September 2017 – Ethiopian Business Review

At the end of the just ended fiscal year, Ethiopia’s parliament approved ETB320 billion budget for 2017/18 fiscal year. The Ethiopian Revenue and Customs Authority (ERCA) also planned to collect ETB199 billion in the year, 62Pct of the approved budget. The tax collection in the preceding year was ETB160 billion. The Authority has been working to increase the tax-to-gross domestic-product (GDP) ratio from 13Pct currently to 17Pct in 2020.
However, the recent effort to increase tax collection, thereby improve the tax-to-GDP ratio, by collecting more taxes ended up being controversial. Tax payers repeatedly voice their frustrations in high sales assessment which implies exaggerated tax amount to be required. Experts also challenge the way the government tries to boost domestic resource mobilisation because efforts to create an enabling business climate for small and informal businesses to go formal and contribute more to the national development endeavour remains minimum. EBR’s Samson Hailu explores the issue to offer this report.

Ethiopian Chamber of Commerce and Sectoral Associations (ECCSA) was re-established in 2003 to safeguard the overall rights and benefits of its members, and serve as a bridge between the business community and the government. ECCSA is an apex organization of chambers and sectoral associations that represent close to 520,000 business enterprises across the country.
The Chamber unifies the voice of the private sector and promotes the sector’s leading role in the economy through advocacy, trade and investment promotion and capacity building. EBR sat down with Endalkachew Sime, the young and dynamic secretary general of the national chamber to learn about its core activities and challenges and the interventions needed to make the private sector the true engine of Ethiopia’s economy.

The electronic sub sector is a vital element of the global manufacturing industry. One of the components of the sub sector is the thriving mobile phone production. Despite having a short presence, the sub sector in Ethiopia is performing better, in terms of foreign currency generation, than other manufacturing sub sectors that receive significant government support such as textile and leather. EBR’s Ashenafi Endale spoke with stakeholders about the promise and challenges facing the sector.

Because of its geological formations, Ethiopia is endowed with extensive mineral resources such as gold, platinum, niobium, tantalum, nickel, copper, chrome, and manganese, among others. However, the sector is ploughed with a number of challenges that calls for policy interventions. As a result the contribution of the sector to the overall development of the country is low compared with its potential. Especially in recent years, the role of the industry has been declining in export revenue generation. EBR’s Ashenafi Endale has consulted research, authorities and insiders to understand the reasons.

Harry A. Adams is Executive Chairman of KEFI Minerals. The mogul is also founder and co-founder of a number of other businesses including the Citicorp Capital Investors Australia, Pilatus Capital, Australian Gold Council, EMED Mining and Cyprus-based Semarang Enterprises. He has overseen a number of start-ups principally through the roles of chairman, deputy chairman and managing director. EBR sat down with the tycoon to discuss about KEFI Minerals investment in Ethiopia.

Holidays spice up social life as they add flavour to a rather dry and dull routine daily life. They not only bring people together to create shared values but also reaffirm social bond and solidarity. However, due to economic, social and demographic changes, holiday celebrations are fading away in Ethiopia especially in urban areas like Addis Ababa. Hiwot Selalew explores the evolutions.

Nicknamed the ‘Yellow Kings’ and with a huge fan base at their home town in Adigrat, Tigray, The Welwalo are joining the Premier League, a top echelon football tournament in Ethiopia, for the first time. Welwalo joned a team of few elite football clubs – Tidel, Mesebo, and Seloda as well as Guna, Trans and Mekelle City – from the State of Tigray to make notable contributions in Ethiopian football. EBR’s adjunct writer Abiy Wendifraw spoke with the club’s administrators to learn about their preparations for the soon-to-begin football season.

Businesses are legally responsible for their criminal actions as if they were individual. This concept, known as corporate criminal liability, looks at practically every commercial or industrial organization whose existence is to make profit. As to the concept, businesses are responsible as an entity separate from their shareholders or partners.

The story of the Laffer curve and three points about Ethiopia’s tax revenue

In economics, the Laffer curve is one possible representation of the relationship between rates of taxation and the resulting levels of government revenue. It postulates that no tax revenue will be raised at the extreme tax rates of 0Pct and 100Pct and that there must be at least one rate that maximises government taxation revenue. The curve is typically represented as a graph (see the figure on the following page), which starts at 0Pct tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100Pct tax rate.

In a recent commentary for the South China Morning Post, Helen Wong, HSBC’s chief executive for Greater China, shows that China’s rising generation of 400 million young consumers will soon account for more than half of the country’s domestic consumption. This generation, Wong notes, is largely transacting online, through innovative, integrated mobile platforms, indicating that it has already “leapt from the pre¬web era straight to the mobile Internet, skipping the personal computer altogether.”

Broadening the Tax Base: The Urgent Assignment for Ethiopia

“At Policy Level, The Private Sector is Said to be the engine of the Economy; But this Engine Lacks the Necessary Accessories to Operate”

Smart Gain for Electronics, Despite Government Being on Flight Mode

Ethiopia’s Barren-Esque Gold Rush

“We are the First Major Mining Deal to Get to This Stage in Ethiopia.”

Keeping in Touch with Traditions Holiday Celebrations Create Shared Values

Welwalo Adigrat, The Yellow Kings, Brings Football back to the State of Tigray

Corporate Criminal Liability: An Emerging Concern for Businesses in Ethiopia

What if Ethiopia is Taxing Too Much and Still Losing Revenue?

The story of the Laffer curve and three points about Ethiopia’s tax revenue

China: The Global Economy’s New Rule-Maker