Economy and Business
Ethiopia’s Kubik, which specializes in the transformation of hard-to-recycle plastic waste into affordable, low-carbon building materials, has raised a $5.2 seed funding round, making it the first Ethiopian company to raise a multi-million-dollar investment in climate and sustainability solutions. Kubik will use this fund to scale production, improve its technology, grow its team and market presence in Ethiopia, and empower female waste collectors. The fresh capital comes as the startup scales its operations in Ethiopia following the launch of its factory in Addis Ababa, where it currently recycles 5000 kg of plastic waste per day, turning it into building materials such as bricks, columns, beams and jambs. Kubik’s products cost at least 40% less per square meter than traditional cement-based development and yield five times less greenhouse gas emissions.
Ethiopia Investment Holdings (EIH) heads say they are close to realizing long-lived government ambitions to sell off stakes in major Addis Ababa hotels to unidentified foreign investors, highlighting that they are seeking investors with “better know-how and understanding” in managing certain businesses, including underperforming state-owned enterprises (SOEs). EIH is eyeing cooperative investment ventures with foreign investors in agriculture, hospitality, manufacturing and infrastructure development.
The Addis Ababa City Administration has unveiled a new regulatory framework, opening up groundwater extraction to private companies as part of a multi-pronged approach to addressing the city’s water crisis. Addis Ababa is only able to meet about 60% of its residents’ water needs and relies heavily on a mix of underground wells and surface water from nearby dams for around 65% of its water supply. Permit applications mandate a comprehensive plan with strict regulations, but experts have emphasized the importance of strengthening regulatory capacity, highlighting the dangers of unchecked groundwater extraction.
The European Chamber of Commerce in Ethiopia (ECCE) recently issued a scathing review of the tax system in a policy brief, criticizing the “unclear powers” granted to tax auditors, and cumbersome appeal process requiring a 50% advance payment. ECCE asserted that the unpredictable nature of tax audits and inconsistencies between tax laws and directives have created an environment of uncertainty and frustration, with its chairman attributing the departure of some European companies from Ethiopia to these tax-related issues. ECCE leaders proposed a range of reforms to enhance efficiency and transparency, urging the establishment of technical committees to review auditor’s findings before they are challenged in appeals, and a mandated 60 hrs of annual training for tax auditors. They also stressed the importance of clearly communicating new tax regulations throughout the assessment process.
The Federal Supreme Court has recently ruled in the prolonged commercial dispute surrounding the share sale agreement of Cosmo Trading Pvt. Ltd, favoring appellant Azeb Mihretab, the founder of JJ Property Management. The Supreme Court upheld the validity of the share-selling agreement that was inked 6 years ago involving Haileyesus Mengiste, a major shareholder of Cosmo trading, and two other stakeholders. The Federal High Court had previously ruled in favor of Haileysus Mengiste, who argued that he was forced to sign the share agreement under duress, evidenced by witnesses and material evidence.
The Ethiopian Agriculture Business Corporation has faced rigorous questioning from the Public Expenditure Administration & Control Affairs Standing Committee, following a four-year performance audit report highlighting shortages of vegetables and fruit seeds, agrochemicals and machinery, as well as mismanagement of inventory. Meanwhile, Ethiopia has launched its largest crop insurance compensation program in a joint initiative involving ATI, WFP and Pula Advisors.
Ethiopian Airlines is on track to see a 30% increase in passenger volume between June 2023 and June 2024, as per its target. This comes amid an 8.1% growth in demand for African airlines. Despite a shortage of aircrafts further exacerbated by supply chain disruptions for spare parts, the airline has seen a 20% increase in revenue in the first 9 months of this fiscal year and aims to double its fleet and route network by 2034. To mitigate spare part shortages, Ethiopian has partnered with Air France Industries KLM Engineering & Maintenance for component support for its Boeing 777 fleet.
Governance and Corruption
The Ministry of Revenues (MoR) has asked Parliament to enact new “crucial” policies to raise the country’s tax-to-GDP ratio, which currently stands at 7.02%, down from 13.4% in 2015. Officials explained that tax collection is burdened by a lack of required policies, administrative inefficiency, and slow technology adoption, as well as illicit financial flows, the abuse of tax incentives and exemptions, and the loss of revenues from tax-exempt sectors. The government forfeited nearly ETB 71 billion in tax revenues due to extending tax-free privileges on select items, with the MoR admitting the need to improve and update review and follow-up mechanisms for beneficiaries. The MoR has called for an assessment of industries and sectors with high tax-generating potential, and argued the need for a policy that would enable such an assessment while ensuring collaboration with regional administrations for tax collection.
The government is preparing to pass legislation that will pave the way for the establishment of chambers of commerce dedicated to manufacturing industries and outline the criteria and requirements for the expansion of manufacturing industries. The bill will enable the formation of chambers of manufacturing industries and sectoral associations at the woreda and city levels, departing from the tradition of a single chamber encompassing both trade businesses and manufacturing industries. It also allows manufacturing industries to “graduate” in size once a year and enables those without working space to join industrial parks, provided they meet certain requirements. The Ministry of Labor and Skills (MoLS) is mandated to regulate and supervise the transition of industries and compile a national database.
The Ministry of Planning and Development (MOPD) has highlighted various challenges emanating from the improper usage of data and statistics, including capacity limitations, data quality, and the gap between statistics and policy making. The MOPD further stated that Ethiopia plans to host three censuses in the coming three years, on agriculture, business establishment, and health and education.
Students have expressed grievances about the declining quality and quantity of cafeteria food in public universities across the country, amid rising food prices, inefficient management of scarce financial resources, and an inflationary economy with a budget deficit of over ETB 281 billion. The nationwide fiscal squeeze has forced many public universities to reconsider their meal plans as the price for a single injera grows higher than the daily food budget of ETB 22 per student. Arba Minch University is facing difficulties securing basic supplies as its primary food supplier recently withdrew due to rising food costs, forcing the university to buy directly from vendors. Meanwhile, Jimma University has diverted a large research grant to address immediate food shortages, while Dilla University has resorted to reducing the academic year by 15 days to stretch its budget further. In response to requests for increased funding, the Ministry of Education has formed a committee to create policies addressing the food crisis and explore long-term strategies for reducing dependency on state subsidies. These strategies include university autonomy and the introduction of student loans and financial credit systems.
The Road Safety and Insurance Fund Service (RSIFS) has placed blame on driving schools and vehicle inspection centers for a recent surge in traffic accidents, amid reports of bribery for issuing driving licenses to inadequately trained students, and as traffic penalties double to over ETB 1.1 billion over the last nine months. RSIFS plans to launch a national road accident management system to improve data quality and reporting and has also proposed implementing standardized national guidelines for all driving schools, as well as a digital point penalty system for stricter driver monitoring. Furthermore, a World Bank-funded project plans to overhaul Ethiopia’s current license issuance system, integrating procedures with EAC, COMESA and SADC countries and introducing new features for driving licenses, including biometric data and vehicle data specifications. However, a transport researcher has attributed the high number of traffic accidents to undiversified transport options worsened by public perception, arguing that driving schools are a small part of the problem.
The Immigration & Citizenship Service (ICS) is preparing to introduce electronic passports (e-passports) within the next 6 months, through a joint venture with a Japanese printing giant titled Toppan Gravity Ethiopia. The e-passports will be locally produced after a printing facility is completed at Bole Lemi Industrial Park and will feature microchip-embedded biometrics to bolster security and combat identity theft. ICS has been subjected to widespread public criticism due to year-long delays in passport delivery, poor customer service, and allegations of corruption that resulted in 44 employees being arrested, including the Deputy Director. While the initiative will save forex and help boost efficiency, local production costs will be 7 times higher than the current import cost of $3 per passport.
With vital export items languishing due to prevailing insecurity on the Red Sea and a chronic scarcity of containers since the COVID-19 pandemic, the government has unveiled plans to address the issue at the policy level while also developing digital software to effectively track and manage available containers in the country within the next three months. Additionally, insecurity has forced major shipping lines to avoid the Red Sea, with adverse impacts on Ethiopia’s available shipping options. This has led the government to offer freight services with its own vessels, while officials explore the potential procurement of new vessels. Meanwhile, the Ethiopian Agricultural Business Corporation (EABC) has reported that just over half of the soil fertilizer ordered for the upcoming harvest has arrived at the Port of Djibouti. Most of the fertilizer has already been transported to Ethiopia and is “in the process of being distributed to farmers.”
Fuel shortages continue to disrupt transportation services throughout the country, wreaking havoc on local lives and economies. Transportation service providers in Jimma and Ambo cities have reported long lines at gas stations for the last month, with wait times averaging 6-7 hours. The fuel shortage comes amid a transportation ban recently enforced throughout the Oromia region by OLA forces, in response to the killing of opposition OFC politician Batte Urgessa. This has exacerbated existing transportation problems throughout the region, caused by insecurity and periodic travel bans. Government officials have attributed the shortage to “logistics problems”, including insecurity in the red sea area, and road closures due to floods.
The government has announced a new Piassa-Mexico-Kera-Gotera-Wollo Sefer corridor development project covering about 460 hectares of land in Addis Ababa, that is anticipated to cost ETB 40.34 billion. This comes on the heels of the controversial Piassa demolitions and amid a wide array of multipronged crises facing the country, including IMF negotiations for additional loans to sustain the country’s failing economy. Officials have stated that they “plan to return more than double the investment cost within 5 years” through developing and leasing demolished areas, and from annual income taxes paid by businesses expected to operate in the redeveloped areas. The government also listed “attracting more investment to the city center; creating tens of thousands of jobs; elevating the image of the city and strengthening its diplomatic role” as “non-quantifiable benefits of the project.”
The AU has announced a statement announcing that an attempt to withdraw over $6 million from its CBE account using fraudulent documents has failed due to “the vigilance and swift action of the CBE staff and the AU finance department.” The Federal First Instance Court has permitted federal prosecutors to initiate criminal charges against EOTC clergyman Belay Mekonnen and two other individuals suspected of involvement in this incident. Prosecutors have been granted 15 days to press charges and arrest more suspects, while the defendants have been denied bail. The AU is undertaking a comprehensive review of its security measures and updating protocols with CBE as a result of this incident. Meanwhile, government forces have arrested 5 high-level EOTC officials, 2 of whom were released the following day. It is unclear why they were arrested.
A recent audit report has exposed corrupt practices at Hawassa University (HU), which had established and operated a multi-sectoral Enterprise for the last 9 years to increase its financial capacity. The audit found that the now bankrupt Enterprise has never undergone an independent financial review, and has not prepared nor submitted a work plan, budget, or procurement plan to the Board it is supposed to be governed by. Furthermore, despite being bankrupt, the enterprise has distributed nearly ETB 1 million in “bonuses” or “gursha” to the university’s staff. Parliament members have asked for the Federal Ethics and Anti-Corruption Commission to investigate the university, and for HU to take corrective measures with regards to the activities of the Enterprise.
Schools across the Wolayta zone in the newly formed South region have resumed teaching services following the disbursal of teacher salaries, which had been suspended for over two months. Schools were closed since the beginning of April after teachers refused to come to work, citing months-long delays in salary payments. Public servants in other newly formed regions have reported similar delays and suspensions in salary payments, impacting service delivery and causing hardship to government employees. Delayed salary payments were also reported by over 1000 teachers in the North Gojjam zone, Amhara region.
Parliament has raised concerns about an irrigation project in the Gurage zone, which was abruptly shut down after it had already used 95% of its ETB 500 million budget. District and zonal officials near the project site have raised doubts, citing an unclear decision-making process. The Ministry of Irrigation (MOI) attributed the project’s sudden stall to the “lack of a dedicated budget code”, asserting that efforts are underway to “reclassify it as a formal project to secure sustainable funding.” Irrigation projects throughout the country report similar lags, as the Megech Dam in the Amhara region is now delayed for its 16th year, with 6 design revisions so far nearly tripling its original budget. Meanwhile, a 3-year delay in supplies for the Rate Irrigation Dam in the South Omo zone has deprived farmers of the intended benefits and raised concerns about project management and contractor performance. Parliament called for proactive measures such as rigorous quality control, efficient resource allocation, and effective project oversight to prevent delays and inefficiency in the future.
Human Rights
The Ethiopian Human Rights Council (EHRCO) has released a statement condemning escalating human rights abuses in the country and calling on the government to cease unlawful arrests, extrajudicial killings, and other rights abuses across the war-torn Amhara and Oromia regions. EHRCO has urged the government to prosecute officials who commit such abuses. Meanwhile, the European Center for Law and Justice (ECLJ) has released a comprehensive report detailing the severe human rights challenges and abuses faced by the Amhara community in Ethiopia. In other news, Eritrea has released a statement denying the accusations of human rights abuses detailed in the US state department's 2023 Human Rights Report, describing the allegations as “fallacious and long discredited”.
The Federal High Court has ordered Meskerem Abera, founder of Ethio Nikat, to defend two charges filed against her 1 year and 4 months ago, alleging that she “used a computer to incite rebellion, violence, and conflict”. Meskerem Abera has been detained at Kality Prison since March 2023, when she was arrested on separate charges of terrorism alongside 51 other co-defendants. That trial is still ongoing, as lawyers have asked for explicit details and clarifications to be included in the terrorism charges, while prosecutors argue that this will endanger the witnesses. The court will give its verdict at the next hearing. Meanwhile, journalist Muhiyadin Mohamed Abdullahi has been sentenced to 2 years in prison for his recent Facebook posts.
A group of Western diplomatic missions based in Addis Ababa, including EU member states and the US, have released a joint statement calling for the release of Ethiopian journalists “unjustly detained for doing their jobs” and advocating for journalists to report freely, without fear of persecution. The Ministry of Foreign Affairs released a statement in response, alleging that “Ethiopia upholds the freedom of the press… within the confines of the rule of law.” The MOF also asserted that “while constructive engagement is welcomed, paternalistic joint statements are unhelpful for bilateral relations and undermine the rule of law in the country.” Meanwhile, a recent Afrobarometer survey has found that 44% of Ethiopians would describe the media’s freedom as “not very” or “not at all” free, while a majority want a news media that is “free of government interference and helps hold the government accountable.” In other news, CEHRO has written a Letter to the Editor of The Reporter Ethiopia, highlighting inaccuracies regarding its recent reporting of human rights violations by MIDROC and state sugar enterprises, citing an unpublished CEHRO report. MIDROC has described the news article as “absolutely baseless” and threatened to take legal action “unless there are corrective measures.”
Gebeya Inc. and the UNHCR have officially launched a digital platform that will help refugees better market their skills and talents, unlocking professional opportunities in the digital economy. This platform aims to connect skilled refugees and host community members with potential employers, with nearly 300 refugees fully onboarded on the platform since its inception in November 2023. Meanwhile, the AU and the World Bank Group recently signed an MoU to strengthen their collaboration on programs focused on youth employment and digitalization, health and pharmaceuticals, and energy and sustainability in Africa.
The Disaster Risk Management Commission (DRMC) has announced that it needs ETB 11 billion to provide humanitarian assistance to over 8 million citizens impacted by drought and conflict until the end of June 2024. The government is expected to contribute ETB 5.1 billion while the remaining 5.9 billion is expected to come from international donors. The DRMC is making efforts to mitigate disasters through a comprehensive risk profile study conducted across half the country. Within the first 6 months of this fiscal year, the DRMC disbursed ETB 515 million to support 4 million residents in the Amhara and Tigray regions. Meanwhile, 190,000 malaria cases were reported in Tigray region in the last 8 months, while polio has neared epidemic proportions in certain woredas. To combat this, an anti-polio campaign has been launched, aiming to vaccinate 2 million children.
Gambella regional officials have stated that most of the 6100 people displaced from Jor woreda by recent cross-border attacks from South Sudanese militants have not been able to receive humanitarian assistance due to fuel shortages and road problems. Out of the 12 children kidnapped during the attack, 8 have since been returned.
UN OCHA has reported that roughly 35% of students in the Amhara region are out of school as 41% of the region’s schools have been forced to close due to conflict and natural disasters. This has left many children vulnerable and increased their exposure to harmful traditional practices, such as early marriage. Regional authorities are currently planning a 6-month curriculum to recover lost learning. In other news, the number of people seeking humanitarian aid due to drought and conflict in the Amhara region has risen to 2.5 million according to regional authorities, requiring the allocation of ETB 2.2 billion per month to support the affected populations. Meanwhile, a Nigerian businessman has filed a lawsuit alleging that the Ethiopian government lacks budgetary allocation to cater for the feeding and welfare of detained Nigerians, requesting their return to Nigeria.
4 people were killed in flash floods in Bole sub-city, following heavy rains in Addis Ababa. Meanwhile, strong winds and hail have damaged tents and left 2000 IDPs homeless in an IDP camp in the South Wollo zone, Amhara region, while subsequent floods have washed away food storages. The Ethiopian Meteorological Institute has forecasted that heavy rainfall this rainy season is likely to cause flooding in various parts of Ethiopia. Humanitarian partners have identified high flood-risk areas throughout the country and have put in place flood preparedness and readiness plans in coordination with the DRMC.
Politics
The Tigray Interim Administration (TIA) has announced that it has reached an agreement with the ENDF regarding the timeline to return IDPs to disputed areas in Southern and Western Tigray, the latter of which is currently under the control of Amhara forces while the former is now under federal control following violent clashes between Amhara and Tigray forces earlier this month. The TIA asserted that “illegal administrative structures and armed groups'' in Southern Tigray will be dismantled by the end of May, while those in Western Tigray will be dismantled by the end of June, in order to “create a secure environment for the return of IDPs”. Fano militias have described this as “beating the war drum”, asserting that they “will not tolerate anyone trying to impose force and invade.” Meanwhile, local administrations in the disputed areas have voiced their opposition to the TIA statement, describing it as “a catalyst for another bloody conflict.”
The EU has announced that it has “temporarily suspended certain elements of the EU law that regulates the issuing of visas to Ethiopian nationals”, in response to a “lack of cooperation” from the Ethiopian government regarding the repatriation of those who have entered Europe illegally. EU countries will no longer be able to issue multiple-entry visas or waive requirements for certain paperwork, while Ethiopian diplomats and officials will now have to pay for travel visas. Additionally, the time it takes to process visas for Ethiopians will triple from 15 to 45 days. Ethiopia has expressed dismay about the decision through a statement issued by the Ethiopian Embassy in Brussels, criticizing the decision for failing to take into account the “arduous process of verifying identity” and requesting the EU to “reconsider its position”. The suspension decision is temporary but does not have a specific end date, and the EU “will continue to assess any progress made on readmission cooperation.” The restrictions come as European governments try to curb illegal migration and control the influx of African refugees, with nearly ⅓ of Africans applying for a Schengen visa facing rejection, often due to “reasonable doubts about the applicants’ intention to return home.” Only 19% of the people ordered to depart the EU in 2023 actually ended up leaving.
NAMA member Tahir Mohammed, serving as Head of the Amhara Regional Culture and Tourism Bureau for the last 2 years and 8 months, has resigned from his position citing “personal reasons”. He was appointed to his position following the 2021 elections, when the ruling Prosperity Party appointed opposition party members to government positions. He has been replaced by another NAMA member, Melkamu Tsegaye.
Conflict and Security
1000 Sudanese and Eritrean refugees have fled a UN-run refugee camp in the Amhara region after they were attacked and robbed by local militiamen. They have all refused to return despite pleas from government and humanitarian officials. Some Sudanese refugees have chosen to flee back to Sudan despite the ongoing civil war. They explained their reasons in a recent letter to UNHCR, reporting that they have been facing rampant insecurity for months, including kidnappings for ransom, killings and armed robberies.
3 people have been killed and at least 2 people injured in an attack by unknown armed gunmen near Lalibela town, Amhara region. 2 of the victims were government officials administering Lasta woreda. One source “close to the woreda administration” has blamed Fano militants for the attack, alleging that the government officials had previously “received warnings” and had “one of their family members kidnapped” by the rebel force. Meanwhile, unverified reports allege that 2 major divisions of the Wollo Fano have recently united under a single command.
Residents have reported that more than 30 houses were burned in the Metekel Zone, Benishangul Gumuz region, following an armed attack by local security forces and militias known as “Returners of Peace”. These “Returners of Peace” were previously members of the armed rebel group GPLM, who were given positions in the government and security structure following peace negotiations with the armed groups. Residents asserted that the attacks were focused on identity, as well as the discovery of gold deposits on the fields of a nearby farm, leading the militants to try and drive farmers out of the area. The district administration said it had no information about the incident.
State media has released a 1-hour documentary about the recent shootout between government forces and Fano militants in Addis Ababa, describing the incident as part of a larger Fano operation aiming to march on the capital and overthrow the government. Featuring alleged captured or surrendered Fano members, the documentary details Fano’s failed operation and the government’s activities to counter the alleged operation. Furthermore, the documentary identifies diasporas, kidnappings for ransom and robbery as the primary sources of Fano’s funding and alleges collaboration between Fano and “the Wolayta Liberation Front (WLF)”, as per the testimony of a captured WLF leader.
The Confederation of Ethiopian Trade Unions (CETU) has released a statement calling on the government to address ongoing conflicts through peaceful negotiations and offer economic assistance to workers facing the challenges of escalating living expenses, emphasizing the significant impact that conflict has inflicted upon the nation’s labor force. CETU also called on the government to reduce the income tax deducted from salaries and establish a wage board to ascertain a minimum wage in order to help workers cope with the rising cost of living. Calls for peace resound throughout the country, including from worshipers during Palm Sunday celebrations, from the Catholic Archbishop of Addis Ababa in an Easter message, and from Oromia’s Abbaa Gaddaas in a recent conference.
Geopolitics
University of Manchester scientists have published research on a new approach to resolving the Nile water resources dispute as the GERD nears completion. Deviating from traditional water-centric agreements, the research explores how sharing benefits of water resources, such as hydro-generated electricity, crops and fisheries, can bring about mutually beneficial results. The study presents a detailed simulation of the combined water-energy system to reveal how different scenarios of international energy trades could help alleviate the Nile water conflict. The simulator covers 13 East African countries to model potential energy trade agreements between Ethiopia, Sudan and Egypt. Meanwhile, find out more here about the energy-intensive process of crypto mining, as well as its expansion in Ethiopia.
Somaliland and Ethiopia are on the brink of finalizing a naval base agreement in accordance with the January 2024 MoU, despite opposition from Somalia. Somaliland has identified three potential locations along its coastline to be leased to Ethiopia, and its officials have highlighted the strategic significance of the Gulf of Aden, plagued by illegal activities such as piracy. They have underscored the necessity of Ethiopia’s presence in combating these challenges. Furthermore, they have emphasized the importance of the economic growth and international engagement that is expected to result from Ethiopia’s recognition of Somaliland’s sovereignty. Discussions are still ongoing between the two signatories, and a final agreement is expected to be signed within the next 2 months. Furthermore, Somaliland has disclosed plans for the Port of Berbera to handle 30% of Ethiopia’s cargo in the 1st year, following the signing of a transit agreement. This transit agreement detailing port use and customs systems is expected to be finalized in the next 60 days, easing Ethiopia’s shipping problems.
Kenyan companies looking to expand in the region are buzzing with excitement as Ethiopia announces plans to open its retail and wholesale trade market to foreign investors. The policy shift will have significant implications, and is expected to lead to greater product variety, enhanced quality, and more competitive pricing for consumers. Meanwhile, the influx of foreign capital is expected to bring substantial investment and expertise, setting the stage for increased productivity and efficiency in domestic industries. Kenyan officials have highlighted that this move will “open doors for exporting Kenyan-made fast-moving consumer goods”, pushing up Kenya’s manufacturing numbers. Meanwhile, the World Bank’ comprehensive Digital Trade Gap Assessment report has identified key digital trade gaps in the Horn of Africa Initiative (HOAI), which aims to promote regional economic integration between Djibouti, Ethiopia, Kenya, Somalia and South Sudan. Find an op-ed on the HOA states here and here.
A recent Gallup poll has shown that the USA is losing influence in Africa as its approval ratings dropped by 3% to 56% in 2023. Russia remains the least popular even though its approval rating is at its highest since 2012, increasing by 8% to 42%. Meanwhile, China rose 6% to 58%, resulting in its highest approval rating on the continent in decades. Of the global powers asked about in the poll, the US was the only one to see its approval ratings decline. The US had an advantage over China across the continent in most years since 2007. The two countries’ rivalry on the continent is due to myriad geopolitical and economic reasons, including debt relief and a race to secure access to precious minerals. Meanwhile, the African Development Bank has issued its second warning against resource-backed loans, calling them “asymmetrical and non-transparent”. Last year, the IMF warned that African countries would stand to lose the most from the escalation of US-China tensions and the potential creation of two isolated trade blocs. Experts disagree, emphasizing that such a scenario would not be inherently good or bad for Africa. Rather, its outcome would depend on the extent to which African countries “leverage the situation to their advantage instead of waiting to be victimized by the situation.”