Why are cars so expensive in Ethiopia?

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Owning a car for many Ethiopians - even those with ready cash to spend in one of the world's fastest-growing economies - remains a pipe dream.

"I have been saving for nearly four years now, and I still can't afford to buy even the cheapest vehicle here," a frustrated Girma Desalegn tells me.
He has been shopping around for a whole week in capital, Addis Ababa, and has still not found an affordable car.
He is looking to buy a second-hand car imported from the Gulf states or Europe - but even they are prohibitively expensive because the government classifies cars as luxury goods.
This means even if a vehicle is second hand, it will be hit with import taxes of up to 200%.
"I have a budget of $15,000 (£12,300) and had expected that with that I could buy a decent family car.
"I don't want to buy the Toyota Vitz," he says pointing to a row of small hatchbacks that have now become popular on Ethiopian roads.
These cost about $16,000 in Ethiopia; in neighbouring Kenya the same car costs not more than $8,000.
It seems little wonder that Ethiopia has the world's lowest rate of car ownership, with only two cars per 1,000 inhabitants, according to a 2014 Deloitte report.

 

 Henok Demessew, who has been running a car import and sales business in the capital, blames taxation.
"If it was not for that, we would have been able to import better cars either from Europe or America. But in order to make any profits we have to sell cars at such high prices.
"On top of the cost of shipping the cars from say from Dubai via Djibouti, we have to deal with multiple taxes to the government, making this one of the toughest businesses to be in, even though it's seen as lucrative."

Tax breaks for local plants

The Ethiopian Revenues and Customs Authority says both commercial and private vehicles imported into the country can be subjected to five different types of taxes.
However, despite the heavy tax burden there is a rise in the numbers of car imports.
In 2016, government records show that 110,000 cars were imported to Ethiopia, an increase of more than 50% on the previous two years.

Addis Ababa Public Transport

Kasaye Ayele, a tariff officer at the customs authority, says there is some discretion.
"Vehicles that are imported to be used for public transport - we collect a much lower tax of 10% and not all five taxes are applied," he explains.
"But for private cars we check the engine capacity and if the capacity is big, we collect anything between 60% and 100% [of taxes due]."
Once all taxes are added to an imported car's price tag, it could cost nearly three times more than the retail price in its country of origin.
But Mr Kasaye defends the taxation policy, saying it was fair and staggered. He cites examples of discounts given for buying second-hand cars.
In a bid to encourage people to buy cheaper, locally made cars, the Ethiopian government has given incentives such as tax breaks to foreign car manufacturers to set up and assemble new vehicles in the country.
Currently Ethiopia produces 8,000 commercial and private vehicles for the local market a year - something the government admits is way below the country's potential.
Prime Minister Hailemariam Desalegn has often pointed out plans for Ethiopia to become a leading manufacturer and exporter of locally made cars.
At least half a dozen car assembly plants, mostly Chinese, have been set up in Ethiopia.
One of them is Lifan Motors, which was set up nearly seven years ago. One of its cheapest saloon models costs about $20,000 new.
It has a plant on the outskirts of the Addis Ababa which assembles about 1,000 cars a year - way below its capacity.

An issue of trust

For the company's deputy manager, Ma Qun, this is down to a lack of confidence in the local market from consumers.
Those who can afford imported brands, will choose them over local cars - despite the high taxes charged on used cars, he says.
"We are not satisfied. Our factory's capacity is about 5,000 a year but we sell just 1,000 units.
"It's because the policy doesn't restrict second-hand cars. So there aren't really many incentives for us to compete.
"We are waiting to see if there will be a change in the policy."
For many Ethiopian car buyers it comes down to value for money.
"We often prefer imported cars because we believe they are much better than the Chinese assembled here," one prospective buyer said.
"On top of that, people don't trust cars assembled locally because what we import from China are not up to a standard quality."
Another pointed out concerns about spare parts for locally assembled cars.
"Those you usually find around here are not genuine. That is the major reason people prefer Japanese cars."
But the government is highly unlikely to change its luxury tax on foreign cars.
So for people like Mr Girma, who wants a big, reliable car for his family, it remains a Catch-22 situation and his search will continue.

Somalia’s MPs elected a Somali-US national as president

Abdullahi “Farmajo” Mohamed

Somalia’s MPs have elected a Somali-US national as the country’s new president in a vote held in an aircraft hangar, the BBC reported on Wednesday.
Ex-Prime Minister Mohamed Abdullahi “Farmajo” Mohamed beat President Hassan Sheikh Mohamud in a surprise result.
The vote was held at the heavily guarded airport complex in the capital, Mogadishu, as the rest of the country is too dangerous, the report said.
Traffic was banned and a no-fly zone imposed over the city to prevent attacks by militant Islamists.
Despite this, suspected militants fired mortar rounds close to the venue on Tuesday night, according to the BBC.

Ethiopia: Residents of Ambo, Sebata say tensions remain high after declaration of martial law

Tensions remain high as security forces continue with their intimidation following the state of emergency declared last october, according to residents of Ambo and Sebeta who spoke to Deutsche Welle (DW).
“Four months after declaring a state of emergency in a crackdown on protests, Ethiopia’s government claims the country has returned to normal. Critics says the emergency decree remains an instrument of repression,” the report by DW said.
One Ambo resident, who asked to remain anonymous as he took part in the protests, said that the state of emergency had “unsettled the public’s inner repose,” the report said.
“Repression was still in place despite the government “falsely” claiming that life was returning to normal,” the resident told DW.
“You cannot go out after curfew. You cannot stand anywhere with a few people. People are filled with fear. They fear the Command Post,” he said referring to   the government body charged with implementing the state of emergency.
A resident of the town of Sabata said arrests and repression under the state of emergency continue. “For example, there are youths who got arrested without a warrant and have been in prison for over three months on the charge that they have listened to music,” he told Deutsche Welle. “The state of emergency is being used by the state to take revenge against youth,” he said.
DW quoted Mulatu Gemechu, deputy chairperson of the opposition Oromo Federalist Congress (OFC), as saying “a de facto state of emergency had been in force in Oromia for some time, but by making it public the government had acquired a legal shield for further acts of repression.”
Gemechu said the number of arrests in the Oromo region is close to 70,000.
This coming April marks three years since protests broke out in Ethiopia. They were sparked by protests by students in Ambo town, some 120 kilometers (74 miles) west of the capital Addis Ababa.

Ethiopia: Private banks face crisis as non-citizens are forced to withdraw shares

Private banks in Ethiopia are in deep capital crises as Ethiopian born citizens of other countries withdraw their shares as per the directive by the National Bank of Ethiopia (NBE) that prohibits non-citizens from holding shares in the banking industry.
The new directive instructs non-citizens, who hold shares in banks, to withdraw their money till the end of June forcing banks to scramble to find buyers of the abandoned shares.
Experts say the majority of shareholders of some of the banks are non-citizens of Ethiopian origin and the decision by NBE will empty their coffers.
Ethiopia’s law does not allow foreigners to invest in the banking sector but a directive in 2010 permitted non-citizens of Ethiopian origin to invest in the sector, contradicting the original law.
NBE requires banks to have a minimum capital of 91 million dollars while at the same time forcing the banks to return shares of non-citizens, sending them to disarray, according to experts who spoke to ESAT.
Sixteen of the eighteen banks in Ethiopia are private, with the government banks scoring a profit of over 90 million dollars while the private banks earned 287,000 dollars last year.

Mattis warns North Korea of 'overwhelming' response to nuclear use

Mr Mattis has been holding talks with his South Korean counterpart, Han Min-koo

The US Defence Secretary James Mattis has said any use of nuclear weapons by North Korea would be met with an "effective and overwhelming" response.

Mr Mattis spoke in South Korea, where he had been reaffirming US support, before flying to Tokyo.
He also reconfirmed plans to deploy a US missile defence system in South Korea later this year.
North Korea's repeated missile and nuclear tests and aggressive statements continue to alarm and anger the region.
The US has a considerable military presence in South Korea and Japan, as part of a post-war defence deal. There are just under 28,500 US troops in the country, for which Seoul pays about $900m (£710m) annually.
President Donald Trump has previously said he wants both South Korea and Japan to pay more towards maintaining that presence. 

South Korean and US forces regularly train together in the country

Mr Mattis used his visit to reassure South Korea that the Trump administration "remains steadfast" in its "iron-clad" defence commitments to the region, said the Pentagon.
Speaking after talks at the defence ministry with his South Korean counterpart Han Min-koo, Mr Mattis told reporters that "any attack on the United States, or our allies, will be defeated, and any use of nuclear weapons would be met with a response that would be effective and overwhelming".
North Korea conducted its fifth test of a nuclear device last year, and claims it is capable of carrying out a nuclear attack on the US, though experts are still unconvinced its technology has progressed that far.
It has also said in recent weeks that it has a new intercontinental ballistic missile, capable of reaching the US mainland, which it is prepared to test launch at any time. 

Mr Mattis's assertion that an attack by North Korea would get massive retaliation will hardly be a revelation to Kim Jong-un, says the BBC's Stephen Evans in Seoul.
The bigger question is whether to talk to the North Korean leader to try to persuade him to abandon or limit the size of his nuclear arsenal, our correspondent adds. On that, the Trump administration has so far been silent.

Chinese fears

Under the Obama administration, the US and South Korea agreed to deploy a US-made Terminal High Altitude Area Defense (THAAD) missile defence system in South Korea.
Its supporters say it is aimed solely at defending from North Korean threats. But China and Russia have complained it is provocative.
Beijing says it goes "far beyond the defence needs of the Korean peninsula". It believes the system's radar would allow the US to spy on its military. 

It is also unpopular with some South Koreans, who fear missile bases could become targets and endanger people who live nearby.
Speaking on Thursday, Mr Mattis sought to reassure China, saying there was "no other nation that needs to be concerned about THAAD other than North Korea".
A Chinese foreign ministry spokesman said on Friday that Beijing remained firmly opposed to the deployment of the missile system.
After his meetings in Seoul Mr Mattis flew to Japan, where there are a further 50,000 US soldiers plus their dependents and support staff in Japan. The US paid about $5.5bn for its Japanese bases in 2016, with Japan paying a further $4bn.

A U.S. Court of Appeals hears arguments in a case against wiretapping of an American by the Ethiopian regime

A DC Circuit Court for the U.S. Court of Appeals today heard arguments on a wiretapping case brought against the Ethiopian regime by an Ethiopian American in Maryland.
Few years ago, the Ethiopian regime had infected the computer of Mr. Kidane with secret spyware, wiretapping his private Skype calls, and monitoring his entire family’s every use of the computer for a period of months.
With the help of the Electronic Frontier Foundation (EFF) and Citizen Lab, Mr. Kidane found that the Ethiopian regime used a notorious surveillance malware known as FinSpy, illegally wiretapped and invaded the privacy of Mr. Kidane, a U.S. citizen on U.S. soil, according to a statement by EFF.
The malware took over Mr. Kidane’s computer and secretly sent copies of his activities, including Skype calls, web searches and indications of websites visited and other activity, to the Ethiopian spy agency.
Mr. Kidane, is a pseudonym that he preferred to use for his privacy and that of his family. Mr. Kidane, a critic of a tyrannical regime back in his home country, brought suit against the regime in 2014, but the federal court held that no foreign government could be held accountable for wiretapping an American citizen in his own home, so Kidane appealed to the U.S Court of Appeals for the District of Columbia Circuit.
According to Nate Cardozo, Staff Attorney for the EFF, who followed the court hearing, the lawyer representing the Ethiopian government argued that foreign governments are “free to commit illegal acts in the U.S. so long as they do them by remote control.”
“The Ethiopian government argued today that if they had sent a mail bomb to Mr. Kidane from Ethiopia, that would have been perfectly legal. They argued that if Mr. Kidane had a self driving car and they hacked into it and made it drive off the bridge, that would have been perfectly legal,” Cardozo said.
Cardozo thinks the argument by the lawyer representing the Ethiopian regime is “absurd.”
Richard Martinez, representing Mr. Kidane argued on the other hand that “remote control doesn’t matter.” According to Cardozo, Martinez argued today at the Court of Appeals that “the Ethiopian government acted in the U.S. using software instead of using a human being and that distinction has no relevance in the law.”
Lawyers representing Mr. Kidane also invoke the Foreign Sovereign Immunities Act, signed into law by President Gerald Ford on October 21, 1976, that provides the exclusive basis and means to bring a lawsuit against a foreign sovereign in the United States.
The United States Department of State and rights groups have been documenting mounting evidences that the Ethiopian regime use electronic surveillance against opponents and critical media both at home and abroad. The Ethiopian Satellite Radio and Television has been one of its targets.
The decision from the U.S. Court of Appeals could take anywhere from one month to six months, it was learnt.

Ethiopian military officer in Somalia accused of selling arms, massive corruption

Haile Gebru

An investigative report by a Somali website accused a high ranking  Ethiopian officer in Somalia of arm sales to rival factions and collecting bribes from Somali politicians who want come to power.
Waagacusub media described Haile Gebre as “the most corrupt military officer” who became extremely wealthy from huge sums of money that he is getting from opportunistic Somali politicians who want to buy the sympathy of Addis Ababa.

Waagacusub media quote one of officer Gabre’s juniors, who remained anonymous for fear of reprisal as saying that “Gebre was corrupted by Somali politicians and he in turn corrupted Ethiopian senior officials so they would condone his wrongdoing.”
“There was several vehicles that were taken from Somali individuals by intimidation or corruption which were later donated by Gebre to most senior military officials and their family members,” the report alleges.
The report further said Gebre had a business interest in the United Arab Emirates in which he is represented by one of his cousins. It said Gebre’s business would give a better exchange rate of foreign currency to Ethiopians who want to import goods to landlocked Ethiopia.
“Recently large construction equipment owned by Gabre were sent to Ethiopia on duty free from Dubai through port of Djibouti,” the report quoted an Ethiopian businessman based in Djibouti as saying.
“All the materials belonged to Gebre but his name can’t be seen on the manifest,” the source told  Waagacusub.
The report further alleges Gebre, also called General Gebre by the Somalis, gets most of the corruption money from Somali politicians who want to use his country’s support in order to come to power. He also gets money from the funds donated by the West to the regional East African body known as the Intergovernmental Authority on Development, IGAD.
The investigative report quoted a famous Mogadishu saying “if you want the power in Somalia first corrupt Gebre and enjoy military and political backing of Ethiopia.”
Ethiopian regime troops in Somalia and their commanders have been accused of corruption and loss of civilian lives since they set their boots on Somali soil in 2006.
The Ethiopian government announced the withdrawal of its troops from several key posts in Somalia due to what it said was lack of financial support from the West, but a considerable number troops are still present operating within and outside the African Union Mission in Somalia, AMISOM.