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. 

Failure Mishap or Triumph?

Hailemariam Desalegn’s political history is filled with surprises. In many ways, his journey from being born in a family of 11 in Boloso Sore in Wolayita Zone, to Prime Minister, is a story of the possibilities that Ethiopia affords. Nonetheless, his triumphs have not been short of challenges; his term was characterized by humanitarian, political and security crises. So much so that he gave up his post as the chairperson of the ruling party and Prime Minister. Yet his resignation has left a mixed legacy of achievements and failures. EBR staff writer Samson Berhane, examines.

Measuring its Impact on Coffee Exports

In October 2017, Ethiopia devalued its currency by 15Pct with the aim of boosting export and improving the current account deficit. Three months later, the impact appears to be positive, with export revival registered in some areas. For example, export proceeds from coffee hit a record high, reaching USD435 million in the first half of the current fiscal year, the highest increase since 2012.

One of the critical problems in Addis Ababa is the lack of efficient public transport. This is despite the fact that government has been deploying various schemes, such as introduction of Higer, Bishoftu, and double-decker buses; and constructing Sub Sahara’s first light railway with billions in investment and subsidies every year. 

These initiatives have been unable to sufficiently ease the transport crisis. While officials stress the government is doing its best to execute projects that expand mass transportation, experts argue that transport sustainability can only be guaranteed through proper planning that takes into account factors like urbanization and changes in land use. EBR offers this report.

Cotton, a natural fiber, has been grown in Ethiopia for millennia. However, the local production hardly satisfies the demand of textile industries in the country. This is despite the fact that a total of three million hectares of suitable land, which is equivalent to that of Pakistan’s, the fourth largest cotton producer in the world, is available in the country. To reverse the situation, Ethiopia recently started experimenting with Genetically Modified (GM) cotton variety known as BT cotton. 

GM cotton varieties have proven to be successful in India, China, Pakistan and US. Currently, 25 million hectares of land is cultivated around the globe with this variety. Ethiopia is moving in the same direction. However, there is a recent development in which growers’ of the commodity are reverting back to locally improved cotton seeds. EBR’s Ashenafi Endale has delved into the matter and spoken to researchers, policy makers and industrialists to offer this report.