December 2015 – Ethiopian Business Review

Awash International And Dashen Banks’ Stiff Competition, the Defining Factors for this Year

Despite the fact that private banks are still a relatively new concept in Ethiopia, two stand tall among the nation’s 16 private banks: Awash International Bank and Dashen Bank. Both enjoy larger after-tax profits than their competitors do. According to the National Bank of Ethiopia (NBE), in the 2013/14 fiscal year alone, both banks’ collective net profits exceeded ETB1.37 billion, accounting for roughly 40Pct of the entire private banks’ after-tax profits that year. While the nature of their competition isn’t necessarily adversarial, both banks have been in stiff competition with one another in certain indicators – such as paid-up capital, total assets, and loan disbursements – in which each bank has enjoyed supremacy over the other in different years. However, the overall success of each bank obscures the reality behind the scenes: both have had their performance – and assets – adversely affected by foreign currency shortages, surging expenditures and liquidity challenges. EBR’s Fasika Tadesse explored each bank’s 2014/15 fiscal year performance – analysing the nuances of each company’s overall figures – in order to shed light on the two financial titans that have dominated Ethiopia’s private banking sector.

For years Dashen Bank has been a leader among private banks – and last year is no exception: it registered the highest after-tax profit of all private Banks, ETB729 million.
The Bank’s president, Asfaw Alemu, has only been at the helm since May 2015, but already has plans to help the Bank to further growth. Under his guidance, the Bank is in the process of reworking its organisational structure, including opening eight district offices. He says this will decentralise power and strengthen employees’ decision-making capacity.
Prior to becoming President, Asfaw served the Bank in various positions, most recently as Vice President for Operations. His rich portfolio includes services at the Development Bank of Ethiopia, Wegagen Bank and at an academic institution where he served for three years as a vice president for business and development at Unity University.

Machinery Shortages Hinder Ethiopia’s Burgeoning Construction

Despite the promising growth prospects of Ethiopia’s construction sector, a lack of construction machinery is proving to be detrimental to contractors-public and private – who rely on them to complete their projects. In fact, a study conducted by the federal government found that of the total 2,705 machineries needed for housing projects alone in the 2014/15 fiscal year, only 41Pct were available. It is a dynamic similar to other construction projects – and is an issue stakeholder are eager to fix. EBR’s Ashenafi Endale spoke with contractors, importers and government representatives to learn about the on-going shortage of construction machinery and what, if anything, can be done to address the shortfall.

Tsehay Shiferaw, President of Awash International Bank, leads the fastest growing private bank in the country. Last fiscal year, the Bank’s after-tax profit was ETB645 million, a 4.4Pct growth from the previous fiscal year net profit.
Having taken the helm in June 2011, Tsehay has set his eyes on global excellence. He hopes that Awash will become one of the top ten banks in East Africa by 2025. To that end, he is leading the Bank through the development of a succession plan that will also help the company grow, especially as it pertains to its technological capacity, overall structuring and human resource development.

Altruism or a Marketing Scheme in Disguise?

Corporate social responsibility (CSR) refers to specific altruistic acts in which companies participate in order to support a particular organisation or cause. Some say this activity is important in a country like Ethiopia, where laws state that local non-governmental organisations (NGOs) must receive the majority of their funding from local sources to participate in ‘right based development activities’. Others however, are sceptical, and caution that CSR may just be another way for companies to market their good deeds in order to attract more customers and make profits. EBR’s Meseret Mamo spoke with stakeholders to learn more about the nuances of the issue and offers this report.

Party rental companies are those that rent items like decorations, utensils and cookware to individuals who are planning events like weddings, funerals, and meetings. Although a relatively new concept in Ethiopia, data demonstrates that the presence of these companies is growing rapidly. According to data from the Addis Ababa Trade Bureau, 208 rental companies were issued to business licenses within the last four years, generating ETB373 million in investment capital. Despite the growth potential in the sector, industry insiders say that difficulties accessing investment capital is hindering their growth prospects. EBR’s Fasika Tadesse spoke with those involved in the sector to learn more about this nascent industry.

Is Ethiopia Addressing the Special Needs of Juvenile Offenders?

Like many sub-Saharan African nations, Ethiopia provides some special treatment for juvenile offenders. The logic behind the provision of special treatment is rooted in the idea that young offenders should be given rehabilitation in order to improve their well-being and hopefully deter them from committing crimes in the future. However, many stakeholders argue that the problems facing teenage offenders extend beyond a mere desire to do bad things – that they’re linked to larger problems like homelessness, cyclical poverty, and whether or not they have attentive parents. EBR’s Meseret Mamo visited the Juvenile Delinquent Remand and Correction Centre, Ethiopia’s sole facility to address the needs of this population, to speak with key individuals involved in the juvenile justice system for this report.

Circus performance stands at the intersection of artistic craft and difficult athletic performance. Often, performers spend years perfecting their craft through athletic training and calisthenics. While it’s garnered much acclaim abroad, circus performance is a growing trend in Ethiopia – and one that numerous performance groups in the country hope will continue to grow. In connection with the African Circus Festival held recently in Addis Ababa, EBR’s Ashenafi Endale spoke with performers and organisers of the event to learn more about the craft and its nascent journey in Ethiopia.

Business organisations and individuals in Ethiopia vary in terms of their stance on the subject of electing insurance as a risk management tool. Practice and figures show that although insurance policies are availed to guard businesses from apparent life, property and liability risks, most prefer self-insurance or other risk management tools instead of traditional insurance.

The Fundamental, Missing Issues in the Debate

Industrialisation is the process of building up a country’s capacity to convert raw materials into new products. It involves a growing complexity of production systems, reliance on primary or secondary economic activities and an increase in output.

Older Posts

Battle of the Titans

Awash International And Dashen Banks’ Stiff Competition, the Defining Factors for this Year

‘Dashen will maintain its leading Position’

Cloud on the Horizon

Machinery Shortages Hinder Ethiopia’s Burgeoning Construction

‘The plan is to make Awash one of the top ten banks in East Africa’

Corporate Social Responsibility

Altruism or a Marketing Scheme in Disguise?

Party Rental Business

Denied of Lawful Attention

Is Ethiopia Addressing the Special Needs of Juvenile Offenders?

Circus Gradually Takes Off in Ethiopia

Insuring Risks of Liability

Industrialisation in Ethiopia:

The Fundamental, Missing Issues in the Debate