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The Ethiopian Minister for Industry Ahmed Abetew rang alarm bells when he spoke to the Ethiopian Federal Assembly on 27 January. Outlining disappointing results for the leather industry, he ordered the Ethiopian Revenues and Customs Authority (ERCA) to no longer issue export licences to foreign firms in the sector that sell their products below world market price. Moreover, twice a month starting in February his department will provide the RCA with the reference price to be applied to companies in the leather goods sector.
According to our sources, the minister singled out several foreign companies. They include the Chinese concerns Huajian International Shoe City Ethiopia Plc and China-Africa Overseas Leather Products S.C. He accuses them of under-invoicing their products sent to their respective parent company and at the same time paying over the odds for input from their head office. The minister went on to say that Ethiopian subsidiaries of foreign companies use this method to register an annual loss or only a symbolic profit. Abetew wants to put an end to such practice, which robs the country of foreign currency and company tax at a time when it has embarked on costly infrastructure projects
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