Ethiopia aims to cut sugar tax ahead of privatization plan

ADDIS ABABA (Reuters) - Ethiopia plans to cut an excise tax on sugar to 20% from 33%, according to a draft law in parliament, proposing the move ahead of plans to privatize the sugar industry as part of a government drive to open up the economy.

A trader said the tax, presented to parliament on Monday, would help domestic sugar manufacturers and consumers who are feeling the pinch from inflation running at more than 20% a year.

Prime Minister Abiy Ahmed, who took office last year, has launched sweeping economic and political reforms, promising to open up state-controlled industries ranging from telecoms to logistics in a bid to draw in more foreign investment.

The Finance Ministry said in November it had commissioned a valuation of Ethiopia’s 13 sugar factories and that it expected it to be complete by the end of December.

The government said the first phase of privatization, involving the sale of six factories, would start in the first quarter of 2020.

Reporting by Dawit Endeshaw; Additional reporting by Ayenat Mersie; Writing by Maggie Fick; Editing by Edmund Blair