Contribution of Khat Kellas and the Impacts of its Closure to Ethiopian Economy (The Case of Hararghe Khat Kella)

Abstract

The researcher was intended to investigate the contribution of khat kellas and the impacts of its closure to Ethiopian economy the case of Hararghe khat kellas. Primary data has been collected through unstructured interview made to the employees of Oromia revenue bureau and Ethiopian revenue and custom authority and the secondary data has been collected from related documents, reports and books. In this regard, seven consecutive years' data (2005)(2006)(2007)(2008)(2009)(2010)(2011) was collected and analyzed by using ratios, percentage, and table and graph. This study has revealed that Hararghe khat kellas has a number of contribution to Ethiopian economy like employment generation, increase government revenue and decrease local consumption which in turn increases foreign exchange. Even if the government has closed these kellas with the intention of export promotion to increase foreign currency, it was not successful as there is no tax discrimination between khat consumed locally and exported. Tax treatment for both is the same and cannot get what it is intended for. Based on the finding of the study, conclusion and recommendations were forwarded.