ADDIS ABABA – Ethiopia will finalize reforms for its underdeveloped mining and oil sectors within the next two months as it seeks to encourage more foreign investors, Samuel Urkato, Minister of Mines and petroleum said on Tuesday.
On the sidelines of the African Mining Indaba in Cape Town, South Africa, the Minister told Reuters that promoting the mining sector had become a priority and that further tax incentives were on the cards. “We are reforming all the laws, the national mining policy and the strategy that goes with that policy.
These reforms include all fiscal regimes too in order to compete for global mining investments,” Samuel said. Since coming to office nearly a year ago, Prime Minister Abiy Ahmed has announced shake-ups across industries, including plans to open up the once closely guarded telecommunications, logistics and power monopolies.
Massive government investment in infrastructure has helped make Ethiopia one of Africa’s fastestgrowing economies, but exports of garments and other products have struggled to take off, meaning the economy is not generating enough dollars to pay for imports. Encouraging the mining sector could help.
Though still small, it brought in $3.5 billion in foreign direct investment in the past five years, helped by new incentives that included updating the country’s geological data, extending dutyfree access to companies engaged in exploration and offering to build infrastructure to accommodate mining sites. “Take a company working at a remote site. They shouldn’t construct roads. The government should do that.
They shouldn’t work on railways. The government will provide that,” Samuel said. 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.
The current law guarantees the government a 5 percent minimum equity stake in projects a lower share than many other African countries. While the government is keen to reap its share of mining revenues, Samuel said it planned more incentives to jump-start the industry. “We will see later how to improve these royalty and fiscal regimes. We will gradually improve the size of royalties,” he said.
The Ethiopian Herald, February 7/2019
BY TSEGAY TILAHUNE
