The trade mechanism has been designed to reduce costs, as well as improve risk management
Ten government agencies and a trade association have signed a Memorandum of Understanding (MoU) to execute a 7.3 million dollar project, dubbed One Window Technology for International Trade. It is thought that it will save 16 billion Br within two years of its implementation.
Eight companies have passed the first stage of a multi-staged bidding process for the procurement of a centralised online real-time electronic (CORE) system, which is the major input for the implementation of the project.
At the signing ceremony held yesterday - June 21, 2014 - at Elilly Hotel, government ministries, such as the Ministry of Trade (MoT), Ministry of Communication & Information Technology (MCIT), Ministry of Transport (MoTr), Ministry of Agriculture (MoA), Ministry of Industry (MoI), National Bank of Ethiopian (NBE), Ethiopian Investment Agency (EIA), Ethiopian Revenue & Customs Authority (ERCA), Ethiopian Shipping & Logistic Services Enterprise (ESLSE), Food, Medicine and Health Care Administration & Control Authority and the Ethiopian Chamber of Commerce & Sectoral Association (ECCSA) shared their desire and commitment to the implementation of the project.
The project, which will be executed at a cost of 7.3 million dollars, is aimed at facilitating Ethiopia's international trade by enhancing the sector's flexibility, enabling it to cope with the existing international trade standard.
The Investment Climate Facility for Africa financed 59pc of the project, while 33pc is a contribution from the Government of Ethiopia. The remaining eight percent comes from the World Bank (WB).
Ethiopia is currently suffering from extreme costs due to outdated trade mechanisms, said Nigsusie Sied, project manager, while presenting the outline of the project.
Ethiopia's current foreign trade is facing issues of rigidity, redundancy of data and the requirement for physical presence and high frequency of visits. This costs private investors in terms of management and administration, as well as larger law enforcement costs to the government.
This, in turn, has led to law competitiveness in the world market, too slow the movement of goods and expensive price of goods in the domestic market.
Importers pay 14,000 birr, while exporters pay 10,000 birr for a consignment on average. This has forced Ethiopia to pay close to 36 billion Br for goods and services that do not add any value from 2013-2017, according to Nigusie. On top of this, Ethiopia is forecast to incur a total of 25 million Br between 2013 and 2018 as a cost for papers used in relation to consignments - one of which takes more than 13 papers on average.
The implementation of the project will save 16 billion Br within two years, on top of improving risk management.
The ERCA is the leading agency in the implementation of the project, under the auspices of a steering committee composed of the heads of the signatory agencies
The eight companies that have passed to the next stage in the tender process for the purchase of CORE software are required to present their technical proposal on the customisation of the software. The software will be integrated with the database of the agencies.