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Mekelle City Administrators should think twice before pulling the plug on struggling businesses

Mekelle City Administrators should think twice before pulling the plug on struggling businesses

 

Tesfai Hailu, Nov. 2017

 

As everyone who lives or paid a visit to Mekelle lately would notice, the city is suffering from an economic slowdown. And, as if that’s not evident enough, anyone willing to listen will have an earful of complaints and laments from restaurateurs, coffee shop and hotel owners as well as others in the service and retail sector whose income has hit rock bottom.

 

In the developed world, this could be classified as a recession compelling economic stimulus such as “increasing government consumption or transfers or lowering taxes” with the logic that it would “cause sufficient economic growth” as Keynesians and social democrats argue.

 

Unfortunately, an economic stimulus, particularly in the form of tax-cut, is not a common practice by the ruling party. In fact, to the contrary and to the outrage of taxpayers, policy and decision makers have the tendency to levy heavy taxes in the worst of economic times as witnessed many a time during tax season. Adding insult to injury – consumed by petty political and partisan bickering – opposition parties rarely make tax-cut a major political or an election issue.

 

The other important thing governments – for the purpose of this article, city governments – do to help business is implement city zoning for commercial activities, i.e. “the buying and selling of goods and services”. Indeed, cities “use zoning laws to prevent conflicts between residential homeowners and businesses”.

 

On that note, in Mekelle’s case, the most fitting area for commercial zoning is 16 kebele. As anyone who grew up or lived long in Mekelle would recall, 16 kebele (formerly known as “Hosanna” and currently and hereafter just “16”) was a predominantly residential area for mid and high income earning families – public servants, teachers, business owners, etc.

 

However, with the emergence and eventual expansion of businesses – such as coffee shops, restaurants, bars, hotels, pool/gaming places, hair salons, clothing stores and other service providers as well as retailers – 16 is now almost entirely a business area. As such, it should be designated as a commercial zone. To that end – as one of the area’s attractions is the outdoor and open air service it provides to residents as well as visitors who flock to the area – businesses at 16 ought to be allowed to cater to customers outdoors.

 

Yet, business owners are currently receiving stern warning from “sub-city” officials who are compelling them to sign an agreement not to put chairs and tables outside (on the sidewalk / ደረጃ) or risk getting penalized. On that note, the owners of a restaurant and a coffee shop I frequent separately told me that – if this new regulation is enforced – they will have no choice left than to terminate the rental contract and close shop (with penalty for a breach of a legally binding contract signed with their respective landlords). That is because they wouldn’t be able to earn a living if their business is constrained to indoor activities.

 

This is certainly problematic in more ways than one, among them:

 

a)    There are thousands of business owners who – similar to the two addressed above – primarily depend on the provision of outdoor service to support themselves and their families. A good number of them, particularly in coffee business, happen to be young women.

 

b)    Many of the small businesses at 16 provide job opportunities to coffee brewers, waiters, bus boys and girls, dishwashers, store attendants, barbers and hairdressers, guards, etc.

 

c)     Property-owners (a good number of them retirees) make a living by renting houses at 16. There, in fact, are those who moved out to the suburbs such as Adeha, Addi-Hausi or Kelkel Debri (some of them to rental houses there) with the anticipation of a rent income from their houses at 16.

 

This means that with the already slow business, taking additional heat as a result of a new city regulation, business owners, employees and proprietors will lose significant income or their entire livelihood.

 

d)    During such a politically charged and volatile time that has made Tegaru unfair targets of identity based violence, businesses in Mekelle and Tigrai at large should be encouraged to flourish, and thereby serve as a pool factor for Tegaru all over the country as well as overseas.

 

Instead, such untimely and shortsighted regulatory policy has the potential to become an unintended push factor for entrepreneurs and jobseekers to go elsewhere despite all the odds against them.

 

The question here is, why are government officials ignoring these facts to go ahead with a regulation that is deemed to kill business; escalate unemployment and poverty?

 

1)     The health and safety factor: No doubt vehicles have the potential to endanger people’s lives at 16, especially at night when alcohol could be a factor, and officials may genuinely be concerned about this.

 

In that case, as alluded to above, 16 should be classified as a commercial zone wherein vehicle movement is restricted. For instance, as streets at 16 are divided in a straight east/west and north/south lines and in a very orderly manner at that, nearly all of them could be turned into one way streets (perhaps except for the asphalt that goes from Atse Yohannes Elementary School down to the street that links Abraha Castle with Romanat where LG building is).

 

Further, speed limit could and should be reduced to as low as 20 kph. on many of the streets to discourage speeding, which is a major problem, especially by three wheel vehicles commonly called bajaj.

 

Not only will this reduce traffic and help prevent vehicle related accidents to pedestrians as well as outdoor service users, but also – by strictly enforcing the regulation – revenue could be raised for the city to help with traffic police officers’ salaries. 

 

2)     Youth idleness: This too could be a concern as it has the potential for adverse economic and social impacts. Nonetheless, taking away or restricting the youth’s legal outlet for entertainment and time spending is not the solution. In fact, it could have the unintended negative impact of compelling them to look for other venues, which could be illegal and more harmful.

 

3)     Morality factor: The 16 area is not viewed favorably by some for its overconcentration of bars and clubs, resulting in noise pollution, booze and unruliness.  

 

When it comes to noise, again deeming and designating the area as a commercial zone could grant it some leverage to serve its purpose. The booth, which may lead some to unruliness, cannot be stopped by decree. Rather, it’s through education and awareness creating that the fight against excessive alcohol consumption can be effective.

 

Besides, the banning of outdoor service affects more coffee drinkers during the day than alcohol consumers at night.

 

To sum up, the purpose of this opinion piece is not to fully and forever defend 16 Kebele to be what it is. But rather:

 

a)     To point out that the timing is not right to impose laws or regulations that are unfavorable to business, and thereby cause incalculable pain suffering to several stakeholders.

 

b)     To add that what is needed to change 16 into a better business area is not a new regulatory policy, but rather development. However, Mekelle is not at a stage to fully utilize 16, or any other downtown area, for better business yet.

 

Looking at many of the high rise buildings with empty rooms at higher than 3rd. and 4th. floors, it’s evident that it will take some time for the city to attract multipurpose business buildings and businesses to 16 Kebele.

 

As I wrap up this article at a hotel in Mekelle, I hear the catchy Amharic song on TV, አሽከርክር ረጋ ብለህአትቸኩል ትደርሳለህ ዘና ብለህ traffic song (roughly: stay calm while driving; don’t rush you will arrive relaxed). And that is the message I’d like to pass to the Mekelle City Government.

 

After all, as the biblical wise man put it long ago, “There is a time for everything, and a season for every activity under the heavens … a time to kill and a time to heal; a time to tear and a time to mend; a time to tear down and a time to build …” Indeed, this is not the right time to kill or tear down 16, but rather mend, and help heal the ailing businesses until there comes a time to tear, and rebuild.

 

After all, “an effective regulatory policy supports economic development and the rule of law, helping policy makers to reach informed decisions about what to regulate, whom to regulate, and how to regulate and when to regulate”.

 

 


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