ADDIS ABEBA- Ministry of Trade and Industry announced that it has formulated a new contract administration directive that would regulate Ethiopia’s export trade.
The ministry called the current export trade procedure as traditional and fails to regulate exporters and buyers through a legally binding pact.
The newly formulated regulation will force exporters to declare to whom they are going to sell and at what price.
The directive has been a subject of several discussions among the National Bank, commodity exchange authority and ministry of revenue as well as exporters and their associations.
It will become effective as of October 29, said Mesganu Arga, state minister of trade and industry, on Monday.
Due to the absence of a legally binding agreement, commodity, Ethiopian exporters have been consistently accused of infidelity in their transactions with their customers globally.
The ministry said foreign businesses have been appealing to the government to interfere over trade agreements which are not legally binding.
Authorities believe that the new regulation has devised a procedure that will create mutual trust between exporters and buyers of their products.
It will also help Ethiopia build its brand by providing quality products based on the international market price, unlike the previous export trends, the state minister added.
“The new contract administration will help to create a very predictable export regime,” said Mesganu.
The state minister also said it will help deter challenges that the sector has recently which includes sudden price hikes and the increasing tendency of under-invoicing.
This has been created after a huge number of exporters joined the export sector temporarily intending to get foreign currency for their import businesses.
They have been creating huge market distortion and need regulating, said Misganu. The ministry has suspended, in some cases blacklisted, exporters due to their inappropriate engagement in the system.
Exporters of coffee, green Mung, white and red Kidney beans and soya beans export trade will get into the new system in the first phase of the export contract administration.
Exporters of the remaining commodities will also join the regime after that, said the state minister.
Ethiopia has garnered close to 797 million USD from the exporting revenue in the first quarter of the 2019/20 fiscal year.
The amount has shown a 95 million US dollar when compared to the same period of the previous fiscal year.