News Analysis: Shops in Merkato remain shut for over a week as merchants challenge new receipt-based transaction requirement

Yishak Endris @Yishak_Endris

Addis Abeba – For over a week, the vibrant activity in Merkato, Addis Abeba’s largest commercial hub, has been significantly disrupted, with numerous shops remaining closed.

The primary reason behind this shutdown is the protest by shop owners against the mandatory implementation of a receipt-based transaction system, a move that has sparked intense debates between merchants and government officials.

During its visit to Merkato in particular in the areas known commonly as “Bomb Terra” and “Dubai Terra” yesterday, 18 November, 2024, Addis Standard observed that many shops remained closed, and daily laborers, who typically engage in loading and unloading merchandise, were left idle.

With increased receipt control measures in Merkato, merchants and porters have reported a significant slowdown in business activities, impacting their daily livelihoods.

A merchant from the Bomb Terra area, who wished to remain anonymous, explained that the increasing disorder in the Merkato area has further hindered business and reduced their daily income.

“Since last week, both I and the other merchants here have been in a state of confusion,” he recalled. “Everyone is expressing their own opinions and fears.”

He added, “Many have closed their shops because of these concerns.”

Another merchant in Merkato’s Dubai Terra area, who sells curtains and sofa fabrics, explained that increased receipt control has led many small and medium-sized retailers to close their shops.

“Most merchants here didn’t acquire these goods with receipts,” he explained. “These goods were obtained through various informal channels, often bypassing legal checkpoints.”

The trader further clarified that the requirement to sell these products with receipts, regardless of their origin, has caused significant chaos.

“Fines of over 100,000 birr are being imposed on merchants who don’t sell with receipts, forcing many to close their shops for over a week,” he added.

In the initial days following the closure of shops in Merkato, authorities issued a statement identifying what they considered the “root cause of the problem.” On 11 November, 2024, the Addis Abeba Trade Bureau released a statement addressing the issue, noting, “It has been observed that some merchants in the Merkato area have been spreading unfounded rumors, claiming that their property will be confiscated and their shops will be closed.”

The Bureau further clarified the source of these rumors, stating, “Some merchants, fearing their property would be confiscated, closed their shops.” It also added, “These individuals spread false information in an effort to disrupt attempts to establish a legal trading system.”

However, the statement from the Bureau had little impact in convincing traders to reopen their shops and resume their daily activities.

During a recent visit, Addis Standard observed that widespread fear has led to the closure of numerous shops across various sections of Merkato. Even the shops that remain open have reported significant product shortages. Additionally, businesses around “Dir Terra” and “Military Terra” were observed to be partially closed.

A merchant dealing in electronics, who requested anonymity, told Addis Standard that increased tax authority control in the area has led merchants to hide their products out of fear.

“You never know who’s going to come here,” he indicated. “[Tax officers] come pretending to be customers, and if you sell them something without a receipt, you’ll be fined.”

Government officials have stated that the recent initiative to mandate the use of official receipts for all commercial transactions is part of broader efforts to enhance tax compliance.

During a recent briefing to officials of the Addis Ababa City Administration, Mayor Adanech Abiebie stated, “The problem that is coming out of Merkato is reflected throughout the country.”

She explained that, following an assessment conducted at the end of the last fiscal year, the government decided to evaluate the volume of goods circulating within the country without proper receipts. Mayor Adanech further noted that this initiative is part of a broader effort to track goods imported into the country and those produced locally.

Addressing concerns from wholesalers who claimed to have purchased goods from factories and importers without the required receipts, the mayor urged them to report these suppliers to the authorities.

“Wholesales need to identify those importers and factories to authorities so that the government [can] take proper measures,” she emphasized.

However, traders speaking to Addis Standard emphasized that the tax initiative has been implemented in an unfair and burdensome manner.

The electronics merchant indicated that he had observed shops behind his store being fined for selling goods without receipts.

“Tax officers came pretending to be civilians and customers,” the merchant said, adding, “In addition to authorities, there are others who claim to be tax officers but are involved in corruption and extortion.”

The trader further disclosed that it is becoming increasingly difficult for merchants to distinguish between genuine and fraudulent tax officers.

“Out of fear, merchants are saying they have no goods, and half of the shops you see here are probably waiting to see what happens,” he emphasized. “If the government doesn’t strengthen its control, this will lead to corruption, bribery, and unnecessary problems.”

The issue of receipt-based transactions was the central topic of discussion during a recent meeting held between the officials of the Addis Abeba Revenue Bureau and representatives of merchants’ associations from the Merkato area.

During the discussion, the Bureau’s head, Binyam Mekuriya, stressed that conducting business exclusively through receipts is “non-negotiable” for any trader.

He emphasized that “challenges such as the presence of illegal brokers, middlemen, and entities unwilling to issue receipts—be they manufacturers, importers, or distributors—must be addressed through collaborative efforts.”

Highlighting that 63% of the city’s revenue is allocated to people-centered development and mega projects, Binyam urged traders to “play their part in addressing these issues and adhering to legal practices.”

The recent disruption of business activities in Merkato has led to a significant decline in daily income for carriers and loaders.

Speaking anonymously to Addis Standard at the “Dubai Terra” area, a carrier and loader described the challenges he faces in securing work due to widespread shop closures and reduced business operations. As the sole provider for his family, he expressed profound concern for their well-being, citing the loss of his daily income as a major source of distress.

In addition, one Merkato merchant who spoke with Addis Standard noted that the receipt control measure is affecting not only merchants but also consumers.

“I observed that when tax officers approached people carrying goods and asked for receipts, the consumers said they didn’t have any,” he stated, describing the situation. “The officers then threatened to fine them if they couldn’t show the shop where they bought the goods without a receipt.”

Despite concerns raised by merchants, the government has recently issued a directive mandating the inclusion of unique QR codes on all tax invoices.

Introduced as a measure to enhance tax compliance and transparency, the amended Tax Invoice Usage and Administration Directive, issued by the Ministry of Revenue, requires taxpayers to utilize distinct invoices for each applicable business category and location. Furthermore, these invoices must incorporate a unique QR code.

The directive stipulates that tax authorities will not recognize invoices that lack the QR code. AS