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New and controversial Excise Tax Amendment bill which has been forwarded to the Budget Affairs Standing Committee of the House of Peoples’ Representatives (HPR) is said to see further changes this week, especially regarding new imported vehicles, cigarettes and bottled water, The Reporter has learnt.

According to the new changes to be introduced to the amendment, an excise tax levy which was proposed on imported new vehicles (cars with production dates not exceeding two years) and with engine capacity of 1300 horsepower and less was to be reduced from 30 percent down to 5 percent, according significant cost advantage to local car assembles and new car importers.

While the news headline regarding the new excise tax amendment was dominated by the proposed levy on imported secondhand vehicles which went as high as 500 percent on vehicles aged 7 years and above, and having 1800 horsepower, the excise levy imposed on the opposite end—new cars with engine capacity not exceeding two years—which was to be 30 percent largely unchanged from the original proclamation has received very less attention.

As most imported secondhand cars experience jump in the excise tax rate they have to face, from where it was at 30 percent to between 8o to 500 percent, the excise levy on imported new cards either in SKD, CDK or CBU forms remained largely stable at 30 percent.

In fact, the excise tax amendment was not that much impressive for many car assemblers in terms of reducing their tax burden but generally supported the changes since it will raise the price imported used cars, thereby opening up the market for further competition.  As far as Eyobe Tekalegn (PhD), State Minister of Finance, the sponsor of the draft bill, the reduction of excise rate to 5 percent might bring about price reduction of 200,000 to 250,000 birr/vehicle.

Although these figures are to be yet worked out by the industry players, multiple car assembly leaders interviewed for similar story two weeks ago, underlined the importance of attaining bigger sales volumes, which is curtailed by severe foreign exchange shortage in the country, than receiving any tax reduction. In fact, the time one CEO argued that attaining the installed capacity of the assembly he leads might just lead to some 25 percent reduction in the average sales price of the products.

The Minister as well seems to be mindful of the conundrum and told journalists yesterday that the reduction of excise levies from 30 to five percent might be a good relief for prices in medium and short term, but admits that the solution is highly short term until companies start to exploit their installed capacity. On top of that, Eyob is convinced that most of cars imported to the country are 8 years and above, making the Ethiopia the dumping ground of old and secondhand cars; and he argues “this has to stop”.

On the other hand, the tax levy on bottled water was made to recline further with 15 percent rate going down to 10, following uproar by the stakeholders that water is very basic and should bit be taxed. He however, noted that the shift is not the first and certainly will not be the last. Furthermore, the new proposed changes to the amendment include slight increase on the excise levy imposed on cigarette and alcohol. In fact, alcohols’ excise has not really changed significantly but said to have the possibility for the future.

In office located around sidit kilo, Eyob also addressed some misleading statements regarding the amendment process and dismissed any statements portraying amendment as new form of fattening the coffers of the government. According to Eyob, there also no new excise levies on basic consumer goods such as sugar, salt and edible oil. In fact, in the case of sugar, Eyob said that new bill will bring down 30 percent rate to 20. Nevertheless, there is slight bump on the industrial raw material oil, which is hazardous for health.  

Source:-https://www.thereporterethiopia.com/article/new-excise-tax-amendment-see-further-improvement-0

The National Bank of Ethiopia (NBE) has approved the appointment of Melaku Kebede, who was serving United Bank as a senior Deputy CEO –Strategy &Technology, as the new Acting Chief Executive Officer (CEO) replacing Taye Debekulu, who has led the bank for six years.

According to the banks press release sent to The Reporter, Melaku’s most recent role as project lead in the development of the Bank’s 2030 strategy has made him the right pick to take United further in the coming years. Apart from that, Melaku is also credited for a number of Fintech applications that the Bank uses currently, giving United the competitive edge it needs to continue as one of the top 5 private banks in Ethiopia. With a collective 14 years’ experience in the banking industry, Melaku has served the Bank for more than a decade including as the Vice President for Systems & E-Banking and as a manager of the banking department. He was also the Vice President for Technology with another private bank Zemen, where he was tasked with the overall project implementation in technology and is credited for his outstanding leadership.

“Unique to the industry’s practice of bringing foreign experts, Melaku is renowned for developing innovative financial solutions and applications in-house, empowering local expertise,” the press statement read. And, according to Bank, the new CEO has been recognized for utilizing Fintech projects with local capacity on multiple occasions. Furthermore, Melaku was instrumental in the launch of interest Free Banking (IFB) window, new ways of handling the local remittance services called BLMT (Broad Band Local Money Transfer), loan origination work flow and many more, the Press release said.

Other key projects that Melaku has left his mark on include “The establishment of EthSwitch (Switch system connecting all bank-ATMs in the country), in the preparation of the Financial National Cyber Security Framework for Ethiopia FIs (Financial institutes) together with INSA and NBE few years back.” Before he had his run-in with the banking industry, Melaku also worked for Unity University as an instructor and registrar and member of University Senate for over 15 years, according to the press statement. Prior to finding his focus in Fintech, he has also worked as a young auditor for both the Amhara and the Federal Auditors General.  

Source: - https://www.thereporterethiopia.com/article/fintech-champion-head-united-bank

A report made by the United Nations’ Department of Economic and Social Affairs predicted that Ethiopia’s economic growth looks promising in the coming two years. The 2020 report titled ‘The World Economic Situation and Prospects’ serves as a tool that explores and explains global economic trends and transitions of the given year. The annual report was released on Thursday, January 16th 2020.

Zooming into Ethiopia, the report showed that economic growth for the East African country is predicted to surpass 7.0% in 2020 and 2021 due to an increase in “private investment, robust public investment and growing business confidence.” On the other hand, setbacks in Ethiopia’s economic growth include a low level of foreign reserves and currency shortages. High levels of debt and an elevated current account deficit are also contributing factors.

While a slight hike in worldwide economic activity is predicted for 2020, the overarching theme of the report showed that global economic development has been monotonous with a decline seen in most parts of the world.

The global economy endured its lowest growth in a decade at 2.3 percent in 2019, at the cornerstone of this decline are continuing global trade disputes, the report stated. 2020 could see growth of 2.5 percent if risks are curtailed, alternatively, the opposite end of that scenario could bring forth a decline to 1.8 percent in 2020.  According to the report, the overall decline is a result of several roadblocks, namely trade disputes, policy uncertainty, geopolitical tensions, the climate crisis, food insecurity and poverty. “These risks could inflict severe and long-lasting damage on development prospects. They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount,” said UN Secretary-General António Guterres in the report.

 

A magnified look into Africa showed that while GDP growth has seen a slight increase, it does not meet the development needs of most sub regions. Mirroring the insufficient progress is the GDP per capita, which has remained stagnant over the last decade, the report stated.  Extreme poverty continues to be the Achilles heel of African countries as the Democratic Republic of Congo, Ethiopia and Nigeria sit among the five countries in world with largest populations living in poverty. Eradicating this issue calls for a “substantial acceleration in economic growth” the report further stated. The glimmer of hope for Africa is found in East and North Africa with both sub regions showing signs of improvement and growth, the former being the fastest growing sub region in the content. The Horn of Africa’s recent peace deal signed between Ethiopia, Eritrea, Djibouti and Somalia is one of the contributing factors to East Africa’s rise. The deal is said to open the door for new investment, trade and business promotions.

Consistently in the lead are countries in East Asia, as the region remains the world’s fastest growing region. The United States is experiencing a lull as GDP is predicted to decrease from 2.2 percent in 2019 to 1.7 percent in 2020. The European Union will see a “modest growth in GDP from 1.4% in 2019 to 1.6% in 2020.”

 

“Amid growing discontent over a lack of inclusive growth, calls for change are widespread across the globe. Much greater attention needs to be paid to the distributional and environmental implications of policy measures,” said Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development. The report concluded that 1 in 5 countries will see a stagnation or decline as a result of the aforementioned setbacks for economic growth.

Source: - https://www.capitalethiopia.com/featured/economic-growth-expected-for-ethiopia-says-un/

he privatization process of the telecom sector to allow new operators will be pushed as per the request of interested buyers. Eyob Tekalegn, State Minister of Finance, said that some actors that are interested to be engaged on the telecom industry claimed that the time line is very short. “In different public consultations interested actors frequently insisted to reschedule the timeline to get more time for preparation,” he added. He said that the relevant body Ethiopian Communications Authority (ECA), who manages the consultations, is expected to come up with new timeline.

A public consultation is being conducted to obtain feedback for the licensing framework. Interested operators expressed their concern that more time is needed for mobilizing the finance and to become active competitor on the upcoming privatization bidding process. The government has disclosed that two operators will be identified by April 2020.

Eyob told Capital that the opening up of the sector will depend on by the decision of ECA. Capital’s effort to get further information from Balcha Reba, Director General of ECA, was unfruitful. In another news, in his latest press conference on Friday January 17 Eyob told the media that the draft proclamation of the popular excise tax revised three areas. He said that based on the consultation and discussion with public and representatives of the parliament some of the levies are revised. “I hope with this new revision the parliament would pass the proclamation in the coming few weeks,” he said.

According to the new revision, the excise tax for brand new cars that are less than 1300 CC would be slashed to 5 percent from the current 30 percent. At the same time bottled water excise tax is also revised to 10 percent from the drafted 15 percent. Currently the excise tax on bottled water is 20 percent. At the same time the excise tax rate for cigarette is revised after the consultation and increased the rate.The draft proclamation revised to 30 percent plus five birr per pack of cigarette.  With the new revision it increased to 30 percent plus six birr per pack.                       

Source:-https://www.capitalethiopia.com/featured/govt-to-give-more-time-for-private-telecom-operators/

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