Broad money supply (M2) blows past two trillion birr in the third quarter of the previous fiscal year. Following suit, the currency outside the banking system also continues on its run.
The National Bank of Ethiopia’s (NBE) quarterly bulletin which reviewed the third quarter of the 2022/23 fiscal year that ended on June 30 indicated that the M2 surpassed two trillion birr for the first time.
The analysis of the economic activity of the period that ended March 30 stated that broad money supply stood at 2.06 trillion birr at the end of the third quarter of 2022/23 reflecting a 30.1 percent annual growth.
The M2 in the second quarter of the reviewed fiscal year was 1.94 trillion birr, which was 5.6 percent lower than the third quarter, while the figure was higher in contrast to the similar period of the year prior which was 1.58 trillion birr.
The increment is said to have occurred mainly due to a 28.5 percent expansion in domestic credit that reached 2.27 trillion birr, up from 1.77 trillion birr a year ago, offsetting 71.5 percent and 41.6 percent respective contraction in external asset (net) and other items (net).
As the document showed, net claims on government grew by 46.9 percent while credit to the non-government sector increased by 23.8 percent.
Component wise, quasi-money supply, which includes savings and time deposit, showed a 30.7 percent annual and 5.3 percent quarterly expansion.
The narrow money supply, which is also known as M1 inclusive of currency outside banks and demand deposit, exhibited 29.0 percent annual and 6.3 percent quarterly increment. The contribution of narrow money to broad money growth was 32.4 percent and that of quasi money 67.6 percent primarily reflecting the significant growth in savings deposits in the banking system.
However, the amount that was circulating outside banks stood at 217.2 billion birr with almost 27 percent increment from 171.2 billion birr a year ago.
Compared with the preceding quarter, the currency outside banks climbed by 8 percent or by 16.1 billion birr.
As noted, the rate on currency outside banks has been growing of late to which experts claim it will affect the banks’ liquidity.
When the government introduced cash on hand and withdrawal limit, which was followed by banknotes demonetization in 2020, the currency outside the banking system, was highly eroded, while after a few months it has taken an aggressive growing path to its former position.
The NBE bulletin indicated that reserve money reached 448.9 billion birr at the end of third quarter 2022/23, indicating a 27.1 percent annual and 6.8 percent quarterly growth. This significant annual increase in reserve money was attributed to 28.5 percent rise in banks’ deposits at NBE and 26 percent growth in currency in circulation.
Regarding current account deficit (including official transfers) narrowed from USD 1.1 billion last year to a deficit of USD 844.7 million the reported quarter.
“This was attributed to a 7.1 percent increase in net private transfers coupled with 7.5 percent decline in trade deficit. Service trade surplus and official transfers declined by 34.2 percent and 5.1 percent, respectively,” it added.
Broad money edges past two trillion birr
EEU wires its ambitions high for 2023/24
The Ethiopian Electric Utility (EEU) targets to expand its revenue by more than a quarter in the 2023/24 budget year.
The state owned electric utility announced that in the 2022/23 budget year it attained 94 percent of its targets in terms of revenue.
Shiferaw Telila, CEO of EEU, pointed out that in the 2022/23 budget year the Utility had targeted to generate 37.7 billion birr, while actual achievements realized 35.4 billion birr or 94 percent of the target.
Of the stated actual generation, 25.6 billion birr was secured from electric energy sales. In the period, EEU had targeted to generate 27.6 billion birr from energy sales.
In the year under review, the company also earned 9.6 billion birr from new electric line connections and 240 million birr from property disposals.
The year saw over 353 thousand new customers gaining access to electricity from the target of over 522 thousand, which was a projection attainment of 67.6 percent.
In the current budget year, EEU has projected to generate 32.8 billion birr from electric energy sales which is 7.2 billion birr or over 28 percent higher from the actual performance attained in the 2022/23 budget year.
Similarly, in the budget year, EEU has targeted to earn 11.9 billion birr from new electric line connections and 260 million birr from disposals.
In the period, 600 thousand new customers are targeted to be covered by the EEU electric system.
In the 2023/24 budget year, in general, the utility has projected to generate 45 billion birr in revenue which is 9.56 billion birr or 26.8 percent increment from the actual performance registered in the 2022/23 budget year.
‘Game changing’ lithium production to commence at Kenticha
The community based mining scheme at Kenticha in Seba Boru, of the Kenticha Mines, is gearing to develop lithium production, an expansion from its production and export of the tantalum ore.
Kenticha Mining plc which was formed by Oromia Mining Group, an enterprise formed by the Oromia Administration, private investors, and the African Mining and Energy (AME) based in Australia, disclosed that the value added operation will have mutual benefit for stakeholders including the public in the area and the government at large.
The mining scheme which was designed to advance the mining business with the modern thinking of a community based mining scheme has already leveled up its plans to engage on social development including development of infrastructure and other social facilities.
“We want to change the image of the mining development with our community intervention including knowledge transfer to empower the local community,” Sammy Million, representative of AME explained.
The company claimed that its approach has to be a structural chain geared towards a ‘win-win’ that makes the community have direct revenue share subject similar to that of the business modality.
The area has been developed under the government control, despite it being closed for about seven years for alleged environmental issues.
In the past few years, the company, which proposed to come up with the value additional production in partnership with the regional government, has followed up with the same by undertaking a detailed study to uplift the development with value addition production.
“Currently, we are on the final stage of coming up with the commissioning,” Sammy said, adding, “The lithium processing plant that is manufactured in South Africa is expected to reach Djibouti in the coming few days.”
According to Sammy, the commissioning work for lithium concentrate is expected to begin in three months time.
Additional, two processing plants are also said to be coming in few weeks time.
If the production line becomes effective, it would generate huge amount of foreign currency for the country since the product is on high demand at the global market.
More than 12 countries have shown signs for off take agreement, “This will be a game changer for us,” Sammy stated.
The mines present a globally important tantalite source in the Neoproterozoic Adola Belt, Qenticha locality in Seba Boru wereda, Guji zone, Oromia region, 600km of Addis Ababa at southern Ethiopia.
For close to three decades, the country has exported the tantalum ore of the mineral, which faced criticism from experts who claimed that it did not fully benefit the country.
AME claimed that it has substantial records alongside major project developments in Africa and has been responsible for originating sponsored projects with more than a billion dollar investment throughout the continent.
South Korea keen to elevate partnership with Ethiopia
Minister of Foreign Affairs of the Republic of Korea, Park Jin, who was in Addis Ababa for a three-day official visit, echoed the fact that Ethiopia is a gateway to Africa.
Deputy Prime Minister and Foreign Minister, Demeke Mekonnen, has discussed with FM Park Jin on ways of further strengthening cooperation between the countries in bilateral and multilateral venues.
The Foreign Minister also discussed bilateral relations with Prime Minister Abiy.
Ethiopia and the Republic of South Korea celebrate the 60th anniversary of the establishment of their diplomatic relations.
