PM: DBE will continue project financing

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Hailemariam Desalegn (PM)

Prime Minister Hailemariam Desalegn strongly rejected the recommencement of project financing from the Commercial Bank of Ethiopia (CBE). However, representatives from the private sector complain that they are being slowed down by the, Development Bank of Ethiopia (DBE).
The PM said that project financing will be managed by DBE, a policy bank. In April the CBE froze its project financing scheme and all ongoing loan requests for projects were transferred to BDE. Since then the private sector claimed that it is unable to manage its operation on schedule.
Investors that Capital interviewed said that the projects that mainly focused on import substitution and exports are unable to commence their operation. “We have been waiting for months to access the loan from DBE,” investors said.
The PM said that DBE is providing loans without collateral since it is a policy bank. “It is a bank that is involved in developmental projects and clients can access loans with a limited share of capital,” he added.
This task could not be handled by private banks, because they depend on deposits from clients, to finance projects. They can’t provide loans without collateral because of the risk. Due to that the project financing will continue under DBE, according to Hailemariam.
He accepted that the process to evaluate and approve the loan request has been delayed, while the bank improves its capacity.
He argued that the projects that come from the local private sector are not coming with a sound project proposal. “The government has now improved the capacity of the Project Study Institute that can support the project proposal development of the private sector,” he added.
“At the current level the loan request at DBE shall be delayed but it is the exact place for project financing,” he added.
Investors in agriculture, manufacturing, hotels and exporters went to CBE in the past but were turned away and sent to DBE.
During his latest press conference held on Thursday November 9 the PM claimed that steel traders and manufacturers encountered a price increase because of the latest devaluation.
He said that the government has made preparations to control inflation which might occur for some imported consumer goods such as edible oil, flour, and sugar.
Despite measures taken, some merchants were illegally raising prices of goods which were already in their shops prior to the devaluation, the Prime Minister stated, adding that strong measures were taken against some traders.
He particularly mentioned the steel sector and said that it inflated by 39 percent after the 15 percent devaluation implemented about a month ago.
He denounced the steel traders and manufacturers for the price increase. “We have agreed with the steel traders and manufacturers to stabilize the market but they have not applied it,” he said.
“So we will take measures on those who are not correct as per the agreement,” he added.
On Friday November 10 a day after the PM’s announcement the association of steel manufacturers visited the Trade Competition and Consumers’ Protection Authority.
Sources at the Ethiopian Association of Basic Metal and Engineering Industries told Capital that they visited the authority to express their claim in relation to the statement of the PM.
They said that the PM did not specify who was responsible for the price increase.
The PM also stated that the National Security Council began operation during the week to take measures on those who were involved in the recent destruction in the country mainly in the Oromia and Ethiopia Somali regions. He said that political leaders involved in the violence in the two regions will be responsible.
On Friday the council chaired by the PM met, while the outcome of the meeting that included regional presidents and security heads was not disclosed when the paper went to print.
The PM criticized Abadula Gemeda, Speaker of House, on his stament that he gave to media about his resignation from his post.
He said that it shall be solved within the party via their democratic centralism culture.