Thursday, March 30, 2023
BusinessKhat exporters in trouble, $ 21 million export earnings lost

Khat exporters in trouble, $ 21 million export earnings lost

32 exporters accused of mishandling $21 million

The licenses of 72 Khat exporters have been revoked owing to trading license breaches and dealers’ failure to bring foreign currency from exported commodities via the legal route, the Ministry of Trade and Regional Integration (MoTRI) says.

On Thursday, Ministry officials presented their mid-term report for the Ethiopian fiscal year 2022/23 to Parliament. State Minister Kashahun Gofe briefed Parliament that 42 trade license licenses had been revoked for allegedly renting and selling licenses for another third party who was not permitted to export Khat.

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The Ministry also cancelled 32 Khat trading licenses after discovering an abuse of the Cash Against Document (CAD) program, which the central bank authorized a year ago to permit exporters to sell Khat on credit. According to Kasahun, 32 merchants were meant to bring in more over USD 21 million after exporting Khat to neighboring markets, but they did not.

“Even though we terminated their licenses, we are still pursuing them to recuperate the money they sold via credit,” Kasahun said.

Following the presentation of the report by Ministry officials, numerous MPs inquired about the issue of Khat in the country’s east, including the government’s decision to suspend local traders, the government’s failure to help farmers grow Khat, and other related issues.

Owing to the suspension of local Khat trade in the previous two months, 447 Chat dealers in Eastern Harerige have gone out of business, and over 15,000 people have lost their jobs, according to Eskinder Aliye, a Member of Parliament (MP). The MP also questioned the Ministry’s decision to suspend and lower the quota without first consulting with farmers and merchants.

“What is the Ministry’s alternative strategy to compensate for this harm and joblessness?” and I’d like to know how you’ve changed as a result of this suspension,” the MP continued.  

He also remarked that the public is worried about the equity of Khat exporters to Somaliland and Puntland. This statement gives the impression that just a small number of individuals control the Khat export market.

Traders and exporters are compelled to pay double taxes, claiming that they must first pay tax to either the Somali region or the Oromia region and then another tax to the federal government, according to Eskinder. “I’d want to know how these people are paying a tax twice on an identical commodity and what kind of tax collection mechanism this is in a single federal country regulated by a single tax proclamation.”

Another MP, Angasa Ibrahim, expressed similar concerns. Angasa said that khat is more than just a trading commodity for farmers, particularly in Ethiopia’s east. The public’s life is entirely dependent on it.” He says that the situation will be bad until they have a decent market and make the requisite amount of money.

In response to questions from MPs, Kasahun said that the situation is difficult but that the end goal is not just to export and get foreign currency. Instead, he said, farmers are given a priority so that the country’s development can continue.

More than 92 percent of khat exports go to neighboring countries. The number of actors is considerable. There are over 4000 licenses, but there are only 500 existing exporters. The bulk of them is not functioning lawfully and have been detected engaging in unlawful trading activities.

While explaining how difficult it is to properly monitor the khat trade, Kasahun noted that sometimes the exporter from Ethiopia and the recipient in the other nation were the same person or that it circled around the same family network.

Kasahun says the goal is to reduce and restrict local market vendors since individuals who call themselves local traders do not sell in the local market.

“Concerning double taxation, we have taken the bold position that any exportable commodity is not taxable, as the policy clearly specifies, and we have submitted multiple letters to the regions and the Office of the Prime Minister, but we still really need Parliament to help us,” he said.

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