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CZECH-ETHIOPIA TIES

Metasebia Teshome
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The Czechs and Ethiopians have long standing relations that interestingly date back to the 17th century. In the current modern world, the Czech Republic has remained an integral partner to Ethiopia. In light of these ties, Capital’s Metasebia Teshome reached out to the Czech Republic’s Ambassador to Ethiopia, Amb. Pavel Mikes, for insights on past and current blooming relations. Excerpts;

Capital: What prompted you to choose a profession in diplomacy?

Amb. Pavel Mikes: In my younger years, I had a deep interest in foreign countries and languages. Moreover, I’ve been interested in Africa since my childhood. I grew up in České Budějovice, and one quite famous Czech traveller, Ladislav Mikeš Pařízek, was born in our city and lived there for quite a long time.
I was inspired by him and also by two names known to every Czech ‘schoolboy’, no matter if he’s six or sixty, Jiří Hanzelka and Miroslav Zikmund.
They made a spectacular trip around Africa in 1947 and 1948 and wrote a book, Africa, the Dream and the Reality, which became kind of a holy scripture for everybody who was interested in the outside world during the Communist era.
Following that spark, years later, I was fortunate to study African History and Linguistics at Charles University in Prague in the 1980s. Despite not being allowed to travel to the continent under communism, I managed to learn fluent Swahili and Amharic, the dominant Ethiopian language, along with English and French. After a long career in academia, I joined the Czech Foreign Ministry in 1999, and have since served as head of mission or ambassador in several other African and Middle East countries including Yemen, DR Congo, Nigeria, Mauritania, Zimbabwe, Guinea and now Ethiopia.

Capital: How would you characterize the current state of relations between Ethiopia and the Czech Republic? How far does the Czech- Ethiopia tie stretch in the past?

Amb. Pavel Mikes: We have had long and fruitful relations over the years and we currently have great relations. Of course, as the ambassador, it is my wish and task to see our relations flourish to even greater heights.
Our business relations date several decades back, which consisted especially of importing leather, intestines to make sausage casings, and arabica coffee. In the 30s during the fascist invasion, Czechoslovakia supported Ethiopia both diplomatically in the League of Nations and delivered arms to the Ethiopian army. Czech even served alongside Ethiopia’s soldiers at the war front.
It’s something the Ethiopians were very grateful for because not many countries helped them at that time. And if you go to the ethnographic museum in Addis Ababa, you will find a nice example of a machine gun with ‘Made in Czechoslovakia’ written on it.
But our relations are older than that. The Czechs learned about Ethiopians in the middle ages through contacts between Czech and Ethiopian pilgrims in Jerusalem. In the 17th Century, Czech Franciscans, Catholic missionaries, went to the Imperial Court in Gondar, stayed with the emperor and wrote a book about their experiences in Latin, of which the description are in Prague in the archives of the Strahov Monastery.
Then, in the 19th Century, a few Czechs travelled to Ethiopia. The most prominent is Antonín Stecker, a medical doctor, who served as the doctor for different Ethiopian emperors in the 1880s. He wrote many articles published in the prominent Czech newspapers in that time.

Capital: What are the main projects, events, or activities that the Embassy is currently hosting and working on?

Amb. Pavel Mikes: The Czech Republic’s activity in Ethiopia is catalyzed by a strong bilateral development cooperation programme which is in line with the Ethiopia’s needs and development priorities. We are active in, agriculture and rural development, ensuring universal access to safe, nutritious and sufficient food at all times of the year. We do so by introducing sustainable soil and landscape management strategies.
We also focus on sustainable management of natural resources by ensuring universal and equal access to safe and affordable drinking water in addition to adequate sanitary and hygiene facilities, with special regard to the needs of women, girls and young children. We also build sustainable drinking water supply systems.
In addition to bilateral development activities, the Czech Republic is ready to provide humanitarian assistance to Ethiopia when need arise, primarily in the event of major disasters or increased influx of refugees from neighboring countries and also in response to comprehensive and long-term humanitarian needs. We are also keen in cooperation within the health sector.
We also offer scholarships, which are provided by our government within the framework of Foreign Development Assistance. Scholarships are earmarked for Ethiopian students as every year. They are offered to students who wish to study their Master’s or Post gradual degrees in the Czech Republic. The study programmes are available in the English language with recommended fields in Geology, Forestry, Agriculture, Environmental studies, Energy, Engineering, Mechanical engineering, IT, Mathematics, Statistics, Economics and Finance. Currently, the scholarships were opened as of July 30, and will be closed on the 30th of September.
We also have a reforestation program in line with the green legacy for peace initiative. Furthermore, stemming from our very intensive cultural relations, the Embassy often organizes an exhibition of Ethiopian painters and sculptors called Ethiopia in Czech Colors.
Currently, we are preparing an exhibition for our development activities which will take place at the Hyatt Hotel on the 27th-28th October, 2022.

Capital: What needs to be done to further bolster the political and economic ties between the two nations?

Amb. Pavel Mikes: Currently, the Czech Republic and Ethiopia have very close relations. Our links are wide and strong and cover all areas. We have good political relations and we fully support the Ethiopian government in its endeavor to secure peace for the whole of the country.
With regards to the economic exchange, we can strengthen our economic ties by creating conducive platforms for the exchanges of business ideas. We can also have an exchange of ideas in academia and art, which are economic drivers as well.

Capital: Over the past few years, Ethiopia has seen a lot of conflict in a variety of locations. What have you done to try and end this conflict?

Amb. Pavel Mikes: As I mentioned, we support the just cause of Ethiopia in many ways. We appreciate and support the Ethiopian Government´s will to negotiate a peaceful solution to the conflict in the north and bring peace to all Ethiopians amongst providing humanitarian assistance when need arise.

Capital: What is your nation’s position on the ongoing conflict between Russia and Ukraine, and what is the best way to put an end to it?

Amb. Pavel Mikes: We stand on the position of international law and the respect of sovereignty and human rights.

Capital: The Czech Republic was singled out as one of the greatest economic accomplishments of post-communist Eastern Europe because of its ability to keep unemployment and inflation low while maintaining consistent development. What is the hidden meaning of these tales?

Amb. Pavel Mikes: The Czech Republic inherited a very strong industrial base. Through hard and bold economic and financial reforms we managed to change our economy from state owned to mostly private owned, and modernized our industry in the process. The opening of our economy to foreign investors, and at the same time a newly gained access to foreign markets helped our economic growth. Being a member of the EU also means that our market is a market of 500 million consumers, which helps a great deal to our success.

Capital: Please list the top priorities for the Czech Republic’s EU Council presidency. What function do catastrophes like the COVID-19 epidemic and the Ukraine conflict have?

Amb. Pavel Mikes: The top priority of our presidency is the war in Ukraine. Then energy prices – electricity and gas are other big priorities, especially because our winter is fast approaching. To solve this problem the Czech Republic is looking for European solutions.

Capital: Is there anything you would like to add?

Amb. Pavel Mikes: I wish all Ethiopians a happy new year; and let the New Year be a year of peace, prosperity and happiness for all Ethiopians.

Normal Vs parallel exchange rates drift astronomically apart

Metasebia Teshome
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Due to the increased demand for foreign currencies, the dollar exchange rate at the parallel market skyrocketed making the official and parallel markets to drift exponentially apart.
In some parts of the city where black market trading takes place, during the week, one US Dollar was selling between 90 to 92 birr. This in comparison to the normal exchange rate was night and day, with differences of 70 to 75 percent.
From Capital’s assessment of the market, importers who specially import cars are buying one dollar for up to 100 Ethiopian birr. With the rising demand of foreign currency, the exchange rate gap between the official and black market went up to 90 percent, on this occasion. The ripple effect was felt as the prices of cars in the country have risen in recent weeks.
According to the exchange rate on September 16, 2022, the official selling price of a dollar was 52.53 birr while it was between 90 and 92 birr in the parallel market.
“It is not something that can be stopped by controlling mechanism,” said Fikadu Digafe, vice governor of National Bank of Ethiopia indicating that there is also a gap between demand and supply.
The foreign exchange provided by the banks is decreasing significantly. In response to excess demand for foreign exchange in the official market, parallel markets for foreign exchange have gained traction. However, the emergence and existence of active parallel foreign exchange market creates several complications to policy makers in their attempt to regulate the external balance.
“We are working to stabilize the situation. NBE is doing an assessment to figure out what the real reason is,” said the vice governor, adding, “It all has to start from knowing the reason.”
It is widely thought that the surging inflation and a shortage of hard currency in Ethiopia are driving up the price of the US dollar on the black market.
According to experts controlling the illegal foreign exchange trade is challenging for the government.
Experts opine for the removing of brokers involved in the currency market through establishing a strong monitoring and controlling scheme, which could help achieve results in a short period of time.
Over the past ten years, the Ethiopian birr has depreciated significantly against the U.S. dollar, primarily through a series of controlled steps. Over the past years, everything has been changing so fast and exchange rates are rapidly fluctuating due to the political uncertainty in the country. The conflict in Northern Ethiopia and the instability in most parts of the country are among the factors that are said to have contributed to the skyrocketing exchange rate of foreign currency.
The government is struggling to control the black market currency exchange, with efforts being unsuccessful.
Two weeks ago, the central bank tried to tighten controls on birr and foreign currency use. Accordingly, foreign residents in Ethiopia who are entering the country from foreign countries had to convert all foreign currencies in their possession to an equivalent sum in birr, through authorized forex bureau. Preferably, such individuals could deposit the foreign currencies into their foreign currency accounts within 30 days of entering the country.
Returning foreign residents possessing foreign currencies above 4,000 dollars have to present a customs declaration, as per the government rule.
Moreover, according to the national bank directive amendment of retention and utilization of foreign currency no 79/2022, banks are required to surrender 70 percent of the foreign currency earnings from export of goods and services, similar to remittance and NGOs who ought to transfer to the national bank.
Exporters of goods and services and recipients of inward remittance get only 20 percent of their export earning in foreign currency after deducting 70 percent to the central bank. The remaining 10 percent is surrendered to the respective bank.

Ethiopost stamps priority to mobile money

Metasebia Teshome
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By Metasebia Teshome
Ethiopia Postal Service Enterprise shifts its plan to open its own postal bank to mobile money as its financial status is not enough to dive into the banking sector.
For the last two years, the only postal service provider in the country, Ethiopian Postal Service Enterprise (Ethiopost), has been in a process to establish its own bank with expectations to have all kinds of banking services. The Ethiopost was gearing to provide customers with access to banking service, including direct deposit, cards, and online bill payments.
Despite the enterprise starting its process to engage in the sector, in accordance with the National Bank of Ethiopia’s regulation and guidelines, as Asmare Yigezu, deputy CEO of the enterprise explained, there is no promising situation with regards to the opening of a postal bank. This was attributed to the National Bank’s changing requirements which have proved to be elusive for the enterprise.
“It is now difficult to establish a bank based on our potential and financial status since the service has been in a series of fall downs in the past. For the last two years, it has been approaching to a good condition and even breaking even,” the deputy CEO explains.
As sources indicate, Ethiopost has been through a series of losses over the past years as a result of low staff motive and capability, poor customer service, weak marketing and traditional and outdated processes and services. This has rendered the enterprise to become uncompetitive in service provision as well as hindered its financial standing.
Starting from May 2020, Ethiopost has been under reform, that aims to modernize its work as well as optimize its operation and quality of service which is the right step in terms of moving the enterprise forward to secure a firm financial standing in order to engage in new services including E-commerce and logistical financial services that offer competitive services as well as enhance the image of the service provider. Currently, the enterprise is focusing on updating itself by providing a wide range of E-commerce and various financial services.
“We are looking at certain options to expand our service including our plans to engage in the mobile money sector,” said Asmare, indicating that the enterprise is conducting its assessment on getting into the mobile money sector. “International partners are also showing their interest to work with us on the mobile money sector. We are also viewing the options of doing it independently,” he added.
In 2020, in order to blossom digital finance and to boost non-cash payments in the country, Ethiopia’s Central Bank regulations allow non-banks to offer basic financial services, potentially opening the door for companies mulling a play in the wireless market by adding mobile money to their portfolios. Following this, the state-owned telecom operator, Ethio Telecom launched Telebirr, the country’s first telecom mobile money service and if it is to push through, the postal service would have been the second governmental mobile money provider.
Given the rich history of the service provider that spans 128 years with close to 900 branches throughout the country, the foundation was and is still said to be ripe for business.
Ethiopia’s financial services sector is currently dominated by bank-led financial services. According to the National Bank directive No SBB/78/2021 the minimum paid up capital required to obtain a banking business license is 5 billion birr which shall be fully paid in cash and deposited in a bank in the name. Owning a business in Ethiopia as a non-citizen is hard, and until recently, even foreigners of Ethiopian descent were not allowed to invest in the country’s banking system.

Tweaking construction industry policy proves vital for progress

Staff Reporter
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Revising a decade old construction industry policy is pin pointed as pivotal to stabilize the market in the right direction for a transformative sector development.
At a panel discussion hosted by the Addis Chamber under the title ‘construction sector’s contribution for national economy: challenges and opportunities’, Wondimu Seta, State Minister of Urban and Infrastructure (MoUI), said that the government is working to revise the construction policy that was ratified in 2013.
“The policy needs to be timely, up to date and renewed to encompass stakeholders like actors in the private sector to have inputs unlike past experiences,” he said.
The State Minister pointed out that the construction sector was booming in the past but the failure to match that with support on the supply end has led it to face a myriad of challenges at the current stage.
He opined that the revision of the policy which was last ratified about a decade ago ought to be tweaked in order to propel the development sector forward.
“Lack of a transformative policy has back peddled development, while other challenges such the global pandemic, hard currency shortage and local conflict have also backtracked the construction industry,” Wondimu explained.
Now MoUI has set short, medium and long term solutions to tackle the problem, “Of course the entire actors, including; contractors, consultants, material suppliers, financers, relevant offices and project owners have to come to the table to provide a holistic solution.”
“To do that we are working to establish a construction industry federation that will include professional associations, contractors and consultants, manufacturers and suppliers and other construction industry actors who will create cooperation, and discuss the issues plaguing the sector in order to come up with solutions to mitigate the same,” elaborated the State Minister.
Previously, there was a construction industry council which had only periodic meetings rather than identifying problems and providing solutions.
The platform was noted to have discussions about the sector as opposed to having a dedicated and detailed studies and solutions in order to come up with policy alternatives for the betterment of the construction industry. “It was not working towards solving the sector problems. Thus we now need a strong and institutionalized entity that shall transform the sector,” Wondimu underlined.
According to the State Minister, like other pillars in the economy, the construction sector needs adequate finance like; bridge financing, project finance, working capital, and others including facilitating a fund for those who demand to invest in the sector without having an alternative to get a required finance, “As a result the government has given attention to the construction sector with regards to access to the required finance.”
The opening up of the financial sector for foreign actors in this regard is expected to come up with huge capacity mainly for the housing finance, which is believed to transform the construction sector in general.
Expanding the sector manufacturing sector is also the other pillar that the government is looking to strengthen in the construction sector.
“As we give attention for the production of household consumers’ commodities, the construction sector needs similar focus. Unless otherwise we shall invest on the manufacturing sector for construction input production so as not to be import dependant, that may derail our transformation in the sector,” he said.
Using modern technology and human capital development in the construction sector have also been stated as crucial to improve productivity.
Regarding equipped contractors with modern technology machinery, a lease financing scheme is said to be introduced.

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