Officials at the Customs Commission have granted franco valuta importers yet another extension for the deadline to finalize their shipments. The decision, which was prompted by requests from importers, extends the deadline by another 30 days.
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.
