Ethiopian Coffee and Tea Authority (ECTA) drafts a directive that would allow value added coffee exporters to sale their products locally in foreign currency.
The directive that was tabled for further feedback from stakeholders, indicated that when enacted, value added coffee exporters will be at liberty to sale their export standard coffee to those having the legal rights to hold foreign currency, such as through the electronic system including credit cards.
For this directive to see the light of day, the financial sector’s regulatory body, National Bank of Ethiopia (NBE), is said to give the green light, for the globally acclaimed Ethiopian coffee to be sold locally in foreign currency.
Similarly, the authority is said to monitor the operation of exporters trading locally.
Currently, as per a special permit given by NBE, roasted coffee exporting company, Wild Coffee Ethiopia, has been engaging in the sales of its high quality export coffee locally, in foreign currency.
Gezahegn Mamo, CEO of Wild Coffee Ethiopia, told Capital that his company has been in this line of business for the last about two years, with the license being renewed annually.
As Gezahegn explains, he provided a solid convincing angle for the central bank to allow him to sale his product locally in foreign currency. He also allowed the regulatory body to handle all the necessary cross checks so that no exploitation is done.
“Initially they were reluctant but I convinced them that Ethiopia is a diplomatic and conference hub in the continent to which several foreigners residing in the country need to have a taste of the premium coffee as long as they pay in foreign currency in close regulation of the central bank,” he recalled how he convinced NBE, adding, “In addition to sourcing foreign currency locally we have been exporting our coffee.”
Gezahegn also backed the latest move of ECTA citing that it is a move in the right direction.
The only thing they have to make sure is that the quality of the coffee and roasting facility maintains the required standard.
“Those who live in Ethiopia or come to visit or converge for a conference may buy the high quality coffee which is an opportune window to promote our coffee to the global coffee lovers without paying penny for advertisement,” said Gezahegn whilst supporting the proposed directive.
According to the draft directive, foreign visitors and travelers, embassies, international conference participants, and individuals who shall come up with legal foreign currency shall buy Ethiopian export coffee locally in foreign currency.
These buyers will have an option of using credit cards or electronics payment instrument to purchase the commodity.
However, according to the draft directive, if the national bank controls and approves the transactions, then a cash sale will be permitted.
With regards to the package labeling, the type of coffee, brand, trade mark, producing country, and date should be mentioned, in addition to marketing it as an export commodity on the package.
Exporters who get the nod to sell the product in foreign currency locally are expected to issue a receipt that mentions the place of sale, volume and value of the product.
Four star and above hotels, resorts and cafés, international airports, national parks, Unity Park, Friendship Park, Entoto Park are the centers where the value added export coffee product are to be sold.
The directive added that international convention centers, AU Headquarters and ECA are the facilities that Ethiopian value added coffee exporters can trade their products.
As per the draft directive, exporters who will be allowed to sale their commodity in foreign currency must fulfill different requirements including standards that allow keeping the quality of the commodity.
Traders are also expected to sale their commodity with minimum and above range of weekly price tags, while they have to report to the national bank for their daily transaction on a weekly basis.
So far the directive proposed that from the total export volume of value added coffee exporters shall sale the ten percent locally but as per the performance it presented to NBE, the coffee authority will look into revising the percentage.
Directive to pave way for exporters to sell coffee in foreign currency locally
NBE beefs up capacity to shoulder growing financial responsibilities
As the financial industry continues to become broad in terms of operation, the National Bank of Ethiopia (NBE) discloses that it is taking diligent steps in enhancing its capacity to shoulder its new responsibilities.
The central bank over the course of the past four years has undertaken massive reforms to align the financial industry with the Home Grown Economic Reform (HGER) and the ten year economic plan.
In this process, the regulatory body has amended a lot of directives or issued new laws besides the amendment of proclamation through parliament. Similarly, some crucial proclamations have been tabled to parliament for revision.
In its new pathway to improving services, the bank has also paid keen attention on refining its service and has beefed up its capacity to regulate the financial industry prudently.
As massive reforms continue to rejuvenate the sector, the responsibility of the central bank continues to expand making the bank to enhance its capability in all relevant spheres.
Yinager Dessie, Governor of NBE, said that one of the targets to attain success in the budget year was building the capacity of the regulatory body.
He said that there are several engagements in the bank as in any office.
“Capacity building and better services are priorities that we are working on, in the budget year, in addition to other planned activities,” Yinager said whilst delivering NBE’s quarterly report to the standing committee in parliament.
Besides rolling out cautionary measures to safeguard the country’s economy, the central bank has regular operations like supervision of financial entities such as microfinance institutions and insurers, currency administrations, and ensuring financial inclusion.
In connection to introducing reforms including the major moves like the establishment of the capital market, which NBE conducted the inception work, the regulator has also been engaged on massive capacity building to handle the upcoming possible challenges linked to the opening up of the financial sector.
To some extent international organizations and countries have also provided their support on skill development and financial support besides hiring prominent experts as advisors.
The government on its aim to improve the financial sector and telecom business, it has set sail to open up the market which was once highly protected from foreign investors and private companies including individuals from the diaspora.
With regards to the opening up of the telecom business, parliament recently approved a proclamation that would allow foreign fintechs to invest on the sector.
Directly or indirectly the central bank is said to have a stake on the upcoming alternative financial source, that is, the capital market.
The draft Banking Business Proclamation amendment that would allow the opening up of the financial sector for foreign actors has also been tabled to parliament.
The National Payment System, which allows foreign operators to be involved in the financial sector through digital schemes like mobile money, Payment Instrument Issuers, Payment System Operators are some of the major moves that would make the regulatory body engagements much broader since it includes more stakeholders including foreign operators.
Foreign Currency Intermediary directive that allow banks to facilitate credits from foreign sources for local borrowers is also the other new directive introduced in the reform period.
Open market operations and standard facilities that are a money market to the central bank or between financial institutions were also introduced in this period.
NBE has also been assigned additional responsibility in looking after private and public employees’ pension funds. The role of the two pension funds are expected to expand their operation in terms of generating more value for the benefit of pensioners.
The opening of the exchange rate which is said to be determined by the market is also expected to come to fruition in the near future.
Amount of blocked airline funds rising
The International Air Transport Association (IATA) warned that the amount of airline funds for repatriation being blocked by governments has risen by more than 25% ($394 million) in the last six months. Total funds blocked now tally at close to $2.0 billion. IATA calls on governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities, in line with international agreements and treaty obligations.
IATA is also renewing its calls on Venezuela to settle the $3.8 billion of airline funds that have been blocked from repatriation since 2016 when the last authorization for limited repatriation of funds was allowed by the Venezuelan government.
“Preventing airlines from repatriating funds may appear to be an easy way to shore up depleted treasuries, but ultimately the local economy will pay a high price. No business can sustain providing service if they cannot get paid and this is no different for airlines. Air links are a vital economic catalyst. Enabling the efficient repatriation of revenues is a critical for any economy to remain globally connected to markets and supply chains,” said Willie Walsh, IATA’s Director General.
Airline funds are being blocked from repatriation in more than 27 countries and territories.
The top five markets with blocked funds (excluding Venezuela) are Nigeria ($551 million), Pakistan ($225 million), Bangladesh ($208 million), Lebanon ($144 million), and Algeria ($140 million).
Nigeria
Total airline funds blocked from repatriation in Nigeria are $551 million. Repatriation issues arose in March 2020 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.
Despite these challenges Nigerian authorities have been engaged with the airlines and are, together with the industry, working to find measures to release the funds available.
“Nigeria is an example of how government-industry engagement can resolve blocked funds issues. Working with the Nigerian House of Representatives, Central Bank and the Minister of Aviation resulted in the release of $120 million for repatriation with the promise of a further release at the end of 2022. This encouraging progress demonstrates that, even in difficult circumstances, solutions can be found to clear blocked funds and ensure vital connectivity,” said Kamil Al-Awadhi as Regional Vice President for Africa and the Middle East.
Venezuela
Airlines have also restarted efforts to recover the $3.8 billion of unrepatriated airline revenues in Venezuela. There have been no approvals of repatriation of these airline funds since early 2016 and connectivity to Venezuela has dwindled to a handful of airlines selling tickets primarily outside the country. In fact, between 2016 and 2019 (the last normal year before COVID-19) connectivity to/from Venezuela plummeted by 62%. Venezuela is now looking to bolster tourism as part of its COVID-19 economic recovery plan and is seeking airlines to restart or expand air services to/from Venezuela. Success will be much more likely if Venezuela is able to instill confidence in the market by expeditiously settling past debts and providing concrete assurances that airlines will not face any blockages to future repatriation of funds.
Call For Application
If you are a local solar home systems and/or solar pumps manufacturer/assembler in Ethiopia, apply to the Grand challenge before January 16 2023. It is a competition presented by Precise consult’s Solar Appliance Manufacturing(SAM) program that intends to systematically select existing high potential local solar systems manufacturers and assemblers based on a pre-determined eligibility criteria and provide tailored technical supports for qualified applicants to boost their production capacity.
ELIGIBILITY REQUIREMENT
To be eligible to participate in the grand challenge, applicants must meet the following eligibility criteria.
- The applicant must be a registered entity and incorporated in Ethiopia.
- The applicant should be operating in Ethiopia for at least 3 years.
- The applicant should have audited financial statements for at least 3 years.
- The applicant should be engaged in assembly and manufacturing of solar pumps or demonstrate the capacity to enter assembly and manufacturing of solar pumps
- The applicant should have existing facility that is currently used or can be used for assembly and manufacturing of solar pumps
- The applicant should have the technical capacity in terms of qualified staff and the financial capacity of local currency working capital needed for solar pump local manufacturing.
- The applicant’s manufacturing proposal must be implementable in Q1 2023 with a project duration of 12 months and ending by December 31, 2023.
- The Applicant shall not have been the subject of bankruptcy, liquidation, judicial settlement, safeguarding, conviction of illicit activities, cessation of activity or any other similar situation resulting from a similar procedure.
- Only applications that meet the eligibility requirements and minimum criteria for the submission will be scored.
To apply: Please visit Precise website
https://preciseethiopia.com/news/CALL%20FOR%20APPLICATION-The%20Grand%20challenge
Open until January16, 2023.
www.preciseethiopia.com
