Aiming to improve the stability of the banking industry by creating well capitalized banks that can mobilize massive financial resources that are needed to speed up economic growth, the National Bank of Ethiopia (NBE) recently raised the minimum paid-up capital requirement for banks ten-fold to ETB5 billion with various grace periods.
The G-20 introduced the Debt Service Standstill Initiative (DSSI) early in 2020 to suspend sovereign debt repayments of least developed countries (LDCs), so they can redirect their resources to fight COVID-19. The suspension period, originally set to end on December 31, 2020, is now extended to December 2021.
Over the last two years the number of entrant banks has proliferated, almost equaling the amount of working banks. Nonetheless, a new directive issued by the caretaker National Bank of Ethiopia has shut the door on the further entrance of new banks, whilst also raising the bar on smaller banks and the close to 20 already in the pipeline.
Banks are now expected to raise their minimum paid-up capital to ETB5 billion within five years from the existing ETB500 million mandated in 2011. Although central bank authorities stress the intention is to discourage unbalanced proliferation and nurture few competitive banks, industry leaders and experts claim that this move is the interest of the leading banks. Up to six existing private banks are forecasted to consider merging, while a substantial number of under-formation banks will either abort their efforts or join hands. EBR’s Ashenafi Endale investigates the implications of the new move.
Fikadu Digafe is Chief Economist and Vice Governor of the National Bank of Ethiopia (NBE). He strides in the most laboring job in the central bank ever since the bank started baptizing itself with reforms ensuing the landslide reshuffle of October 2019. He was previously in charge of external economic analysis and international relations at the bank. For many years, Fikadu has been engaged in the research works of the central bank, including scripting for the quarterly bulletin of the bank, Birritu.
Coal is the second-most used source of energy globally. Primarily used for power generation, it is the raw material of choice for 40Pct of electricity production worldwide. With an estimated 430 million metric tons of coal deposits in the country, the Ethiopian government is trying to utilize this resource by encouraging small- and large-scale coal producers and investors. As a result, the country has managed to satisfy 40Pct of its annual demand from the local market. However, the quality of the coal produced is of poorer quality compared with imports from countries like South Africa. Resultantly, manufacturers going local are incurring additional costs. EBR’s Ashenafi Endale explores.
Mekuanint Alemu is Founder and Board Chair of C&E Brothers Steel Factory, which has been engaged in the production of reinforcement bars for the last ten years and mining exploration over the last three years. He recently established YO Trade and Manufacturing PLC, a sister company and the only large-scale coal producer in Ethiopia. It is currently installing a coal washing plant in Ethiopia allowing it to eliminate coal impurities using water, some chemicals, and mechanical techniques. The plant is expected to start operations after five months. EBR sat down with Mekuanint to learn about his recent ventures.
The House of People’s Representatives recently unanimously approved the revised Commercial Code of Ethiopia, replacing the 61-year-old document which was in place since 1960. The revision sought to amend 825 sections of trade-related issues and is expected to serve intact for 30 years as up-to-date technological advancements have been considered, according to the government.
The amendment introduced two new organizational arrangements for a company’s establishment while excluding ordinary partnership. It is now permitted to establish a one-person private limited company as well as a limited liability partnership. EBR’s Ashenafi Endale assesses the new commercial code.
The Middle East is one of the leading consumer markets that relies heavily on imports due to its low agricultural capacity. Ethiopia, in close proximity, has one of the most robust agrarian economies with leading livestock numbers. Nonetheless, only countries that have adopted the halal certification framework are tapping into the Middle East’s consumer market. Ethiopia is mostly absent in this regard. The linking of unapproved animal meat as the cause of COVID-19 has deepened the acceptance of halal certified foods, pharmaceuticals, cosmetics, and other products even in non-Muslim nations. Religion is leveling up to science.
In a bid to cutout the halal barrier to Ethiopia’s exports to the Middle East and beyond, a new strategy of interlinking gulf countries’ halal accreditation systems with Ethiopia’s is taking root. To this end, Ethiopian slaughterhouses are working towards certification by the new system to export halal-certified food. Halal is expected to boost Ethiopia’s exports and free it from the USD3 billion chokehold of the past decade. EBR’s Ashenafi Endale explores
Corporate or institutional banking is a segment of the industry where specific deals and attention are provided in a specially designed way. These services include handling the loans as well as accounts of big economic players. Although corporate banking is one of the biggest business segments even in many developing countries, it is still in its infancy in Ethiopia. Almost all existing banks pursue mass marketing approaches and basically collect retail savings and lend to businesses. EBR’s Ashenafi Endale investigates new developments in the banks’ clientship landscape.
No doubt, the power of sport is among the least exploited capital in peacemaking as well as nation building. Sport is not ideological but can unarm every extremist. Sport heroes as well as events have been uniting people from all walks of life. But lately, this capital has been eroding.
Now, the sport community including businesses, universities, and government institutions, are joining arms to lay the foundation for a great public sporting series dubbed Kerod Running, under the theme of Running for Peace. EBR’s Abiy Wendifraw looked past the making of Kerod Running, expected to be a more conceptual version of the Great Ethiopian Run.
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