Ethiopian Business ReviewEnding the conflict with Eritrea, as well as implementing reforms that strengthened public institutions and broadened the political space are among achievements of Prime Minister Abiy Ahmed (PhD) administration. In addition, the homegrown economic reform agenda that outlined macroeconomic, structural, and sectoral reforms is expected to pave the way for jobs creation, poverty reduction, and inclusive growth.
According to the Industrial Development Report 2020, much of the world, especially Africa, is not engaging with new technology and remains excluded from recent technological breakthroughs.
Ashenafi EndaleAs a developing country, the Ethiopian economy is largely characterized by the informal sector with studies indicating its expanding size. The International Monetary Fund estimates that in countries in transition, like Ethiopia, the underground economy accounts for as high as 40.1Pct of GDP. Although the government has been taking different measures to reduce the role of the informal sector, these interventions have failed to materialize. However, the government now says its latest measure of replacing currency notes with new ones is positively working in that direction. But experts disagree with the government’s concision by saying the expansion of the informal economy is highly interconnected with the formal economy’s failure to produce enough goods to satisfy national demand. EBR’s Ashenafi Endale reports.
“I Want to be the Top Industrialist Woman in Africa.”
Amelework Gidey is Founder and Managing Director of Technostyle, a company known for over 20 years as a furniture importer and distributer. She is one of the leading female entrepreneurs in Ethiopia’s emerging manufacturing sector. With the acquisition of the foam and furniture manufacturing division of MNS, a Turkish based textile manufacturer and exporter, Technostyle has been expanding through backward integration of its core businesses since 2015. This has given the company a better competitive edge as it now controls a good proportion of the supply of raw materials.
The Role of Public Enterprises in Ethiopia
Ethiopia’s economic policies of the past two decades indicate the growing role and significance of state-owned enterprises (SOEs). Essential services such as electricity, telecommunications, shipping and logistics, and transport are mainly provided by SOEs. In addition to giant public enterprises, like Ethiopian Airlines, Ethio Telecom, and Ethiopian Electric Power, there are also SOEs engaged in railways, industrial parks, hotels, sugar, and other manufacturing industries. Although SOEs are increasing in the volume of transactions they involve, most remain inefficient and unable to service their debts. Their accumulated debt is especially skyrocketing, putting a huge stress on the national economy. The current accumulated debt of 21 SOEs is ETB846 billion, which is more than half of the total national debts. EBR editors explore the issue.
Beyene Hailemeskel, is the former Director General of the Public Enterprises Holding and Administration Agency (PEHAA), which oversees 21 state-owned enterprises (SOEs) in Ethiopia. He joined the agency 20 years ago, gradually climbing the ladder to the top position. Beyene, who argues that state intervention remains a crucial driver of Ethiopia’s economy, stresses SOEs are undergoing deep reforms to the core. EBR paid audience to Beyene’s reflections on SOEs’ performance and futurity, weeks before he tendered his resignation at the end of October 2020.
Since domestic resources are not large enough to finance various development endeavors, Ethiopia, just like any developing nation is forced to turn to Foreign Direct Investment (FDI). To facilitate the flow of FDI into the country, the government tried to introduce a favorable legal framework in line with constantly changing global dynamics, but without compromising national interest.
Microinsurance is insurance that can be accessed by the low-income segment of the population and small businesses. Despite its business potential and instrumental role in averting social and economic risks, the penetration of microinsurance remains very low in Ethiopia, a country with 80Pct of the population engaged in smallholder, rural, and rain fed agriculture, and where crop and livestock failure is frequent. EBR’s Ashenafi Endale explores why microinsurance could not capitalize on the rising demand and takeoff as a new business front.
Last year, Parliament passed a law forcing financial institutions to accept movable properties like livestock, patents, land operating rights, agricultural products, land ownership rights, warehouse receipts, and intellectual property rights, as collateral. The central bank is betting this will fundamentally change the credit landscape, which is currently highly collateralized and is resulting in bank credit injustice. The new move is expected to expand credit markets and improve access to credit for farmers, micro and small enterprises as well as cooperatives.
Abiy WendifrawEthiopian football clubs have been financially dependent upon their hometown municipalities and government funding arms for long. However, this is to become history, after the clubs decided to bet higher. A fotball games televizing bid floated by the Ethiopian Premier League S.C, recently established by the 16 elite clubs, fetched a dream amount, enough to free local football from undue dependence and thus usher an unexpected comeback. EBR’s Abiy Wendifraw delved into recent moves undertaken to commercialize the football industry.
