After seizing equipment, Ethiopia goes ahead with Huawei deal

Telecoms

In another controversy over China's influence in the African ICT sector, the Ethiopian government has allowed Huawei Technologies to take back $13 million of telecom equipment that was being held while the country's tax agency looked into charges that the goods were illegally imported.

Despite the incident, Huawei has been picked by Ethio Telecom, a state-owned telecom company, to roll out a high-speed 4G network across the country's capital, Addis Ababa, as part of a $1.6 billion deal signed earlier this year with Huawei Technologies and ZTE.

In October this year, Ethiopian tax authority ERCA said it would confiscate the equipment and slap the company with a tax avoidance charge, after the equipment had been held in a warehouse for almost a year. The equipment was imported into the country toward the end of 2012 after Ethio Telecom made known plans to expand its network in the East African country.

Ethio Telecom is the sole telecommunication services provider in Ethiopia and the only operator in the East Africa region that is still under tight state control. The Ethiopian government has refused to open up its telecom sector to private investors.

According to a Ethiopian government official, Ethiopia and China became involved in diplomatic talks over seizure of the equipment. The two countries are said to have agreed that it was important to maintain good bilateral relations by allowing Huawei to take back the equipment.

However, the Chinese company has also been ordered by ERCA to pay five percent of the total tax due on the equipment as well as warehouse charges incurred over the past one year.