Amnesty International, in a report entitled, New Weapons Fueling Sudan Conflict, shows how recently manufactured foreign weapons have been transferred into and around Sudan, in breach of the arms embargo on Darfur…According to Amnesty International, recently manufactured or recently transferred weapons and ammunition from countries including China, Russia, Serbia, Türkiye, the United Arab Emirates (UAE) and Yemen are being imported in large quantities into war-torn Sudan, and then in some cases diverted into Darfur…The group revealed that advanced drone jammers, mortars and anti-materiel rifles manufactured in China have been used by both sides of the conflict. However, a variety of recently manufactured armoured personnel carriers from UAE have reportedly been used by the paramilitary Rapid Support Forces (RSF). (Sudan Tribune)
Electronic Check (E-Check)?
An electronic check, or e-check, is a form of payment made via the Internet, or another data network, designed to perform the same function as a conventional paper check. Since the check is in an electronic format, it can be processed in fewer steps.
Additionally, it has more security features than standard paper checks including authentication, public key cryptography, digital signatures, and encryption, among others.
Mind the small print
Contracts serve to record an agreement on principle and codifies what parties have promised to do. It also implies consent to the agreement and provides recourse if the parties do not keep their side of the deal. In other words, a contract describes the deal between two parties as well as what repercussions there will be in case the deal is not respected by any of the two parties.
Much as it is common in Ethiopia to regard a contract as an intention to be renegotiated the moment circumstances change, the actual legal implications are in fact binding. This contradiction is observed more often in countries where constitutions are derived from foreign models and it is no wonder that the implementation of rules and regulations is subject to different interpretations. In other words, if a dispute over a contract is taken to court, the contents of the contract will be taken more literally than the signing party had perhaps intended.
It is therefore wise to take contracts more seriously than is often done and to make sure that your interests are included in it. More often than not a contract is drawn up by the party, who has more experience in dealing with third parties and contracts are usually derived from models used earlier. The language used is often complicated and intimidating, and there is a chance that the weaker party will sign without fully understanding what the implications are or making sure that his/her interests are well described.
Examples are found in employment contracts, housing contracts and sales. And while the employee, tenant and client are eager to sign and get the deal they so long looked for, they may end up in a weaker position than was necessary, more especially if they did not bother to read the so-called small print. What to do? Here follow some suggestions.
In the first place it is important to sit down and try and define what you want out of the deal you are about to make. Easy as it sounds, it is surprising how difficult it often is to describe exactly what you want. It is helpful to ask yourself some questions like:
- What are you actually looking for? What product or service will improve the quality of your life or your business? When you are looking to rent a house or office space for example, what are the minimum requirements in terms of space, location, facilities, quality and maintenance? Once you know what you are looking for, your search will be focused, and it becomes easy to say “no” to what doesn’t meet your minimum requirements.
- What can you afford? While prices follow market trends, this is not to say that you need to follow suit. There is a limit to everybody’s budget, and it is important to set that limit. Defining the range that you are willing and able to pay for the services or product you are looking for provides you with a framework within which to negotiate. Again, it becomes easy to say “no” once the costs are beyond the limits that you set for yourself.
- For how long do you require the services or product you are looking for? It is important to set a timeframe and include a minimum period for example when renting premises. One-year contracts are common but are not in your interest. Try and negotiate for longer periods as this will allow for less stress and uncertainty.
- What are the advantages and the disadvantages of the deal that is being offered? It is interesting to note that while somebody eagerly wants something, the disadvantages are easily brushed aside. Often, the client ends up with less value for money than was necessary.
Secondly, get a second opinion. Ask around and be informed. Find people in your social circles whom you can trust and who are able to advise you. And if you can afford it, personally or in your business, hire the services of a lawyer or consultant, and get expert advice on matters you are not an expert in yourself.
Thirdly, include conditions in the contract that will protect your interests. Write them down, put them on the table and have them included in the contract. Don’t accept the excuse that the standard contract normally doesn’t include your issues. You should not sign until you are confident that your interests are represented.
As mentioned earlier, contracts are often drawn up in complicated language. Ask yourself whether you understand the rest of the contract. If not, ask for an explanation, negotiate if necessary and have the issue written down in a way that is understood by both parties.
Finally, know what the consequences are for not sticking to the deal. Exceptions and consequences are the issues that are often found in the small print at the bottom of the main text or as footnotes, discouraging you to go into the details. You need to understand for yourself and accept what the exceptions are and what the consequences will be in case you or the other party want out. Don’t take this lightly. If the consequences are too light, the chance for the contract to be broken is higher, putting you at more risk than necessary, which is what you want to avoid in the first place.
Remember, a contract is an agreement between two parties, and you are responsible yourself for making sure that your own interests are protected. Don’t expect the other party to do that for you.
Ton Haverkort
Financial literacy and investor education- whose role is it in a nation? Why they are the critical pillar for the Ethiopian Capital Market to thrive
For those of you haven’t read my previous three articles, I discussed the importance of the ecosystem approach for the Ethiopian Capital Market to thrive, provided historical grasp about the genesis of capital markets around the world and potential pitfalls capital markets harbour and pointed out that the Ethiopian Capital market at its early stage might suffer from the financial sector market concentration etc., and in the last edition I pointed out the various regulatory risks and how to mitigate them.
In this edition I will discuss – Financial Literacy and investor education. I will deep dive and explain whose role is it and how can it be done at the national level. Who has the explicit mandate or is there such a thing? What is the role of the Capital Market Authority’s role if any?
Within a fast-evolving financial landscape where access to financial services is made easier while more risks are being transferred to citizens the world over (this could be argued either way- in principle this is the case in most countries), financial literacy has become a key life skill for individuals as well as micro and small businesses. Remember Small and Micro businesses are
the engine and source of employment for most economies.
Financial education can help enhance financial literacy by increasing financial knowledge, skills and attitudes. In turn, this can contribute to individuals’ (including vulnerable and low income) participation in financial, economic and social life as well as to their financial well-being. As a complement to financial inclusion and financial consumer protection, financial education is also important to restore confidence and trust in financial markets
Capital markets play a significant role in the economic development of a nation While the advent of capital market in Ethiopia brings many opportunities to access finance and increase economic activities- democratise investor participations and stimulate growth for it to thrive among other things it requires financially literate and educated investors. Capital markets facilitate the mobilization of savings from investors to businesses and governments that need capital. They also provide a platform for raising capital, capital markets enable businesses to expand, innovate, and create jobs, which in our case is critical to provide meaningful work to our growing and young population. Further, they offer a wide range of securities for investors, depending on their risk tolerance and investment goals and guide investors to put their money in investments with high returns, ensuring money goes to projects with big growth potential. In a nutshell, capital markets are indispensable in promoting sustainable economic growth and development. This is only fanciful if the wider population has no knowledge of the basic functioning of the financial systems and the capital markets.
In Ethiopian context with the advent of the Capital Market, the critical questions remain how educated (financially literate) and aware are citizens?
Financial literacy in Ethiopia is currently at a relatively low stage, even when compared with peers in Sub-Saharan Africa. This low level of financial literacy negatively influences the level of financial inclusion. Roughly, 82 percent of the unbanked adults reported not owning an account
due to lack of financial literacy or awareness. Low basic literacy and limited awareness of mobile internet, especially among women, are barriers to meaningful access, usage, and control over financial and digital financial services.
However, efforts are being made to improve this situation. The National Bank of Ethiopia has developed a National Financial Education Strategy. Additionally, the UN Capital Development Fund (UNCDF) and the Ministry of Innovation and Technology in Ethiopia have convened key stakeholders to deliberate on nationwide digital and financial literacy survey. This survey aims to measure Ethiopians’ financial and digital literacy levels and how it is utilized in financial matters. This was in February 2023, and no information whether the survey took place and the result if so.
Ethiopia’s goal is to ensure that 70% of its citizens are digitally literate and financially included by
2025. This highlights the recognition of digital and financial literacy as crucial to achieving this goal. There is no data or study that informs us of how this grand plan is tracking with only 12 months left. It suffices to say to attract retail investors (important for wider reach and financial inclusion) increasing the level of financial literacy is critical in Ethiopia. Again, knowing the baseline is critical to develop a national financial literacy and inclusion strategy.
Why this is important and how can we educate citizens and whose role it is?
Financial literacy plays a crucial role in the functioning of capital markets by empowering individuals with the knowledge and skills necessary to make informed financial decisions. This understanding fosters greater participation in financial markets, as individuals are better equipped to assess investment risks, evaluate the suitability of various investment options, and implement effective risk management strategies. It also provides a means in understanding how the economy works, that is, how to earn, spend, save, manage, and invest money. Works.
Moreover, financial literacy can contribute to market efficiency and stability, as it reduces the likelihood of hasty investment decisions and susceptibility to fraudulent schemes. It also promotes the use of financial instruments and can help reduce inequality by enabling individuals to take advantage of new investment opportunities. In essence, financial literacy not only benefits the individual investor but also enhances the overall health and vibrancy of capital markets.
The responsibility for educating citizens falls on multiple stakeholders. Governments often play a pivotal role through public education systems and initiatives like the OECD recommendation on Financial Literacy, which emphasizes the importance of financial well-being. Additionally, non-profit organizations and financial institutions contribute by providing resources and programs to enhance public understanding of financial concepts. Schools are increasingly incorporating financial literacy into their curricula to equip students with essential financial skills from a young age. Moreover, the private sector, including employers, can offer financial education as part of employee benefits. Ultimately, a collaborative effort from all these entities is necessary to improve financial literacy rates and promote economic stability and growth.
Similarly, investor education is a shared responsibility among various stakeholders, each playing a crucial role in enhancing financial literacy. Regulatory bodies like the Ethiopian Capital Market Authority have a key role to play in advancing financial literacy through investor education as part of their investor protection mission. Financial institutions often provide resources and tools to help educate investors about different types of investments and the risks associated with them.
Additionally, individual Companies CEOs and other executives, like Warren Buffett, have done a lot to educate investors. They often share information with investors and teach them important concepts that can be widely applied. Furthermore, financial Advisors and Planners provide personalized advice and education to help investors make informed decisions. Moreover, many media outlets and publishing companies produce content aimed at educating investors. This can range from news articles and blog posts to books and online courses. In summary, investor education is a shared responsibility among various stakeholders, each playing a crucial role in enhancing financial literacy.
I thought this was my last piece, but couldn’t contain both investor education and investor protection in one piece, so, I will conclude with the importance of investor protection, why it is important and what it takes the Capital Markets to do this. In short, investor protection indirectly promotes a vibrant capital market. Investors will freely enter the capital market in large numbers only when their interest is fully protected. This would bolster confidence and enables ordinary citizens to part their savings into the various investment opportunities. Furthermore, investor protection helps maintain the integrity of the market. It ensures that the
public has the necessary information to make informed investment decisions. Stay tuned…
Mengistu Woldemariam is a Senior consultant in business and finance.
Previously lecturer in corporate finance and accounting and currently works in consumer and investor protection. – Senior Program Manager
Writer could be contacted: Weldemariammengistu@gmail.com
