Ethiopian embassy in Washington DC has sold 500,000 dollars worth of Grand Ethiopian Renaissance Dam Bonds to the Ethiopian diaspora, Ethiopia’s Ambassador to the United States said.
“The bonds, particularely foreign currency dominated bonds, have been issued very recently. Within the first two months they were issued, we were able to sell half a million dollars worth of bonds which demonstrated to us that the response from the diaspora is very encouraging,” Girma Birru, Ethiopia’s Ambassador to the US, said in an exclusive interview with Capital.
Floated by the federal government for the financing of the Grand Renaissance Dam under construction on Nile River, the bonds are available for purchase in currencies of USD, Euros and Pounds Sterling for Ethiopians living aboard.
All Ethiopian nationals and foreign nationals of Ethiopian origin living and working outside Ethiopia can buy bonds as small as 50 dollars/ Euros/ pounds to support the financing of the dam.
The sale of bonds, being done in birr locally, is an aide to the nation’s aspiration of covering the dam’s five billion dollar costs on its own.
“The response seems to be very positive; the interest is increasing by the day. We are trying to explain to the Diaspora what benefits they get by buying the bond. The interest they will receive will benefit them in a way that would not happen anywhere else,” said Ambassador Girma.
A bond that matures in five years will earn a yield square with the London Interbank Offered Rate plus 1.25 percent of the total bond’s value. , LIBOR is a competitive rate daily set for interbank lending-banks borrowing and lending to each other using commercial paper. Repurchase agreements and similar instruments are usually benchmarked by the London monetary market.
National Bank guidelines for state bonds with a 6-7 year maturity date will enjoy LIBOR plus 1.5 percent; an 8-10 year old bond will have LIBOR plus two percent interest rates.
“The interest rate for saving here in the US or in the UK for example is below one percent, the interest the bond offers is significantly higher than that, it is a benefit that is not available for the Diaspora elsewhere,” explained Ambassador Girma.
The ambassador says the mission he leads has made it one of their priorities to educate the Diaspora about the benefits of purchasing the bond.
With an estimated 500,000 Ethiopian Diaspora living in the US, the sale of the bonds there is one of the key regions the federal government targets for its bond sale.
Ambassador Girma says if they managed to convince the Diaspora save between 25 and 50 percent of the estimated 1.8 billion dollars remittance that flows into Ethiopia from there, it would be a great success.
The challenge for the government however is the Diaspora there is reportedly largely sympathizing with opposition parties that often embarrass visiting senior government officials with big demonstrations usually calling on the US to halt its assistance to the Ethiopian government over claims of human right abuses and repression.
“Most of the diaspora here are very positive towards what is happening in Ethiopia. The silent big majority are those who have a good heart toward what is happening in Ethiopia. There are some angry vocal extremist groups which we have back home as well,” Ambassador Girma said downplaying the influence of opposition groups.