Policy design to control currency outside banks underlined as of paramount importance to improve liquidity resources in the financial industry.
Experts in the financial industry argue that there is a missing link in the system that has made it hard to combat currency that is circulating outside banks, which is highly affecting the macroeconomic circumstance.
Liquidity challenges have now become a notable site as one of the problems bewildering the financial industry to which some experts opine is an attribute of the loss in control of banks by the regulating body.
On the other hand, some argue the problem is seen on most of the financial industry players, “Nevertheless, it’s a problem that occurs in the absence of a proper strategy and policy which is expected to be emplaced by the government.”
If the liquidity problem is happening in one or two banks it can be stated as a fractional problem of the given financial firm, but the reality is different.
“Now, almost all of the financial institutions are facing this challenge,” one of the major bank leaders expressed.
As the leader informs Capital, the situation indicates that there is systemic problem in the market.
Experts to this end have critiqued government to revitalize its policy.
“Resources that come to banks are not an expression of the market,” financial experts claimed.
They underlined that the report of the National Bank of Ethiopia (NBE) shows that the currency circulating outside banks is increasing from time to time, “This is one of the indicators of how problematic the systemic process is rather than the problem of the banks.”
“This should be corrected immediately with different policy instruments, otherwise the problem will be extravagated,” experts signaled their concern.
According to NBE’s second quarter report of the 2022/23 budget year, the currency outside banking system beat 200 billion birr for the first time in the sector.
The reported indicated that in the second quarter that closed on December 2022, the currency outside banks reached 201 billion birr which rose by 26.6 percent compared with the same period of a year ago.
That amount was however 169.6 billion birr in the first quarter of the budget year which elasticated by over 30 billion birr or 18.6 percent just in three months time.
As of December 2022, the currency outside banks had a share of 8.7 percent of the broad money that increased by 0.4 percent compared with the preceding quarter, while its share for the broad money has decreased compared with the preceding budget year..
In his recent appearance at parliament on Thursday July 6, Prime Minister Abiy Ahmed acknowledged the situation.
“Significant amount of resources is circulating outside the banking system,” the Premier said.
He underscored that as per this coming budget year strategy, his government has taken a direction to tighten monetary policy.
He explained that controlling the money supply and sucking the resource that was pumped to the market will be a policy that his government will take into account in the current budget year that began yesterday, “This move will help to control the market and inflation.”
He added that controlling the resource circulating outside the banking system will be undertaken with the urgency that is required.
Policy shifts signaled as vital to escape the perils of liquidity
IATA releases industry net zero tracking methodology to guide industry emission reporting
The International Air Transport Association (IATA) will publish an annual Track Zero report using IATA’s Net Zero Tracking Methodology to report industry-level progress towards aviation’s commitment to Net Zero carbon emissions by 2050.
The Net Zero Tracking Methodology and related reporting process were developed with industry experts. IATA will aggregate and report annually inputs from IATA member airlines on an industry basis. After thorough validation, aggregate industry data from the previous calendar year will be reported annually in the fourth quarter of each year. The first report with airline-contributed data is planned for publication in Q4 2024. Non-IATA member airlines are also encouraged to contribute data and participate in the reporting.
“Transparency is a critical element of aviation’s decarbonization. We will report our progress annually to ensure standardized, accurate and comprehensive reporting of aviation’s journey to net zero. Industry-level data in the Track Zero report will help airlines, governments, and investors with tools to improve decision-making to accelerate progress,” said Marie Owens Thomsen, IATA’s Senior Vice President Sustainability and Chief Economist.
Individual airlines may use the aggregate data of the Track Zero report to benchmark their own progress towards decarbonization. They may also choose to report their progress on decarbonization to key stakeholders including governments, investors and customers, using IATA’s Net Zero Tracking Methodology.
“Decarbonization is an industry challenge, not a competitive issue. Nonetheless, the report and the methodology behind it can enable benchmarking that could intensify decarbonization efforts by spreading the success of best practices and sparking innovation,” said Owens Thomsen.
Key features of the Net Zero Tracking Methodology include Standardization, Accuracy and Comprehensiveness.
The decision to publish a Track Zero report follows the release by IATA of five roadmaps detailing critical actions for aviation to achieve net zero CO2 by 2050. They address aircraft technology, energy infrastructure, operations, finance, and policy. Together, they show a clear direction and will evolve with the insights of the Track Zero report, practical experience and emerging technologies to help aviation set interim milestones on the way to net zero.
Hijra Bank prepares to sell shares to boost capital
Hijra Bank, one of the full-fledged Islamic banks, announces that it is planning to inject and sell new shares with the aim of increasing its capital to 6 billion birr.
On a press conference held on July 7, 2023, the bank which started its operations in August 2021 to provide interest-free services stated that it profit margins grew by 162% for the completed 2022/23 financial year, in contrast to the year prior.
As indicated in the press release, Hijra Bank has been able to increase the number of customers by 122 percent while its total asset increased by 207 percent to seven billion birr in the stated period.
“The fact that Hijra Bank has been able to achieve these multifaceted successes at a time when the banking industry in general is in high competition while the country is experiencing great pressure in the economic sector makes its success doubly successful,” said Dawit Keno, president of the bank.
The bank signaled that it has planned to increase its share holder base, through the bank president who said, “We have prepared a special sale of shares so that our Hijra Bank families who did not have the opportunity to become shareholders during the founding period can become shareholders of our bank, which is making great strides.”
The bank currently has more than12, 000 shareholders,
Hijra Bank a pioneer in technology in the field of interest-free banking services is currently implementing more than 18 modules of the Al Core banking system, which is certified annually by the Accounting and Auditing Organization for Islamic Financial Institutions-AAOIFI, which is used by more than 165 interest-free banks in the world.
AGRA curves out strategy to bolster agri-food systems
African-based agriculture organization, AGRA, unveils its five year strategy to bolster agri-food systems in Ethiopia.
The strategy which aims to strengthen the resilience of smallholder farmers by strengthening seed systems and adopting promotion of sustainable farming practices, is said to be in line with the country’s ten-year economic development plan (2021-2030).
At the launch event held on July 6th, 2023 at the Skylight hotel, Tilahun Amede, head of the AGRA Ethiopia office, expressed that the mission of the organization is to increase the annual agriculture productivity by 30 percent, “The 2023-2027 strategy focuses on improving seeds, creating agricultural efficiency, irrigation, market linkage strengthening of the Small and Medium Enterprises (SMEs) and enhancing the country’s capability to design policies, strategies and flagships for execution and monitoring.”
“By enhancing climate-smart technologies and practices for sustainable farming, the strategy aims to decrease climate change impact on the agriculture sector by 30-40 percent. The strategy is designed to impact up to 2 million farmers in Ethiopia,” Tilahun further highlighted.
Speaking during the launching ceremony, AGRA’s Board Chair and former PM, Hailemariam Dessalegn said, “Agriculture has always been a top priority for Ethiopia as the country seeks to leverage on developing huge underutilized arable land. Modernizing production systems, developing irrigation infrastructure, improving uptake of technology, boosting agricultural export revenues and import substitution, are a top priority for the country. We are committed to work with the government and the private sector to drive innovation and investment in the sector, ensuring that the benefits of agricultural transformation reach all Ethiopians.”
Fikru Regassa, State Minister of the Ministry of Agriculture, said, “We appreciate the invaluable contribution that AGRA has made in our country. I am optimistic that together we can enhance food security in Ethiopia and address our country’s strategic decision to stop relying on imported seed.”
As indicated, the strategy is aligned to the country’s long-term economic development blueprint, 2021-2030, that envisages building a climate-resilient green economy.
“By working together we will boost agricultural productivity in Ethiopia which currently contributes 32.7 percent of the country’s GDP and employs 65 percent of its 110 million people,” the State Minister further cited.
AGRA has invested over $15.5 million, with a focus on enhanced private sector involvement in seed production and distribution. The program has built local capacity to train and mentor seed companies and strengthen local markets by increasing grain quality and reducing aflatoxin levels.
Founded in 2006, AGRA, formerly known as the Alliance for Green Revolution is an African-led African-based organization that seeks to catalyze agriculture transformation in Africa. AGRA is focused on putting smallholder farmers at the center of the continent’s growing economy by transforming agriculture from a solitary struggle to survive into farming as a business that thrives. As the sector that employs the majority of Africa’s people, nearly all of them small-scale farmers, AGRA has recognized that developing smallholder agriculture into a productive, efficient, and sustainable system is essential to ensuring food security, lifting millions out of poverty, and driving equitable growth across the continent.
