Ethiopian Business ReviewBetween 1997 and 2008, average non-tax revenue has been increasing in Africa largely driven by the global commodity price boom. Nevertheless, especially after 2012, non-tax revenue declined sharply due to dropping commodity prices. Despite this, the non-tax revenue collected by African countries reached a staggering USD133 billion in 2017, which is much higher than the USD100 billion the continent reportedly loses annually in the form of illicit financial flows.
Ashenafi EndaleGrand Ethiopian Renaissance Dam
Eight years ago, when Ethiopia announced its bold decision to build the biggest possible dam on the Nile River, to which it contributes 86Pct of the water volume, with financing from domestic resources, the issue grabbed global headlines. Despite considerable consternation in Egypt and Sudan, the country was able to embark on the Grand Ethiopian Renaissance Dam (GERD), which will be the largest hydropower plant in Africa, and the seventh globally upon completion.
Seven years later, however, the Metal and Engineering Corporation (MetEC), the contractor for the electromechanical and hydraulic steel structure work on the project, became a focus of controversy amid allegations of delay, corruption, resource wastage and all sorts of mismanagement. The controversies have since put the GERD on the spotlight; and many even doubted the completion of the project. This was further complicated with the untimely death of Simengew Beleke (Eng.), manager of the project who was found dead of a gunshot wound on July 26, 2018, at Meskel Square, Addis Ababa.
Last year, the government cancelled all the contracts awarded to MetEC and signed contracts with five Chinese, French, and German companies to undertake the electro mechanical works. With this, the government seeks to start the project with a fresh schedule and finish the project in 2022, six years after its initially planned year of completion. However, there are still uncertainties over the finalization of the grand project. EBR’s Ashenafi Endale, who visited the game-changing power project, reports.
Nassir Dino (PhD), associate professor of software engineering, is chairman of the organizing committee of ‘Zamzam Bank’. He is also the cofounder and president of Higher Learning Center of Excellence (HiLCoE), a specialized centre of excellence in education, research and consultancy in the field of information and communication technology (ICT). The Centre was established in 1997 and has since graduated thousands of skilled professionals.
Thirteen years ago, Nassir started to establish Zamzam, the first Islamic bank in Ethiopia. However, his effort did not bore fruit because the National Bank of Ethiopia (NBE), the financial regulatory body, denied them license to start operations in the final hours.
After 13 years of patience, however, his effort got favorable response from the administration of Prime Minister Abiy Ahmed (PhD). During the holy month of Ramadan, on May 22, Yinager Dessie (PhD), the new governor of NBE, met the founders of Zamzam; and informed them the good news. After more than a decade of stall, the Governor told them to resurrect Zamzam. On the same day, the Premiere also reaffirmed his support for the realization of the bank. This was announced in a historic speech the PM made at the grand Iftar at the Millennium Hall. For Nassir, his team and the tens of millions of Ethiopian Muslims, the ecstasy the news created was unprecedented and is still afresh.
Zamzam has already started floating shares and is set to start operations in about a year. EBR’s Ashenafi Endale discusses with the professor who also studied Islamic Banking and Islamic Insurance in London, the UK, about the prospect of the bank.
Kiya AliA Town Blessed by Nature Facing Modern Challenges
Located 454km from Addis Ababa in the southern part of Ethiopia, Arba Minch is home to more than quarter a million people. The town is also a habitat for various aquatic and wild animals. Because of the good climatic condition, the area is also conducive for several varieties of fruits and vegetables.
Arbaminch’s natural endowment is a great factor for the growth of tourism in the town. This has contributed for a burgeoning hospitality industry which has grown by leaps and bounds in recent years. However, mainly because of human factors, these natural resources are at risk of perishing. EBR’s Kiya Ali, who visited the naturally endowed town recently, reports.
Brews Inflation, Exacerbates Balance of Payment Problem
The budget deficit for 2019/20 fiscal year stood at ETB97.1 billion, twice the amount registered two years ago. Despite the escalating figure, the government claims it is under control since it accounts for only three percent of the gross domestic product (GDP).
Nevertheless, experts stress that the deficit goes as high as 17Pct of the GDP when the money borrowed by public institutions is included in the equation. As the budget deficit grows, there is a fear money supply would rise, which will ultimately lead to a rise in inflation, which has already reached 15.4Pct. The consequence will further exacerbate balance of payment problem, which is already at alarming stage. EBR’s Ashenafi Endale spoke with officials and experts to shed light on the matter.
The Likely Impact of Interest Free Banking on the Financial Sector
In 2010, there were few Islamic banks under establishment in Ethiopia. However, they failed to open their doors because the government prohibited the provision of full-fledged interest free banking in 2011. Until now, interest free banking services are provided by conventional banks at a single window level. However, things have started changing after Prime Minister Abiy Ahmed (PhD) gave a green light to the formation of the much awaited banks recently. Consequently, five Islamic banks are preparing to float shares, while few more are under establishment. Will the entrance of these new financial institutions change the banking industry? EBR’s Ashenafi Endale & Kiya Ali report.
Even under normal banking operations, not all loans can be collected fully because loans are not free of risks. This affects the financial performance of any bank because it leads to an increase in non-performing loans (NPLs). This is exactly what is happening in Ethiopia at the moment. Due to macroeconomic and bank specific factors, borrowers are increasingly finding it difficult to pay back loans. Industry insiders say the average NPL figure has now reached eight percent. The National Bank of Ethiopia (NBE) has set five percent as the upper limit any bank’s NPLs may go. EBR’s Ashenafi Endale examines the causes.
Abiy WendifrawThe legendary Coach
Born in Arsi, State of Oromia, the legendary coach Haji Adilo discovered his running ability at grade nine. Soon enough, he was able to compete in regional and national championships in the late 1980s. But, he had to wait for a decade to race in international competitions. Though it was short lived, the experience helped him to show his skills to the world. However, in 2000, Haji was forced to resign from racing because of health complications. Fast forward 19 years, he has become one of the few successful long distance running coaches chosen by many elite athletes. EBR adjunct writer Abiy Wendifraw sat down with him to learn what makes the legendary coach tick.
Crime in the City Goes Through the Roof
Addis Ababa, home to over four million people, hosts more than 100 diplomatic and international organization missions. The City’s full to burst population; and alarmingly high inefficiency in the security institution in recent times, have caused a significant rise in crime activities in the city. The huge youth unemployment and widening income inequality in the metropolis have further exacerbated the situation.
As many, including residents and diplomats, continue filing theft, burglary and other criminal reports, the city administration is doing too little to match the scale of the problem. EBR’s Kiya Ali explores.
Recently, an increasing number of cinemas with modern visual and sound system are opening their doors in Addis Ababa. Since last year, Century, Gast, Birsh and Abyssinia Cinemas have joined the industry to screen Hollywood made views along with local ones. Together with Edna Mall’s Matti Multiplex, which opened 11 years ago, these movie theaters are serving moviegoers with the appetite of watching Hollywood movies upon release. EBR’s Kiya Ali explores.
