Tax collection is essential for any government to generate revenue and fund public services. However, when tax collection mechanisms become overly complicated or burdensome, they can hinder economic growth, create inefficiencies, and encourage tax evasion. One such issue that has become a growing concern in many countries is the excessive number of checkpoints for tax collection. These checkpoints, often set up to ensure compliance, can instead create significant roadblocks for businesses and individuals, affecting economic activity negatively.
Tax collection checkpoints are established to monitor and ensure compliance with tax laws, particularly in sectors prone to tax evasion, such as transportation, trade, and logistics. Governments use these checkpoints to prevent tax evasion by ensuring that businesses pay their dues; regulate the movement of goods and services; monitor imports and exports to enforce duties and tariffs and verify proper documentation for tax payments.
While these goals are well-intended, an excessive number of checkpoints can become counterproductive, leading to unintended economic consequences.
When businesses encounter multiple tax collection checkpoints, they face additional costs in terms of time and money. Truck drivers, traders, and transporters often have to stop at numerous locations, leading to delays in the supply chain. This results in higher transportation and logistics costs; ncreased operational expenses for businesses and delayed delivery of goods, affecting production and sales.
These inefficiencies can reduce profit margins and discourage businesses from expanding their operations.
Excessive checkpoints create opportunities for corruption, as businesses and transporters may be forced to pay unofficial fees to pass through efficiently. Corrupt officials may take advantage of the situation by demanding bribes, which can increase the cost of goods and services for consumers; educe government revenue as taxes are bypassed through bribes and undermine public trust in the tax system.
For businesses engaged in inter-state or international trade, frequent tax checkpoints can be a major hindrance. Delays in border crossings or internal trade routes can reduce competitiveness in global and local markets; discourage foreign and local investment and force businesses to find alternative, often illegal, routes to avoid taxes.
Excessive regulation and delays make a country less attractive for trade and investment, leading to economic stagnation.
When legal trade becomes cumbersome due to too many tax checkpoints, businesses may turn to informal or underground markets to evade taxes altogether. This shift leads to loss of government revenue, unregulated markets that can exploit consumers and a decrease in formal employment opportunities.
Countries with multiple tax checkpoints, particularly in Africa and South Asia, have reported significant challenges in trade and economic growth. For example:
In Nigeria, businesses and transporters often complain about excessive roadblocks and tax checkpoints, leading to higher costs and delays in moving goods.
In India, before the introduction of the Goods and Services Tax (GST), multiple state-level tax checkpoints created long delays for transporters, which negatively impacted supply chains and economic efficiency.
Governments can leverage technology to minimize physical tax checkpoints by implementing digital tax collection systems. E-invoicing, online tax payments, and digital tracking of goods can significantly reduce the need for manual inspections.
Overly complicated tax structures lead to multiple checkpoints. Streamlining tax policies and ensuring uniformity across regions can reduce the need for excessive monitoring.
Instead of relying on physical checkpoints, tax authorities can focus on intelligence-based enforcement, using data analytics to identify potential tax evaders and audit businesses efficiently. Engaging businesses in discussions on how to improve tax collection without hampering trade can lead to more practical and less intrusive solutions.
To conclude, while tax collection is necessary for economic development, excessive checkpoints create bottlenecks that can hurt businesses, encourage corruption, and stifle economic growth. Governments must strike a balance between ensuring tax compliance and facilitating smooth economic activities. By adopting digital solutions, simplifying tax policies, and reducing unnecessary regulatory burdens, economies can thrive without compromising tax revenue collection. Addressing the issue of excessive tax collection checkpoints is crucial for fostering a business-friendly environment and promoting sustainable economic growth.
There always seems to be something or someone else to blame when things are not going well. Some other person or condition is causing the situation we are in. On the road, it is another driver, at school it is the teacher or the test, at home it is the husband or the wife or the children. And in the business? It is the workers, or the administrator, or the tax collector, or the importer, the exporter, the forwarder, the government, the policy, the regulations, the internet, etc. Really? Is it normally somebody or something else or could it be that we ourselves are part of the problem? Let us look at this issue a bit closer. Also in Ethiopia, it is always the fault of something or somebody else. We say: “The glass fell down.” instead of “I dropped the glass.” Things happen to us instead of us recognising that we play an active part in the situation. Many business owners blame their problems on other persons or external circumstances. They are not to blame, they think. They think of themselves working so hard, shouting their instructions so loud, sweating so much. They find it difficult to accept that they may be making a mistake, that they are part of the problem themselves, that they are responsible. Having responsibility is an intriguing concept. It literally means “having the ability to response”. Response to other people, to circumstances, to anything that comes our way. That ability to response is a skill that can be developed. Yes, the way we react is determined for a great deal by our culture and the way we have been brought up, the role models provided by our parents, teachers, bosses, leaders. But that does not mean that is the only way or necessarily the best way to response. Just because somebody else reacts in a certain way, doesn’t mean we must repeat that behaviour, certainly not when it doesn’t seem to be effective, when it doesn’t change the situation for the better. In other words, we are in a position to choose the way we response and if we base our responses on certain values and on principles, the chance is higher that our responses will have better results. Responsibilities in running a business are many. The ability of the business owner or manager to response to the internal and external environment of the business will in the end turn the business into a poor, mediocre, or successful business. There are choices to be made. How to respond for instance to developments in the market, policy changes, suggestions from workers, demands from clients? This is where you have the opportunity to set the standards and lead the company where you want it to go. This requires a proactive approach. It also requires insight in the risks that we take and the hazards we may face in moving our business forward. Having such insight will allow us to put measures in place, which will be activated when a hazard strikes. By doing so, the chance for the risk to turn into disaster will be reduced. As we see more and more extreme weather phenomena hitting countries around the world, we also see the proactive measures that are taken to prevent a hurricane for example to turn into a disaster. So, the question is then whether we are sufficiently aware of the risks we face and of the measures we can take to prevent disaster coming our way. In doing business, we need to make sure we put all preventive measures in place that are available. Not doing so, will most likely bring us into trouble, when a certain hazard strikes. Fire and accidents on the work floor are common. Measures to reduce risk include but are not limited to protective working gear and clothing, safety instructions, training in how to safely use equipment, training in first aid, first aid materials, fire extinguishers and insurance (fire, accident & theft insurance are commonly available). Failing to take any of these measures will expose individual workers, management, and the company at serious risk, much of which can be prevented. This does not only apply to management of a company or organization but also to personal and family life. Accidents at home are the cause for countless injuries, loss of life and damage of assets and property and all the costs that come along. It is not that long ago that wearing a seat belt and having a third-party vehicle insurance were not compulsory in Ethiopia. Luckily the Government introduced such measures now by law. We still see however irresponsible behaviour by drivers and their passengers. Driving while answering the telephone or texting messages is common; driving and drinking as well. More often than not, we see only the driver buckled up and not their passengers, including children. It is obvious that the traffic police do not have the capacity to enforce these basic rules effectively. But does the responsibility lie with the police or with the driver, who is supposed to be aware of the risks and protect passengers instead? In conclusion, pointing fingers is a common response when things go wrong. It does not help, however. What helps is being aware of our responsibility and take the right and timely measures to prevent disaster to come our way as much as we can, at home, in traffic and at the workplace. Sounds like an open door? Just look around and see for yourself where things can go wrong. Perhaps we conclude that we should point the finger at ourselves instead.
The Ethiopian Quality Award Organization (EQA) was established in 2008 through a collaboration between Addis Ababa University (AAU) and Walta Media and Communication. Its mission is to cultivate a national quality brand by recognizing and rewarding organizations that implement quality systems in their products and services, while keeping pace with the rapidly evolving global economic landscape and market competition. To achieve its goals, EQA has been working closely with the government and is currently collaborating with the Office of the Prime Minister to draft a regulation aimed at enhancing its resources and maximizing the benefits for recipients of its prestigious award.
As the organization prepares for upcoming changes and continues its activities, Tewodros Mebrat, CEO of EQA, spoke with Capital to discuss the current state of the award, its challenges, and future aspirations. Since 2016, Tewodros has been at the helm of the Ethiopian Quality Award Organization (EQA) as its CEO. His role encompasses overseeing executive leadership, training initiatives, and public relations, all while driving the organization towards its strategic goals. Under his guidance, EQA has embraced ambitious business strategies and cultivated a workplace culture rooted in transparency and accountability.
Capital: What is the current state of the Ethiopian Quality Award (EQA)? Has the previous level of grace and prestige been maintained?
Tewodros Mebrat: The grace and prestige of the Ethiopian Quality Award have significantly increased. For example, the award ceremony, which was previously held in hotels, is now hosted at the National Palace—a venue that is not easily accessible to everyone, symbolizing the award’s elevated status. The ceremony attracts representatives from high-standard companies and organizations competing for this prestigious recognition. Maintaining the award’s grace is critical; if we fail to do so, institutions and companies may lose their desire to compete in the future. While the process itself provides a valuable learning experience for participants, even those who do not win, the award ceremony must be conducted at a high level, consistent with international standards.
Capital: It is known that the expenses involved in this process are significant. How do you manage these costs from start to finish? What role does the government play in supporting the organization?
Tewodros: Initially, the founders of EQA, Addis Ababa University (AAU) and the former Walta Media (a state-affiliated media organization), provided funding to support the initiative. Currently, large organizations, including private companies and state-owned enterprises that understand EQA’s mission, are sponsoring the program. Additionally, registration fees from participants help cover the costs of the quality competition. However, we still face a significant resource gap, particularly in promotion, training, and raising awareness about quality issues. To address this, we are drafting regulations and engaging with the Office of the Prime Minister. We have already had one round of discussions and received feedback to refine the regulations further. Once finalized, we hope to secure direct government budget support, similar to practices in other countries.
It’s important to note that the award must remain neutral, especially since government institutions also compete. At the same time, EQA plays a vital role in enhancing the country’s international competitiveness, making it a key government initiative deserving of budget support. For example, the cost of supporting a single organization from registration to the final stage exceeds one million birr. However, as a non-profit organization, we only charge a service fee to cover operational costs, unlike profit-driven certifications like ISO.
Ultimately, EQA’s success relies on patriotic individuals with extensive expertise who volunteer their time and skills to serve the organization. If their contributions were monetized, we would not be able to sustain the organization’s operations.
Capital: You mentioned that you have prepared regulations. What is your current relationship with the government, and how is it evolving?
Tewodros: We, along with the President of Addis Ababa University, have met with the Head of Cabinet Affairs in the Prime Minister’s Office and discussed our collaboration with the Minister of Trade and Regional Integration. For the government to provide budget support, there must be a proper channel for allocating funds. Currently, the Ethiopian Science Academy serves as a model for us. It is an autonomous body where scholars conduct research, and the government allocates a budget of 10 million birr in grants, along with free office space. This type of arrangement is relatively new in Ethiopia.
In other countries, such as the United States, foundations often support initiatives like the Malcolm Baldrige National Quality Award, which receives consistent funding through its foundation. This model is not yet widespread in Ethiopia. For the EQA, the goal is not to generate revenue but to provide services through government funding or other sources, ensuring its independence. Additionally, to foster a culture of quality and raise public awareness, we believe the government should allocate a dedicated budget for this purpose.
Capital: What are the benefits for organizations that receive this award, and what additional advantages do you expect to create for awardees?
Tewodros: The primary benefit for organizations is gaining a clear understanding of their operational health, the systems they have in place, and their capacity to sustain performance in the future, even without key individuals. Beyond the competition, the detailed feedback they receive—spanning over 60 pages—is invaluable. It highlights their strengths and areas for improvement, guiding them toward better practices. Often, organizations are unaware of their gaps, which is why some participate multiple times, using the feedback to address their weaknesses. For example, some organizations have competed more than seven times, continuously improving through the process.
Additionally, organizations that win the award three times consecutively must take a five-year break from competing. This ensures that the focus remains on improvement rather than just winning. For instance, Horizon has won the award twice in a row and has registered again this year. If it wins this time, it will be excluded from the competition for the next five years. Such companies serve as benchmarks for developing human resources and systems, contributing to overall organizational growth and strength.
We are also working on establishing mandatory indirect quality standards.
For example, certain industries, like food and beverage production, could be required by law to meet specific quality standards. However, this must be approached carefully, as the government also considers factors like job creation and investment. Not all organizations can be expected to meet excellence standards immediately.
To further enhance the value of the award, we are advocating for a legal framework that would provide additional benefits to awardees. These could include priority in procurement and bidding processes, the right to use the EQA logo on their materials, and expedited public services or customs procedures. We are drawing inspiration from developed countries, where awards like the Malcolm Baldrige carry significant weight. For example, in the U.S., receiving the Malcolm Baldrige Award is a major advantage for organizations, as it expands their market share and builds trust with stakeholders. We aim to replicate this impact in Ethiopia, making the EQA a symbol of excellence that drives both recognition and business growth.
Capital: When do you expect the regulation ratification process to be finalized?
Tewodros: The regulation ratification process is currently being led at the board level, as it is crucial for the existence and future of the institution. I am actively supporting this process by submitting the necessary documents. Dr. Samuel Kifle, the chairman of the board and President of Addis Ababa University, is spearheading this effort. We anticipate that the process will be completed this year. Additionally, President Taye Atske Selassie, the honorary guardian of EQA, has expressed support for issuing the regulation. Our motto emphasizes “quality as a national priority,” and the government has invested significantly in quality infrastructure, highlighting that the administration is prioritizing quality issues. Therefore, I am optimistic that the regulation will be finalized very soon.
Capital: How much do organizations pay to participate in the competition?
Tewodros: We have recently increased the participation fees. Previously, organizations paid 175,000 birr, but the fees are now set at 250,000 and 300,000 birr. While these fees help cover some costs, organizations are not just competing; they are also supporting our mission. We have established a minimum fee level and rely on sponsors to cover the remaining expenses. If the government provides additional support, we may be able to reduce these fees further. It’s important to note that the Ethiopian Quality Award is not a profit-driven initiative; our goal is to promote and recognize quality excellence.
Capital: What are the current gaps or weaknesses in your organization?
Tewodros: Our most significant gap is in promotion. While we excel at coordinating and supporting our technical committees, who excel at evaluating participants, we struggle with raising awareness about the award and its importance. Improving our promotional efforts is critical to reaching a wider audience and attracting more participants.
Capital: What do you expect from the agreement you made with 27 Marketing and Branding?
Tewodros: We expect this partnership to significantly enhance the visibility and recognition of EQA. With the help of 27 Marketing and Branding, we aim to improve our presence not only in traditional media but also on social and digital platforms. There have been organizations interested in competing in the past that requested information but ultimately did not participate for various reasons. We believe that with improved marketing and branding efforts, more organizations will be encouraged to compete, leading to an overall increase in participation.
