Ethiopian Diaspora Complain about Tax, Barely Brush GTP

Ethiopian Ministers displayed enthusiasm during the meeting with the Diaspora.
Ministers displayed enthusiasm during the meeting with the Diaspora. From left: Alemayehu Tegenu, minister of Water and Energy; Mekonnen Manyazewal, minister of Industry; Teklewold Atnafu, governor of the central bank; and in front stands Hailemariam Desalegn, deputy PM.

Addis Fortune
Close to 700 members of the Ethiopian Diaspora congregated in the Lalibela Grand Hall at the Sheraton Addis, on Friday, January 21, 2011, for a meeting chaired by Hailemariam Desalegn, deputy prime minister and minister of Foreign Affairs (MoFA).

Representatives of various government institutions presented the GTP, the government’s grand five-year plan, to the Diaspora, taking up most of the morning. However, the question and answer session that followed in the afternoon was devoid of challenges to the officials.

The issues that were raised were the same as the ones raised by the Diaspora on many similar occasions before: duty-free privileges, the allocation of land, bureaucracy, and a lack of good governance.

One of the participants who came from Geneva, Switzerland, commented that they pay as much as 100,000 dollars in duty tax on cars they import, while previously it had been free for those returning to the country after many years abroad. The money would be better used if it was spent for other purposes in the country, he argued.

The money they are asked to pay in this manner for other items is making their investment endeavors in the country difficult, many others argued.

Authorities of the Ethiopian Revenues and Customs Authority (ERCA) had asked Ahmedin, a participant from California, to pay duty tax on 33,000 books, 11 computers, and four printers he had imported to open a public library, he claimed. However, he got the books and computers into the country.

“It took me three years to do that,” he told the meeting. “If it had been medicine, it would have gone to waste. I am still negotiating on the printers.”

However, duty-free privileges had been abused and that was why it was discontinued, Nbiyou Samuel, deputy director of the ERCA, told the audience.

“As much as 75pc of the cars that were imported were used for purposes other than what the privileges were intended for,” he told the meeting.

Authorities at the ERCA had started cracking down three years ago on the owners of imported cars that had been transferred to third parties. They had introduced the payment of a percentage of the money that was recouped to informants who gave them information about such vehicle.

The money collected in the form of tax is eventually spent on the development of the country and is beneficial, according to Mebrat Beyene, director deneral of Diaspora Affairs at the MoFA. She reminded the Diaspora who have businesses in the country to have their fingerprints taken for tax purposes before they returned to their homes abroad.

The other issue raised during the question and answer session was the issuance of land in the capital. A participant from Asia claimed that he was fed up with the bureaucracy he faced when he tried to acquire land from the city administration.

“Those officials who sent me back and forth to the city administration are in this meeting and I would like an explanation,” he said. “The city has stopped giving land to developers.”

Haile Assefa, manager of the city administration, was stern in his response.

“The city has not stopped giving out land,” he told the audience. “The system has changed. The city floats tenders for the lease each month, allowing the land to be sold at market prices.”

The corruption related to the issuance of land was included in the questions raised. Some mentioned that they have been asked for bribes in their dealings with land, to the delight of the room which showed its appreciation of the question with loud applause.

Land is very open for corruption, the city manager admitted.

“We have decentralised the system down to the kebele level to discourage such corruption,” he said.

Participants were unhappy about some questions that were raised. Some spoke out loud that questions should be strictly related with the GTP. However, hardly any of the questions delved into the plan’s details.

At one point during the afternoon session, questions on the government’s policies on financial institutions, on which it has a steadfast closed-door policy, made the room come alive as much as the questions about corruption and good governance.

They asked why the Diaspora was not allowed to participate in the ownership of financial institutions. They also queried the limit on the current dollar accounts they opened in local banks to be increased.

The central bank limits the deposit of foreign currency in current accounts to 50,000 dollars.

The nature of the account where customers can withdraw the money anytime they wish is a danger to a country like Ethiopia with limited foreign exchange reserves, said Teklewold Atnafu, governor of the central bank.

“Had they wished to deposit this money into a savings account, the bank would gladly allow them to deposit as much as they wanted,” he told the audience.

He also announced that the central bank will soon make the deposit interest rate for the Ethiopian Diaspora who deposited their money in local banks 10pc, which was welcomed with a round of applause. However, opening up the ownership of local banks would make it difficult to differentiate between the Diaspora and other foreigners, Teklewold said.

The governor pointed out that there were other saving mechanisms, such as investment and lease financing as well as the purchasing of government bonds, that the Diaspora could take advantage of with ease.

In a bid to curb inflation and obtain a source of financing for its development plan by encouraging savings, the government had introduced these saving instruments a couple of months ago.

Hailemariam, who spoke after the question and answer session, admitted that he was shocked by the problems some of the Diaspora had claimed they had faced, especially in the bureaucracy of government institutions.

“We are already on track and we know these problems have solutions,” he said.

Sitting on the podium next to Hailemariam was Brehane Gebrekirstos, the state minister for MoFA.

“A new Diaspora policy will be drafted soon,” Brehane promised the audience. “There will be meetings held with Ethiopians living abroad in April, starting with those in the US.”

The Ethiopian Embassy’s relations with those living in the US has been almost nonexistent since the departure of Brehane, who had served as an ambassador there, Agazit Girma, a participant, told Fortune after the meeting.

The meeting wound up at around 6:30pm without much discussion on the GTP that had taken almost the whole morning to present.