Ethio telecom began offering equity in October 2024, putting 100 million ordinary shares up for sale at a par value of 300 birr. Prospective investors must buy a minimum of 33 shares, while the ceiling is set at 3,333 shares valued at nearly one million birr. Buyers are subject to a 1.5 percent service fee and 15 percent value-added tax (VAT).

The shares are being sold on Telebirr, Ethio-telecom’s mobile money platform.

The company’s ambitious public offering sparked skepticism among experts, who questioned whether the state-owned telecom operator could achieve its target before the original January 3 deadline, despite the option for early closure if shares are fully purchased.

The doubts appear to have been justified, as the operator has pushed the deadline back by five weeks.

The prospectus published by Ethio telecom as part of its initial public offering contained what experts characterized as dubious and unreliable information.  They

The figures included in the prospectus were taken largely from a re-evaluation of Ethio telecom’s finances conducted by consulting giant Deloitte over the last year.

Among other things, the evaluation places the value of Ethio telecom’s property, plant, and equipment assets at close to 130 billion birr in June 2024, up from the 51 billion birr value stated in the company’s audited financial statements the year prior.

Ethio telecom’s representatives have not responded to The Reporter’s inquiries about the offering.

On November 7, 2024, Finance Minister Ahmed Shide  granted importers two weeks to finalize any ongoing franco valuta transactions. The letter said the scheme had lived out its usefulness, and declared that commercial banks would henceforth be responsible for supplying foreign currency to importers.

The development came one week after Prime Minister Abiy Ahmed (PhD) accused unspecified individuals and companies involved in international trade of using the franco valuta scheme as cover in the illicit trade and smuggling of commodities such as gold.

However, a subsequent notice from Customs Commissioner Debele Kabeta informed franco valuta importers they had been granted an additional 30 days to wrap up ongoing transactions, setting the deadline near the end of December 2024 for importers registered at Customs branch offices.

However, complaints from these importers relating to complications in the import process have pushed the Commission to extend the deadline by yet another 30 days, according to a statement released this week.

Federal officials first introduced the franco scheme in a bid to cut down on the time importers would spend waiting to open letters of credit at commercial banks, who themselves were struggling with severe forex shortages.

The scheme allowed individuals and businesses with forex on hand to import basic commodities directly. The list of eligible commodities was determined by the government, and included items like edible oil, sugar, and flour.

The move was part of a broader rush of policy amendments aimed at preventing Ethiopia’s economy from spiraling further into crisis. Over the past six years, the government has introduced more legislative changes than in the previous decade. Yet, despite the flurry of reforms, not all of these measures have succeeded, and the government has often failed to assess their impacts, according to experts.

The reintroduction of the scheme in August 2024, following the adoption of a floating exchange rate, a first in the history of this policy, raises significant questions about its effectiveness and sustainability, argue experts.

Although higher-ups at the National Bank of Ethiopia (NBE) have a mostly positive outlook for the amended Banking Business Proclamation ratified by Parliament last week, allowing the entry of foreign banks for the first time in five decades, concerns about the move were echoed during a roundtable discussion on Friday.

“Since foreign banks are connected to their respective home economies, they might import [their] economic crises into Ethiopia. Local banks could also fail to compete with foreign banks and be forced out of the market,” said Frezer Ayalew, director of banking supervision at the NBE.

The new bill permits banks to enter in one of four ways. They can incorporate a subsidiary in Ethiopia, buy stakes in a domestic bank, establish a local branch office, or open a representative or liaison office. The law caps foreign investment in a bank at 40 percent ownership, while a domestic bank cannot sell more than 49 percent of its authorized shares to foreign investors.

Frezer worries that foreign banks could display “cherry-picking tendencies” in the Ethiopian market, though he says that is expected.

“Foreign banks usually focus on lending to large corporate companies and investors. They prefer lending to clients who have a low-risk profile. Or they might focus on selected geographical areas,” he said.

Still, he hopes to see the entry of foreign banks push local banks to compete at a higher level.

“Foreign banks’ entry will induce a shockwave; an elevated level of efficiency and competition in the banking sector. They will inject new capital denominated in forex. They will bring new technology and skills. Therefore, local banks might step up to improve efficiency and stay competitive. Foreign banks will also diversify Ethiopia’s forex revenue sources,” said Frezer.

Mesfin Getachew, director of legal services at the NBE, says the amended NBE establishment proclamation will enable it to better regulate the financial sector. Key among the changes in the bill are provisions clarifying the central bank’s relationship with the government, according to the Director.

He cited an article limiting the direct advances to the government at 15 percent of average tax revenue calculated over three years. The previous proclamation allowed the government to take a direct advance from the central bank based on negotiation.

However, the 15 percent cap can be overruled in the case of economic shocks brought on by natural disasters, states of emergency, or other forms of pressure.

In a statement issued this week, the party stressed the urgent need for global attention and engagement to protect Tigrayans’ rights and lives in the face of persistent challenges.

The opposition political party expressed deep concern over the country’s deteriorating humanitarian and security situation, which it blames on the federal government’s inability to uphold the Pretoria Agreement and its constitutional commitments.

The situation in Tigray has deteriorated as a result of internal conflict within the Tigray People’s Liberation Front (TPLF) and a weakened interim administration, which has significantly hampered the delivery of key public services. Despite a recent agreement intended to foster inclusivity, the TPLF continues to have complete authority over the Tigray regional administration, raising concerns about governance and public well being, according to Salsay Weyane.

“Against this backdrop, the previous scrutiny and periodic assessments by observers of the peace agreement seem to have diminished,” reads the party’s statement.

Salsay Weyane has raised the alarm over the apparent silence of key stakeholders and relevant bodies, urging these entities to redouble efforts in addressing the pressing humanitarian and governance crises affecting the region.

The party also appealed to the Tigrayan diaspora to intensify their diplomatic efforts and other peaceful means of struggle to alleviate what it deems internal and external threats to the existence of Tigray.

The findings of a recent fact-finding mission undertaken by the UK Visas and Immigration agency indicate the terms of the Pretoria Agreement have been neglected. The report, released this week, gathered input from a range of sources in the region.

It states the pillars of the peace agreement that ended the two-year war in 2022— the restoration of constitutional order, respect for human rights, and unhindered humanitarian aid—remain largely unfulfilled, resulting in continuing instability and dissatisfaction among Tigrayans.

Interviews with regional political parties found an overwhelming sentiment that the peace agreement is effective only on paper, according to the report. Civilians continue to live in fear of having their property expropriated by militants or federal forces, according to the agency.

The announcement came during the Africa Financial Summit (AFIS 2024), which took place this week in Casablanca, Morocco. Pressed for a timeline for Ethiopia’s impending banking liberalization, the Governor told summit attendees that legislative preparations would be finalized very soon.

“We have been working on it for the past year, and next week it will be ratified,” said Mamo, emphasizing the significance of the upcoming legislation. “For any bank that wants to explore the largest economy in East Africa, a country of 120 million people is open to business. This is the historic liberalization of the Ethiopian economy to foreign investment.”

Ethiopia’s banking industry, recognized as one of Africa’s last finance frontiers, is poised for transformation as the Governor briefed a gathering of prominent African bank executives about the country’s substantial growth and untapped opportunities for foreign investment and innovation.

The draft Banking Business Proclamation, which was approved by the cabinet in June this year, is under review by lawmakers. Last month, the parliamentary committee for Planning, Budget and Financial Affairs conducted its first round of discussions on the proposed amendments.

If ratified, it would pave the way for foreign lenders to establish local subsidiaries and acquire stakes in domestic banks. The legislation would allow them to operate branches, purchase shares, and employ foreign nationals in senior roles while ensuring that Ethiopian residents are included on their boards.

The proclamation would enable the government to issue up to five new banking licenses to foreign institutions. Foreign companies that have expressed interest include Kenya’s KCB Bank and Standard Bank.

The National Bank of Ethiopia (NBE) Governor hopes to see recent economic reforms encourage other investors to join. He presented a promising report on the fiscal, monetary, external, and financial during a briefing at the summit in Morocco.

The summit drew over 1,000 leaders from the financial sector, including bankers, insurers, fintech innovators, and regulators, to foster dialogue and collaboration on the continent’s economic future and the evolving landscape of financial services.

The Ministry of Urban and Infrastructure Development is set to establish national standards for  the registration and licensing of real estate developers, agents, liaison brokers, and property valuators. Its officials will also be in charge of monitoring compliance and enforcing penalties, including the revocation of licenses, after the standards are set.

The absence of clear laws has led to disputes and widespread issues in the real estate industry, including disputes over property rights, inconsistent valuation practices, and inadequate consumer protection.

The experts behind the new bill expect it to provide a robust foundation for regulating these critical areas, ensuring that both developers and consumers are better protected in their dealings.

The legislation will enable property owners to comprehend the true value of their properties, which will make it easier for them to participate in capital markets. Officials also hope to see the bill promote urban growth through the standard application of valuation and property tax estimates.

Experts have raised concerns about the omission of a regulatory framework for developers managing projects with fewer than 50 units. Previous drafts of the bill had included provisions aimed at addressing the unique challenges faced by smaller developers, but these are notably absent in the current iteration.

Experts warn that another important aspect to consider is the matter of fairness in contracts between sellers and buyers regarding pre-sale agreements. While the law seeks to tackle contractual terms, it does not clearly define the nature of real estate contracts. Experts point out that lawmakers have not sufficiently dealt with the practical difficulties involved in classifying pre-sale agreements as either construction contracts or sales of immovable property.

According to the ratified proclamation, a unit can only be sold once it is 80 percent completed. Transfer of ownership below this threshold is prohibited unless there is mutual agreement between the buyers and the developer.

Additionally, upon reaching the 80 percent completion mark, the developer is entitled to request a title deed from the appropriate government authority.

The bill permits both local and foreign investors to participate in the Ethiopian real estate business. To qualify, they must obtain a real estate developer’s qualification license from the federal, state, or city-level urban and infrastructure authority. Additionally, both local and foreign investors are required to develop a minimum of 50 units per project.

Developers must provide essential documents, including building descriptions, architectural designs, title deeds, and any other relevant construction documents. They must also issue receipts for payments received from buyers.

The legislation prohibits developers from engaging in false advertising and from collecting payments or registering properties before obtaining land ownership and building permits.

Parliament ratified the Real Estate Development and Immovable Property Marketing and Valuation Proclamation by majority vote, with two objections and one abstention this week.

The announcement follows a decision from Finance Minister Ahmed Shide on November 7, 2024, directing importers to wrap up ongoing franco valuta transactions within two weeks. A letter from the Minister said the scheme had lived out its usefulness and declared that commercial banks would henceforth be responsible for supplying foreign currency to importers.

A subsequent notice from Debele Kabeta, Customs commissioner, issued to all customs branch offices, including the one at Addis Ababa’s Bole International Airport, instructs officers to permit importers with the appropriate documents a full month to finalize their imports.

Federal officials first introduced the franco valuta scheme in a bid to cut down the time importers would spend waiting to open letters of credit at commercial banks, who themselves were struggling with severe forex shortages.

The scheme enabled  individuals and businesses with forex on hand to import basic commodities directly. The list of eligible commodities was determined by the government and included items like edible oil, sugar, and flour.

The Finance Ministry has reversed the decision in light of reported improvements in foreign exchange reserves.

This week’s notice from the Customs Commission emphasized that only importers who are registered at branch offices and acknowledged by the head office will be permitted to complete their franco valuta commodity imports within the next 30 days.

The executives of Safaricom Telecommunications Ethiopia Plc have called for government support in ensuring equal access to open platforms, criticizing incongruent tariffs on phone services provided by competitor Ethio telecom.

During a visit to Safaricom headquarters this week, members of the parliamentary committee for Democracy Affairs heard CEO Wim Vanhelleputte, CEO of Safaricom Ethiopia, advocate for equal access to telecommunications networks, urging that all customers should be able to utilize both Safaricom and Ethio telecom networks without exclusion.

Safaricom’s recently appointed Chief External Affairs Officer, Andualem Admassie (PhD), noted issues with off-net and on-net parity with Ethio telecom.

The state-owned operator’s customers are charged extra when making phone calls to a number in the Safaricom network, while Safaricom has a fixed charge regardless of network.

Andualem and Vanhelleputte want to see this change.

“We want the country to benefit and to grow digital connectivity and financial inclusion; those are priorities for the country as a whole. We are asking if there is an opportunity to get both networks [to give] equal access to the customer so that they can use both networks and not get excluded from calling our network,” said the CEO.

On the other hand, Safaricom Ethiopia’s mobile money platform M-Pesa and Ethio Telecom’s Telebirr currently do not support inter-platform money transfers. 

Safaricom execs see this limitation hindering the potential for seamless financial transactions, highlighting the need for collaboration between the two networks to enhance digital financial inclusion in the country.

This absence of interoperability raises concerns about accessibility and convenience in an evolving digital economy, according to Vanhelleputte, who says segments of the market are under a monopoly.

“Monopoly is a contradiction to liberalization. We have 32 banks; we have multiple fintech financial institutions; all of them should be able to offer digital payments. So, we ask policymakers if we really want to accelerate digital Ethiopia, we should try to gate all the financial institutions to give them equal access to offer digital payments,” he said.

Ethiopia’s drivers will soon be able to use M-Pesa, as well as other banking and mobile money platforms, to make fuel payments as part of an initiative from the Ministry of Transport.

“After certain negotiations, we got the green light that after a few months, M-Pesa can be another platform for fuel payment. Still, it is not allowed to pay taxes via M-Pesa. Safaricom Ethiopia itself pays taxes using Telebirr. The company needs the government to look into such issues,” Andualem told the visiting MPs.

Ewnetu Aleneh, chair of the parliamentary committee, agreed to engage in discussions with the Ethiopian Communications Authority to address the concerns raised by the private telecom operator.

Ewnetu pledged to address concerns raised by Safaricom regarding its M-Pesa service, promising to relay these issues to the relevant finance standing committee and initiate discussions with the National Bank of Ethiopia (NBE).

Safaricom Ethiopia has garnered 6.1 million 90-day active registered customers since it began operations in 2021. The firm’s network, consisting of more than 3,000 sites, can cover 46 percent of the population.

The amended tax invoice usage and administration directive mandates taxpayers to utilize differing invoices for each business category that applies to them, as well as for each business location, and include a unique QR code on the invoice.

Tax officials will not accept invoices that do not include this code, according to the directive inked by Aynalem Nigusie, minister of Revenue. 

Starting immediately, all printing enterprises are required to include a unique QR code, provided by the tax authority, on every printed tax invoice. Officials hope the new rules will enhance tax compliance and streamline the verification process for tax authorities by ensuring the accurate tracking and reporting of transactions.

All businesses are mandated to print a unique QR code on the right header of their tax invoices. The QR code must have a minimum width and height of two centimeters.

Revenues officials mandate printing press enterprises to obtain a letter of permission from the relevant tax authority before printing tax invoices for any taxpayer.

The amended directive requires taxpayers who printed tax invoices prior to the directive’s implementation to utilize them within three months from the effective date.

Ethiopia has registered considerable progress in tax collection over the last two decades, with revenues rising from 12.4 billion birr in 2005 to 165.3 billion birr in 2015 and over half a trillion birr by the end of the 2023/24 fiscal year.

However, the growth of the country’s economic output has outstripped its tax collection over the same period. The tax-to-GDP ratio was estimated to be 13.4 percent in 2015. By the end of the previous fiscal year, the figure had dropped to seven percent.

Tax officials have cited a lack of crucial policies, administrative inefficiency, slow technology adoption, and a flourishing contraband trade for the languishing revenue figures.

The problem was raised during the Prime Minister’s address to Parliament last month, where he attributed ailing tax collection to the prevalence of an informal economy.

“We do not collect taxes,” said the PM.

Located on a 9,000 square meter plot 100 kilometers east of Addis Ababa, the Factory produces aluminum sulfate, hydrogen peroxide, and sulfuric acid compounds. It used to supply its products to textile and leather industries, paper and pulp factories, sugar estates, beverage manufacturers, and wastewater purification plants before business began to turn sour due to market disruptions.

Executives say issues arising from the COVID-19 pandemic, foreign currency shortages, and competition from cheap imports have cast doubts over the Factory’s competency and financial viability. The problems were the center of discussion of a conference organized this week at Nexus Hotel.

Ahmed Motuma, general manager at Awash Melkassa Chemical Factory, said the manufacturer was forced to cease production completely in 2021 as a result of lockdown measures during the pandemic. The Factory, which is an arm of the state-owned Chemical Industry Corporation, lost clients as a result.

Ahmed observes a lack of access to foreign currency needed to import inputs has exacerbated the situation. Despite the resumption of production in 2022 after the government approved the company’s purchase of raw materials using Birr, business has yet to pick back up.

“When we stopped the production of aluminum sulfate, hydrogen peroxide, and sulfuric acid chemicals, our regular customers went away, including the Addis Ababa Water and Sewerage Authority. Even though we immediately restarted production, we couldn’t retain the clients,” said the General Manager.

Ahmed and his management team say they are actively seeking new market opportunities and making overtures to clients in hopes of luring them back. The company is also engaging in a promotional campaign and doubling down on marketing efforts, according to its executives.

However, clients have raised concerns about the quality of the chemicals produced at the Factory, packaging and labeling, and high prices.

A consumer survey conducted by the company found that the affordability of imported chemicals and the lack of supply in local markets have led to a rise in the import of chemicals from China, India, Turkey, and other countries.