Prof. Fissehatsion Mengistu served as Public Policy, Legal and Tax Advisor to the Ministry of Finance during the last years of the reign of Emperor Haileselassie I.
His professional life also included Vice Presidency for Planning, Development & External Relations with the Ethiopian Civil Service University. He was also International Business, Global Enterprises and Global Marketing professor at the International Leadership Institute (ILI) of the University. He as well worked at the same university’s Institute of Tax and Customs Administration as professor of National and International Investment, Taxation, Procurement & Finance. He is currently President and CEO of a newly formed Afro-Global Consultancy Services (AGS). (AGCS)
The Ethiopian Herald: Thank you very much for dedicating your time.
Prof. Fissehatsion: It’s my pleasure.
Q: How do you see the tax revenue collection in Ethiopia?
Prof. Fissehatsion: There has been important progress in this regard. The new Ministry of Revenue (MoR) have started to mobilize the public towards this end. The public mobilization campaign was launched by Prime Minister Dr. Abiy Ahmed himself.
These are important initiatives. But it is very important to understand that the campaign cannot be a silver bullet to tackle the challenges in tax revenue collection. We have to first ask why the tax to GDP ratio is lower than many countries of south of the Sahara? What factors have contributed to this?
One has to understand whether Ethiopian business community is paying taxes to the desired level. I say this because there exist traders that opts for concealing their transaction. Government usually indicates that most businessmen are unwilling to pay taxes. This should be corroborated with facts through rigorous researches.
This fiscal year’s budget for instance has marked a 70-billion Birr deficit. Overall, there have been declines in the collection of tax revenue over the last years. We should undertake a series of research/multi-disciplinary research to come up with the right cure.
Q: In addition to the research, what practical steps ought to be taken?
Prof. Fissehatsion: Let me answer this question in a simple term. Modernization and automation of work process go without saying. But what matters most is the formation of patriotic work force, tax collectors and administrators, who abhor corruption. This is a task that should be put top on the agenda.
Particularly, the leadership’s hands ought to be clean. If the people understand that the leadership is corrupt, it is likely for them to develop unfavorable mentality to tax compliance.
Q: Do you think that we can take lesson from other African countries?
Prof. Fissehatsion: Ethiopia has quite a different history. We have never been colonized. And for me what I always say at various events is that business experiences of, Kenya, Nigeria or South Africa, is not necessarily good for us.
I’m saying that we should customize their experiences if need arises in this respect. In so doing, we need to appraise the socio-economic benefits of the experiences.
Q: Let’s resort to aspirations of economic integration in the Horn region. Do you think Ethiopia can benefit out of it?
Prof. Fissehatsion: Let me speak with examples. If we allow the free flow of goods and services to Ethiopia, with our current manufacturing potentials, I don’t think we can benefit much out of it. We will be flooded with foreign products. It will usher us in a permanent state of dependency. So, I am for regional economic integration in the debate in this regard but series of researches has to be made as to its impacts.
Q: So, what is it needed to attain this?
Prof. Fissehatsion: Regional economic integration is possible but we have a lot of works ahead as I rightly mentioned it above. It needs committed and selfless leaders with a vision. As far as I concern the trust and confidence between the government and the people is crucial. After all we need leaders who want to lead a legacy of their own people. We want leaders that are accountable and responsible to their own people. And we want leaders absolutely loyal to their people and to the next generation. This is absolutely crucial.
There are a number of preconditions that would make us to be a great country. We have a lot of potential. If we don’t use it, we will become poor. Look the rest of Africa, there is tremendous minerals, oils and resources. There are lots of rivers, land and very good climate but very poor society.
So, what I want to say is promoting our national interest while not living in isolation. We cannot live in isolation but integration has to go in a step by step fashion. It should be research based. We have to be very careful in the actions that we take.
Q: What kind of investment usher us in the trajectory of success?
Prof. Fissehatsion: Kenya produces similar type of agricultural products as we do. Sudan has mineral oils and resources. In my view people have comparative advantages. If you look, Kenya is much more industrialized than us. If you go to supermarkets in Addis, for example, over eighty to eighty five percent of products are imported goods. We are not manufacturing at all. We are not producing at all. So, we need to expand our manufacturing base first.
We have built industrial parks in many areas for instance. And the parks are attracting investors from across the world like China, India or Turkey targeting export trade. But this doesn’t mean that it is in the last interest of our country. So, we need to use local knowledge as well to build our industrial infrastructure. The knowledge that we get from Merkato is very huge. The knowledge of Ethiopians is high. In my opinion sustainable industrialization is ensured by using the indigenous knowledge.
Foreign investment only trickles technology down. With foreign technology, it is tough to champion an inbuilt knowledge. For instance, if a person has car assembly plant, then after five years, he/she fix cars. Not more than that. This person is less likely to produce engine. We are not producing the core aspects of technology. If we don’t produce these, we are in the permanent state of dependence.
So, we need to have heavy industries which are extremely important to the region. Another one, we need to give attention to our agriculture. It is very crucial. First, we need to feed our people. If we cannot feed
our people, there is not dignity at all.
Also, good governance is important. Good governance does mean speaking on TV for hours. It is practically living up to public expectations.
Q: There is increasing militarization in Horn region, what do you think is its impact in the region?
Prof. Fissehatsion: This is politically sensitive matter. But the thing is to strike a balance between promoting our own national interest and that of others. What is their interest in the Horn? Have there been a lot of studies on this matter?… So, we need to be very series. I mean the Red Sea is strategic position for many things. The Ethiopian history must be taken to account and its relationship with Arab world and Israel, America, Russia and China and others.
Q: The region where Ethiopia belongs to is poor, what are alternative sources to finance infrastructural facilities?
Prof. Fissehatsion: The most important thing is to build economy first, generate revenue and use it properly and wisely for building infrastructure. If you look at the government’s policy, it is to mobilize resources domestically”. It is good idea. The other thing is we should prioritize investment. We have to make an intelligent decision. Why our leaders buy expensive vehicles when a lot of our peoples are begging? The leaders should be role model to the society.
We have a good climate. Still, we are importing agricultural products like juice and others. We have ample forest resources. Still, we import furniture from different countries suffering outflow of hard-won currency. Our agricultural policy must be reshaped. There are many policy issues that we need to revise in order to promote our national interest.
The Ethiopian herald February 15/2019
BY ABDUREZAK MOHAMMED
