Oromia Bank, the first private bank to introduce interest-free banking (IFB) services in Ethiopia, celebrates its 10 year of service.
In 2013, the bank rolled out its first IFB services and as Teferi Mekonnen, president of the bank depicts, “This initiative has opened the door for many Ethiopians who want banking services that are compatible with their religious beliefs and morals.”
As the president pointed out, 43 branches are completely providing IFB while the other 525 branches are providing other banking services in conjunction with IFB.
Over the past decade, the bank has expanded financial services to Ethiopians who follow Sharia principles by reaching more than 1.2 million customers across the country with 5.1 billion birr provided in loan services with 8.2 billion birr in savings.
As reports have shown, the bank has facilitated the coming up of various business through provision of funds which come with no burden of interest.
Despite the country’s opal production increase by seven folds, the foreign currency generation sinks five times than in previous years.
Ethiopia which is now a global known market for opal, has now been best described by the Mines Ministry as a mineral that has not ripped the benefit that it so deserves.
According to the Minister of Mines, Habtamu Tegegn, there is a significant increase in opal production at the country level, but the foreign exchange earnings are low.
Opal, which is now popular among Ethiopians, was discovered in Ethiopia in 1994, in an area called Mezo in the north of Shewa, and in 2008, it was confirmed in a another place called Sunrise in Delanta District, South Wolo Zone. Currently, Afar as well as Gondar and North Shewa are hotspots for opal.
At present, more than 85% of the opal in Ethiopia is exported to India, and very little is exported to other countries. To this end, the ownership rights have been taken away by the Indians who currently lead in the export of the mineral.
According to the minister, Opal is a sector with high waste of electricity, whose procedure requires efficiency.
From 2011 to 2015 EC, the production of value added opal increased by 7 times, but at the same time, the foreign exchange earnings decreased by 5 times.
Meanwhile, the Amhara Regional Mineral Resources Development Office announced that it has planned to export 18,156 kilograms of opal to the foreign market in the budget year. It plans to earn 7.2 million dollars by exporting opal products in the fiscal year. This quarter in actuality it reeled in about 324K USD, from the export of almost 11,000 kgs.
Ethiopian opal prices range from 10-250 per carat depending on size, type and color. High-quality gems will have color over the entire surface, free of visible inclusions on the surface of the opal.
Cement production in the horn to receive huge boost
By our staff reporter
Lemi National Cement, a massive miller that is anticipated to start production in 2024, discloses that it has completed the rotary kiln closing and kiln tail frame capping in under11 months.
Located in the Amhara region, 130 km north of Addis Ababa, the cement mill is a joint venture (JV) investment between Western International Holdings, based in Hong Kong, and East African Holding, one of the successful corporate conglomerates in Ethiopia.
The largest cement factory in Ethiopia, according to Deputy Project Manager Abebaw Bekele, is capable of producing 10,000 clinker per day from the cement mill.
In terms of clinker production capacity, Abebaw said that it is also the largest on the continent, highlighting that “the preheater has a147 meter length, which makes it the longest preheater in the world.”
After officially beginning in December 2022, the project’s major equipment installation was completed in eleven months. “Prime Minister Abiy Ahmed, who recently visited the facility, directed that the project be operational within 15 months instead of the original 18 months,” explained Abebaw, adding, “Now, the civil work has fully been accomplished and the equipment installation part has reached at 80 percent.”
“It is a breakthrough for the country, since similar projects are taking up to three years,” he contrasted the progress. Experts stated that rather than being handled by a single business, taking on such large projects in joint ventures is essential to finishing such projects on schedule, “When investments are carried out jointly challenges like financing are bypassed easily.”
According to Buzuayehu Tadele, Chairman of Lemi National Cement and East African Holding Company, Ethiopia would learn from the fresh and excellent experience gained in the logistics industry. He recalled how difficult it was to move large project equipment from the port from the past experience, which has now been eased in this new venture investment.
According to Buzuayehu, the most recent progress made on the project guarantees that it will start up on schedule. The next four months will see the completion of the electrical system and conveyance, enabling the facility to be formally inaugurated in March. The entire cost of Lemi National Cement is six hundred million dollars. It will deliver five million metric tons of cement annually when it begins production. “Our factories will have the capacity to produce eight million tons per annum while our facility located in Dire Dawa will also create a capacity to produce three million metric tons per annum,” stated Abebaw.
The Lemi plant alone, according to the Deputy Project Manager, has the ability to raise cement production by 50 percent, which is a significant contribution to meeting market demand.
The project construction team has overcome numerous challenges, according to Lin Zhong, Executive Director of Sinoma Suzhou, an EPC contractor, including a lack of territorial resources, delayed logistics and transportation, blocked customs clearance procedures, a complex security situation, and low construction efficiency brought on by the rainy season.
As a result, the project has consistently maintained the best possible state in terms of construction organization and technology.
For Ethiopia, Sinoma is nothing new since it has developed many cement mills in previous years. It was recently chosen to build a cement plant at the Melka Jebdu Industrial Park, 19 km west of Dire Dawa and 510 km east of Addis Ababa, through a similar joint venture. The project is said to cost USD 243 million in total.
Ethiopia’s mortgage pioneering bank, Goh Betoch, signals that it’s searching for provisions in government policies to realize its goal.
The bank, which is steered by well-known banker, Mulugeta Asmare, President of Goh, and Getahun Nana, a former vice governor of the central bank, in his capacity as Chairperson of the Board of Directors, announced that the financial firm has been asking the government to establish the necessary regulatory framework which is currently lacking, for mortgage banking.
According to the bank’s officials, in the annual report on the second general assembly that took place a week ago, the government needs to give a directive to help the housing industry, which is a major concern for the nation’s residents.
Mulugeta, who is the founding President of Goh which began operations in late 2021, stated in the financial report that, “However, it is worth noting that our operations have been severely affected by insufficient laws and by the absence of a conducive environment for mortgage banking.”
In an effort to create an atmosphere that would enable the bank to process mortgages efficiently, the bank has submitted many comprehensive suggestions to the appropriate government authorities.
Nonetheless, the bank stated in its annual report, which was closed on June 30, that the majority of its operations are focused on housing schemes. For example, during the time under review, about half of the loans and advances were used to fund housing initiatives.
According to the report, the bank had 1.32 billion birr in total outstanding loans and advances at the end of the 2022/23 financial year, up 1 billion birr, or 342 percent, from the year before.
Of the total, 49.2 percent of the loan portfolio was allocated to mortgages, with foreign trade accounting for the remaining 35.5 percent.
Although the recently formed bank’s earnings for the year is lower than it was the year before, it has achieved amazing feats in other key areas of performance.
The bank raised around 912 million birr for the year, which is a 255.3 percent increase over the 256 million deposit mobilization in the 2021/22 fiscal year.
To reach 21,932, the number of deposit accounts has grown by 16,908 or 336.6 percent as the report indicated.
According to the annual report, “regular deposit accounts for 17.5 percent of the total deposit, while commitment savings for mortgage loans account for 70.2 percent.” In terms of earnings, the bank had an almost 75 percent increase to 212.6 million birr.
The bank’s assets have increased by more than a double this year, totaling 2.63 billion birr. This new bank asset has increased by 117.4 percent, or 1.39 billion birr, in a single year, according to the annual report.
Total assets consist of investment securities, loans and advances, and cash and bank balances, making up 77 percent of the assets; the remaining 23 percent are all other assets.
Profit before tax for the reviewed financial year was 6.4 million birr, a 19 percent decrease from the previous year.
The report stated, “Investments made on branch expansion, technology, increases in depreciation and amortization expenses and deployment of other relevant resources are mainly attributed due to the decline in profit from the previous same period.” There are now nine branches after five of them became active during the given period.
Throughout the year, the bank has engaged in a variety of operations, such as acquiring a parcel of property and creating a subsidiary that would work in the mortgage industry, a crucial area of business for the financial institution.
The President stated, “In addition to establishing a company, a real-estate developer, in which the bank is a significant shareholder, a strategic partnership has been formed with various stakeholders to secure loanable funds.”
