Blog – Page 157 – Ethiopian Business Review

Wide Spread Contraband Trade Cripples Ethiopia

Contraband , part of the shadow economy, is still a threat to Ethiopia’s economy. But even more, it has recently started to affect the well-being of the nation. The recent violence in the states of Ethio-Somali and Benishangul Gumuz shows the severity of the problem. Items from textiles products to precious metals are traded by contrabandists. This has paved a way for a shadow economy to thrive, raising its contribution to the GDP to as high as 40Pct. EBR’s Ashenafi Endale investigates.

Head of governments across Africa convened in Beijing to attend a high-level summit hosted by China. The summit, which was also attended by Prime Minister Abiy Ahmed, is called the Forum for Africa-China Cooperation, FOCAC, and was organized with the aim of increasing diplomatic, economic and bilateral ties amongst the two sides. It started on September 3, 2018, and lasted for two days. The summit kicked off at a time when Chinese financial support to Ethiopia is being cut down.

Inadequate infrastructure continues to undermine the competitiveness of African countries in the global arena. Despite being blessed with ample mineral and other natural resources, the continent has the lowest infrastructural development in the world in areas like energy, water, sanitation, transportation, and communications technology.

Before the 1880s, Eritrea was part of Ethiopia. It was the advent of colonial rule that created a historic divide between them. Global developments after the second World War and diplomatic efforts by Emperor Haileselassie helped the reunion of the two countries in 1952 through federation. However, the federation was abolished in 1962 and subsequent internal power struggles ignited the Eritrean liberation movement. In a war that spanned for 30 years, Eritrea finally became an independent state in 1991.

The two countries established formidable relations since then. That close relationship, however, was short lived, because of a bloody two-year war between the two countries brokeout in 1998.

Tamrat Layne, 63, was Prime Minister of the Transitional Government of Ethiopia, serving from June 1991 to October 1995. He became a member of the Ethiopian Peoples’ Revolutionary Party (EPRP) while a teen, and later defected with 36 other comrades to form the-then Ethiopian People’s Democratic Movement (EPDM), in 1982.

After ten years of guerilla fighting, his party, which allied with the Tigray People’s Liberation Front (TPLF) to form the Ethiopian People’s Revolutionary Democratic Front (EPRDF) in 1989, ousted the Dergue military regime on May 28, 1991. A few years before their victory however, the Oromo members of his party left to form the Oromo People’s Democratic Organization (OPDO); similarly, fighters from the southern Ethiopian region also left to form several ethnic based parties. Finally, when almost all other non-Amhara members evacuated the EPDM, the party retitled itself as the Amhara National Democratic Movement (ANDM) in 1994.

Nation Continues to lose billions to raw material imports

In recent years, domestic sourcing, a procurement strategy adopted by companies to purchase their inputs, is gaining momentum due to the fact that localisation brings cost-savings across the supply chain, especially in light of climbing costs in traditionally low-cost regions. However, although many multinational and local companies are investing in the country, Ethiopia lags behind in this regard. Even though the lack of raw materials on the local market has forced companies to lean towards imports, the scarcity of foreign currency is putting extra pressure on their survival. EBR’s Ashenafi Endale investigates the difficulty faced by manufacturers due to low level of raw materials sourcing from domestic suppliers in Ethiopia.

If anything has cast a pall over the Ethiopian economy, it is the foreign currency shortage, which reached historic lows just three months ago. This has prompted businesses to look for alternative means to alleviate the problem, such as transacting using diaspora accounts. The accounts are offered to non-residential Ethiopians, as well as Ethiopian-born foreign nationals who have been working and living abroad for more than a year. This has opened a window of opportunity for legal as well as illegible account holders to access foreign currency without waiting for the approval of letters of credit. EBR’s Samson Berhane reports.

Michael Joseph is a pioneer of mobile money in Kenya. He is credited with the remarkable success of the M-PESA mobile payments system that has helped Kenya develop its rural economy. In the ten countries where M-PESA operates, networks of thousands of small shops and businesses allow mobile customers to swap physical cash for electronic credits. The network now has over 30 million active users. EBR’s Samson Berhane sat down with Joseph, who is currently Vodafone Group’s Director of Mobile Money and Board Chairperson of Kenyan Airways, on the sidelines of the launch of Dashen Bank’s new mobile money platform (Amole) one month ago, to discuss his success in deploying one of the world’s most successful mobile money services and his views towards Ethiopia’s banking as well as telecom sectors.

Why Ethiopia imports huge amounts of wheat while endowed with vast suitable land for farming

In recent years, wheat shortages have been getting more and more severe in urban areas like Addis Ababa, putting pressure on local businesses engaged in wheat processing, as well as residents. On the other hand, close to 10 million people who have been struck by drought and displaced by internal political conflicts have to wait for months in order to receive wheat. EBR’s Ashenafi Endale explores the fundamental reasons behind wheat scarcity in Ethiopia.

Although the government incorporated a pre-primary school program into the Education and Training Policy in 1994, attention is still not being paid to the sector. Instead, the major focus for the government has been scaling-up primary, secondary and tertiary schools. Shortages and high turnover of teachers, a lack of clear direction to develop early education and budgetary shortages have been the major problems keeping pre-primary school programs from expanding as EBR’s Samson Berhane reports.

Transacting in the Shade

Wide Spread Contraband Trade Cripples Ethiopia

Decisive Moments

Eritrea Hopes to Rise

Ethiopia, Eritrea Should Reunite

Unraveling Local Sourcing Problems

Nation Continues to lose billions to raw material imports

Bewildering Diaspora Account

15 Minutes With the Father of M-Pesa

The Irony Behind Wheat Scarcity

Why Ethiopia imports huge amounts of wheat while endowed with vast suitable land for farming

Neglecting What Matters Most