Ethiopia’s narration as an international investment hub is fast diminishing. Starting business is becoming like pulling blood from a stone. Meanwhile, the nation glows and self-congratulates itself with biased reports, endorsing a lofty dream, far from its reality on the ground. From everyday entrepreneurs to startups and big foreign investors, the reality on the ground is fast becoming their reality, which is impacting an image of a nation wanting to move from its past reputation.
The challenge starts with getting a business license. Often underpaid, less engaged government bureaucrats with mechanisms to account for their actions or performance are now the first contacts of business between the government and the entrepreneurs. That should not be. Bureaucratic hurdles are still a challenge in the midst of an overregulated private sector. These are unfortunate happenings that should come to an end.
Ethiopia is a country where it takes over four months to get a business license, whereas it takes just one day in Rwanda.
Despite the need for the creation of job opportunities, where over a quarter of the Ethiopian youth remains unemployed population, Ethiopia still requires over three months to get a tax identification number (TIN) from tax authorities, a prerequisite needed to be met to get a business license in Ethiopia.
From Woredas to Tax Authorities, with the “there is no system, come back tomorrow” approach, the nation must stop the rhetoric and should walk the talk now to genuinely reform the doing business climate. Ethiopia cannot afford to lose a single entrepreneur because of tedious bureaucratic hurdles.
Of course, the last two and half years saw a huge departure from the past in reforming the business climate in Ethiopia. For instance, the government has removed the company name publication requirement, which has been in place for decades.
The attempt to digitize the tax system is also commendable, adding to the promised discontinuation of the requirement of business license renewal or reduce its frequency from every year to every 3-5 years. However, a deep look into the doing business climate reveals the much-anticipated reforms propagated by the government are far from being a reality.
Despite the promise of the government to eliminate the requirement of presenting a lease agreement or physical address, businesses are still being asked to do so. The law requiring businesses to renew their business license every year is still being enforced. The much-hoped tax exemption (for over a year) to new entrants is yet to be implemented.
Overall, Ethiopia continues to take some positive steps forward, and some backward. It is a gesture, a status quo it can no longer keep safe, but change, in an African society that is endorsing and embracing an era of free trade, learning from the virtue of European and North American nations.
Despite facing challenges that startup companies face, Financial Perspective (FP), a new digital magazine intends to be the voice of entrepreneurship, free enterprise, and give the private sector that is ever neglected a recognition beyond rhetoric and slogans.
Aiming to address the information gap in the business sector, FP envisions to be a credible source of information for entrepreneurs and companies, be it small or large, whose contribution to the economy undeniably is large with a potential to transform the nation.
With articles written by experienced journalists having authority over business matters, FP targets to impact policymakers by objectively reporting the reality on the ground, identify problems faced by businesses, and suggesting practical solutions.
Welcome to the first edition of FP and enjoy reading.