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A
meeting called by the Ministry of Trade (MoT) on
Thursday, March 17, to discuss the challenges
importers face in the implementation of two recent
proclamations by the ministry turned into a forum
where importers aired their frustrations about what
they call undue pressures being imposed on
businesses.
The meeting was hosted by Abdurahman Sheik Mohammed,
minister of Trade, and Ahmed Tusa, state minister of
Trade. It was also co-chaired by Eyessuswork Zafu,
President of the Ethiopian Chamber of Commerce and
Sectoral Associations. He was called to the stage
from the audience, where he was originally seated,
for the consultation with some 500 businessmen.
The proclamations up for discussion were the “Trade
Practice and Consumers Protection Proclamation No.
685/2010” and the “Commercial Registration and
Business Licensing Proclamation No. 686/2010”, which
were designed by the government to curb the price
fixing of commodities and regulate businesses’
compliance with the tax regime. They have also
earned the ire of a majority of businesspeople
present at the meeting.
Among the issues that businesspeople are
particularly against, are the penalties for a
businessperson who violates Article 8 of the
Consumer Trade Practice and Consumers’ Protection
Proclamation. The penalty for those found guilty of
hoarding or causing artificial inflation could be
fined by up to 15pc of a business’ annual income.
In cases where it is impossible to determine the
amount of annual income the fine could range from
birr 500,000 to Birr 1,000,000 (one million Birr)
and with rigorous imprisonment of between five to 15
years. Another issue of contention includes the
possible suspension of one’s business licence, for
late payment of taxes, for up to a year.
In addition, another source of discontent comes from
the lack of cohesion with regards to regulations
issued by the Ethiopian Revenues and Customs
Authority (ERCA) and the MoT, whereby a regulation
passed by the MoT would be overruled by an internal
regulation of the ERCA.
In addition to the often contradictory working
procedures of ERCA and MoT, businesses are now even
more burdened with the prospect of fines of up to
one million Birr, one disgruntled importer said.
“Despite the challenges we face in the business
slump we now have the prospect of being fined by up
to one million Birr. If we are exposed to such
challenges, wouldn’t it be prudent to leave the
country and move abroad”, questioned Woldeberhan
Gessesse, who imports electronic goods from Dubai
and China.
The penalties the importers argue are too high for
businesses and can cripple businesses indefinitely.
“Under the article on hoarding, say if I have stock
of an item that the ministry deems it as scarce, and
say that I have no buyers because of the elevated
prices, are you to telling me that I cannot put the
stock in a warehouse and fill my shop with items
that could be sold?” one importer asked the
minister.
Girum Bekele, who imports consumer items and
distributes them through small retailers, mostly
street vendors, says he also finds it difficult to
tell his clients to present a Tax Identification
Number (TIN) and sees flaws in the manner in which
the proclamation was presented.
“My issue is regarding the requirement that our
customers need to have a TIN number to buy from us.
But some of my customers who buy the items I bring
to the market are the type that resell on the
streets and at Saturday markets,” he stated.
“I wonder if these were factored in when the
proclamation was being designed. What I ask is, have
there been proper deliberations before it was
announced that TIN numbers were mandatory. Shouldn’t
one have asked how many have TIN numbers and what is
the level of awareness in regards to the importance
of TIN numbers”, Girum continued.
Girum considers that unless the government comes up
with a mechanism to address customers like this,
businesses risk closing. “For our work we pool
monies from bank loans and equbs [informal saving
associations]. Unless the issue of TIN numbers and
other related issues are addressed, our hands are
tied we cannot do business, we cannot service bank
loans and our employees will be without jobs and go
hungry,” warned Girum.
In addition to regulations about hoarding and TIN
numbers, a combination of the devaluation of the
Ethiopian Birr, pegged at 16.69 against the dollar
on March 18, along with a lending cap for banks, has
hit importers hard. It is resulting in a decrease in
imports and shortages of some imported items.
Measures by the government in recent times, such as
the placing of price caps and restrictive
legislation, are narrowing the space for businesses
to operate and would only leave room for big players
in the industry that have ample resources to
withstand the pressures, two importers told Fortune.
They argue that to really help the businesses, the
government needs to support them and engage in
dialogue rather than put penalties and restrictions
in place.
Mulugeta, 42, for his part indicated that “the
unilateral moves” by the government show what little
regard this government has for businesses and it
manifests itself in the actions being taken.
“When the devaluation occurred and banks limited
loans, it was us that used our own money, sometimes
borrowing from relatives from abroad, to access
foreign currency to bring commodities to the public.
With threats of actions on us for a perceived lack
of tax compliance and now competing with the
government in providing items to the market I fear
that this will break businesses rather than foster
compliance,”quipped Mulugeta.
The salvo of criticism was immediately returned by
Nuredin Mohammed, director of Trade Registration and
Licensing Directorate, who defended the MoT’s track
record in terms of holding consultations with
businesses by stating that as early as November 2008
the ministry had convened meetings for businesses to
comment on the draft proclamation. He also cited
other opportunities businesses could have used that
included the consultations with Chambers of Commerce
while the proclamation was being debated in
Parliament.
“With regards to TIN numbers, it is the duty of all
citizens to pay taxes. The issue here is to see
everyone on equal footing and there cannot be a case
where one business pays taxes and another eludes its
responsibilities. Paying taxes is an obligation for
all citizens,” reminded Nuredin.
Abdurahman also stepped in to point out that the
government’s move towards bringing commodities into
the market was part of a regulatory move towards
combating inflation.
“When we say we will be introducing commodities to
the market, we are only talking about two or three
items. The government does not have a policy, the
intention, nor the programme, to compete with
private businesses,” he assured.
Abdurahman, in the interest of saving time, further
directed the gathering to limit their comments to
addressing problems concerning the implementation of
the proclamations rather than entering into debates
on the necessity of the proclamations as they are
laws enacted by Parliament. To which a steady walk
out of the participants ensued leading up to the end
of the session.
A much distressed Eyessuswork Zafu for his part
attempted to play a reconciliatory role by stressing
that the business community needs to organise itself
so that it can make sure that it is included in
consultations regarding matters affecting it. He
also opined that the one million Birr fine did not
necessarily apply to businesses across the board but
to those large businesses whose transgressions were
at par with the fine. |
