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So, this is Christmas …

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… and what have you done? Another year over, a new one just begun.

These are the opening lines of a song by the late John Lennon, which is still one of the most popular Christmas songs, played by many radio stations around the world this time of the year. The message is simple and timeless and points a finger at our own responsibility to make this world a better world. Nevertheless, we see the world around us sliding away into more conflict and environmental degradation at the hand of man. Yesterday evening I watched some of the DVD recordings of the “Live 8” concert which was organised in 2005 with the purpose to influence the leaders of the eight most powerful countries of the world, who met in Scotland the same weekend, to relief some of the most in-debt countries of their obligations to repay some of their loans. And they did. The concerts were powerful and charged with an emotional plea for one world. Sometimes people can come together for a good cause and achieve a good result. But for how long? What are we doing today to make this world a better world?

Most of us are following the political and economical developments in the world and at home from a distance, accepting the fact that nothing can be done about it anyway, that the power is in the hands of a few others who play the game at other levels. It is good to realize where you stand and know whether or not you can do something about a certain situation.

It is true that we all have issues that we are concerned about: national and international politics, disasters and emergencies, terrorism, extremism and closer to home the costs of living, the education of our children, crime, our health, our jobs, the business etc. All issues are certainly issues to be concerned about. Not everybody is in a position though to influence them. There are issues within our so-called circle of concern and there are issues within our smaller circle of influence. If your circle of concern is big and your circle of influence is small, chances are that your life and business are at the mercy of your external environment. Your situation is dictated by other people, circumstances and factors and you have a lot to worry about. The point is to realize how big your circle of concern and your circle of influence are in relation to each other and ask yourself what to do to enlarge your circle of influence to push towards your circle of concern.             

In other words, make up your mind about the issues that you are concerned about, decide whether or not you want to do something about it and subsequently work on enhancing your influence on the issue. If you conclude that an issue is not for you to have any influence over, it may be better to stop being concerned about it at all. Instead focus on what you can have a (growing) influence over.

Now, your actions again depend very much on what your values are. Values represent what we really find important in life and surprisingly enough very few people will find it easy to define exactly what their values are. But most people act according to their values even if they are not very conscious about it. After all, where your treasure is, there your heart will be. If someone finds it very important to have a car (s)he will try and get one. Those of you, who have built a house, will know how difficult it was to complete the project, but it was worth it because it was very important. Other people find it important to be around their family and because of it hesitate to take on a job that will separate them from their family. Other examples of values are to have respect for each other, to be honest, integrity, etc. We can also know what people do not find important as we observe their behaviour. Somebody who finds it important to get rich quick but does not value honesty or hard work for example will find other innovative ways to get the money. In other words, our values guide our behaviour for a great deal. Do you know what your values are? Try to list and write them down and you will discover that it is not so easy to have a deeper look into your inner self. But if you can, it will help you in getting more clarity about your do’s and don’ts.

Business owners can take this a step further and look into how their personal values translate into how they manage their business. Now, with only a few days to go before Christmas, it is a good time to reflect a bit on our personal and corporate values and goals. In doing so, try and complete the following exercise:

  • Define your personal values.
  • Do they match the corporate values?
  • What can you do to increase the match between your personal and the corporate values?
  • In which areas of your work can you become more proactive and thus more effective?
  • Write this down and share with management.
  • Agree on a time frame to evaluate progress.

For more inspiration during this festive season, I suggest you search the full lyrics of Lennon’s Christmas song.

Merry Christmas.

Ton Haverkort

Spheres of Globalism

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Alazar Kebede

Many people would think globalism and globalization refer to the same phenomenon. However, there are important differences between the two. Globalism, at its core, seeks to describe and explain nothing more than a world which is characterized by networks of connections that span multi-continental distances. It attempts to understand all the inter-connections of the modern world and to highlight patterns that underlie and explain them. In contrast, globalization refers to the increase or decline in the degree of globalism. It focuses on the forces, the dynamism or speed of these changes. In short, consider globalism as the underlying basic network, while globalization refers to the dynamic shrinking of distance on a large scale.

Globalism is a phenomenon with ancient roots. Thus, the issue is not how old globalism is, but rather how “thin” or “thick” it is at any given time. As an example of “thin globalism,” the Silk Road provided an economic and cultural link between ancient Europe and Asia. Getting from thin to thick globalism is globalization and how fast we get there is the rate of globalization. Of course, the Silk Road was plied by only a small group of hardy traders. Its direct impact was felt primarily by a small group of consumers along the road.

In contrast, the operations of global financial markets today, for instance, affect people who are living in far and remote area of the world. Thus, “globalization” is the process by which globalism becomes increasingly thick and intense. Joseph Nye, the former Dean of the John F. Kennedy School of Government at Harvard University explained that the general point is that the increasing intensity, or thickness, of globalism, the density of networks of interdependence, is not just a difference in degree from the past. An increasing “thickness” changes relationships, because it means that different relationships of interdependence intersect more deeply at more different points.

At the same time, it is important to note that globalism does not imply universality. After all, the connections that make up the networks to define globalism may be more strongly felt in some parts of the world than in others. For example, at the turn of the 21st century, a quarter of the United States population used the World Wide Web. At the same time, however, only one-hundredth of one percent of the population of South Asia had access to this information network. Joseph Nye noted that since globalism does not imply universality and given that globalization refers to dynamic changes, it is not surprising that globalization implies neither equity nor homogenization. In fact, it is equally likely to amplify differences or at least make people more aware of them.

Joseph Quinlan, the Managing Director and chief market strategist at United States Trust, Bank of America Private Wealth Management argued that both globalism and globalization are all too often defined in strictly economic terms, as if the world economy as such defined globalism. But other forms are equally important. There are four distinct dimensions of globalism: economic, military, environmental and social. He noted that economic globalism involves long-distance flows of goods, services and capital and the information and perceptions that accompany market exchange.

These flows, in turn, organize other processes linked to them. One example of economic globalization is low-wage production in Asia for the United States and European markets. Economic flows, markets and organization, as in multinational firms, all go together. Environmental globalism refers to the long-distance transport of materials in the atmosphere or oceans or of biological substances such as pathogens or genetic materials that affect human health and well-being.

Military globalism refers to long-distance networks in which force, and the threat or promise of force, are deployed. A well-known example of military globalism is the “balance of terror” between the United States and the former Soviet Union during the Cold War, a strategic interdependence that was both acute and well-recognized. What made this interdependence distinctive was not that it was totally new but that the scale and speed of the potential conflict arising from interdependence were so enormous.

The fourth dimension is social and cultural globalism. It involves movements of ideas, information, images and of people, who of course carry ideas and information with them. Examples include the movement of religions or the diffusion of scientific knowledge. In the past, social globalism has often followed military and economic globalism. However, in the current era, social and cultural globalization is driven by the Internet, which reduces costs and globalizes communications, making the flow of ideas increasingly independent of other forms of globalization.

Branko Milanovic, the Presidential Professor at the City University of New York’s Graduate stated that the division of globalism into separate dimensions, as presented above, is inevitably somewhat arbitrary. Nonetheless, it is useful for analysis, because changes in the various dimensions of globalism do not necessarily go together. For example, economic globalism rose between 1850 and 1914 and fell between 1914 and 1945. However, at the same time as economic globalism was declining during the two World Wars, military globalism rose to new heights as did many aspects of social globalism.

Branko Milanovic argued that without a specifying adjective, general statements about globalism are often meaningless or misleading. The same applies when talking about globalization or globalism today. Based on the historic evidence, we should expect that globalism will be accompanied by continuing uncertainty. There will be a continual competition between increased complexity and uncertainty on the one hand and efforts by governments, market participants and others to comprehend and manage these systems on the other.

In conclusion, as Joseph Nye noted, we should not expect or fear that globalism will lead to homogenization. Instead, it will expose us more frequently and in more variations to the differences that surround us.

Oromia Bank achieves record profit and strong growth in various areas

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By our staff reporter

Oromia Bank announced a net profit of 1.5 billion birr, marking another record profit before tax. The bank’s investments, as of June 30, 2023, amounted to 153 million birr. Additionally, it made further investments totaling 17.1 million birr, with 8.59 million from Oromia Insurance, 4.83 million from Sun Industry, 3.68 million from Etswitch, and the remainder from three other companies, as stated in its annual report.

During the year ending on June 30, 2023, Oromia Bank generated a total of $371 million in foreign exchange through international banking operations, achieving 102.1 percent of its plan. The bank also witnessed a significant 33 percent increase in its foreign exchange reserves compared to the same period the previous year, contributing to notable growth within the Ethiopian banking industry.

The bank reported total assets of 65.4 billion birr at the end of the fiscal year, with its capital reaching 5.4 billion birr.

Teferi Mekonon, the bank’s CEO, highlighted a 43 percent increase in income, amounting to 2.45 billion birr compared to the previous year, reaching a total of 8.3 billion birr. The report further disclosed that the bank’s net profit reached 2 billion birr.

The 14th annual regular and 5th emergency general meeting of Bank of Oromia SC was held at Millennium Hall.

The bank demonstrated a 24 percent growth in deposit collection performance in 2010, with deposits reaching 54.3 billion birr as of June 30, 2023.

Foreign currency earnings from international banking operations amounted to 371 million dollars, reflecting a growth rate of 32.8 percent, as stated in the report. Moreover, the bank’s total assets exhibited a 27 percent growth, reaching 66 billion birr as of June 30, 2023.

Currently, Oromia Bank serves 4.3 million customers, with over 2.5 million utilizing digital banking services.

Tough times, tight measures: Gov’t leans its finances in first quarter

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By Muluken Yewondwossen

Government borrows 17 billion birr from the National Bank of Ethiopia (NBE), in the first quarter of the budget year, whilst disclosing that direct advance (DA) will only be used as a last resort to fill the budgetary shortfall.

According to the Ministry of Finance’s (MoF) quarterly debt report, the government received 17 billion birr during the first three months of the 2023/2024 budget year.

When compared to a similar period of the 2022/23 budget year, which was 60 billion birr, this year’s figure is far lower.  

The 236.5 billion birr DA that were converted to long-term bonds as a result of the October 2022 occurrence included the 60 billion birr that were issued in the first quarter of the previous budget year.

In a statement released in August, the government through the NBE said that various fiscal and monetary tools are being applied to fight inflation. As noted, one of them was the reduction of DA, which is one of the contributors to runaway inflation.

According to the decision, NBE would only lend up to one-third of what it did the previous year and drastically cut its DA to the government in this fiscal year.

“Agreements have been reached with the MoF to utilize this facility as a last resort in the event that the market is unable to generate enough Treasury bills (T bills) and Treasury bonds, which were imposed on all commercial banks, including the state-owned Commercial Bank of Ethiopia, a year ago, to collect 20 percent of each loan disbursement,” NBE cited in August

The government has authorized 801.6 billion birr in expenditures for the 2023/24 budget year, which is about the same as the year prior.

The government now intends to collect 479.5 billion birr in taxes during the budget year, accounting for 59.8 percent of the authorized budget.

With a net share of 2.1 percent of the GDP, the deficit of the declared over 801 billion birr budget is 281.05 billion birr and from the authorized budget, the deficit accounted for 35 percent.

According to the MoF’s budget statement, loans for projects, domestic loans, and loans to protect essential services would be used to close the deficit.

Of the authorized budget, the percentage of domestic loans is 30.2 percent, while the share of the remaining two loans was 4.8 percent.

According to MoF, the size of the domestic loan will be 242 billion birr and will mostly consist of DA, T-bills, and Treasury bonds.

Including the 60 billion birr that was taken in the first quarter of the 2022/23 budget year and converted into long term bond in the past budget year, the direct advance amount was 190 billion birr.

According to the MoF report, as of September 30, 2023, the total outstanding debt of DA had grown from 130 billion as of June 30, 2023, to 147,000 million. The Ministry’s annual debt bulletin from the previous year indicated that the outstanding debt was 120 billion birr, while the most recent report shows a 10 billion birr increase.

In compliance with Directive No. MFDA/TRBO/001/2022, which requires commercial banks to buy a five-year treasury bond at 20% of their new loan disbursement, a new domestic debt instrument was introduced on November 1st, 2022. As of September 2023, the total amount of this debt instrument was approximately 48.4 billion birr.

It was 38.2 billion birr as of June 30, having grown by 10.2 billion birr during the first quarter of the current fiscal year. On September 30, 2023, there were 371.8 billion outstanding T-bills, up from 341.9 billion birr on June 30, 2023, a rise of 8.75 percent.

As of September 30, 2023, there was 1.9 trillion birr in total domestic debt, 2.23 percent more than there was 1.9 trillion birr on June 30, 2023.

As of September 30, 2023, the public sector’s total external debt was USD 27.73 billion, down from USD 28 billion as of June 30, 2023.

The MoF stated in its report citing, “The main reason is a relatively lower disbursement in the quarter compared to principal payments, another factor is that a stronger USD against other currencies leads to lower external debt in terms of USD.”

This 1.23 percent shrinkage between the two periods can be partially explained by exchange rate variation. IDA accounted for the majority of the USD 151.74 million in foreign public sector debt payments made between July 1, 2023, and September 30, 2023.

According to the report, there has been a decrease in the disbursement of external financing in the last two years. One reason for this decline in the total disbursement of external debt is that state-owned public enterprises, apart from Ethiopian Airlines, have not received a new loan in the last four years. The report explicitly said that low payments from Chinese creditors also play a role.

The principle, interest, and fees associated with paying off the foreign public sector debt came to USD 306.96 million over the reporting period.

The external debt’s present value (PV) as a percentage of GDP was around 13.1 percent, but the entire public sector debt’s PV was approximately 34.9 percent.

At September 30, 2023, 56.11 percent of the entire debt of the public sector was made up of domestic debt, and 43.89 percent was made up of external debt.

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