[{"bbox": [96, 152, 1134, 340], "category": "Text", "text": "Ethiopia has a vibrant and growing but increasingly challenged private economy. In the past decades, the economy of the country has seen a substantial increase in size, the GDP doubling every five-years on average since 2005/06 although the competitiveness of the economy has been lagging behind other comparators in the region. Various reports have highlighted Ethiopia's poor performance in trade logistics, tax administration, digital readiness, access to finance and foreign currency, access to electricity, labour turnover, and policy consistency and coordination. Business regulatory apparatus of the government is strongly characterised by a chronic lack of implementation capacity in a context of corruption unchecked and administrative red-tape"}, {"bbox": [96, 365, 1134, 499], "category": "Text", "text": "Customs compliance challenges present severe constraints to the operation and growth of the private sector in Ethiopia. Constraints remain unresolved in: frequent changes to customs directives and procedures with no prior consultation and/or dissimination of information to businesses affected by them, online and offline systems that are not reliable and not user-friendly, lack of a risk-based system for goods inspection and customs valuation procedures that are not systematic nor transparent."}, {"bbox": [96, 523, 1134, 736], "category": "Text", "text": "Domestic tax is considered by many businesses as the most problematic area of doing business in Ethiopia despite the fact that tax administration has recently experienced various modernization efforts including through EU-funded interventions. These mainly constitute the introduction of digital means for various tax administration services by the authorities which have significantly reduced transaction costs (pecuniary and time) of compliance. However, challenges remain in inconsistent and unclear tax laws, lack of modern procedures and tools and significant capacity gaps in conducting tax audits and burdensome and less-transparent handling of tax disputes. Unpredictable taxation rules and their implementation could be considered as one reason for the rise of informal sectors in an economy."}, {"bbox": [96, 762, 1134, 976], "category": "Text", "text": "BMOs in Ethiopia have a long history. However, they have not been able to live upto the expectations of private sector operators in bringing substantial changes to the business environment. Most of these BMOs lack a strong value-proposition that would be a precursor to becoming financially sustainable having a strong capacity in voicing the needs of the private sector. Nonetheless, they provide a crucial entry-point in supporting the sector as they are present in various forms including generic BMOs, sectoral associations and Foreign Direct Investment (FDI) communities. Eurocham, although being one of the youngest of these communities is playing a vital role in representing the interests of European investments in Ethiopia. It has managed to build formal and sustainable relationships with key government institutions which European investors deal with on a day-to-day basis."}, {"bbox": [96, 1000, 1134, 1294], "category": "Text", "text": "The absence of a developed capital market ecosystem including informed stakeholders and market participants is a near to medium challenge that is detrimental to the success of capital market development in Ethiopia. Market participation is essential for the existence and liquidity of the market. Since the concept of capital markets is new to the country, there are challenges stemming from lack of knowledge and experience as well as basic awareness of the industry. In this regard, it is imperative to identify actions needed to take to prepare the various stakeholders for the launch of the exchange and the introduction of capital markets in Ethiopia. Investors and the general public will play a vital role in the injection of capital into the market and the facilitation of liquidity. The market itself will benefit this group of stakeholders by introducing various vehicles of wealth creation and preservation. The capital market being new, it might not, by design, and readily support MSMEs and this would be where EU's support would make a difference. The proposed action will support the establishment of capital markets that work best for MSMEs in key value chains and those led by women and youth."}, {"bbox": [96, 1318, 1134, 1506], "category": "Text", "text": "The action will follow a transformative approach meaning it will promote deep, systemic, and sustainable changes with the potential for large-scale impact in the areas identified as challenges i.e cross-border trade facilitation and optimized customs processes, transparent, efficient and accountable domestic tax administration and realizing capital markets that are MSME-friendly. It will unlock the potential of domestic and European-based private sector in the country in key value chains that are sources of its major exports to the world, and to the EU- including coffee and Horticulture products. Moreover, through tackling the aforementioned challenges and relaisation of opportunitites the action could build enabling environment for formalisation of economic operators."}, {"bbox": [96, 1530, 1134, 1638], "category": "Text", "text": "It will provide support to relevant government authorities in designing and implementing critical regulatory reforms to solve specific bottlenecks, render capacity building and focuses on development of procedures and tools. It will also provide substantial support to private sector associations. Its service delivery as well as advocacy components will further be closely associated with private sector institutions."}, {"bbox": [1038, 1681, 1143, 1706], "category": "Page-footer", "text": "Page 6 of 27"}]