Since the early 2000s, the federal government has continuously aimed at implementing an economic reform programme designed to stabilise the financial position of the country, promote private sector participation in the economy and attract foreign direct investment (FDI). The Ethiopian economy has grown at rates around 9-10% in recent years, mainly due to strong growth in the agriculture and service sectors as well as sustained inflows of official development assistance and FDI. This rapid growth of the Ethiopian economy has increased the size and importance of the private sector, but Transparency International 2009 reports that it has also led to enhanced opportunities and incentives for corruption to occur. In addition, Ethiopia's Anti-Corruption Commission (FEAC) estimates in a 2007 report that corruption is worst in the interaction between the public and private sectors.

Corruption has traditionally been perceived by foreign companies to be a major impediment to their operations in Ethiopia. For example, according to the World Bank & IFC Enterprise Surveys 2006, there are indications that petty corruption is widespread in Ethiopia, given that approximately 13% of the companies surveyed expect to pay facilitation payments to 'get things done', while 23% identify corruption as a major constraint. This perceived challenge is supported by Global Integrity 2006, referring to earlier surveys in which 78.5% of responding companies believed that corruption in the public sector negatively influenced their operations, versus 40% that identified corruption in the private sector to negatively affect their operations. In addition, Global Integrity 2006 further reports that a businessman has described Ethiopia as 'the land of 10%', which implies that hardly anything can be accomplished without adding this amount to the costs as a kickback. Moreover, practices of corruption are increasingly taking the form of private-to-private corruption whereby private companies yield procurement contracts to other private companies in return for bribes or other undue favours.

On the positive side, the World Economic Forum Global Competitiveness Report 2011-2012 indicates that foreign companies' perception of the occurence of petty corruption in Ethiopia have changed slightly for the better. For example, whereas the surveyed companies in the 2008-2009 report ranked corruption as the single most problematic factor for conducting business in the country, corruption is now perceived by companies to be much less of a constraining factor compared to other factors, e.g. such as access to financing, inflation, tax regulations and inefficient government bureaucracy. The same report also reveals that foreign businesses perceive the demand for bribes and other irregular payments for routine government services to be less widespread that in other countries in the region. In addition to the overall level of corruption in Ethiopia, the World Bank & IFC Enterprise Surveys 2006 reports that the average number of companies expecting to pay facilitation payments and identifying corruption as a major constraint is much higher in other Sub-Saharan countries than in Ethiopia. Still, however, companies are generally advised to consult with experienced attorneys, to develop, implement and strengthen integrity systems, and to carry out extensive due diligence before committing funds or when already doing business in the country.

According to the US Department of State 2011, Ethiopia's regulatory system is generally considered to be non-discriminatory, although there have been instances in which burdensome regulatory requirements have acted as obstacles to doing business in the country. Similarly, in the World Economic Forum Global Competitiveness Report 2011-2012 foreign companies rank difficult access to financing among the top constraints for doing business in Ethiopia. Other major constraints include inflation, inefficient government bureaucracy, as well as tax rates and tax regulations. According to the US Department of State investment climate statement 2011, however, the government of Ethiopia has eliminated most of its discriminatory tax, credit and foreign trade treatment of the private sector as well as has simplified administrative procedures and has established guidelines regulating business activities. The report also states that foreign investors do not face unfavourable tax treatment, denial of licences, discriminatory import and export policies or inequitable tariff and non-tariff barriers. The persistence of corruption in Ethiopia can partly be explained in terms of a lack of coherent rules and regulations, extensive red tape and poorly trained public officials. According to the Bertelsmann Foundation 2010, high levels of corruption are present in the ruling party and its business affiliates who benefit from a lack of a regulatory framework to safeguard against the emergence of monopoly or oligopoly power. State ownership and bureaucratic management still govern many sectors of the economy and the financial, construction, beverage and transport sectors, in particular, are subject to strong political pressures.

Although official and unofficial barriers, such as corruption, still deter foreign investment and certain sectors remain off-limits to foreign participation (e.g. banking), the country has taken several steps to liberalise its foreign investment laws, such as those relating to agriculture, and to streamline the regulatory environment and registration process to obtain business licences. For instance, the government-established Ethiopian Investment Agency (EIA) provides investment information and a one-stop shop that, according to the US Department of State 2011, significantly cuts the cost of obtaining investment and business licences. Other investment and trade related information is provided by the Ethiopian Chamber of Commerce and Sectoral Association, which is an autonomous private sector organisation. According to the World Bank & IFC Doing Business 2012, the process of starting a company has been simplified significantly, now taking an average of 9 days and 5 procedures, which is well below the regional average of 37 days and 8 procedures. Registration of property, building a warehouse and enforcing contracts can also be done faster and cheaper than in comparable Sub-Saharan countries.

The legal system is based on common law, but consistent enforcement is an issue. The rule of law consequently remains limited, due to the lack of checks and balances between state powers and a traditional interference of the executive branch in judicial matters. Moreover, according to the US Department of State 2011, judges often lack understanding of commercial matters and case scheduling suffers from extended delays. This constitutes a major impediment for settling commercial disputes and results in a weak understanding and enforcement of property and contractual rights. Both the Ethiopian Arbitration and Conciliation Center and the Addis Ababa Chamber of Commerce provide commercial dispute services. International arbitration is also possible for foreign companies, but there is no guarantee that a decision made by an international arbitration body will be fully accepted and implemented by Ethiopian authorities, as reported by the US Department of State 2010. Ethiopia is not a member of the International Centre for the Settlement of Investment Disputes (ICSID) or of the New York Convention of 1958. Access the Lexadin World Law Guide for a collection of laws in Ethiopia.

Individual Corruption

Several sources suggest that the Ethiopian judiciary is tainted with corruption. For instance, according to Bertelsmann Foundation 2010, at lower levels, corruption and incompetence are rife, while at higher levels political interference is the rule rather that the exception. In addition, despite some improvements with regard to competencies and coverage, the judicial system is still very weak. Furthermore, the judicial system lacks experienced staff, which sometimes makes the application of laws unpredictable, as emphasised by the US Department of State 2010.

Business Corruption

Investors involved in commercial disputes in Ethiopia have expressed a lack of confidence in the judiciary to objectively assess and resolve disputes, according to the US Department of State 2011. The underlying reason behind this distrust is the fact that Ethiopia's judicial system is weak, overburdened, poorly staffed and prone to corruption. This further explains that whenever cases are related to government entities or higher-level public officials, there is significant government influence and intervention into legal proceedings. However, on a better note, the report states that a separate court has been created specifically to speed up the processing of commercial cases, nevertheless, arbitration still remains the most efficient means of resolving disputes.  

Political Corruption

Bertelsmann Foundation 2010 indicates that the Ethiopian judicial system lacks independence and operates under close orders from the executive. The independence of the judiciary is further hampered by the fact that the executive can appoint and dismiss court officials at will, while judges who voice opinions contrary to the executive have been dismissed or passed over for promotion, as reported by Global Integrity 2008. Although the courts show some independence in less prominent cases, the judiciary often acts only after very long delays due primarily to the workload of the system. There is a severe lack of well-educated judges and other judicial personnel, which often result in long delays in trial proceedings. Corruption in the system is also reported as one of the constraints, according to Bertelsmann Foundation 2010.

In November 2009, the Supreme Court sentenced Judge Girma Tiku, former head of the First Instance Court for Urban Affairs of Lideta Subcity, to seven years in prison and a fine of USD 80 on charges of corruption, as indicated by the US Department of State 2010.

Frequency

The World Bank & IFC: Doing Business 2012:
- It requires 37 procedures and takes 620 days to enforce a commercial contract through the judiciary at a cost of 15.2% of the claim.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the Ethiopian judiciary's level of independence from influences of government, citizens, or companies a score of 3.1 on a 7-point scale (1 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 3.8 and 3.6 respectively on a 7-point scale (1 'extremely inefficient' and 7 'highly efficient').

The World Bank & IFC: Enterprise Surveys 2006:
- Only 24% of the companies surveyed believe that the court system is fair, impartial and uncorrupted.

UNECA: African Governance Report 2005:
- 60% reported that the judiciary is hardly or not at all independent of other branches of government.

- 31% of respondents in the household survey expect public prosecutors to demand bribes.

- 35% of respondents in the household survey expect judges to demand bribes.

Individual Corruption

Corruption within the Ethiopian police is considered to be rampant by the population. Accordingly, the US Department of State 2010 reports that corruption remains a problem particularly among traffic police who routinely solicit bribes from motorists.

According to an October 2010 article by Daily Ethiopia, a top sergeant of the federal police was arrested by the Ethiopian Ethics and Anti-Corruption Commission for allegedly accusing an Ethiopian woman of terrorism and forcing her to pay her way out of the charges through bribes. The sergeant, who was head of the surveillance department at Bole International Airport was arrested after being caught taking USD 100 from the woman. The EACC notes that the sergeant had successfully managed to get ETB 10,000 of bribes from the unsuspecting women. 

Political Corruption

According to Global Integrity 2010, appointments to law enforcement agencies are generally based on non-professional criteria, and individuals appointed often have clear party loyalties. Furthermore, the police are not at all protected from the interference of the executive in practice; in fact, they are considered by the public to be highly influenced by political considerations. The same source pinpoints that, in practice, the police enjoy general protection from most criminal investigations. Currently, the Federal Ethics and Anti-Corruption Commission (FEAC) is battling a backlog of police corruption cases.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the reliability of the Ethiopian police services to enforce law and order a score of 4.1 on a 7-point scale (1 being 'cannot be relied upon at all' and 7 being 'can always be relied upon').

Transparency International: Global Corruption Barometer 2005:
- The police in this public survey score 3.7 on a 5-point scale (1 being 'not at all corrupt' and 5 'very corrupt').

Individual Corruption

Citizens living in Addis Ababa cite drivers' licence procedures as an area where bribes are often required, with the average bribe being ETB 500, as reported by the Transparency Ethiopia Corruption Diagnostic Baseline Survey 2009.

According to Global Integrity 2010, a driver with a forged driver's licence was pulled over by a traffic police officer and was, for once, unable to get around the arrest by paying a bribe - a behaviour that he had otherwise resorted to over the past five years. The officer happened to be new to the force. The driver explained that his forged driver's licence, which he acquired by paying ETB 500 (USD 30), did not represent a problem for him not even when he violated traffic rules as long as he paid a bribe ranging from ETB 20 to ETB 100 (USD 1.20 to USD 6). After his arrest, the driver was bailed out for ETB 600 (USD 36). He further explained that both the driver and his brother had to pay a bribe to a detective involved in the case in order to change information in the documents of the offender so that the court would hasten the bail agreement. Moreover, Global Integrity 2010 reports that the corruption within the Ethiopian motor vehicle regulation system directly results in thousands of annual traffic accidents and hundreds of deaths per year.

Business Corruption

Companies are sometimes required to pay bribes when dealing with public utility authorities in Ethiopia. This is illustrated well by Global Integrity 2010, according to which business inspections by government officials to ensure public health and safety standards are generally carried out in an arbitrary and ad-hoc manner, and bribes are frequently extracted from companies in return for favourable treatment or expedited processing. Furthermore, according to the source, for high-profile businessmen it is generally difficult to do business in Ethiopia, including receiving licences and permits, without involving at least one influential government official.

Global Integrity 2010 also notes that former Transport authority employees who had been fired because of malpractice solicited potential clients who were not willing to go through the bureaucracy required to get a driver's licence and offered them fake licence in return for bribes.

Frequency

The World Bank & IFC: Doing Business 2012:
- Starting a company requires the entrepreneur to go through 5 procedures, taking 9 days at a cost of 12.8% of income per capita.

- It takes 9 procedures, 128 days at 369.1% of the income per capita to obtain the necessary licences and permits, notifications and inspections and public utility connections to build a warehouse.

- It takes an average of 3 years to close a business at a cost of 15% of the estate.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give government regulations in Ethiopia a score of 3.6 on a 7-point scale (1 being 'burdensome' and 7 'not burdensome').

The World Bank & IFC: Enterprise Surveys 2006:
- 3% of the companies surveyed expect to give gifts to get an operating licence.

- 4% of the companies surveyed expect to give gifts to get a construction permit.

- 7% of the companies surveyed expect to give gifts to get an electrical connection, 5% expect to give gifts to get a water connection, and 4% expect to give gifts to get a phone connection.

Individual Corruption

Citing a 2007 study by the Federal Ethics and Anti-corruption Commission (FEAC), Transparency International 2009 reports that leasing land is virtually impossible without bribing the city administration, and this practice is said to continue due to a lack of detailed and clearly laid out laws and directives. The lack of accountability makes it possible for officials to exploit loopholes and enrich themselves through corruption. This perception is supported by the Transparency Ethiopia Corruption Diagnostic Baseline Survey 2009, in which citizens living in Addis Ababa cite property registration as an area where bribes are often needed, with the average bribe being ETB 500.

Business Corruption

Corruption within land distribution is considered by many to be institutionalised, according to the Federal Ethics and Anti-corruption Commission (FEAC). This is illustrated well by the US Department of State 2009, according to which, state and party-owned companies tend to receive preferential access to land leases and credit. Moreover, sub-city land administration officials have allegedly developed an attitude that it is their right to take bribes. Corrupt practices involve facilitation payments as well as bribes in order to be allowed to keep land that is leased. Arbitrary interpretations of laws and regulations also occur.

In April 2010, seven defendants accused of corruption were sentenced by the Federal High Court for two to fifteen years of prison in addition to fines for selling land illegally, according to the US Department of State 2010. Two fake companies were created by a former technician in the Land and Housing Department in order to appropriate ETB 205 million (USD 12.5 million) and two employees in the land leasing company formalised the associations.

Political Corruption

The government owns the land in Ethiopia. With land values increasing in Addis Ababa, Transparency International 2009 reports that incentives for corruption in the allocation of land, which is provided to individuals and investors on long-term leases, have grown significantly. Moreover, an increasing number of reports reveal collusion between the private sector and government officials. In addition, according to the same source, there have been frequent corruption cases against land developers. FEAC reports prosecuting 49 cases involving land distribution in 2007, with its investigations leading to the confiscation of over 575,000 square metres of land at an estimated value of almost USD 120 million.

Frequency

The World Bank & IFC: Doing Business 2012:
- It takes 10 procedures to register property over a period of 41 days, costing 2.1% of the property value.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the protection of property rights in Ethiopia, including financial assets, a score of 4.4 on a 7-point scale (1 being 'very weak' and 7 'very strong').

Individual Corruption

The tax revenue services are perceived by citizens to constitute the most corrupt institution in Ethiopia, according to Transparency International's Global Corruption Barometer 2005. In addition, citizens interviewed in the Transparency Ethiopia Corruption Diagnostic Baseline Survey 2009 report that tax procedures are an area where bribes are often needed, with the average bribe being ETB 400.

Business Corruption

According to Global Integrity 2008, tax laws are sometimes enforced arbitrarily. For instance, some groups, such as companies owned by the ruling party and government officials, are consistently favoured. This makes business almost impossible to conduct for independent companies, according to the source. Global Integrity 2010 further states that, according to some private sector businessmen, civil servants within the tax collection agency are corrupt and that some pay higher taxes than other. The Revenue and Customs Authority (RCA) has identified ETB 4.5 billion worth of unpaid taxes and blacklisted 171 taxpayers for evasion. However, tax evasion remains a problem. In a similar vein, business executives surveyed in the World Economic Forum Global Competitiveness Report 2011-2012 rank tax regulation in Ethiopia as a problematic factor for doing business in the country. In sum, the Ethiopian tax system is generally considered to be non-transparent and prone to corruption.

Frequency

The World Bank & IFC: Doing Business 2012:
- A company spends an average of 198 hours per year making 19 separate tax payments at a total tax rate of 31.1% of profits.

The World Bank & IFC: Enterprise Surveys 2006:
- 4.5% of companies are expected to give gifts when meeting with tax inspectors.

UNECA: African Governance Report 2005:
- 42% of respondents in this expert-opinion survey state that the tax system is rarely or never transparent.

- 73% of experts responded that the tax collection system is mostly or always affected by corruption.

Business Corruption

According to Global Integrity 2010, the customs administration has a professional and full-time staff, however, customs laws are usually enforced arbitrarily, with some privileged groups, most notably companies owned by the ruling party and government officials, consistently evading customs and excise laws. In turn, this engenders ample possibilities for corruption in interactions with customs officials.

Frequency

The World Bank & IFC: Doing Business 2012:
- A standard export shipment of goods requires 7 documents and takes an average of 42 days at a cost of USD 1,760 per container.

- A standard import shipment of goods requires 9 documents and takes an average of 44 days at a cost of USD 2,660 per container.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Ethiopia a score of 3.5 on a 7-point scale (1 being 'extremely inefficient' and 7 'extremely efficient').

Transparency International: Global Corruption Barometer 2005:
- Customs scores 3.6 on a 5-point scale in this public survey (1 being 'not at all corrupt' and 5 'very corrupt').

Business Corruption

According to the US Department of State 2008, the Ethiopian government reviews investment proposals in a non-discriminatory manner and foreign investors do not regard the screening process as an impediment to investment or a limit to competition. Nonetheless, the US Department of State 2011 reports that companies have complained about unlawful contract termination and non-transparent tender award processes and that companies have perceived favouritism towards Chinese vendors. Moreover, companies have reported allegations of preferential treatment in relation to procurement, with government contracts being won by companies owned by the ruling party or government loyalists, according to the US Department of State 2009.  

Companies are recommended to use a specialised public procurement due diligence tool in order to help mitigate corruption risks related to public procurement in Ethiopia. For more information on public procurement, see 'Public Anti-Corruption Initiatives' in the Initiatives section.

According to the US Department of State 2010, the Ethics Commission arrested in 2008 the former managing director of the Ethiopian Telecommunication Cooperation and 12 other senior management staff for approving an equipment and technology contract that violated government bid regulations and cost ETB 1.52 billion (USD 92.7 million). The company found that the evidence against the former managing director and the staff presented a prima facie case of corruption and ordered the 12 defendants to present their cases. In January 2011, the defendants were found guilty of corruption by the Federal High Court. 

Political Corruption

Several sources suggest that political corruption is common in Ethiopian public procurement. For example, in October 2009, federal MP Belete Etana Disassa published a testimony alleging several instances of serious corruption within the federal government, including illegal procurement and unaccounted spending amounting to USD 200 million, as reported by the US Department of State 2010.

Furthermore, the same source also reports that it is not uncommon for government tenders to be discontinued after bids are received, re-released several times without being filled, or awarded to bidders with strong links to the government and ruling party with little to no transparency in these processes. This perception is supported by the US Department of State 2011, according to which the abrupt cancellation of some government tenders, favouritism towards certain groups, as well as the overall lack of transparency in the procurement system are the most pressing issues within public procurement.

Similarly, the Bertelsmann Foundation 2010 indicates that although the public procurement system has become more transparent, it is not free from government manipulation. For example, according to the source, the government makes sure that companies owned by, or closely affiliated to the ruling party are awarded contracts to transport food aid to areas in need.

Frequency

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 3.3 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 3.7 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

The World Bank & IFC: Enterprise: Surveys 2006:
- Almost 12% of the companies surveyed expect to give gifts to secure a government contract.

Business Corruption

Corruption is not uncommon within environmental and natural resource administration in Ethiopia. Accordingly, as reported by Global Integrity 2010, business inspections by government officials to ensure public environmental standards are generally carried out in an arbitrary and ad-hoc manner, and bribes are usually extracted from companies in return for favourable treatment or expedited processing.

Political Corruption

Conflicts in the region provide ample opportunities for corruption, especially through illicit access to natural resources. As a result, smuggling and black-market trading of minerals, especially gold, is pervasive as reported by Transparency International 2003.

• Legislation: In principle, the legislative framework in Ethiopia created against corruption is comprehensive and strong. The Federal Ethics and Anti-corruption Commission Establishment Proclamations No. 235/2001 and No. A33/2005 (Anti-Corruption Law) criminalise attempted corruption and extortion, while the Criminal Code 2004 criminalises active and passive bribery, money laundering and bribing a foreign official. Furthermore, an amendment was made to the Anti-Corruption Law in 2001 which prohibits bail for anyone charged with corruption. However, the government does not implement these laws effectively, while the judiciary is known to be politically influenced. At the end of March 2010, the country enacted Assets and Property Registration Law, as part of its anti-corruption efforts. The law calls for government officials and their relatives to register their assets and properties and is expected to help Ethiopia to minimise the prevalence of corruption in the country, according to Afrique Avenir. The new law also requires government officials not to accept any gift in connection with their duties. The US Department of State 2010 records that the registration started in December 2009 and that by end-2010, the president, prime minister and all the cabinet-level ministers registered their assets. However, the opposition has expressed its concern over the fact that it is not clear if these officials will be asked where and how they got their assets. Ethiopia has signed and ratified both the AU Convention on Preventing and Combating Corruption and the UN Convention against Corruption (UNCAC), which potentially can add pressure to the government to further strengthen its anti-corruption legislation. For more information on legislation in Ethiopia, see the Lexadin World Law Guide.

• Government Strategies: In 1998, Ethiopia became the first African country to pledge anti-corruption undertakings to the World Bank in order to get new loans approved. Thereafter, the initial steps of the Ethiopian Government's anti-corruption campaign focused on conducting surveys and research to identify the extent of the problem as well as the types of corruption to be addressed. Prior to the establishment of the Federal Ethics and Anti-corruption Commission (see below) in May 2001, the Government also focused on anti-corruption training of public officials and assessment of needs and problems. Since 2001, FEAC has headed the fight against corruption in Ethiopia. More recently, Ethiopia has been selected as one of 7 pilot countries for the Construction Sector Transparency Initiative (CoST). CoST is a voluntary multi-stakeholder initiative designed to be applicable to any country and to any government department or agency with responsibility for public-sector construction projects. The Ethiopian committee overseeing the implementation of CoST in the country consists of ten members from government, the construction industry and civil society. CoST aims at promoting the concepts of transparency and accountability in the construction sector and focuses specifically on public disclosure of information. The ultimate aim is to enhance the accountability of procuring bodies and construction companies for the cost and quality of public-sector construction projects.

• Anti-Corruption Agencies: The Federal Ethics and Anti-corruption Commission (FEAC) was established in 2001 through the Establishment Proclamation of 2001 (revised in 2005) and has a threefold mandate to prevent, investigate and prosecute corruption in the public sector. It also has powers to investigate corruption in the private sector as long as the issue in question concerns public officials, such as public-private collusion. The FEAC reports to Parliament and is accountable to the Prime Minister. Several sources note that the FEAC has made achievements in its efforts to curb corruption. Transparency International's Global Corruption Report 2009, reports that it has grown in size and staff and has prosecuted some high-profile cases in recent years. In its 2009-2010 report to Parliament, the FEAC reports having received almost 3,000 corruption complaints and tip-offs from the public, out of which around 1,500 were within its own jurisdiction - 405 of the complaints were subject to further investigation. According to the same source, the Ethics Commission also held training and awareness sessions on the concept of ethics, the anti-corruption law and the corruption prevention strategies. In addition, it also runs a public education campaign and has adopted a multi-stakeholder approach, through which it increasingly cooperates with civil society organisations, such as Transparency International's Ethiopian chapter, Transparency Ethiopia. According to the US Department 2010, the anti corruption commission released a statement claiming that 110 persons convicted of corruption were sentenced to prison or to pay fines between March and May 2010. Corruption allegations included abuse of power, embezzlement of public property, receiving bribes and administrative mismanagement. The prison terms ranged from 1 to 21 years and the fines amounted up to ETB 1,000 to ETB 5,000. Among the persons sentenced to 21 years of prison were the previous finance section head of the Federal Courts Law Enforcement Division and the former manager of the land development office of the Kolfe subcity in Addis Ababa. Nevertheless, sources also highlight the possibility that the ruling party is actually using the FEAC as a weapon against political opponents. Apart from evaluating its overall performance as 'weak', Global Integrity 2010 also reports that appointments to the FEAC are not based solely on professional criteria, and the institution is not considered completely independent from the executive.

• Auditor General: The constitution of 1955 established the Office of the Auditor General as a separate, independent entity reporting directly to Parliament. Its auditing mandate covers the entire public sector. The establishing legislation has been amended several times in the past, and in addition to defining the powers and duties of the institution, the legislation envisioned the conditions of appointment, the independence of the Auditor General and the reporting mechanisms. However, the appointments of staff do not always support the independence of the institution, and it suffers from insufficient staff and inadequate funding, according to Global Integrity 2010. Another problem is that the government does not always act on the findings of the office's reports. Moreover, according to the Bertelsmann Foundation 2010, the government reacts very harshly when criticised by the agency. In 2006, the Auditor General was dismissed by the Prime Minister after releasing a report showing that ETB 4.8 billion was unaccounted for in the federal government's funding allocations to regional administrations. According to the US Department of State Investment Climate Statement 2011, the government is in the process of establishing a new accounting standards body. The new National Accounting and Audit Board (NAAB), according to the legislation draft, would have the power to accredit accounting and auditing firms as well as oversee financial reporting standards of both private and public enterprises. The statement further notes that the central bank has already issued a directive for all banks and insurance companies to adhere to International Financial Reporting Standards (IFRS) in 2011.

• Office of the Ombudsman: The Office of the Ombudsman was instated in 2000 and is legally protected from political interference. In practice, however, the office is not free from political interference and is sometimes steered by political incentives. The Ombudsman has the responsibility to ensure that executive organs carry out their functions in accordance with the rule of law and that administrative decisions do not violate citizens' rights. Additionally, the office receives and investigates complaints about public officials and administrative practices and seeks remedies to curb maladministration. The present Ombudsman describes the agency as still very young and in need of capacity-building. In addition, Global Integrity 2010 reports that the institution is not very effective, primarily due to its lack of mandate.

• E-Governance: Only a few government ministries have websites providing useful information for citizens, investors and companies. One such entity is the Ethiopian Revenue and Customs Authority (ERCA), which contains a large amount of relevant information on legislation and requirements concerning taxation and customs procedures. Another relevant online service is the Ethio Market (ETM) which provides all kinds of investment related information for foreign investors. The most comprehensive initiative concerning e-governance by the Ethiopian government has been the establishment of the Ethiopian Investment Agency (EIA), which functions as a one-stop shop, from which investment and business licences can be obtained in a matter of hours. The Federal Supreme Court also plans to commence web-based services, including accessing pending court debates, verdicts, charges, defences, judges' profiles and an e-litigation service to help press charges and defend oneself against charges. The court also plans to install authentication and registration software for immovable properties as a web-based service.

• Public Procurement: The Proclamations No. 430/2005 and No. 57/1996 determine the procedures of public procurement and address conflicts of interest for public procurement officials. They furthermore demand mandatory training for procurement officials, require competitive bidding, ensure the possibility for official review of procurement decisions and prohibit companies known to have violated the law from future bidding. In practice, however, Global Integrity 2010 reports that regulations concerning the interests of public officials are not adequately enforced and companies who have violated the law before are not successfully prohibited from future bidding. The law also requires the government to disclose the results of procurement decisions and, in practice, citizens can access these results. Major public procurements are widely advertised. The Ethiopian Privatisation and Public Enterprises Supervising Agency, through which most tenders are issued, has initiated training of personnel working with procurement, and has prepared standard bidding documents for the process. All in all, Global Integrity 2010 evaluates Ethiopian procurement legislation and its enforcement as being 'weak' to 'moderate'. To achieve more transparency, efficiency, fairness and impartiality in public procurement processes in addition to maximising the benefit from public property use, the government established a new public procurement and property administration agency in September 2009, according to the US Department Investment Climate Statement 2011. The agency functions as an autonomous government organ, has its own judicial arm, and is accountable to the Ministry of Finance and Economic Development.

• Whistle-Blowing: Article 444 of the Criminal Code, Proclamation No.414/2004 provides legal protection of whistleblowers. Several sources note that whistleblowers are continuously providing information on graft and corruption to the Federal Ethics and Anti-corruption Commission (FEAC), and that civil servants are well protected from recrimination and other negative consequences when reporting corruption. In practise, however, Global Integrity 2010 assesses the de facto protection of both public and private sector whistleblowers as inadequate. According to the FEAC, whistleblowers can present their complaints of alleged corruption offences in person, by telephone, fax, email or by letter, and the FEAC will not disclose their identity without their permission. Reporting mechanism numbers can be found on the FEAC website (see also this 2007 FEAC report - section '7.3.1 Channels and Mechanisms of Making Corruption Complaints' - for more information). According to Freedom House 2007, the main constraints on an effective whistle-blowing system in Ethiopia are the high level of politicisation of many corruption cases and restrictions on the media to freely investigate alleged corruption.

• General Comments on the Public Anti-Corruption Initiatives: Donor pressure has been one of the main drivers behind the initial establishment of anti-corruption undertakings in Ethiopia. Generally, the anti-corruption bodies are inadequately funded and are inhibited from using their powers effectively. Several observers have questioned the sincerity of the fight against corruption, noting that there is considerable inconsistency in the political leaderships' willingness to fight corruption. Another problem with the work of the anti-corruption agencies is the lack of public awareness about the fight against corruption coupled with their high degree of politisation which limits their effectiveness as control mechanisms.

• Media: In principle, freedom of the press, access to information of public interest and prohibition of censorship are guaranteed by the constitution. However, the reality of the situation has reportedly deteriorated in recent years, especially following the 2005 elections when large numbers of journalists and other civil society actors were imprisoned or intimidated. Authorities occasionally detain, beat or harass journalists and, as a result, an increasing number of journalists practise self-censorship or are forced into exile, according to the US Department of State 2010. The same source further states that in 2008 a reporter was attacked by 3 civilians who admitted in court that they were hired to attack him. The reporter states that he suspected government supporters to be behind the act as they felt threatened by the reporter's newspaper reporting on corruption. By the year's end the case was not further investigated, although the reporter pressed for such measures. According to Global Integrity 2010, it is almost impossible for independent TV or radio stations to get a license and that the media is widely viewed as a political tool in Ethiopia. In a 2005 UNECA study, 75% of the experts surveyed reported that the media operates in an environment where their rights are frequently violated by the government. Authorities frequently invoke the 1992 Law on the Press regarding publication of false and offensive information in order to justify the arrest and detainment of journalists. In late 2008, Parliament adopted a new media law after heavy debate and criticism from civil society, international NGOs and donors. Although the law barred government censorship of private media and the detention of journalists, it also allowed prosecutors to seize material before publication in the name of national security, and has given the government broader powers to pursue defamation cases against the media. The news media are dominated by state-owned broadcasters and government-oriented newspapers. There are a number of independent newspapers, but they struggle financially and face government harassment. According to Transparency International 2010, Transparency Ethiopia initiated a journalist roundtable initiative in cooperation with the Anti Corruption Commission of Ethiopia with the goal of encouraging the media to further engage in corruption and ethic plagued issues. The roundtable discussion, in which reporters from prominent print and broadcast media outlets participated, focused on the barriers that handicapped anti-corruption investigations and the need to conduct on-going anti-corruption sessions. Freedom House 2011 ranks Ethiopia 168th out of 196 countries in relation to press freedom and describes the country's press environment as 'not free', while the Reporters Without Borders 2010 ranks the country 140th out of 175 countries.

• Civil Society: Civil society in Ethiopia is generally considered to be weak and it is consequently not particularly active in the fight against corruption. However, there are some organisations voicing their views on corruption issues, and there has generally been a growing interest on behalf of the private sector and CSOs/NGOs in fighting corruption. However, this activity is not without costs. The leaders of two influential civil society organisations (CSOs) dealing with governance, Daniel Bekele of ActionAid and Netsanet Demissie of the Organisation for Social Justice in Ethiopia, were arrested in November 2005 and convicted of 'crimes of outrage against the Constitution'. More than 60% of experts surveyed in a 2005 UNECA study reported that civil society had a weak or no influence on government policies and programmes. Nevertheless, citizens surveyed by the Transparency Ethiopia: Corruption Diagnostic Baseline Survey 2009 believe that it is extremely important to include members of civil society and the private sector if corruption is to be fought in Ethiopia. In February 2009, Ethiopia passed The Charities and Societies Proclamation, a highly controversial law, which prohibits civil society organisations that receive more than 10% of their funding from foreign sources from engaging in activities pertaining to advocacy, human rights and democracy, as reported by the US Department of State 2009. Given the fact that nearly all CSOs that work in these areas rely on foreign funding, the law will in essence prevent civil society from taking part acting as a check and balance against government abuses.  

• Transparency Ethiopia (TE): TE is a local chapter of Transparency International. It was legally established in 2002, and conducts advocacy work on anti-corruption laws and works to promote greater public awareness of corruption issues through reporting, workshops, seminars and events. It also seeks to build coalitions with the private sector, other civil society organisations and governmental entities to prevent corrupt practices and strengthen public institutions. For example, TE has been conducting research and functioned as advisor on selected anti-corruption issues for the Federal Ethics and Anti-corruption Commission (FEAC). TE produced the Corruption Diagnostic Baseline Survey 2009, intending to gather data on citizens' confidence on public institutions and to evaluate the quality of public services.

• Organisation for Social Justice in Ethiopia (OSJE): The OSJE is a human rights NGO that aims to promote social justice, democracy and good governance by addressing the denial and violations of basic rights of the poor and marginalised. The OSJE functioned as a secretariat for a 35-member coalition of NGOs to observe the May 2005 elections, and has been publicly outspoken about corruption in the country. The leader of the organisation has been jailed on charges of treason.

• ActionAid: ActionAid is an international NGO with an Ethiopian chapter working against poverty and injustice through various focus areas, such as HIV/AIDS prevention, justice and good governance. The leader of the chapter has been outspoken about governance issues and has consequently been jailed on charges of treason. The organisation has been accused by the Ministry of Justice for attempting to interfere with the administration of justice by calling for the release of jailed civil society leaders.

• Initiative Africa (IA): IA is an Addis Ababa-based NGO and think-tank that brings together project managers and their organisations to improve and bring innovation to governance and development practices in Ethiopia and greater Africa. The organisation was established in 2002 by individual business entrepreneurs. IA promotes the study of public and private governance and facilitates dialogue and knowledge-sharing through locally driven development programmes and activities, such as workshops, analyses and conferences. IA works to combat inequality, injustice and power differentials by promoting actions that advance human rights, good governance and democracy, and by building the capacity of local CSOs/NGOs working in this area. IA works in partnership with communities, government agencies, international organisations, NGOs and the private sector.

The websites listed below provide useful facts on Ethiopia as well as contacts and tools for companies operating in Ethiopia:

• International Finance Corporation: Global SME Toolkit
  Guide to sustainable business management practices for SMEs.
• Business Fighting Corruption
  An online resource centre for business on collective action to avoid corruption which contains a guide and resources for partnerships with companies and other stakeholders to fight against corruption.
• CIA World Factbook: Ethiopia Profile
• World Bank: Ethiopia Data Profile

Sources for further reading:

• Freedom House: Freedom in the World - Ethiopia 2011.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• Global Integrity: Ethiopia Country Report 2010.
• US Department of State: Human Rights Report - Ethiopia 2010.
• Transparency International: Global Corruption Report 2009.

UNCAC Status: Signed 10 December 2003. Ratified 26 November 2007.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read more about the UNCAC.

Other Relevant Conventions or Treaties:

• African Union Convention on Preventing and Combating Corruption: Signed 1 June 2004. Ratified 18 September 2007.
  Read Transparency International's summary and assessment of the convention.
• United Nations Convention against Transnational Organized Crime: Signed 14 December 2000. Ratified 23 July 2007.
  Read Transparency International's summary and assessment of the convention.

Transparency CPI: 2011: 120/182 (Score: 2.7)

Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.

World Bank CORR Index (-2.5 - +2.5): 2010: - 0.70

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2010.

OECD COUNTRY RISK CLASSIFICATION (0-7): 2011: 7

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.

Data Verification:

Publication Date: November 2011

Data verified by: Global Advice Network

General Information Sources

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: Global Competitiveness Report 2011-2012.
• Global Financial Integrity: 'Illicit Financial Outflows from Ethiopia Nearly Doubled in 2009 to USD 3.26 Bln, Says New GFI Report', 05 December 2011.
• US Department of State: Investment Climate Statement - Ethiopia 2011.
• Global Integrity: Ethiopia Country Report 2010. 
• Transparency International: Global Corruption Report 2010.
• The Globe and Mail: 'Ethiopia election win tainted, observers say', 26 May 2010.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• Freedom House: Freedom in the World - Ethiopia 2010.
• Human Rights Watch: "One Hundred Ways of Putting Pressure": Violations of Freedom of Expression and Association in Ethiopia, 2010.
• Human Rights Watch: 'Ethiopia: Repression Rising Ahead of May Elections', 24 March 2010.
• US Department of State: Human Rights Report - Ethiopia 2010.
• World Economic Forum: Global Competitiveness Report 2009-2010.
• US Department of State: Human Rights Report - Ethiopia 2009.
• Transparency Ethiopia: Corruption Diagnostic Baseline Survey 2009.
• Transparency International: Global Corruption Report 2009.
• Gadaa.com: 'Ethiopia: Journalists self-censor to avoid harassment from govt (Nebiat Gebissa)', 8 November 2009.
• Abbay Media, The Ethiopian Information Bank: 'Reporter's Notebook: Ethiopia', 28 March 2009.
• Global Integrity: Ethiopia Country Report 2008.
• US Department of State: Human Rights Report - Ethiopia 2008.
• US Department of State: Investment Climate Statement - Ethiopia 2008.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2008.
• Institute for Security Studies: 'Where is Ethiopia Heading?', 17 March 2008.
• Federal Ethics and Anti-corruption Commission: Anti-Corruption Efforts in Ethiopia 2007.
• The World Bank & IFC: Enterprise Surveys 2006.
• Global Integrity: Ethiopia Country Report 2006.
• Torenvlied & Haarhuis: Dimensions and Alignments in the African Anti-Corruption Debate 2004.

Corruption Levels Sources

Judicial System

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• US Department of State: Investment Climate Statement - Ethiopia 2011.
• US Department of State: Human Rights Report - Ethiopia 2010.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• Freedom House: Freedom in the World - Ethiopia 2010.
• Global Integrity: Ethiopia Country Report 2008.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2008.
• Human Rights Watch: World Report - Ethiopia 2007.
• UN Economic Commission for Africa: African Governance Report 2005.

Police

• World Economic Forum: The Global Competitiveness Report 2011-2012.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• Freedom House: Freedom in the World - Ethiopia 2010.
• US Department of State: Human Rights Report - Ethiopia 2010.
• Global Integrity: Ethiopia Country Report 2010.
• Daily Ethiopia: "Top official nabbed over corruption", 25 October 2010. 
• Gadaa.com: 'Ethiopia: Journalists self-censor to avoid harassment from govt (Nebiat Gebissa)', 8 November 2009.
• Abbay Media, The Ethiopian Information Bank: 'Reporter's Notebook: Ethiopia', 28 March 2009.
• US Department of State: Human Rights Report - Ethiopia 2008.
• Global Integrity: Ethiopia Country Report 2006.
• Transparency International: Global Corruption Barometer 2005.

Licences, Infrastructure and Public Utilities

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• Global Integrity: Ethiopia Country Report 2010.
• Capital Ethiopia: 'Tesfaye Biru et.al. court case stretches', 13 April 2009.
• US Department of State: Human Rights Report - Ethiopia 2009.
• Transparency Ethiopia: Corruption Diagnostic Baseline Survey 2009.
• Global Integrity: Ethiopia Country Report 2008.
• Nazret: 'Ethiopia - Tesfaye Birru et al to appear in court on Tuesday', 25 February 2008.
• The World Bank & IFC: Enterprise Surveys 2006.

Land Administration

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• US Department of State: Investment Climate Statement - Ethiopia 2011.
• US Department of State: Human Rights Report - Ethiopia 2010.
• Transparency Ethiopia: Corruption Diagnostic Baseline Survey 2009.
• Transparency International: Global Corruption Report 2009.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2008.
• The Reporter: 'Chronic Corruption in Land Administration', 7 July 2007.
• The World Bank & IFC: Enterprise Surveys 2006.

Tax Administration

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: Global Competitiveness Report 2011-2012.
• Global Integrity: Ethiopia Country Report 2010.
• Transparency Ethiopia: Corruption Diagnostic Baseline Survey 2009.
• Global Integrity: Ethiopia Country Report 2008.
• The World Bank & IFC: Enterprise Surveys 2006.
• UN Economic Commission for Africa: African Governance Report 2005.

Customs Administration

• The World Bank & IFC: Doing Business 2012.
• World Economic Forum: The Global Competitiveness Report 2011-2012.
• Global Integrity: Ethiopia Country Report 2010.
• US Department of State: Investment Climate Statement - Ethiopia 2008.
• Transparency International: Global Corruption Barometer 2005.

Public Procurement and Contracting

• World Economic Forum: The Global Competitiveness Report 2011-2012.
• US Department of State: Investment Climate Statement - Ethiopia 2011.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• US Department of State: Human Rights Report - Ethiopia 2010.
• Global Integrity: Ethiopia Country Report 2008.
• US Department of State: Investment Climate Statement - Ethiopia 2008.
• Global Integrity: Ethiopia Country Report 2008.
• The Reporter: 'Chronic Corruption in Land Administration', 7 July 2007.
• Daily Monitor: 'Agency, Trains Staff on Int'l Procurement', 17 August 2007.
• The World Bank & IFC: Enterprise Surveys 2006.

Environment, Natural Resources and Extractive Industry

• Global Integrity: Ethiopia Country Report 2008.
• Transparency International: Global Corruption Report 2003.

Public Anti-Corruption Initiatives Sources

• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• Freedom House: Freedom in the World - Ethiopia 2010.
• US Department of State: Human Rights Report - Ethiopia 2010.
• Global Integrity: Ethiopia Country Report 2010.
• Afrique Avenir: 'Ethiopia enacts assets and property registration law', 31 March 2010.
• US Department of State: Human Rights Report - Ethiopia 2009.
• Transparency International: Global Corruption Report 2009.
• Construction Sector Transparency Initiatives: 'Ethiopia joins the construction sector transparency initiative (CoST)', 13 January 2009.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2008.
• Lexadin: The World Law Guide - Legislation Ethiopia 2008.
• Federal Ethics and Anti-corruption Commission: Anti-Corruption Efforts in Ethiopia 2007.
• Human Rights Watch Report: Ethiopia 2007.
• The World Bank: Development Outreach: Dealing with Corruption in Ethiopia 2006.
• Transparency International: Global Corruption Report 2003.
• The African Development Bank: Combating Corruption in Africa 2003.

Private Anti-Corruption Initiatives Sources

• Global Integrity 2010: Country Report- Ethiopia.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2010.
• Freedom House: Freedom in the World - Ethiopia 2010.
• Freedom House: Freedom of the Press Index 2010.
• US Department of State: Human Rights Report - Ethiopia 2010.
• Reporters Without Borders: Ethiopia Country Report 2010.
• Human Rights Watch: "One Hundred Ways of Putting Pressure": Violations of Freedom of Expression and Association in Ethiopia, 2010.
• Human Rights Watch: 'Ethiopia: Repression Rising Ahead of May Elections', 24 March 2010.
• Freedom House: Freedom of the Press Index 2009.
• Reporters Without Borders: Worldwide Press Freedom Index 2009.
• Transparency International: Global Corruption Report 2009.
• Transparency Ethiopia: Corruption Diagnostic Baseline Survey 2009.
• Gadaa.com: 'Ethiopia: Journalists self-censor to avoid harassment from govt (Nebiat Gebissa)', 8 November 2009.
• Abbay Media, The Ethiopian Information Bank: 'Reporter's Notebook: Ethiopia', 28 March 2009.
• The Bertelsmann Foundation: Transformation Index - Ethiopia 2008.
• Freedom House: Freedom of the Press - Ethiopia 2008.
• Global Integrity: Ethiopia Country Report 2008.
• Human Rights Watch: World Report Ethiopia 2007.
• Freedom House: Countries at the Crossroads - Ethiopia 2007.
• The World Bank: Development Outreach: Dealing with Corruption in Ethiopia 2006.
• Amnesty International: Ethiopia - Prisoners of conscience on trial for treason 2006.
• Torenvlied & Haarhuis: Dimensions and Alignments in the African Anti-Corruption Debate 2004.