ADDIS ABEBA- The growing illicit and contraband trade have been blamed as Ethiopia’s revenue from the mining sector continues to drop.
Ethiopia earned close to 49 million US dollars from minerals export during the 2018/2019 fiscal year, which ended on July 7.
The amount shows a sharp decrease in earnings compared to the previous fiscal year, which was 130 million dollars. The earning was 541 million USD five years ago.
“The growing illegal and contraband trades of minerals have been affecting the sector,” said Betru Haile, market development linkage and forecast director.
The rampant security challenges that the country has gone through has its own impact on the sector’s performance, he added.
Apart from contraband, gaps in legal frameworks, lack of cooperation among actors in the sector are among the major challenges that are often said to have a negative impact on the mining performance.
Officials said a national committee has been formed in a bid to achieve the ambitious plan and help the ministry address the already identified problems, which include policy shortcomings and rising trend of contraband, in a coordinated manner.
The government reduced the corporate income tax rate for miners to 25 percent two years ago, from 35 percent, and more recently lowered the precious metals royalty rate to 7 percent, from 8 percent.
For the current year, the ministry plans to earn 265.8 million US dollars in the current 2019/2020 fiscal year, in a lower case scenario.
If the ongoing reforms and other related side works could be carried out effectively by the committee, the earning could reach as much as a billion US dollars.
Betru said environmental assessment on MIDROC Gold Mine Pvt. Ltd. Owned gold mine project has been concluded.
Once the company addresses the issues stated in the findings, the mining will resume producing gold. Mining interruption of MIDROC Gold because of the health hazards on the local community has contributed to the decline of the income.
In the fiscal year that ended on June 7- 2019, the Ministry issued 24 explorations and mining licenses in 4.95 billion US dollar total investment.
There are over 200 licensed mining companies operating in Ethiopia. Of these, the ministry issued exploring and mining licenses for 24 companies with a 4.95 billion US dollar total investment in 2018/19 FY.
By Sisay Sahlu