The National Bank of Ethiopia (NBE), has announced that it provided USD 300 million via the state owned Commercial Bank of Ethiopia (CBE) and private banks for the manufacturing sector this week. However, local industries still claim that the hard currency disbursement is unfair.
Early this week the Central Bank official who met with members of the chemical industry stated that the government is making a valiant effort to provide foreign currency but the hard currency shortage is still challenging the manufacturing industry.
“This week we have provided USD 300 million to the manufacturing industry so they can import materials they need to make their products.”
However the manufacturing industry, particularly local manufacturers argue that the allocation is almost nothing. They say the disbursement excludes local investors. For instance, a single foreign investor has secured up to USD 200 million in one year. This amount is two thirds of what the government stated it allocated for industries just this week.
They told Capital that industrialists and bankers know the suppliers’ credit scheme affects local investors, who are carrying a huge debt burden; but the government has not addressed the issue.
During its latest meeting with bankers, NBE announced that it would start providing foreign currency for private banks to provide to their customers. On Monday it stated that the central bank would provide USD 100 million for all 16 private banks.
Sources in the sector told Capital that from the total USD 300 million two thirds is provided via CBE, the state owned bank.
The local investors have expressed their disappointment with the suppliers’ credit scheme, which is a means to provide foreign currency on a future payment system, only targeting the foreign investors. It gives them a priority when obtaining hard currency and the private sector is managed on a traditional first come first serve scheme.
They claimed that the scheme is ‘apartheid law’ because it excludes the local investors from being part of the game.
During his last meeting with the media Yinager Dessie (PhD), said the government will continue with the suppliers’ credit scheme. He said that the foreign investors came to the country though the trust that the government gave.
The central bank announced that it has started providing foreign currency to private banks. The new system was targeted to address the hard currency demand not only by the state firm but private actors and encourage them to generate hard currency.
Even though the hard currency shortage is not new for the country the challenge in the past two years has become serious and industries have been forced to drop their production rate significantly and some of them have already closed their industry.
According to industry actors, even though the government stated that it allocates millions of USD, in the actual terms industries receive a few thousand dollars. “If you see my industry it received only USD 1, 800,” one of the industry actors who wanted his name and business not to be mentioned told Capital.
NBE hands out USD 300M, but forex thirst continues
MANAGING WHAT?
The modern world system has become quite adept at adapting rational management in all spheres of human existence. Nonetheless and quite often, just managing rationally, without clarity about what is being managed, has created undesirable consequences. Well-managed outfit in the realm of ‘organized crime’ is not something society eagerly welcomes. In fact and in this and other similar cases, the more efficient and rational the management, the more disparaging the outcome, at least to a society that still espouses decency! In late modernity, preoccupation with the means without critically examining the end has become the norm and is leading the world astray!
In this regard, the so-called global institutions of learning (or more appropriately, institutions of indoctrination) as well as those concerned about the daily routines of overall governance (of all kinds; economic, political, etc.) do no seem to be genuinely concerned about critical reflections. Trying to understand lived experiences and projecting their import towards the future should have triggered processes leading to enlightenment. Instead, the obsession of the status quo is to make sure the global sheeple will remain doggedly fixated on its grazing, willingly supplied (the forage that is) by globally operating dominant interests. Just like the old bread & circus gimmick (Roman empire, et al.) The very idea of thinking ‘outside the box’ has become subversive to the top dogs of the world order and their institutions, including the mills, i.e., the universities. To make sure nothing changes, rot learning and ‘copy-catting’ are encouraged across the board. Moreover, to deepen this idiotic venture, which pervades modern existence, the global status quo selectively but generously rewards the most obedient of the human drones. Those deemed gullible/pliable are celebrated, while critics are visibly penalized, to send the message home, so to speak!
Why the global obsession with management efficiency? Here is how we see it. The crux of the matter is; one cannot manage in a vacuum. There must be something to be managed, like a Mafiosi operation or something like a state. In a world system bent on commodifying all and sundry, the efficient management of unsustainability became the raison d’etre of the modern nation state itself! For instance, ‘Mafiosi States’, which are states behind the formally established states, have become quite plentiful in our interstate system. Why? Because these entities can effectively diffuse the independent agendas of invigorated states, i.e., states that have been recaptured by their sheeple (human mass). The ‘deep state’ of the powerful nations plays a significant role in the fabrication of such ‘Mafiosi States’ in the peripheries and semi-peripheries. Think Venezuela! In addition, to these, other entities are being considered, again by the ‘deep state’, to take over the management of certain critical missions. For example, initiating and conducting wars on behalf of formal nation-states, without the states themselves being directly involved, is one new way of handling the delicate business of war! Mercenary Corporations are being established as proxy initiators and active managers of wars! These well-managed outfits, private contractors, as they are called by MSM (Main Stream Media, whish is part & parcel of the deep state) are now in bidding wars for the privileges of waging actual wars across the planet!
At the same time, the state, under the leadership of transnational capital, officially and we might even say proudly, is fully occupied in the advancement of the killing industry, via what is euphemistically called, the ‘defense industry’. See Klikauer’s article next column.
Just because the killing industry unfailingly produces more efficient killing arsenals/weaponry doesn’t mean the world is better off. As expected, modern management is significantly contributing to this powerful life-destroying component of the modern state. Naturally, the psychos will not agree to such an opinion. By effectively managing the industry, the psychopaths claim, they can produce new and more potent WMDs that can kill a lot more people or cause much more destructions than previously employed WMD. In other words and ironically, the lousier the management in the production/management of weaponry, the better off humanity becomes. In this regard, one can say the legendary mismanagement of the Pentagon and its operations, are contributing rather smartly, and of course in a rather round about way, to the retardation of global wars. Long-live inefficiency! See page 41.
The mortal sin of the existing system is its unrelenting drive to commodify everything under the sun. Outer space is now game to the Facebooks and Amazons of this world, to say nothing about other major state players. This commodification does not even spare the naturally secluded sphere of human intimacy. A lot of our modern relationships, marriages, etc. are based, rather superficially, on the efficient business model of giving and taking (Gandhi). Also and not surprisingly, the efficient management of unethical paradigms is being celebrated the world over. Preachers are famous not because they give solace to the emotionally distressed, but because they have become very rich. In fact their mission has increasingly distanced itself from the poor and working stiff. A doctor is considered a ‘god’, not because of saving thousands of lives, but because of his ungodly ways of incessant accumulation, etc., etc. Note that lawyers, accountants, consultants, etc., all reside in the universe of the professions. As a result of their unparalleled management proficiency they form a class of their own. This is why we have the ‘ambulance chasers’ (crooked lawyers) or the ‘book cookers’ (crooked accountants) or the banksters (crooked bankers).
Herein lies one of the major structural deficits of the modern world system. It is operational proficiency and not the underlying objectives (high moral/ethical standards, good governance, equitable economies, peaceful collective existence, etc.) that are getting real attention. Hoodwinked by their own stupid learning, our bureaucratic states are not pursuing sustainable or resilient futures. To the contrary, they are actively engaged in managing destruction or unsustainability. And of course this behavior gets them rewarded, as they are nothing more than mere appendages/tools of transnational capital. Don’t forget, everything is there to support the veiled criminality of the global order. Criminality against nature, criminality against the sheeple, criminality against intellect, criminality against social harmony, etc., etc.! So long as everybody is converted to a money worshipping daft, everything else will fall into place, as meticulously planned by the power that be! ‘We have now sunk to a depth at which restatement of the obvious is the duty of intelligent people. If liberty means anything at all, it is the right to tell people what they do not want to hear.’ George Orwell. “Perfection of means and confusion of ends characterizes our times.” Albert Einstein. Good Day!
Rules hinder local company from competing with imports
A pipe factory in Amhara is experiencing chronic difficulties competing in the local market because its products cost 20 percent more than imported ones.
Ethiopia was hoping to stop the 100 percent of imports by agricultural firms by producing three layers of greenhouses. However, taxes for importing raw material and 15 the percent Value-Added (vat) sales tax makes their products expensive and hinders them from competing with foreign imports.
‘We encounter a big challenge in the market as our quality greenhouse material price is higher than imported ones,” said Adam Dawed General Manager of Amhara Pipe Factory.
According to the manager, power cutoffs during production incur a high production cost, shortage of foreign currency also makes human resources and machines idle.
Established in 2016, the Amhara Pipe Factory is based in Bahir Dar – the Amhara region’s capital with the majority of share holders by Amhara Regional State and the Golden Trade Company Egyptian-American investors’ with17.8 million USD paid up capital.
The factory produces Agricultural films (greenhouse films) Geo-membrane sheets, HDPE pipes. U PVC pipes and rigid conduct, borehole casing, and screening and also delivers tubes for irrigation and construction.
The factory manufactures greenhouse films with 50 microns up 200 microns with up to 14-meter width and 200-meter length.
In Ethiopia greenhouses are used often in flori-agriculture and by fruit and vegetable farms and used by over 13 commercial farms, though the product has a higher price when compared to imported greenhouse film.
According to some research, producing in the greenhouse film is said to boost productivity by 50 percent and makes all plants grow uniformly.
The Amhara Pipe Factory has the actual capacity of producing 8,640 metric tones per annum, the factory uses only 25 percent of its production capacity. The factory employs 300 people.
“We hope that there will be a good market in African countries when the Continental Free Trade Agreement is implemented,” adds the manager.
Currently the flower, fruit, vegetable, and herb farms occupy 10,897.21hectars of land run by 19 operators engaged in large scale and modern fruit production.
At present, there are 31 vegetable exporting farms throughout the country. These farms produce a wide variety of vegetables including green beans, snow peas, tomatoes, paprika, eggplant, baby corn, & onions.
Presently there are 72 active flower farms and Ethiopia is the second largest flower producer and exporter next to Kenya in Africa.
Bottle Water tax to be repealed
The Ministry of Finance (MoF) has promised to reduce and change the excise tax levied on bottled water manufacturers.
Bottled water industry representatives had frequently asked the government to reconsider the excise tax imposed on bottled water production.
Via their association they met with relevant bodies like the tax policy director and people advising minsters. They met often at MoF over the past few weeks to discuss the issue, according to Ashenafi Merid, General Manager of Ethiopian Bottled Water and Soft Drinks Manufacturing Industries Association (EBWSDMIA).
The government announced that it would amend the existing excise tax proclamation which had expanded the types of products that could be taxed and increased the amount of indirect tax. They also plan to reduce the tax percentage on some products and exclude others from excise taxes altogether. Excise taxes are also known as sin taxes and are imposed on luxury items or those harmful to health.
According to sources, the excise tax on water products could be calculated on sales as opposed to production in the upcoming proclamation.
“Currently our factories are paying excise tax not only on the production but on the importation of raw material which is affecting the sector,” Ashenafi said.
The government claimed that even though water is basic and a type of food, bottled water manufacturers affect the environment. The tax is being imposed to mitigate this. The general manager of the association said members have agreed to help the environment by collecting wasted plastic and recycling. Ashenafi argued that “currently industries are working on recycling and some new industries are established to process the plastic to fiber.”
If the tax scheme wasn’t changed some of the factories would be closed, according to the General Manager.
He told Capital that the government representatives have promised the percentage rate would be changed and collected from sales.
We have conducted our own study showing the stated tax effect on the sector, which employs many people and provides experience to others.
Kenya and Uganda don’t tax bottled water, but Ethiopia’s tax is 20 percent. The excise tax makes the product expensive, while the product is basic. They also argued the tax by mentioning ‘the food, medicine and health care administration and control’ proclamation.
The food, medicine and health care administration and control’ proclamation 661/2009 in its definition states that “food” means any raw, semi-processed or processed substance for commercial purpose or to be served for the public in any way intended for human consumption that includes water and other drinks, chewing gum, supplementary food and any substance which has been used in the manufacture, preparation or treatment of food, but does not include tobacco and substances used only as medicines.
We insist the government kill the excise tax on water since it is basic for the community. The excise tax on bottled water is calculated on the packaging not on the water.
The association has 80 members in the water industry and other about 15 new comers are under preparation to commence their production. The association has also included soft drink manufacturers.
For the current year the government has targeted to collect 10,366.3 birr and 8,738.1 birr from import goods and local products respectively. The sum of two is about nine percent of the total targeted tax collection for the year that is about 211 billion birr.
