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Check FAQAbout Samson
I am a writer and a journalist, residing in Addis Ababa. Despite being a non- native English speaker, I can fluently and proficiently communicate in English both verbally and in writing. I am currently working as Editor-in-Chief of the Ethiopian Business Review Magazine, the most circulated monthly in Ethiopia. I have been working in the media industry for the past three years. I am a creative person having a high command over technical and commercial writing, reading and typing skills. I can also manage digital and social media very well. I consider myself a great team player owing to my profession as a journalist and involved in various research activities including working as a quantitative researcher in projects of Girl Hub and Central Statistical Agency. . Through my staying at university and professional life I have had the exposure to work under stressful environments and pressure, enabling me to improve my management and interpersonal skills. I possess expertise in editing, stylizing and proofreading in a timely manner. I can also add a fresh perspective to editing, and presentation of Newspapers as a whole.
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Portfolio
The fine line between lucrative and wasteful transport projects
Ministers, executives, and private sector representatives gathered in Addis Ababa for a historic investment summit led by President Sahlework Zewdie, marking the launch of transport infrastructure projects worth over three trillion Birr. The ambitious ten-year plan aims to create 1.4 million jobs, increase road coverage by 71%, and significantly expand railway and flight infrastructure. However, concerns about feasibility, financial constraints, and past project delays were raised. The Ministry of Transport plans to adopt rigorous monitoring and evaluation procedures to ensure successful implementation, while experts emphasize the need for feasibility studies and prioritization.
Living Cost Lingers at Five-Year High
The cost of living in Ethiopia remains at a five-year high with a year-on-year inflation rate of 13.6%, despite a drop in food prices. The inflation rate has stagnated due to a decrease in food inflation, but the prices of goods like clothing, footwear, and Khat have surged. The National Bank of Ethiopia's tight monetary policy and the Prime Minister’s Office's new committee aim to control inflation. Experts like Yohannes Ayalew and Atlaw Alemu provide insights into the inflationary pressures and economic health, highlighting the impact of inter-regional conflicts and market destabilization on Khat prices.
Nyala Tops Profit List Among Private Insurers
Nyala Insurance achieved a remarkable net profit growth of 71% to 122.2 million Br, leading among private insurers. The company's market share in general insurance is 6%, and it surpassed Awash Insurance in profit. Key factors for this growth include an overhaul of the risk management system, a prudent underwriting policy, and increased income from investments. Despite a slight decline in retention rate, Nyala's earnings per share rose significantly. The company also saw a decline in paid claims and an increase in gross written premiums. However, rising expenses in salaries and benefits were noted, suggesting a need for cost control mechanisms.
The uphill battle to choke money laundering
Ethiopia has made significant strides in combating money laundering, including demonetizing the Birr and encouraging electronic transactions. Despite being removed from the EU's high-risk list, challenges remain due to legal loopholes, lack of strong institutional integration, and inadequate customer identification procedures. The Financial Intelligence Centre and other agencies are working to address these issues, but further improvements are needed to effectively curb money laundering and terrorism financing.
Amhara Bank in dispute with commercial banks over unpaid interest
Amhara Bank is in a dispute with 10 commercial banks over the repayment of interest on its paid-up capital, which amounts to between 420 million Birr and 780 million Birr. The bank argues that interest should be paid on closed accounts, while the commercial banks claim that the nature of the agreement prevents them from doing so. Amhara Bank has sought intervention from the National Bank of Ethiopia and is considering legal action to resolve the issue.
The Solar Market in Rope Halters
The article discusses the challenges and opportunities in Ethiopia's solar market, highlighting the struggles of rural households like Tinsaye Tenaw's in accessing electricity. It examines the high costs and limited availability of solar products, exacerbated by contraband markets and regulatory hurdles. Despite significant market potential, private investment is hampered by foreign currency shortages and restrictive policies. The article emphasizes the need for better financing mechanisms, government incentives for local assembly, and end-to-end control for solar companies to ensure quality and service delivery.
Coca-Cola’s optimistic strides in Ethiopia
Daryl Wilson, Managing Director of East Africa Bottling Share Company, discusses Coca-Cola's extensive expansion projects in Ethiopia, including new facilities in Sebeta and Hawassa. Despite challenges such as foreign currency shortages and political instability, the company remains optimistic about Ethiopia's economic potential. The merger with Ambo Mineral Water and the impact of COVID-19 on business operations are also highlighted. Coca-Cola plans to introduce new products and increase local production capabilities to meet growing demand.
Traders Await Trade Deal Between Somaliland, Ethiopia To Use Berbera Port
Traders in Ethiopia are anticipating a trade agreement with Somaliland to utilize the Berbera Port for commercial goods. Currently, the port is used for public goods and some factory imports. Talks are ongoing, with hopes for a deal this year. Ethiopia missed a chance to buy a 19% stake in the port, which is primarily owned by DP World and Somaliland. DP World aims to increase Ethiopia's use of Berbera Port to 30% over the next decade. DP World has invested significantly in the port, which is under construction.
Mugher on Risk of Shutdown Despite Production Upturn
Mugher Cement, despite a significant profit increase to 60 million Br and a production boost of 28% in the last fiscal year, faces potential shutdown due to persistent power disruptions at its Tatek plant. The company struggles with a 1.2 billion Br debt to the Commercial Bank of Ethiopia and ongoing operational challenges. The power issues, affecting multiple cement manufacturers including Dangote Cement Industries, are a major bottleneck, with Ethiopian Electric Power denying any deficit. Industry stakeholders emphasize the need for solutions to avoid shutdowns.
Light Railway incurs 4.6 billion Birr in losses
Addis Ababa Light Railway, under the Ethiopian Railway Corporation, incurred a 4.6 billion Birr loss in its first four years, borrowing from the Commercial Bank of Ethiopia to repay its USD 475 million debt. A performance audit by the Office of the Auditor General highlighted financial mismanagement and inefficiencies, including fines for late payments to Chinese Exim Bank. Despite the railway's public service role, the Addis Ababa City Administration has not subsidized its losses. The newly established Liability & Asset Management Corporation will manage the debt of state-owned enterprises, including the Ethiopian Railway Corporation.
Raw Material Deadlock
Ethiopian manufacturing sectors, including edible oil, cement, and textiles, are grappling with severe raw material shortages exacerbated by foreign currency constraints. Companies like Shemu Group and PhiBela Edible Oil Factory are operating well below capacity due to limited access to necessary inputs. The National Bank of Ethiopia's prioritization of forex for essential imports offers some hope, but systemic issues like poor supply-chain management and economic sabotage persist. Long-term solutions proposed include reforming production systems and improving integration between small, medium, and large industries.
Two Companies in the Running to Print Security Items
Berhanena Selam Printing Enterprise (BSPE) has shortlisted two multinational companies, Quadra Graphics from Serbia and Eagle Press from India, for a partnership to print security items such as scratch cards and identity cards. The selection was made from an initial pool of 18 companies based on technological efficiency, capital, and experience. The partnership aims to save foreign currency and expedite the start of security printing services. The final decision requires endorsement from the Ministry of Public Enterprise. The Enterprise has faced challenges in procuring necessary printing equipment due to forex shortages and organizational restructuring.
Induced Fear
The National Bank of Ethiopia's new rule limiting weekly transactions to five aims to curb illegal money transfers and strengthen the formal remittance market. However, this measure has sparked concerns about its potential negative impact on business transactions and economic slowdown. Experts and industry insiders are divided on the effectiveness of the rule, with some supporting it as a necessary step and others criticizing it as draconian. The article also highlights the broader context of Ethiopia's remittance flow, comparing it to other African countries and discussing various government efforts to boost formal remittance channels. The high cost of formal money transfers and the impact of COVID-19 on remittance inflows are also examined.
Silent Depreciation of Birr: Misplaced Concern or Practical Reality?
The Ethiopian Birr has depreciated significantly over the past decade, with the government maintaining a policy of devaluation to boost international competitiveness. However, this strategy has led to high inflation, increased costs for producers and consumers, and a widening gap between official and parallel exchange rates. Experts argue that the policy has failed to achieve its goals and suggest that Ethiopia should focus on reducing imports and solving structural economic issues before liberalizing its exchange rate regime. The International Monetary Fund's recommendations for further devaluation are criticized as potentially harmful to the Ethiopian economy.
Co-founder of East African Bottling wins court injunction
The foreclosure proceedings to sell 32,624 shares of East African Bottling SC were suspended after stockholder Nigussie Hailu obtained an injunction order. The Federal Courts Judgment Execution Directorate had announced the foreclosure following a federal high court order. Nigussie, the only local shareholder since 2017, faced foreclosure at a floor price of 58.2 million Birr. The settlement, once finalized, will conclude a 25-year court case involving former Prime Minister Tamrat Layne. Nigussie and his partners were previously convicted of corruption. Nigussie, a founder of EABSC, currently owns 222,000 shares, significantly more than the amount up for foreclosure.
Foreign Mortgage Banks: Panacea to the Housing Crisis?
The article discusses the severe housing crisis in Addis Ababa, where low-income residents face decades-long waits for affordable housing. Prime Minister Abiy Ahmed advocates for opening the financial sector to foreign mortgage banks to address the housing demand. This proposal has received mixed reactions from financial experts and industry insiders. Proponents argue that foreign banks could bring efficiency and long-term funding, while critics fear market domination and adverse impacts on local banks. The article highlights the challenges and potential benefits of allowing foreign mortgage banks to operate in Ethiopia.
Mushrooming Banks: Same old, Same old
The Ethiopian banking industry is experiencing rapid growth with over 20 new banks under formation, potentially increasing the total number to 42. Despite this growth, the industry remains concentrated in urban areas, particularly Addis Ababa, leaving rural areas underserved. New entrants are encouraged to adopt distinct business models to avoid replicating the practices of existing banks, which focus heavily on corporate customers. The Commercial Bank of Ethiopia continues to dominate the market, influencing the operations of private banks. Experts suggest that new banks should focus on specialized sectors like investment, agriculture, and industry to become market leaders. There is also a call for more community and regional banks to improve financial inclusion. Mergers and acquisitions are rare in Ethiopia's banking sector, largely due to fears of losing influence among shareholders and executives.
Dashen’s Profits Grow Moderately, Shareholders’ Returns Sink
Dashen Bank reported a four percent growth in net profits to 756.1 million Br, but shareholders' returns have been declining for five consecutive years, now at 392 Br. The bank's management attributes this to economic slowdown, competition, and tight regulations. Despite a 25% growth in total revenues to 3.4 billion Br, gains on foreign exchange dealings dropped by seven percent. Increased expenses, including interest on deposits and salaries, have also impacted profitability. The bank has faced challenges in loan collections due to unrest in parts of the country but has seen a 22% increase in deposits and a 42% increase in loans and advances.
New bill allows foreigners open investment banks
A new bill in Ethiopia allows both foreign and local investors to open investment banks, which will not be permitted to collect deposits or provide loans. Instead, these banks will offer advisory services and facilitate stock transactions, mergers, and acquisitions. The bill aims to boost economic growth and establish the Ethiopia Securities Exchange (ESX) within a year, with a 25% government stake and 75% private ownership, including foreign investors. The ESX will be based in Addis Ababa, with potential for additional exchange markets in other cities.
At USD37.5, Ethiopian workers earn lowest wage among major producers of coffee
Ethiopian laborers in the coffee sector earn significantly less than their counterparts in other major coffee-producing countries, with wages 10 times lower than those in Costa Rica. A study by the International Labor Organization highlights the disparity, attributing it to factors such as the quality of coffee, marketing systems, and living conditions. The absence of a minimum wage in Ethiopia's coffee sector and low bargaining power of workers contribute to the low wages. Expert Betelehem Hailegebriel points out the lack of skilled manpower and technological advancement as additional factors. Ethiopia's coffee producers also earn the lowest among major producing countries.
Ethiopia: Govt Seeks U.S.$12 Billion in Funding for Economic Plan
The Ethiopian government aims to secure USD 12 billion in funding for a new three-year economic reform plan, with potential sources including the IMF, World Bank, and debt restructuring. Improved relations with Western countries like the U.S. and France may aid in obtaining debt relief and financing. However, policy conditions, particularly those related to foreign exchange liberalization, could complicate negotiations. The IMF requires liberalization within a year and assurances that the Ethiopian Central Bank will cease direct funding advances to the government.
Rwanda to Host Key Trade Insurance Event in July
Kigali, Rwanda will host the 23rd Ordinary Annual General Meeting of the African Trade Insurance Agency (ATI) from July 5 to 7, 2023, along with an investor roundtable on trade and investment risks. The event will address Africa's economic challenges post-COVID-19, the Russia-Ukraine war, and climate change. ATI will also unveil its new brand identity. Rwanda's Finance Minister Uzziel Ndagijimana expressed pride in hosting the event, which will see participation from finance ministers of 21 ATI member countries and various regional and international investors and insurers.
We are buffer zone for Ethiopia – Somaliland Foreign Minister
Essa Kayd Mohamoud, Somaliland's foreign minister, discusses the country's efforts to gain international recognition, its strategic relationship with Ethiopia, and the ongoing conflict in Las Anod. He highlights the importance of the Berbera port for trade, the fight against illegal activities, and the role of Somaliland as a buffer zone for Ethiopia. The minister also addresses the historical context of the Las Anod conflict, the involvement of extremist groups, and the need for peaceful resolutions. Additionally, he touches on Somaliland's relationship with the US, Taiwan, and its stance on China, emphasizing the country's democratic values and strategic importance.
Sudan Backs Ethiopia's Dam
Sudan has shifted its stance to fully support the Grand Ethiopian Renaissance Dam, reversing its previous opposition alongside Egypt. This change was announced during Ethiopian Prime Minister Abiy Ahmed's visit to Sudan, where he met with Sudanese leaders including Abdel Fattah al-Burhan. The visit aimed to strengthen bilateral ties and support Sudan's political transition. The two countries agreed on the dam's issues and emphasized resolving internal Sudanese problems without external interference. The article also discusses the Framework Agreement signed in December 2022 to transition Sudan to civilian rule, highlighting the need for inclusive negotiations in the next phase.
Ethiopia Braces for Deeper Drought As IGAD Predicts Fifth Failed Rainy Season
Drought-affected regions in Southern and Eastern Ethiopia are projected to face insufficient rainfall in the upcoming season, according to IGAD. The forecast indicates drier-than-average conditions in the Greater Horn of Africa from October to December 2022, exacerbating the ongoing humanitarian crisis. The drought, which began in October 2020, has severely impacted millions, with Ethiopia, Kenya, and Somalia being the hardest hit. Rising food prices, driven by macroeconomic issues and the conflict in Ukraine, are worsening the situation. Northern Ethiopia, in contrast, may experience flooding, potentially displacing over 1.7 million people.
Traders Await Trade Deal Between Somaliland, Ethiopia to Use Berbera Port
Ethiopian traders are awaiting a trade agreement with Somaliland to use the Berbera Port for commercial goods transport. The port, partly used by East Ethiopian factories for vehicle imports, is under construction, financed by DP World, which owns 65% of it. Somaliland's Ministry of Finance revealed Ethiopia missed buying a 19% stake in the port. DP World and Somaliland aim for Ethiopia to route 30% of its goods through Berbera within a decade, challenging Djibouti's 95% share. Officials from both countries are reviewing the agreement, with hopes for its completion this year.
Africa: Infrastructural Gaps and Lack of Financing for Transport Are Key to Success for AfCFTA
The United Nations Economic Commission for Africa (ECA) emphasized the need for investment in Africa's transport and tourism sectors during the African Business Forum in Addis Ababa. Key discussions focused on the importance of regional infrastructure projects for the success of the African Continental Free Trade Area (AfCFTA), which could significantly boost intra-African trade. The forum highlighted the need for substantial investment in transport infrastructure, including road, rail, maritime, and air transport, to enhance connectivity and reduce costs. Aviation was identified as a sector with significant growth potential, with calls for market liberalization and consolidation. The African Development Bank and the African Export Import Bank were noted for their roles in financing infrastructure projects. Policy reforms in tourism and travel sectors were also recommended to spur intra-African tourism.
Are moves to discourage cash hoarding bearing the opposite impact?
Ethiopia's 2020/21 fiscal year has been marked by economic unpredictability due to the Coronavirus pandemic and political instability. The government, under Abiy Ahmed, introduced measures to curb illegal activities, with significant actions from the Central Bank, including cash withdrawal limits and demonetization. The latest cash holding limit of 200,000 Birr has sparked concerns among businesses, particularly in construction and horticulture, about its impact on liquidity and daily operations. While the National Bank of Ethiopia aims to discourage cash hoarding, there are doubts about the effectiveness of these measures. Commercial banks have seen a decrease in deposits and face liquidity challenges, despite a temporary increase in deposits following currency conversion. The article presents a balanced view, highlighting both the intended benefits and the practical challenges of the new regulations.
Somali region’s thriving Mobile banking service
Jigijiga, the seat of the Somali Regional State in Ethiopia, has seen a significant rise in mobile banking services, driven by companies like Rays Microfinance's Sahay and E-Birr. These services have rapidly gained popularity, with Sahay registering over half a million users and E-Birr achieving similar success. The region's affinity with neighboring countries, where mobile banking is more prevalent, has facilitated this growth. However, challenges such as poor internet connectivity and restrictive regulations by the National Bank of Ethiopia persist. Support from USAID and foundational work by HelloCash have also contributed to the sector's expansion.
Merkato: Addis’ Wild West
Merkato, the largest open market in Ethiopia, is central to the lives of traders like Tedros Fekiru and Elias Alem, but they face increasing challenges such as corruption, taxation issues, and lack of infrastructure. Despite being a trade hub, the market's problems, like corrupt tax officers and the lack of toilets, are largely ignored by city administrations. Business owners are forced to navigate a complex tax system and compete with illegal street vendors, while infrastructural gaps like parking shortages deter customers. The Addis Ababa Traders Forum's Deputy Chairperson, Wujrayib Yibgeta, and other traders express frustration over the government's inaction on these longstanding issues.
The digital payment rush
The digital payment sector in Ethiopia is experiencing rapid growth, driven by new entrants like ArifPay Technologies and Sunpay Solutions. These companies aim to disrupt the market with innovative and secure payment processing services. The National Bank of Ethiopia's recent directive has opened the market to local investors, ending the monopoly of ET Switch. Despite challenges, including competition from banks and ethio telecom, the new entrants are optimistic about the untapped potential and are focused on winning customer trust over the next few years.
Enterprise looking for lenders to buy two ships
The Ethiopian Shipping and Logistics Services Enterprise seeks external lenders to purchase two bulk cargo ships to expand its services for Ethiopia's importers and exporters. Despite owning 11 ships and transporting 11 million tons of cargo annually, the enterprise has not made a purchase in the last decade. CEO Roba Megersa highlights the need for a soft loan due to high commercial loan interest rates. Financial constraints have delayed the procurement process, although a project office was established last year. The enterprise, which handles 60% of Ethiopia's imports, grossed a profit of 2.5 billion Birr last fiscal year.
Public Transport Enterprise eyes cross-country service
The Public Service Employees’ Transport Service Enterprise in Ethiopia has purchased 50 luxury buses for USD 6.1 million to start cross-country transport services. The enterprise, which currently operates 460 buses for federal and city administration employees, plans to build depots worth 4.9 billion Birr in Addis Ababa and increase its fleet to 610 by 2030. Bishoftu Automotive Industries has been tasked with importing the buses from Yutong, pending approval from the National Bank of Ethiopia. The enterprise is also piloting an e-card system.
Green mung bean price surges as demand grows exponentially
The price of green mung bean in Ethiopia has surged to 6000 Birr per quintal, doubling in six months due to increased demand, particularly from China. The Ethiopian Commodity Exchange (ECX) has facilitated the trading of 27,000 tons worth one billion Birr, with the majority of the crop being exported. Factors such as reduced production in Myanmar and increased international prices have created significant market opportunities for Ethiopian suppliers. Despite a slight decline in production, Ethiopia has the potential to become a major supplier of green mung bean, especially from regions like Gambella.
Government Wheat procurement cost surges by USD 100 million
The Ethiopian government has procured half a million tons of wheat for USD 225 million, a significant increase from previous offers due to rising international wheat prices. The Ministry of Finance and the Ministry of Trade and Industry managed the procurement, citing urgency in supplying wheat to regions like Tigray, where food assistance is critical. The procurement process, usually handled by the Public Procurement and Disposal Service, was expedited by a special directive from the Prime Minister's Office. Additional tenders for wheat, rice, and sugar have been floated to stabilize the market.
Ministry begins rebuilding oxygen plants as critically-ill patients increase
The Ministry of Health in Ethiopia is addressing the oxygen supply shortage for COVID-19 patients by building new plants and repairing existing ones to increase production capacity to 3,267 metric cubes per hour. Currently, the country has 33 oxygen plants, with 20 operational, 10 non-functional, and three being installed. The Ministry faced challenges due to forex shortages and power outages but has now secured the necessary forex to import spare parts for repairs. The Ministry aims to boost oxygen supply to meet the needs of critically ill patients, with additional support from private sector contributions.
NBE ready to help Banks facing liquidity shortages
The National Bank of Ethiopia (NBE) is prepared to loan money to any of the 19 commercial banks if they face liquidity shortages, although no banks are currently experiencing such issues. Governor Yinager Dessie assured that there is sufficient reserve money available. The central bank's transaction limit has raised concerns about cash hoarding, but no evidence supports this, and bank deposits are increasing. Last year, banks faced severe liquidity shortages, but the situation has stabilized. Prime Minister Abiy Ahmed noted significant growth in savings following the demonetization of the Birr.
New NBE directive bans using Diaspora account to import items not under priority list
Abyssinia Bank Launches Mobile Remittance App
Abyssinia Bank has launched a new mobile app, CashGO, enabling customers to send and receive money from abroad at a lower service fee. The app aims to streamline remittance services and encourage the use of formal channels. The bank has previously partnered with VISA and KOBIL Systems GmbH to enhance its digital offerings. Abyssinia Bank, one of Ethiopia's largest banks, continues to expand its digital footprint, contributing significantly to its forex earnings and overall profitability.
What Does The Downgrading Of Ethiopia’s Credit Rating Entail?
Ethiopia's credit rating has been downgraded by Fitch, Standard & Poor's, and IHS Markit due to concerns over the country's ability to meet its debt obligations, exacerbated by the COVID-19 pandemic and the Tigray military operation. The downgrades reflect Ethiopia's increased risk of default and may lead to higher borrowing costs and reduced access to credit markets. The government's decision to restructure its debt under the G20 common framework has been seen as a distressed debt exchange. Despite the downgrades, experts suggest that Ethiopia's chances of obtaining loans from international financial institutions like the IMF or World Bank are not hampered, as credit ratings are not a criterion for these loans. The African Peer Review Mechanism has pledged to support Ethiopia in engaging with Fitch for a potential rating upgrade in the future.
Fuel fuels cost of living
The cost of living in Ethiopia has risen following a government decision to increase fuel prices by over 10 percent. This has led to a similar increase in prices for various food and non-food items. The Addis Ababa City Administration raised transport tariffs by 22 to 25 percent, and the taxi service Ride increased its base fare. Retailers like Kemal Aman are facing challenges with the price hikes. Economist Demis Chanyalew warns that fuel price adjustments could lead to imported inflation. The government reduced fuel subsidies in response to a rise in international fuel prices, which had increased the import bill by 1.5 billion Birr in the previous month. Ethiopia has spent 24 billion Birr on fuel subsidies over the past two years. Inflation rates have also been high, with headline inflation at 19.2 percent and food inflation at 23.1 percent.
Commercial Banks’ NPL soars due to Tigray Conflict
Commercial banks in Ethiopia are experiencing a surge in non-performing loans (NPL) due to the ongoing conflict in the Tigray region, which has disrupted business operations and loan collections. Banks with significant presence in Tigray, such as Commercial Bank of Ethiopia, Wegagen Bank, and Lion Bank, are particularly affected. Despite the challenges, Cepheus Capital suggests that a major system-wide NPL problem is unlikely, as most banks are expected to manage the uptick in NPLs due to their strong initial positions and good provisioning levels.
Looking for hope amid the rubble
The ongoing conflict in Tigray has devastated the region's economy, leading to the closure of businesses, significant infrastructure damage, and a shift towards the informal economy. The war has severely impacted investment, manufacturing, tourism, and agriculture, with many residents resorting to petty trading and black market activities to survive. Key sectors like telecom, electricity, and education have suffered extensive damage. Efforts to rebuild are underway, but the economic recovery of Tigray will require substantial political and economic interventions.
World Bank suggests gov’t stop preferential treatment to ethio-telecom
The World Bank has recommended that the Ethiopian government cease offering preferential treatment to ethio-telecom to foster a competitive market. The Bank criticized the ban on foreign companies in digital banking, warning it could hinder innovation and investment. The Bank's Country Director, Ousmane Dione, suggested that ethio-telecom should compete on equal terms with new market entrants. The directive has disappointed telecom providers like Safaricom, which had plans to enter the Ethiopian market. The Ministry of Finance and Ethiopian Communications Authority clarified their stance, emphasizing the liberalization of the telecom sector, not the financial sector. The World Bank also opposed the restriction on independent cell tower companies, arguing it could slow network rollout, especially in rural areas.
Central Bank approves another stimulus package for Hospitality Sector
The National Bank of Ethiopia has approved a new financial stimulus package for the hospitality sector, extending the previous 3.3 billion Birr package to address the ongoing impacts of the COVID-19 pandemic. The new package allows commercial banks to take up to three billion Birr in fresh loans at an interest rate of 5.5 percent. This adjustment follows complaints from commercial banks about incurring additional service costs. The package, aimed at paying salaries and working capital, is set to expire on June 22, 2021. Industry stakeholders, including the Addis Ababa Hotel Owners Association, have expressed support for the Central Bank's actions.
Ethiopia’s Economy in 2021
Ethiopia's economy faced significant challenges in 2020 due to the COVID-19 pandemic, locust invasions, and the Tigray conflict. The International Monetary Fund forecasted zero percent GDP growth for 2021, while the Ethiopian government optimistically predicted a 6.6 percent growth. Economists like Ayele Gelan and Gutu Tesso expressed concerns over political instability and its impact on sectors like agriculture and industry. Cepheus Capital offered a more optimistic prediction of 4.1 percent growth. The importance of peace, stability, and investor and consumer confidence was emphasized as crucial for economic recovery. Fitsum Assefa, Planning and Development Commissioner, highlighted the government's focus on addressing supply side problems and promoting quality economic growth.
Ethiopia’s Economy in 2021
Ethiopia's economy faces significant challenges in 2021 due to the lingering effects of the COVID-19 pandemic, political instability, and natural disasters. While the International Monetary Fund predicts zero percent GDP growth, the Ethiopian government remains optimistic, forecasting a 6.6 percent growth. Economists are divided, with some predicting slight recovery and others foreseeing continued economic stagnation. Key factors influencing the economic outlook include peace and stability, agricultural productivity, and investor confidence. The government aims to address supply-side issues and boost food production to stabilize the economy.
Association calls for adjustment of wage based on Inflation
The Ethiopian Economics Association (EEA) has called for the adjustment of wages for senior citizens and pensioners to account for inflation. A policy paper by Atnafu Gebremichael highlights the negative impact of inflation on fixed-income earners and recommends indexing wages to inflation. However, experts like Tiruneh Assefa and Atlaw Alemu caution that frequent wage adjustments could exacerbate inflation. The paper also suggests that prudent monetary policy, operational independence of the Central Bank, and anti-corruption measures are essential to combat inflation effectively.
Commercial banks not obliged to pay interest on funds collected by new entrants
Commercial banks in Ethiopia are not required to pay interest on funds deposited by financial institutions under formation, as per the country's bank establishment proclamation. Frezer Ayalew, Director of Bank Supervision at the National Bank of Ethiopia, clarified that since these banks can withdraw the money upon receiving a license, they cannot demand interest. Amhara Bank, which has collected six billion Birr, is among those seeking interest payments. However, the law does not mandate such payments, and any interest would only come from service fees, which is a gray area in the law. Currently, 20 banks have been approved to establish, with four more awaiting licenses, potentially increasing the total number of commercial banks to 43.
New law allows ethio telecom go global
The Council of Ministers approved a new regulation allowing ethio telecom to invest in international markets and the mobile banking sector locally. The regulation significantly increases the company's paid-up capital, making it the most capitalized state-owned enterprise in Ethiopia. CEO Frehiwot Tamiru highlighted the company's growth and future plans, including launching mobile banking services and inviting other telecom providers to share its infrastructure. Ethio telecom reported substantial revenue growth and asset valuation, positioning itself as a preferred telecom operator in Ethiopia.
Ethiopian woman sits exam on hospital bed 30 minutes after giving birth
A 21-year-old Ethiopian woman, Almaz Derese, took her final year exams in a hospital just 30 minutes after giving birth to a baby boy. Despite the challenges, she was determined not to miss the opportunity she had worked towards for a decade. Supported by her husband, she completed her exams in English, Maths, and Amharic. The incident highlights the prevalence of child marriage in Ethiopia, where over 40% of young girls are married before 18. The education ministry noted an increase in the number of students giving birth during national exams, with more than 11 students having given birth since the exams started.
The Pharmaceutical Fund & Supply Agency (PFSA) procured an estimated five million HIV test kits worth 2.5 million dollars from Beijing Wanti Biological Enterprise, whose products were found to be below the standard in algorithm tests carried out by the Ethiopian Public Health Institute (EPHI) in August 2017.
Local Labour Can Replace 67pc Expats, Study Finds
A study commissioned by Ethiopia's Ministry of Labour & Social Affairs and conducted by Tak-Innovative Research & Development Institute has found that local labor can replace two-thirds of the non-nationals working in the country. The study, which cost nearly half a million Birr, was conducted over three months in various regions and the capital, Addis Abeba. It aimed to assess the effectiveness of technology transfer in Ethiopia, where over 15,927 work permits are issued to non-nationals annually. The study involved 163 Ethiopians and 132 non-nationals across 10 sectors and found that 84% of local workers have acquired new technological skills from expatriates. Challenges identified include low salaries, lack of a dedicated directorate for tech transfer, and the absence of a digital database for work permits. The research suggests that the Ministry should digitize its system to better track work permits and ensure technology transfer. Examples of successful tech transfer include the SVS Salt Processing Factory and the Addis Abeba Light Rail project, where local workers have replaced foreign experts.
Tassew Woldehanna (Prof) has over three decades of experience in academic, research and consultancy services in the areas of child welfare, poverty and food security in Ethiopia and elsewhere. The 56 year old researcher has been involved in the national Poverty Analysis Report; a controversial study criticized for neglecting the facts on the ground. EBR’s Samson Berhane sat down with Tassew, on the sidelines of the seventh Tana Forum held in Bahir Dar last month, to get his take on the current economic and political situation in the country, and his work at AAU.
Although optimism about the future of Eritrea was high in the 1990s, Eritrea now exists in isolation; the lives of ordinary Eritreans is tough and many cities remain underdeveloped. In fact, Eritreans now make up a significant portion of those migrating to Europe on dangerous crossings through Libya.
Debt stress has always been a contentious matter in Ethiopia. As the country pursues billions of dollars worth of infrastructural development projects, external debt stock has been growing proportionally, now accounting for almost 30Pct of the GDP. While the risk to debt sustainability escalates, several challenges limit the prospects for bucking this trend. This includes the wide gap between investment and savings, and the underperformance of the export sector. With such factors in mind, the International Monetary Fund (IMF), changed the debt stress rating of Ethiopia from moderate to high recently, hinting that the chance of defaulting on loans is increasing. Although the government is able to take corrective measures such as refraining from taking commercial loans, experts say that is too late.
As housing affordability in the capital becomes a hot issue, the twin problems of ‘asset bubbles’ and housing affordability have challenged the minds of policy-makers, experts and the general public. The demand for housing has kept increasing in urban areas like Addis Ababa, whereas the supply of land has remained unchanged, leading to inflated prices. This, in turn, diminishes the affordability of houses for residents. Worryingly, any low and average income earners are unable to construct or buy their own houses due to the skyrocketing lease prices. While experts attribute the problem to the law governing urban land distribution, the government remains firm in its position that there is no shortage.
Awash Tops All Banks Again
Awash Bank, Ethiopia's first private bank, has maintained its leading position in the industry, reporting a 35% increase in net profits to one billion Birr and the highest earnings per share (EPS) among all banks. Despite a challenging previous year, the bank's performance has been lauded by financial analysts and its president, Tsehay Shiferaw. The bank's growth is attributed to significant increases in interest, service charges, commissions, and other incomes. Awash's total assets have also grown by 35% to 42 billion Birr, making it the largest among private banks in Ethiopia. Comparatively, Dashen Bank's net profit grew by 4% to 756.1 million Birr, but its EPS dropped, and its gains on foreign exchange dealings decreased.
Berhanena Selam, Serbian Firm Partner to Print Scratch Cards
Berhanena Selam Printing Enterprise has partnered with Serbian firm Quadra Graphic to print scratch cards, following a competitive bidding process. The partnership aims to address the high capital requirements for advanced security printing. Quadra Graphic, known for its experience in printing various security items, will contribute a security printer, while Berhanena Selam will provide the plant location. This collaboration is expected to alleviate Ethio telecom's significant annual expenditure on scratch card printing abroad. The partnership also aligns with recent regulatory changes that increased Berhanena Selam's authorized and paid-up capital.
Committee Collects 350m Br to Establish New Bank
Dallol Bank, currently under formation in Ethiopia, has collected 350 million Br in paid-up capital, nearing the 500 million Birr requirement set by the National Bank of Ethiopia. The bank, founded by academicians, medical professionals, commercial bankers, and entities under the Ethiopian Orthodox Church, began selling shares two years ago. The Organising Committee, led by Mesfin Araya and advised by veteran banker Tilahun Abay, plans to open 10 branches in its first year and aims to commence operations within two to three months. The banking industry in Ethiopia has experienced significant growth, with a 37% increase in deposits and a 47.6% increase in loans, resulting in an aggregate profit of eight billion Birr in the last fiscal year.
Tough Job Ahead
Tedros Adhanom has been elected as the new Director General of the World Health Organization (WHO), becoming the first African to hold the position. His election comes amid criticism of WHO's budget management and resource mobilization efforts. Tedros, endorsed by the African Union, won the election with 133 votes out of 186 member states. His campaign faced challenges, including allegations of covering up cholera outbreaks in Ethiopia and opposition from the Ethiopian Diaspora. Tedros aims to improve global health systems, ensure universal health coverage, and enhance WHO's transparency and accountability.
Access Capital Bursts Back on the Scene, Keeps Ermias as a Chairman
After three years of inactivity, Access Capital Services S.C. has re-elected Ermias Amelga as its board chairman despite previous controversies. The shareholders' meeting, marked by discontent and strict security, saw the election of new board members Yosef Asrat, Getachew Bekele, and Antonio Silla. Ermias, who also decided to step down as CEO, reported the company's assets at around 126.5 million Br, though he believes the actual value is higher. Shareholders remain divided, with some optimistic about the company's revival and others critical of the meeting's formality and transparency.
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