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.