Published On  Nov 13,  2011




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It is madness trying to renew a business licence these days at the Ministry of Trade, as the deadline for renewal fast approaches, writes EDEN SAHLE and HADRA AHMED, FORTUNE STAFF WRITERS contributed to this story as well.

Improving Licence Registration Creates Ministry of Trade Havoc


Customers queue inside the Ministry of Trade (MoT) on Wednesday, November 9, 2011, desperately waiting to renew their licence before the next day which they were led to believe was the deadline after which they will be penalized.

No other word but chaos can adequately describe the scene inside the ground floor of the Ministry of Trade (MoT) on Marshal Tito Road. Indeed, last week was when businesses thought that the season to renew their licenses was coming to an end; thus the not-surprising hustle and bustle by business owners and their liaisons to push things along and push the bureaucracy harder to make it before the deadline on January 9, 2012.

Many of them were greeted with crammed rooms with no air-conditioning for ventilation of the thick air that pushed people back right from the gate. The mobile ACs put at the far ends of the room were not functional, as the few ventilation equipment lay about on the floor. Customers did not want to expose themselves to “cold”, according to staff members. The air was filled with the steaming breath and sweat of so many exhausted people waiting in the unmanageably long line. Some stood on the sidelines. Others were sat on a number of couches alongside the windows. Still others tried to stretch their necks over others heads in a bid to get the attention of the staff of the Ministry processing the license renewals.

Customers holding documents and waiting desperately to renew their licences got into constant fights with the front desk employees who are expected by the Ministry to clear an average of 30 files a day.        

It was as if no one knew what was going on. Neither was there anyone responsible to advise businesspeople where to go to start the process. The environment was simply devoid of order, coordination or any sense of a system.

Zemichael Berhe, an exporter of cereals to Sudan, was one of the many queuing to renew their licenses. He came from his home town, Metema, 897km north of Addis Abeba, where he has been engaged in the business for the last 1o years. He has been going to the Ministry daily since October 7, 2011 in desperate search for his lost file.

Long gone are the days when businessmen like Zemichael would take no more than two days to renew their licenses. He was not able to renew his license despite being at the MoT for five days because his file was not found. The hustle and bustle he experienced was a first for him, even though he had gone to the Ministry many times over the last decade when the office was still functioning manually.

 “It only took me two days to renew my license last year before they changed their working procedures,” he told Fortune in frustration.

Tension was not the only thing in the air in the room. There were also the clerks who were manning the six customer service windows.  Some were impatient, impolite and dismissive; others were outright rude. It was clear that the registry department at the Ministry and its staff members were near hysteria, unable to manage what appeared to be a process out of control. Few of them tried to accommodating and tolerant, carrying the burden of handling the altered environment to which they appeared to be little prepared for.

Indeed, the ministry changed its working procedure by introducing an International Standard Industrial Classification (ISIC) and creating the Ethiopian Standard Industrial Classification (ESIC).

“Customers do not understand what has changed here,” a frantic staff behind one of the windows, told Fortune.

Several other changes have occurred at the Ministry over the past two years.

It all began with change at the helm of the leadership, with Girma Birru, former minister of Trade and Industry going to  serve as Ethiopia’s special envoy to the United States. The new leaders, in their ambition to discipline what they considered a rogue private sector, decided to initiate the re-registration of businesses at the end of the last Ethiopian fiscal year. The entire business registry department was deployed to undertake this politically significant task.

When they turned their attention back to their regular jobs, there were already huge numbers of files piling up. It seemed the whole process of re-registrations carried out a few months earlier had no use. The Ministry had acquired a new system from a private company, Custer Computing Plc headquartered at Sahlesellasie Building, Ninth Floor, on Ras Mekonnen Street, that overrode the previous process and now required businesses to register anew.

“All I have gone through a few months back to get registered again has no use,” said a private company manager, who claimed he has been there for the past two weeks, visiting the department almost every day.

Custor, which was hired by the Ministry of Communication & Information Technology (MoCIT), developed and installed the system software three months ago. However, hardly any of the staff at the Ministry were properly trained and few knew how to operate the Online Trade Registration & Licensing System software.

“We were trained for only three days,” said one registry staff.

However Teshome Kassa, business development team leader at Custor stated that the front desk employees were trained for a total of five days while the IT staff was trained for three. 

Though accessed from anywhere and fully automating all functions of registration and licensing, operating the new software remains a challenge for employees new to the system.

One staff at the front desk was struggling to open a page that was stuck. Few minutes later she had to call the Ministry’s IT people for help. The solution of the staff in his mid 20s was to restart the system to see whether the page would resume the data entry. His trainers from the company were no longer there in the afternoon, for they usually come in the morning, according to a staff member.

It was apparent that the front desk employee’s were ill-prepared to handle the influx of people. This has been aggravated by the push by the Ministry to have businesses renew their licences before the actual deadline of January 9, 2012, after which penalties will be levied for renewals.

Part of the problem affecting the new system is the classification of businesses under the new re-registration scheme that covers all economic and social sector activities while grouping similar business activities together. It was enacted through a new Commercial Registration & Business Licensing Proclamation passed in February 2011 and applied to all businesses. 

However, its aim of facilitating the better functioning of trade while increasing stability, effectiveness and fair trade practice has put new demands on traders to fulfill; thereby contributing to the longer queue at the ministry.

Those who have come for a new license or to renew their old license are required to obtain a tax identification number (TIN), support the capital they claim to have with a bank statement and provide a permanent address for their business. Formerly, people simply declared their capital and got general licenses for “import” and “export”.

Only nine employees are tasked with making sure these requirements are met and handling customers who come in droves. The requirement that each process 30 files on average a day and the haphazard situation of the office is no doubt the source of their frustration, making them lash out at customers.

Adding to the problem is the extended processing time for a customer that results from the re-registration scheme. A businessman engaged in imports for instance is required to have a license for each item he imports.

This system has increased the time of processing to issue a license, according to Kiber Temesgen, trade registration and license permit supervisor, who claims that employees at the front desk work over 10 hours a day.

It is because of this unsystematic process of issuing licenses and searching for files that are not returned to their original place but strewn all over the small file room that delays and arguments with customers ensue.

“No one understands what we are going through.” Kiber told Fortune in frustration. “We are exhausted.”

But business people are concerned with expediency and no amount of explanation seems satisfactory from the demeanor of many at the Ministry last week. Such is the explanation for businesses who had been led by the Ministry to believe that the deadline was on Thursday, November 10, 2011, for renewal without penalties. Many were under the impression that they would not be able to receive services at government institutions and banks if they did not do so by that time.

Hence, the chaos at the Ministry last week. Although the Ministry’s staff told businesses that there was still time and told them to return, many were reluctant to take their word.

“We pulled the deadline back while there was time,” Kiber told Fortune. “Based on previous experience we wanted to avoid the last-minute rush.” 

The Ministry which  won praise from its customers, multilateral organizations and the domestic media only few years ago for successfully introducing business process reengineering (BPR) seems to have lost its previous image.

Ethiopia is to rank 111 out of 183 in doing business according to the forecast of the World Bank’s (WB) doing Business survey published a few weeks ago. Although this ranking puts it better than Sudan and Eretria, it is below neighbouring Kenya.

This is worse than last year when Ethiopia ranked 104th. The survey found out that it takes nine days to set up a business, including acquiring a license.

With the sole responsibility of handling business set ups and renewals, this is indeed bad news for the Ministry. However, it seems changes are not over. The leadership is once again changing hands with both the Minister and the State Minister replaced last week.

Customer frustration is bound to increase as the real deadline to renew licences approaches. Perhaps indicative of this frustration is the number of licences being returned compared to previous years. Over the past six months, 606 licenses were returned to the Ministry while only 94 licenses were returned the previous year. These numbers were 38 and 139 in 2008 and 2009, respectively.





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