Ethiopia planning to create a conducive environment for businesses & fight unemployment
Moving forward, Ethiopia is working towards bringing more transparency and ease of doing business in the country as part of broader economic reforms under the leadership of the Prime Minister Abiy Ahmed. The holistic approach of the government is to revive the weak economy which is suffering from heavy external debt burden, low level of tax income, increasing unemployment and huge trade deficit resulting in chronic shortage of hard currency, to mention a few.
Since the new government has come in power last year, in the month of April, Ethiopia has been brought under reform’s regime which includes opening up the economy from government’s control. The government is planning to open up state monopoly companies to private investors and the Central Bank has also revised a few restrictive channels on loans and the general financial system.
The P.M met with the Ethiopia Investment Commission (EIC) recently, to review progress on performance of the ‘Doing Business Initiative’ which the government is presently undertaking.
The move to help the running businesses and start ups to have access to finance as presently they face problems. The lending practices which allow putting up movable assets as collateral are being revised.
Slashing down bureaucratic bottlenecks is also in process which will enable focus investment areas of electricity, mining, housing, manufacturing and Small and Medium Enterprises (SME’s), to run smoothly. The P.M feels that these economic reforms shall help to reduce the problem of unemployment.
Additional tax incentives to exporters
To reduce unemployment and improve its hard currency earnings, the Ethiopian government is set to provide an additional tax incentive to investors engaged in exporting products and services. Who so ever generates more foreign currency through exports and create more jobs shall be benefited from tax incentives.
While the import of the country has exceeded over USD 17 billion, the export earning of the country is on a decline, below USD 2.8 billion widening the trade deficit. The tax to GDP ratio, which is around 10% currently; this has led to huge budget deficit making the country dependent on external loan, which surpasses USD 26 billion.Ethiopia News Region