Frustration, uncertainty engulfs investors

The much anticipated unveiling of the under formation mortgage bank, Selam bank, falls through the cracks.
The founders agreed with Goh-Betoch Bank to transfer its shareholders.
Selam bank which was well on its way to becoming the second mortgage bank following Goh Betoch bank was backed by most influential leaders from various industries, including media, business, and real estate elite including Bethlehem Thilahun, Aman Feshetsion, the founder of EBS TV, Zemedeneh Negatu, head of Fairfax Africa Fund Ethiopia and Yared Alemayehu of Walia Tannery.
After facing delays from its initial plan to start share selling in late 2019, the bank faced further delays resulting from the pandemic, and started officially selling its share in May 2021. It then promised to launch its operation 5 months from May 2021 aiming to meet the huge housing demand in Addis Ababa and other towns through introducing new construction technologies and innovations at affordable prices, to finance 100,000 affordable mortgages totaling ETB 200 billion in the next 5 years
Now, the bank is planning to transfer its shareholders to Goh-Betoch Bank.
Bethlehem Tilahun, one of the founders of the bank informed Capital that they have gained permission from the regulator, National Bank of Ethiopia, to go ahead with the process. However, she declined from giving further information on the matter.
It is said that Selam Bank’s shares had a par value of 1,000 Br, with a minimum purchase of 10 shares required to join, while the maximum amount an individual could buy amounted to 100,000 shares. The bank was also planning to raise a paid-up capital of five billion birr of which two billion was before the opening its doors to customers.
Now, Goh-Betoch has taken over Selam’s shareholders, which has been welcomed as a positive step towards salvaging some of the investments made by individuals and businesses.
Mulugeta Asmare, president of Goh told capital that after the request of Selam Bank, Goh bank’s board approved the request.
“Since we are currently selling shares, it is okay for Goh, if they join individually or as a corporate,” the president said whilst indicating that the number and amount of shareholders and shares are yet to be seen.
Sources who spoke to Capital now accuse the bank for going silent on shareholders on updates of the bank, “The bank had a promising start, with its share sale generating significant interest and enthusiasm from the public. The bank had set an ambitious goal of collecting two billion Ethiopian birr in capital, and it appeared well on track to achieving it. The bank’s active and rapid promotion had also raised hopes that it would be a serious contender in Ethiopia’s mortgage banking industry. The situation has left many wondering about the future and what it could mean for Ethiopia’s mortgage banking industry.”
Though there could be several potential reasons for Selam Bank’s sudden silence, as sources indicate, one possible reason could be that the bank is facing internal issues, such as management or operational challenges that have hindered its ability to operate including economic factors, which can hamper the bank’s operations.
“Regardless of the reason for the bank’s silence, it is crucial for Selam Bank to provide its stakeholders with regular updates and maintain transparent communication channels. The lack of communication has caused frustration and uncertainty, which could negatively impact the bank’s reputation and investor confidence,” lamented sources.
Goh is the first and the only private mortgage bank since 70s which started its operation in October 2021 with a capital of 1.2 billion birr.
By way of simple definition, a mortgage bank is a bank specializing in mortgage loans. It can be involved in originating or servicing mortgage loans, or both. The banks’ loan their own capital to borrowers and either collect payments in installments along with a certain rate of interest or sell their loans in the secondary market.

Required foreign currency and tax and customs issues hamper the country in meeting the National Electrification Program (NEP) 2.0 target that is to be attained by 2025.
In an event organized by the Ethiopian Solar Energy Development Association and Precise Consult, in partnership with the Ministry of Water and Energy, and Ministry of Irrigation and Lowlands with regards to the status of solar appliance manufacturing in Ethiopia, it has been stated that there is a huge alternative to filling the electrification gap through solar energy. However, as cited in the discussions, there were several hurdles on the sector which hinder the set goals by the government in achieving universal electricity access nationwide in the coming two years’ time. In retrospect, the NEP 2.0 became effective in 2019.
At the meeting, a detailed study carried out by Precise was presented which indicated that Ethiopia still had the third largest access to electricity deficit in sub-Saharan Africa with only 45 percent of the population having been connected.
As it stands, by 2025, the plan is for 65 percent of the population to have electricity through the grid, and the other 35 percent through off-grid technologies – stand-alone solar (SAS) systems and mini-grids.
The 35 percent of the population that is expected to be covered by the off grid system is determined as over nine million households.
Through his study presentation, Abel Endrias, Off-grid Energy Innovation Program Manager at Precise, said that if the NEP 2.0 targets are to be met, annual supplies of solar home systems (SHS) products will have to rise significantly over the next few years by an average of 12 percent.
“There exists a significant gap between projected demand for SAS and the supply. The projected demand is unlikely to be met without a commensurate increase in the amount of forex available to the sector,” he added.
USD 1.4 billion in foreign currency is needed to meet the NEP target with only USD 150 million unlocked up until 2022, “This shows that there is still a long way to go to achieve government’s universal electrification plan.”
Due to lack of possible conducive environment for the sector, the current assemblers are forced to operate below 20 percent of their capacity, according to Precise Consult’s study.
Besides the foreign currency challenge for local manufacturers or assemblers to import their inputs, the implementation of tax incentives targeting the sector as a whole or to specific local assemblers and manufacturers is not consistent due to frequent policy amendments.
Tsehaye Yenus, Electrical and Electronics Desk Head at the Ministry of Industry, said that local industrialists should have better advantage on the market, “To alleviate the problems regarding the electrification issue, we are working with the Ministry of Finance in terms of customs duty and other issues.”
“Regarding electronics and the electrical sector, there is a gap on customs issues that must be solved. Main components on the sector should be free from customs duties to benefit manufacturers and we are working with relevant government offices to come to similar understanding,” he added.
Tsehaye expressed that companies which are interested in investing on the sector is increasing, which in the long haul reduces the foreign currency demand.
“If big companies that start production from scratch are coming, the foreign currency demand may reduce and the industry linkage will improve,”he told Capital.
Regarding the quality issues, there was also a challenge that the study cited, which was that the market share of quality non-certified products was on the rise, while quality assurance procedures were not in favor of quality products.
“For this, the Ethiopian Conformity Assessment Enterprise’s solar laboratory testing is used for market assessment certification. This verification process does not grant local manufactures complete authorization to export their products,” Tsehaye pointed out.
The study underscored that if barriers were to be lifted, the local sector suppliers like assemblers and manufacturers would bring comparative advantage for the economy and users at large.
“Local manufacturers and assemblers are more likely to have a better understanding of the local market and customer needs. Thus creation of specialized technicians and engineers who can provide high-quality after-sales services, including troubleshooting, repairs, and maintenance, and SHS products tailored to the specific needs and conditions of the Ethiopian market are stated as an advantage if the local expertise stand on its strength,” the expert highlighted the path to success.
The study also indicated that increased availability of spare parts, make it easier to replace faulty components and reduce the time needed for repairs. “As a result, improved maintenance and repair services can result in more reliable SHS products, ensuring that rural households have consistent access to electricity, and likewise the growth of the domestic solar industry can create jobs and stimulate economic development in rural areas,” the research analysis read.
According to the study, solar PV systems manufacturing alone could potentially create 50,000 full time skilled jobs.
“The overall cost needed to connect the yearly targets of NEP 2.0 including the net forex need, operational costs and capital investment, can be reduced by USD 151 million within the coming three years if some portions of the targets are replaced by locally value added SHS. This amount is the total cost needed to achieve more than 560,000 connections,” Abel said on his presentation.
In its finding the study indicated that the forex saving achieved through local assembly can go as high as 24 percent per unit, if locally available components such as plastic molds, cables, and packaging materials, are sourced from local manufacturers and locally assembled products can be sold at a price 13 percent less than imported products.
“If the products were manufactured locally, then it has a potential of cost saving up to 38 percent with about 50 percent reduction in product cost for the end user,” the research highlighted.
Currently, there are four SHS assemblers in the market with a total capacity of 80,000 units annually and additional 6 assemblers are finalizing their entry to the market with a total capacity of 413,000 units.
Abramba Technologies is the only SHS manufacturing firm in Ethiopia with the capacity to manufacture up to 100,000 units annually, while it is yet to become operational.
The NEP is an action plan launched in 2017 for achieving universal electricity access nationwide by 2025.

The Greek Community School accuses the government of trying to illegally seize its property.
As the situation heats ups, the school’s board of directors has now resorted to taking matters to its own hand by filing a lawsuit against the government, claiming that it had no legal right to take possession of the property.
In a press conference given by the school on Wednesday, June 7, 2023, regarding the current situation, the school’s lawyer, Zenebe Fikre stated that, “Our right to be heard has been denied, and our property has been confiscated by the government without our knowledge.”
As the lawyer indicated, the issue, which started three years ago in relation to taxation, has now reached a stage where the government has decided to take over the school illegally.
On March 20, 2015, the Ministry of Justice, based on the letter sent by the Ministry of Education (MoE), in a letter written to the Civil Society Organization Authority (ACSO) stated that the Hellenic Greek Community, which manages the Greek school, is not properly managing the school, and further requested the authority to establish a temporary board. Following the statement, the authority established a board which had 6 members from 4 ministerial offices, and one from the school’s parent committee and one from Olopikos Hellenic Athletic Association Greek Club to administer the school until it registered its endowment property.
The school lawyer now claims that despite the community’s great management of the school, the government has seen it otherwise, “On April 24, 2023, the court issued an injunction to stop the Ministry of Education and ACSO from setting up a new board to take over the school, for further investigation. The court is now considering the ownership and legitimacy of the school thoroughly.”

“Whilst this was pending, on last Friday June 2, 2023, the prosecutor filed a lawsuit and when we were appearing at the high court for a scheduled hearing; the court passed a decision without hearing our answer. The court ultimately ruled in favor of the government. As a result, those who claim to be the administration, we do not know where they are from have since been in the compound since Saturday,” the lawyer expressed, puzzled by the decision made.
Over the years, there have been multiple allegations against the school over corruption for close to 30 years.
“We had two appointments in court; no one was able to present any evidence. As a community school, the school exercises its right to write about taxes. However, the school uses collected funds for operations and is prepared to accept responsibility for any unlawful actions,” the lawyer underlined.
“Currently, the aim of these parties is to take over the land under the disguise of an endowment; this action was forced upon the school administration by MoE, ACSO, and others for their personal gain,” Zenebe pointed out.
The lawyer also alarmed that the school license which expired as of March 2023, has not been renewed by MoE, “On the other hand, when accusations arose, the school made the decision to change by becoming an international school and did everything required of it. However, the Ministry still didn’t approve our request.”
The doors of the Greek community school have been opened since 1985 and are in the community premises located around Olompiya. Currently, the school has more than 1100 students, who are mainly foreigners. The school has been well-known to the Ethiopian government, Greek Embassy, and MoE.
Capital’s efforts to contact the Ministry of Justice for an exclusive were unfruitful.