ashenafi Endale, EBR’s Staff Writer report. 

Wednesday, 16 May 2018 06:00
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