Month: March 2024

   By Geda Yoseph, Associate at DMLF

Introduction 

Bitcoin is the first decentralized digital currency that allows peer-to-peer transfers without any intermediaries such as banks, governments, agents, or brokers, using the underlying technology of blockchain. Anyone around the world on the network can transfer Bitcoins to someone else on the network regardless of geographic location; you just need to just open an account on the Bitcoin network and have some Bitcoins in it, and then you can transfer those Bitcoins. Bitcoin can be used for online purchases and or as an investment instrument. Primarily it’s used to buy goods and services. On the other hand, Bitcoin mining refers to the process of validating and recording transactions on the Bitcoin network. The primary purpose of Bitcoin mining is twofold: validating transactions to prevent fraud and adding new blocks to the blockchain, thereby creating new Bitcoins in a decentralized manner. 

Trading of Bitcoins and other cryptocurrencies remains mostly as an unregulated activity. Cryptocurrencies have three core characteristics: decentralized, unregulated, and quasi-anonymity. However, this does not mean that cryptocurrencies do not have self-regulation protocols. Cryptocurrencies such as Bitcoin have their own self-regulating protocol. Bitcoin is an internet-based cryptocurrency. Individuals can earn Bitcoin by trading, mining,and payment for services. As of January 2020, over 160 international branded companies accept Bitcoin for their services and products. This indicates that cryptocurrencies are becoming the payment system of future generations.

Advantages of Bitcoin 

Both Bitcoin and traditional currency are similar in that both are a store of value, they differ in many ways. First things first, Bitcoin is the first and most recognized cryptocurrency, a digital currency that is secured by cryptography. Bitcoin has several advantages as compared to traditional fiat currencies, assets can be transferred faster on the bitcoin network. The system also has lower transaction fees, because it’s decentralized and there are no intermediaries, and it is cryptographically secure; the identities of the sender and the receiver are kept hidden, and it is impossible to counterfeit or hack the transactions. Plus, all the information is available on a public ledger, so anyone can view the transactions. Hence, Bitcoin plays a significant role in attracting investors from different countries by facilitating financial transactions.

Bitcoin in Ethiopia 

Bitcoin is a simple and secure way to enter crypto mining. Ethiopia has now seen Bitcoin networks and clubs, such as Bit Club and AWS Mining, across the country, and more and more people are investing in them. In February 2024, it has been reported that the Ethiopian Government’s investment arm, Ethiopia Investment Holding (EIH) signed a Memorandum of Understanding with Honk-Kong-based West Data Group’s Center Service PLC to commence mining bitcoin. Moreover, according to the Reporter, in May, 2018, a Memorandum of Understanding (MoU) was signed between the Ethiopian Ministry of Science and Technology (MoST) and Input Output Hong Kong (IOHK) for the use of blockchain application platform called Cardano, a type of blockchain record management platform used in Ada cryptocurrency.                           

 Bitcoin Mining

According to data from Bitcoin mining services company Luxor Technologies, in 2023, Ethiopia ranked fourth behind the USA, Hong Kong, and Asia as one of the top destinations for Bitcoin mining rigs. Russian bitcoin mining company Bitcluster has already built the first bitcoin mining facility, and companies such as Hashlabs Mining have started building bitcoin mines in Ethiopia for their global clients. Ethiopia is positioning itself as a leader in the data center space in Africa, which is estimated to grow to $5.4 billion by 2027, according to Aritzon Advisory and Intelligence. The economic benefits of Ethiopia strategically leveraging its abundant energy resources for Bitcoin mining are vast and far-reaching. It is only a matter of time before other African nations join the bandwagon.

Regulating Bitcoin                       

In order to determine the legal status of bitcoin under the current Ethiopian legal framework, it is important to review the proclamation that establish the NBE ,the National Payment System Proclamation and proclamation that establish Information Network Security Administration (INSA). According to the National Bank of Ethiopia Establishment Proclamation, Proclamation No. 591/2008, Article 5(1), the NBE has the power and duties to coin, print, or cause to be coined, printed, and circulated the legal tender currency. This provision does not talk about bitcoin and other cryptocurrencies .The NBE also made a statement regarding cryptocurrencies in 2022, which states that the use of Bitcoin and other digital currencies for transactions is illegal in Ethiopia, warning that violators will face strict action. The National Bank of Ethiopia (NBE) also added that it will take “legal measures” against anyone found to be using cryptocurrencies for transactions in the country. “Birr is the only legal currency in Ethiopia, and all financial transactions shall be effected through it’’ said NBE. The NBE stressed that there is still no officially recognized cryptocurrency exchange in Ethiopia.

The Information Network Security Administration (INSA) stated on August 24, 2022, that “individuals and entities” involved in “crypto operations” must register with the authority within 10 days. The “urgent notice” comes after parliament amended INSA’s mandate to “regulate and control cryptographic products and their transactions”. Proclamation No. 808/2013, which established INSA, under Article 6(9), provides that the agency shall have the powers and duties to regulate cryptographic products and their transactions, set necessary criteria and develop operating procedures, and develop and implement cryptography infrastructure.

The other legal framework is the Ethiopian National Payment System Proclamation (Amendment) Proclamation No. 1282/2022. Under Article 2(20), the Proclamation defines a payment instrument as any instrument, whether tangible or intangible, that is issued against the receipt of a fund equivalent in Ethiopian Birr that enables a person to obtain money, goods, or services or to otherwise make payments, which include electronic money and cards. This definition is based on traditional currencies rather than emerging cryptocurrencies like bitcoin. Article 5 of this Proclamation also states that no person except the National Bank may be an operator or issuer of payment instruments unless such person is licensed or authorized by the National Bank.

Conclusion

There are strategic deficiencies in the country’s legal norms to govern Bitcoin. Ethiopia has not enacted a law that allows the use of cryptocurrencies. However, Bitcoiners are engaged in expanding the business in the country. Bitcoiners inspire Ethiopians to partake in the Bitcoin business either by buying Bitcoin or through engagement in mining. Signing a memorandum of understanding with different organs is not enough; providing an effective, efficient, and adequate legal and institutional framework for the implementation and regulation of the agreement is very important. Thus, the Ethiopian government should consider enacting a law that comprehensively governs bitcoin.  Along with this, improving the capabilities of financial institutions, law enforcement agencies, and regulatory authorities is crucial to deal with the bitcoin system.

For any related inquires, you may contact us at info@dmethiolawyers.com

    By Geda Yosheph,  Associate at DMLF                     

                         Introduction

The Ethiopian health sector is one of the areas that has shown good progress in the recent past. Following the change of government in 1991, the new Government of Ethiopia put in place many political and socio-economic transformation measures. Among these, it developed a first national health policy, which was followed by the formulation of four consecutive phases of comprehensive Health Sector Development Plans (HSDPs), starting from 1996/97. The policy and the first HSDP were based on critical reviews of prevailing national health problems and a broader awareness of newly emerging health problems in the country. At the core of the health policy are democratization and decentralization of the health care system; developing preventive, promotive and curative components of health care; assurance of accessibility of health care for all parts of the Population; and encouraging private and NGO participation in the health sector. During the past fifteen years, the Federal Ministry of Health has built an impressive framework for improving the health for all, including maternal and neonatal health.

Providing an effective and adequate legal framework for the health sector plays a crucial role in enhancing the development of the health sector by advancing the quality of service and its coverage.

There are only a few scattered laws and regulations enacted to govern and regulate the health sector.

                                Legal Framework of Health Sector

FDRE Constitution 1995 

The legal framework plays an important role in promoting, developing, and regulating the health sector. The health sector deals with the life of a human being; it’s all about the protection of the health of citizens; hence, strict and effective regulation is very important. The purpose of laws is not only regulation; they also play a significant role in promoting the development of the health sector by encouraging the participation of the private sector and all other stakeholders in the health sector. The EFDRE Constitution provides a general framework for the state structure, rights, and duties of citizens and government. The 1995 FDRE Constitution also provides a general framework with regard to public health and the right to a clean and healthy environment. The Constitution, under Article 41(4), imposes an obligation on the state to allocate ever-increasing resources to provide public health, education, and other social services. States play an important role in providing good public health in developing countries like Ethiopia, where the private sector is not strong enough to provide effective health services to the public. The health sector also deals with citizen’s health rights. The EFDRE Constitution, also under Article 44, recognizes citizen’s right to a clean environment, and it provides that all persons have the right to a clean and healthy environment. This right is also among the rights that obtain international recognition through different treaties and conventions. Ethiopia also enacted a proclamation that regulates environmental issues. The Constitution also imposes an obligation on the state to establish and implement basic policies for public health, which is provided under Article 51 of the Constitution. The government also has a duty to protect and promote the health, welfare, and living standards of the working population of the countries. Ensuring access to public health and a clean environment are also among the duties of government provided under the constitution. This general framework provided in the constitution is implemented by proclamations, regulations, and directives issued by the representatives of the House of Representatives, the Council of Ministers, and Health Minister, respectively.

                    Proclamations governing the health sector

In order to encourage the expansion of health services, the government enacted Social Health Insurance Proclamation No. 690/2010. Social health insurance is one of the sustainable health care financing mechanisms that enhance equitable access to improved health services through cross-subsidization. The main objective of this proclamation is to ensure the expansion of health service coverage, which plays a significant role in the accelerated socio-economic development of the country. The other objective of social health insurance is to provide quality and sustainable universal health care coverage to the beneficiary through the pooling of risks and reducing financial barriers at the point of service delivery. This social health insurance ensures the expansion of health services through cost sharing between beneficiaries and the government in the health sector. This social health insurance is playing a crucial role in ensuring health service coverage, especially in rural areas. The health service package given to beneficiaries of this social health insurance includes all essential health services and other critical curative services, which are determined by regulations.

The health sector is one of the areas that needs strict and effective regulation.. Unless  regulated, unsafe, inefficacious, and of poor quality modern and traditional medicines can cause serious health problems in the society. To prevent such risk Food, Medicine and Health Care Administration and Control Proclamation, PROCLAMATION NO. 661/2009 is issued. Primary objective of this proclamation are:  

• To protect the public health from unsafe, inefficacious and poor quality modern and traditional medicines;
• To protect the public from health risks emerging out of unsafe and poor quality food;
• To avert health problems due to substandard health institutions, incompetent and unethical health professionals, poor environmental health and communicable disease;
• To control and deter illicit production, trafficking and use of narcotic drugs, psychotropic substances, and precursor chemicals;
• To make the fragmented and poor quality administrative and regulatory system in the health sector efficient and effective, it is found necessary to establish a new and coordinated food, medicines and health care regulatory system.

Unlike Proclamation No. 690/2010, which focuses on encouraging the expansion of health services, Proclamation No. 661/2009 is concerned with the regulation of the health sector, especially with regard to medicine, food quality, drugs, and chemicals, and providing an effective and efficient legal framework for the health sector.

                                                     Entry Regulation  

Health professionals to engage in this activity of providing health services, first of all, they have to obtain a license or certificate issued for a health professional to provide medical or other health-related services. Proclamation No. 661/2009, under Article 33, provides that no person shall practice as a health professional without having obtained a professional practice license issued by the appropriate organ.

Proclamation No. 661/2009 has regulatory purpose. Hence executive organs play significant role in this regulatory activity by: 

• prepare and submit to appropriate organ health regulatory standards for safety and quality of food, safety, efficacy, quality and proper use of medicines, competence and practice of health professionals, hygiene and environmental health, competence of health and controllable health related institutions; 
•  Issue, renew, suspend and revoke certificate of competence for specialized health institutions, food and medicine processing plants, quality control laboratories, bioequivalence centers, importers, exporters, storages and distributors and trans-regional health service institutions. The other power and duties of the executive are provided under Article 4 of Proclamation No. 661/2009

                      Regulation after entry

The law regulates not only at the point of entry or license, but even after health professionals obtain a license to provide health services, they are subject to regulation and inspection. The executive organ appoints inspectors to implement the provisions of the Proclamation and other laws and directives related with food, medicine and healthcare administration and control.

The other proclamation is Drug Fund and Pharmaceuticals Supply Agency Establishment Proclamation, PROCLAMATION NO.553/2007.Primary objective of this proclamation are:  

• to supply quality assured essential pharmaceuticals at affordable prices in a sustainable manner to the public;
• to design a system of mobilizing funds from different sources to ensure uninterrupted and sustainable supply of pharmaceuticals to all public health facilities and thereby serve the public in an equitable manner

This proclamation establishes the Pharmaceutical Supply Agency (hereinafter referred to as “the Agency”) as an autonomous federal organ having its own legal personality. The objectives of the agency include:

• to enable public health institutions to supply quality assured essential pharmaceuticals at affordable prices in a sustainable manner to the public;
• to play a complementary role in developmental efforts for health service expansion and strengthening by ensuring enhanced and sustainable supply of pharmaceuticals
• to create enabling conditions for enhancing the accumulation of the Fund in its revolving and cost recovery process

The other legal framework is the Proclamation on Public Health, Proclamation No. 200/2000. This proclamation is issued to promote the health of society and the creation of a healthy environment for future generations by enhancing the active participation of society in the health sector. This Proclamation imposes a duty on the Public Health Authority to appoint qualified inspectors to implement the provisions of Proclamation No. 200/2000 and other laws and directives related to public health. Public health proclamations regulate food quality, food standard, water quality, waste handling and disposal, the availability of toilet facilities, the disposal of dead bodies, control at entry and exit ports, communicable diseases, etc. The primary concern of this proclamation is to protect public health by regulating and setting standards in order to protect society from any health issues. This Proclamation is also one way by which the government implements its constitutional duty to protect public health as stated under Article 90 of the EFDRE Constitution.

                                                   Conclusion 

The health sector is one area that is showing good progress in terms of quality of services and coverage. Legal frameworks also play an important role in regulating and promoting the health sector. In this short brief on the legal framework of the Ethiopian health sector, we try to discuss constitutional frameworks and different proclamations enacted by the House of Representatives to govern the health sector and promote the development of this area. The legal framework governing the health sector in Ethiopia is more scattered and disorganized, and the number of articles and commentary written on this area is also very few. We recommend that an effective, efficient, and organized legal framework is very essential to the development of the health sector and protecting public health.

For related inquires, you may contact us at info@dmethiolawyers.com

By Geda Yoseph, Associate at DMLF

                                      Introduction   

Bankruptcy is the death of a business organization. Just like a human being, business organizations pass through different stages from establishment through registration, development, and bankruptcy due to losses. Like entry, exits from businesses or activities for which they are licensed are also subject to rules and regulations. When a business organization suffers losses or is declared bankrupt, the law regulates how such an organization exits from the business. Bankruptcy law under the Commercial Code provides the rules and procedures through which business organizations go when they are declared bankrupt. A business organization is established by registration upon their exit from business due to bankruptcy or any other reason registration of that business organization is canceled. This material (Brief) is prepared to give a brief on bankruptcy law under the new commercial code, which was adopted on March 25, 2021, by the Ethiopian Parliament. This brief also gives an overview of existing rules, and regulations under the new commercial code.  

                                                  Bankruptcy

Bankruptcy is the judicial process by which the debtor is found not able to meet his commitments towards his creditor. On the other hand, the Black‟s Law Dictionary defines winding up as: “process of settling the accounts and liquidating the assets of a partnership or corporation, for the purpose of making distribution of net assets to shareholders or partners and dissolving the concern.” What one can infer from this definition is that winding up presupposes a company or another business organization where there are shareholders or partners. The Commercial Code did not define the concept of bankruptcy. It simply dealt with the conditions of bankruptcy. There are two important conditions that need to be fulfilled for the existence of bankruptcy. The two conditions are suspension of payments and declaration of bankruptcy. In the absence of any of these two conditions there is no bankruptcy. In other words, the two conditions are cumulative rather than alternative. The objective of bankruptcy proceedings is to timely, efficiently and effectively organize the liquidation of the debtor’s business, whether by piecemeal liquidation or by a sale of business as a going-concern, in order to maximize the value of the assets available for recovery by creditors, to ensure for honest debtors a fresh start after a full discharge of their debts and to provide for sanctions against debtors and their management as well as creditors that are responsible for its bankruptcy.

                                          Conditions of bankruptcy

Any trader who has suspended payments and has been declared bankrupt shall be deemed to be bankrupt. Suspension of payments shall result from any fact, act, or document showing that the debtor is no longer able to meet the commitments related to his commercial activities.

                                           Opening of Bankruptcy Proceedings

Bankruptcy proceedings shall be opened upon the application of a debtor who has been in cessation of Payments. Debtors who have been in cessation of payments shall at the latest within forty-five days apply to court for the opening of bankruptcy proceedings unless the debtor has already applied for the opening of reorganization proceedings. Bankruptcy proceedings may also be opened upon the application of: a) persons who are jointly and severally liable with the debtor; b) one or more creditors whose claim against the debtor is due and payable; c) a liquidator appointed to liquidate the debtor’s business outside bankruptcy proceedings. In addition to his application, debtors shall submit documents listed under Article 637(1) of commercial Code. These documents are:

• The last three balance sheets or financial statements of the business organization;
• A profit and loss account;
• A cash flow statement in order to demonstrate that the debtor is able to finance the observation period.
• A list of commercial credits and debts to be collected, with the names and address of the Creditors and debtors.

Where the debtor is not in a position to provide the Court for a complete set of documents, the debtor shall explain the reasons in the petition. The Court may ask the debtor to submit any further relevant documents and may ask any third party to provide such documents, in particular banks and public administrations. The court may also initiate bankruptcy proceedings on its own motion where, as a result of proceedings against the debtor, it is apparent that the debtor is in cessation of payments. The court which has ascertained the debtor’s cessation of payments shall refer the case to the court that has jurisdiction to order judgment of bankruptcy, which is the Federal High Court, in light of Article 11 Sub Article (2) of Federal Court Proclamation No. 1234/2021. In addition to their application, creditors shall submit documents listed under Article 637 Sub-Article (4) of commercial code and may suggest the name of the person to be appointed as trustee in bankruptcy. These documents are: 

• Evidence that creditors have a due and payable claim that has not been paid;
• Evidence showing why the debtor was unable to effect payments;

• Evidence showing the reasons why the creditor, using ordinary civil procedures could not or was no longer in a position to enforce his claims against the debtor;
• Evidence showing that the debtor is in a situation of cessation of payments.

                                       Judgment of Bankruptcy

At first hearing, or, where appropriate, on receiving the report from the investigator the Court shall:

1. declare the debtor bankrupt;
2. appoint the supervisory judge
3. appoint the trustee in bankruptcy for the conduct of the bankruptcy proceedings
4. fix the date of cessation of payments, where the date has not been fixed in the context of reorganization proceedings

A judgment of bankruptcy against a business organization comprising joint and several liability partners shall result in the bankruptcy of partners; the assets of the firm and of the partners shall be dealt with separately and the bankruptcy proceedings shall be conducted separately.

                                   Notice to Creditors

Where an application for bankruptcy is filed by creditors, partners with joint and several liabilities or a public prosecutor, the Court shall notify the debtor of the application within seven days from the application. The debtor shall, within twenty days from the receipt of the application, submit his reply indicating his agreement with or opposition to the application of bankruptcy. The debtor shall submit the documents listed above and other supporting documents indicating whether he is in cessation of payments. Where the debtor admits the cessation of payments, the debtor shall indicate whether his business can still be eligible for reorganization proceedings or should go to bankruptcy proceedings.

                      Opening of Bankruptcy Proceedings after Death

A debtor, whose registration has been struck off the commercial register may be declared bankrupt where such trader has been in cessation of payments within one year from the date he was struck off from the register. Where the trader was not registered in the commercial register, he may be declared bankrupt at any time after the cessation of payments.

                                    Publication of Judgments

Bankruptcy judgments shall be publicized according to Article 648 of the commercial code. The judgments rendered on bankruptcy shall be publicized by the registrar of the court by means of notices posted at the entrance of the Court and by an exact publication in a newspaper of wide circulation in Ethiopia. The court’s registrar shall ensure that the judgment rendered for opening reorganization proceedings is entered in the commercial register in accordance with the relevant laws.

                                                Conclusion 

Ethiopian Bankruptcy Law is the least known and hence the least practiced in Ethiopia. There have been relatively few bankruptcy cases since the Commercial Code went into effect in I960. This brief provided a general overview of Ethiopian bankruptcy law under the new commercial code. Bankruptcy, as a judicial process, passes through several stages and processes until the final process is finalized. Different parties and bodies also participate in and conduct this judicial process; each of these parties has their own respective duties and responsibilities in this process. This brief highlights the duties and responsibilities of these different parties and bodies during this judicial process under the new commercial code. Like entry, exit from business is also subject to regulation because, unless it is strictly regulated, the interests of different parties may be affected; hence the law provides strict regulation. This brief also provides a general overview of this regulation, procedure, procedure and material required, and duties of each party during this judicial process of bankruptcy.

For any inquiries, you may contact us at info@dmethiolawyers.com