As Government Unplugs Support System Too Early

Globally, no other industry has been hit as hard by the COVID pandemic as the hospitality industry has. With severe restrictions on travel, hotels shutting down, and tourist attractions deserted, the world has experienced the first disaster of its kind in decades. In Ethiopia, the hospitality industry experienced a double blow from the pandemic and a series of security challenges nationwide. As if the series of security challenges were not enough, the country plunged into war in 2020, affecting famous tourist attractions such as Lalibela and Al Nejashi Mosque. Even though the government showed a gesture of goodwill to support the industry through tax related incentives, tourism remains too broken to revive after brief painkiller measures, write EBR’s Addisu Deresse and Eden Teshome.

Endowed with abundant natural resources, Ethiopia has one of the most diverse agro-ecological configurations in the world. With 74.3 million hectares of arable land spread over 18 major agro-ecological zones at altitudes ranging from 148 meters to 4,620 meters above sea level, the country’s diversity makes it suitable for growing over 100 types of crops. Agriculture forms the biggest component and bedrock of Ethiopia’s economic development, contributing to about 32.7 Pct of the country’s GDP and 65.6 Pct of employment. With 85 Pct of Ethiopia’s 105 million people living in rural areas, the agriculture sector primarily consists of smallholder farmers who make their living from less than one hectare of land. The agricultural sector has reported considerable growth rates over the past decade as the result of an estimated doubling in the use of modern farm inputs, rapid expansion of arable land, increased labor productivity, government investments in the extension system, and an improved road network. The light of hope in the farming fields, however, is dimmed by startling losses following harvests, writes EBR’s Bamlak Fekadu.

The bars of gold, the diamonds, the gemstones, and the oil were stories Ethiopians have lived with about the riches of their country under the earth. Not materialized enough to change lives, those stories have remained a myth. Even though various administrations admitted the economic value of gemstones and mining in general, the lack of proper policy and legal frameworks, skilled labour, private investment, and market promotion at local and global scale have challenged the robust growth of the sector. This seems to be the thing of the past as the current administration of Abiy Ahmed (PhD) has put the sector at the heart of its ten-year perspective plan. With an overhauled institution under the leadership of Takele Uma (Engi.), the Ministry of Mines is set to enable the country make the most out of its mineral resources. Even though there are still high hopes for gemstones with positive global market prospects, production is still challenged by conflicts, parallel markets, and artificial products, among many other challenges, writes EBR’s Bamlak Fekadu.

Housing Prices Have Tripled in Less than Two Years

Buying houses from real estate developers incurs 15Pct Value Added Tax (VAT) and 6Pct title deed transfer fee on the actual price tag. Additionally, real estate developers take more time to deliver housing units which further escalates the cost of construction—ultimately pushing the price tag further up. The price of houses developed by real estate firms has further skyrocketed because of the price of finishing materials, which are almost entirely imported, have dramatically shot up by over 200Pct over the past couple of years. This is attributable to the worsening foreign currency shortage and subsequent rising exchange rates of major foreign currencies against the local currency.

This makes houses built by real estate companies over expensive for the vast majority of Addis Ababans. As a result, house buyers have been looking for affordable options.
Villas developed by unlicensed individuals have become one of the options. These players have lesser tax obligations and deliver houses for less in a shorter time span by using adhesives and other chemicals to shorten the curing time of concrete. For this and the curativeness of the business, they are mushrooming and becoming more active in the housing market.

As their number increases, there is fear that the market will become even more informal and out of the watchful eyes of the government. EBR explores.

Since the inception of the Organization of African Unity (OAU), the concepts of economic union and integration have existed without realization due to various factors including the similarity of goods produced, subpar infrastructure, and dissimilar legal systems, to name a few. Relative to other regions, the continent is primarily reserved to small-scale trading. Ethiopia, like many other African nations, enjoys such cross-border trade along its borders with neighboring nations. For many years, such trade has been treated as illegal, and the traders were nothing but contrabandists. Despite the significance of these trade points and the signing of framework agreements among neighboring countries, the severe lack of infrastructure and skills necessary to oversee the trade process has prevented countries from reaping the benefits of developed cross-border trade. Even though there are few improvements on the Ethiopian side in terms of setting up free trade zones and other infrastructure, ongoing security and natural challenges prevent this landlocked country from realizing the full potential of cross-border trade, writes EBR’s Bamlak Fekadu.

Ethiopia’s financial sector, that had lived under a tight grip of the government for decades, now seems to be undergoing a series of shake ups in the past few years. While some measures by the central bank seem to have a loosening effect on some areas, other measures have been restrictive and demanding with a slew of directives. The most tightly controlled sector in the Ethiopian economy has seen a rise in the number of banks and other financial institutions. More telling is the diversification being seen in availing financial services to previously unreached areas and sections of the population. Here, the sector is registering positive trends towards availing banking services and credit to wider and wider audiences. With such endeavors, however, financial institutions have to enter the risky business of uncollateralized lending—at least in small amounts. In all, lending diversification is most welcome and requires further strengthening, writes EBR’s Bamlak Fekadu.

One of those staples found in the majority of households, milk is of the utmost importance—culinary, nutritional, and economic—to vast swathes of Ethiopians. Of course, the nation is blessed with abundant cattle, toping African nations in its numbers. Not the case with productivity and marketing depth, however, as Ethiopia lags behind in both metrics. Milk of the cow and its many derivative products have not garnered enough attention from authorities, both past and present. Perhaps the upcoming proclamation on the matter will change how milk is produced, processed, and availed to markets. Key here is the issue of feed for the cattle that produce the white gold. With fodder prices escalating, productivity is declining—offering a window to adulterers. EBR’s Bamlak Fekadu takes a look at the sector that upholds the livelihoods of so many rural and semi-urban Ethiopians while providing nourishment to millions more.