Thursday, July 25, 2024
BusinessEthiopia’s over-reported flower export data raises confusion

Ethiopia’s over-reported flower export data raises confusion

Reports indicate 2022/23 exports could be USD 200mln lower

A misalignment between fresh flower export revenue data has created confusion between regulators at the central bank, the Customs Commission, and the Ministry of Agriculture.

A new reconfiguration of last year’s export reports finds that flower export revenues are only two-thirds of the officially disclosed figures.

The National Bank of Ethiopia (NBE) registered cut-flower export revenues nearly at USD 600 million for the 2022/23 fiscal year, making flowers the second-most valuable export commodity, after coffee.

Sofia Kassa (PhD), a state minister of Agriculture, reiterated this figure during discussions on the horticulture industry with stakeholders in Holeta town, on January 4, 2024.

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“The horticulture sector generated 660 million dollars in 2022/23, of which 95 percent was generated from flower exports,” said Sofia.

This figure has also been reported to and accepted by the Ministry of Trade and the national export council.

Nonetheless, a different set of verified data from the Horticulture Export Coordinator team at the Agriculture Ministry’s investment and input department pegs revenues from flower exports last year at only two-thirds of the reported USD 620 million.

“A total of 1,600 hectares of land is [used to grow] flowers. How can 620 million dollars be generated from this tiny farm area? How could flower export revenue become second next to the coffee industry, which has 200 years of experience in Ethiopia and 871,000 hectares of farmland? We started investigating In order to clarify these discrepancies,” said a senior expert at the Agriculture Investment and Input department. “After the reconfiguration, we found out the actual export revenue from flower export in 2022/23, is only two-thirds of the 620 million dollar being reported.”

The discrepancy is attributed to the Customs Commission according to the experts.

“Flower exporters submit their monthly export plans to obtain permits from the Customs Commission,” explained the expert from the Agriculture Ministry. “But the export volumes are unusually lower than the plans they submit. However, the Commission, which should have compiled the real export data at the end of every month, was not doing so. Instead, it has been reporting data using the plans.”

The central bank, the Ministry of Agriculture, and other government agencies have been utilizing the erroneous data from the Commission, according to the expert.

The Reporter has obtained actual monthly flower export data for 2022/23 that also appears to have some inconsistencies.

For instance, the data show Ethiopia exported 7.2 million kilograms of cut flowers in July 2023 (the first month of the fiscal year), generating USD 34.8 million. This comes to USD 4.8 per kilogram of flowers exported, in line with the USD 4.7 floor price set by the NBE.

However, data from the NBE for the same month of July 2023 shows exports of over 9.5 million kilograms of flowers, generating 44 million dollars.

This indicates a USD 10 million discrepancy between the data from the Horticulture Export Coordinator team and the central bank, equivalent to nearly a third of the actual export data figure.

The figures mentioned by State Minister Sofia are also subject to the discrepancies. The inconsistencies also stretch further back than last year.

For July 2021, the Customs Commission reported 33 million dollars in flower exports, while the NBE reported 16 million dollars – less than half, according to the documents seen by The Reporter.

“We have notified Customs officials. We have communicated our findings to senior officials at the Ministry of Revenues,” said the senior expert.

He warns the unverified data is misleading government policies and decision-making.

“It’s also creating the wrong impression that, ‘if flowers can generate this much foreign currency from such a small amount of farmland, why doesn’t Ethiopia capitalize on flowers alone?’,” said the expert. “Why would the country face such grave forex shortages? Especially following the failure to service external debts, we are seriously looking into the over-reporting of forex revenues. This is common in FDI and remittance as well.”

Officials at the Customs Commission and NBE declined to comment on the issue.

Notifying senior government offices about the discrepancies is not enough, according to the expert. The problem will persist until the Customs Commission rectifies its data reporting issues, he warns.

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