Water bottlers have put forth a recommendation of coming up with a proposal to the Ministry of Finance (MoF) in order to protect the industry from the recently implemented African Continental Free Trade Area (AfCFTA).
On the discussion organized by Addis Ababa Chamber of Commerce and Sectoral Association on the bottled water industry under the motto of ‘sub sector platform on opportunities and challenges of bottled water manufacturing industry in Ethiopia’ Maleri Wedajehun, presented a paper on challenges and opportunities on the sector and the present participants expressed their concerns over the opening up of the market under the AfCFTA citing that it will damage their business and jobs that they created.
Participants said that there are 85 bottlers existing in the country besides 10 new entrants but they argued that a single company from another African country might present a capacity that can cover or overshadow their capacity.
Getnet Belay, President of Ethiopian Bottled Water, Soft drink, Fruits and Vegetable Processing /Manufacturing Industries Association (EBSFMIA), expressed his concern that the opening up of the market may damage the sector because bottlers in other neighboring countries have huge capacity that will dominate the market.
Maleri explained that market saturation, tax, bargaining power of buyers, substitute products, environmental issues, and other issues are the challenge for the sector. He added that the opening up of Ethiopian trade for other actors like CFTA and World Trade Organization may be an additional challenge for Ethiopian bottlers.
Representative who comes from MoF said that the market liberalization is implemented on 90 percent of goods and services under CFTA. The balance percentage will be opened in 13 years period in different rates except the 3 percent that any country preferred to close fully from other actors.
“Currently, we are listing excluded lists of products and services under the 10 percent scheme. So far we don’t know whether the water sector is excluded or not, but the tariff imposed on any given product would have similar response from other countries. Due to that the CFTA would give an additional market opportunity for the country that has ample capacity to ready on the incoming competition,” he said.
He reminded that except few countries, the African economy is similar with Ethiopia and that the country’s industries are supposed to compete, “But you know in this sector you can come up with a proposal to consider the bottling water sector on sensitive lists in order to protect it,” he expounded.
The presenter and participants have also claimed that the excise tax should be nil since the sector is not part of the motive of the indirect levy.
The excise tax that was revised last year has imposed a 10 percent levy on water sales that was 15 percent on the draft. However, since then the bottlers have frequently argued that the water industry is supposed to be considered as one of the development goal and food items and should therefore be encouraged rather than the imposition of the stated tax.
While MoF rejects the claim and holds that the tax is imposed on users and not bottlers citing that it is one of the income instruments that help to support the development projects carried out by the government.
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