The Italian Ministry of Foreign Affairs and International Cooperation has renewed the annual financial contribution for four archaeological missions in Ethiopia organized and led by Italian universities.
The University of Naples “L’Orientale” is the longest archaeological mission carried out by an Italian institution in Ethiopia, specifically in the area of Axum. The mission, led by Prof. Andrea Manzo, has been operating in Tigray since 1993 in cooperation with the International Association for Mediterranean and Oriental Studies (ISMEO) and the cultural bureaus in Mekelle and Axum.
This archaeological mission has largely contributed to the development of in-depth studies on the Aksumite kingdom. The University of Rome “La Sapienza” is the leader of three important archeological missions in Ethiopia. Since 1999 Prof. Margherita Mussi has researched the sites of Balchit and Melka Kunture, in the Upper Hawash Valley, to analyze the adaption of the Homo Erectus and Homo Sapiens’ species to the local environment.
Prof. Mussi, who is also the Director of the archeological site, has closely cooperated with local Authorities to promote the inclusion of Melka Kunture and Balchit in the UNESCO World Heritage List. The University of Rome “La Sapienza” has also carried on two archeological campaigns in 2017 and 2018 led by Prof. Enza Spinapolice in Gotera and Yabelo bringing to light the exceptional relevance of this area from an archeological standpoint, specifically for the study of the transition from the nomadic life to the pastoralist settlements.
For the first time, the Italian Ministry of Foreign Affairs and International Cooperation has decided to finance the archeological campaign conducted by Prof. Marina Gallinaro in Borana in order to study the rock art and the pastoral life that developed in this area. This project, which aims at researching and protecting rock art’s sites, has been developed in close cooperation with the Oromia Culture and Tourism Bureau.
These archeological campaigns are realized in coordination with the Ethiopian Ministry of Culture and Tourism and the Authority for Research and Conservation of Cultural Heritage (ARCCH), stressing the strong and long-lasting cultural ties between Ethiopia and Italy.
Italy extends funding for four archaeological missions in Ethiopia
FINANCING HOUSING
Goh Betoch Bank SC is a new dynamic bank in town which is set to open its doors soon. The bank when operations begin will be the first mortgage financial firm aiming to bridge the gap in the challenging financial housing market.
This extraordinary bank has its sight set on realizing a better form of housing for all Ethiopians by providing strong financial schemes which stems from the great need of housing in the country. To make sure these goals are realized it has appointed its first ever president, Mulugeta Asmare, who himself is no stranger to the financial industry. Mulugeta’s career has grown astronomically over his close to 3 decade involvement in the financial industry. He has served also in top levels of management as he previously was the president of Abyssinia bank. Capital sat down with this financial expert, for an in-depth look into the country’s first private mortgage bank. Excerpts;
Capital: You are the first CEO of the first private mortgage bank in the country. How can you express this feeling?
Mulugeta: It is a big pleasure to be the first, however, at the same time it is a big challenge. We are getting in the market with a new system and operation which has never been in the country and it is going to be a strange and new arena.
We are trying to share experiences from other countries’ mortgage banks, which includes giving the proper education and trainings. So even if it is challenging, since its technically new grounds, we have embarked on this great journey, and we are confident that we will pass through the challenges and achieve great success in the process.
Capital: You have been leading one of the biggest banks in the country; don’t you think coming to a new organization will be a bit challenging?
Mulugeta: For the last 27 years I have been working in the banking sector in different positions up to the president or CEO level. For the last five years I have been working in Abyssinia bank as president. After my years of service, I saw it best to resign with my own consent so as to take a break and after one year of good recreation, I received an invitation from the organizing committee of Goh mortgage bank to join them.
Having realized the solution that they are going to provide in the market gap, which is important for the country and for the coming generation I wanted to be part of this monumental movement. However, in this market it is challenging to find the right CEO or president that can steer the financial institution to great strides. Moreover, to find the person with the right experience is a hurdle since in the sector there is a lack of experience in man power. Noting these challenges I decided to step up to be the CEO for a temporary period.
As the bank is new to joining the sector more so to the financial housing niche, I can understand that it can be presumed to be challenging since financing housing is one of the biggest challenges in the country. However, from my point of view, the bank could benefit our country, and I have decided to make a comeback not disregarding the challenges, but acknowledging that this could play an instrumental role in paving better housing for our country.
Capital: Can you elaborate for us the formation of the bank as a whole and also government’s support to its formation?
Mulugeta: Most of the financial institutions and their formation in our country are based on some regional, religious, ethnicity and similar foundations. This is of course always disheartening.
However as the political sphere of the country was the same, and as result lots of investors formed banks with someone they trusted and thought the customers would be drawn to them with the affiliation on the aforementioned basis of their bank’s formation. Of course not all banks are like that, there are some banks which are free from such kinds of formation but the effect is not noticeable.
Goh Mortgage bank is free from such kinds of mindset. This is evident since even the eleven organizers stem from different ethnic groups with different political views but have come together to join hands for a greater purpose. Individually, they are bankers with long experience in the sector with no personal interest except from forming the bank and benefiting the society and the country by solving the problem in the housing sector.
So we believe it will continue, by building a healthier Ethiopian institution which is free from any influence of religion, ethnic, or political beliefs.
The bank will engage mainly in financing the housing sector, and will also operate other banking operations which are similar with other commercial banks.
We are planning to support the majority of our society to have their own house by giving out long term loans, and to this end government has provided its backing as the National Bank of Ethiopia gave us the green light to for the bank license and we are waiting to commence operation.
Capital: When do you plan to start the operation? Similarly, how have you prepared in terms of technological readiness?
Mulugeta: In terms of technology we have selected a company called Technos in a bid to build a core banking system. With regards to opening our doors we plan to do that in the coming month. As we embark on our operation, we will use locally developed software for the transition period until the company completes its work, then we will upgrade to the same.
Additional to the core banking, we are also building our own data center which will be completed in few weeks and be operational.
We have organized our head office and some branches; we have already hired employees and gave them trainings. The last thing we are waiting for is green light from the national bank to start our operation based on its supervision, since we have already received the license.
As previously mentioned, we are planning to start our operation in September 2021, and our doors are open to provide so our services to any Ethiopian citizen who can full fill the given criteria.
Capital: What kind of support are you waiting from the national bank, and also are you working with the Ministry of Urban Development and Constructions?
Mulugeta: The Ministry of Urban Development and Constructions is one of the different stakeholders in the housing sector and knows the gap properly. It is authorized to control the quality and speed of construction and wants housing to be widely available; in this case we expect the full support from ministry to build completely standard houses. Additionally, we plan to work and engage with the city administrations and also the mayor offices which are some of the other stakeholders.
The central bank is the superior bank where all the commercially banks are equally administrated. However since we are coming in with a different kind of bank, I believe that we need different kinds of practice stemming from the central bank. One of the biggest support of the national bank include; assembling long term deposit and loan and also creating a special policy practice where the central bank can create a conducive environment for the bank to thrive.
Additionally we may start working with international financial institutions to get long term funds and to this end we need the national bank to make new practices to facilitate our access and use of fund.
Prime Minister Abiy Ahmed has also said that the banking sector is only open for foreign mortgage bankers, which is a great move so we take it as a direction of hope that the national bank will also prepare different framework’s to benefit the new upcoming local bank as well.
Capital: How will the loan period being provided work?
Mulugeta: There are three different loan-term periods. The first one is a short term loan which has to be paid back in 12 months or in one year.
The other one which is stretched up to five years is the medium loan term whilst the last which is over five years is to be provided as the long term loan period. The last one could go for up to 30 years. Most of the loans in mortgage banks are long term loans. It is with this provisions that we seek a special policy framework from the national bank to allow us to give long term loan without proportion.
Solving Addis’ escalating costs
Deputy Mayor Adanech Abeibe and Addis Ababa Trade Bureau Director Abdulfeta Yesuf were engaged in consultative discussions with the business community on the reasons for the high cost of living in the city. Hundreds of businesses’ representatives of the business community participated on the meeting held on August 21, 2021 at Elilly International Hotel.
The Addis Ababa City Administration Trade Bureau said that it is working to increase supply in goods especially on agricultural production. As Abdulfeta said there has not been massive observed shortages of supply in the city while greedy traders are trying to destabilize the market and reduce the cost of living by creating economic fraud by hoarding goods. However to reduce inflation and shortage of goods in the market the bureau expressed that it is thoroughly working on this.
Further raising certain issues regarding the price hike and inflation, traders have asked the trade bureau to set a price book with defined limit of price points. To that regard, the trade bureau has said it will consider setting a maximum price to regulate the market in a way that fosters competition and protects the interest of consumers.
The deputy mayor called on the business community to help in taking top control by handing over greedy traders who in an effort to take advantage of the current national situation create a shortage of products in the market which leads to increase in prices which ultimately leads to engagements in illegal activities.
In recent time, the price hike has been seen on food items, manufacture items and house hold goods. For instance, teff, wheat and rice have been showing a 10percent jump in the capital in under a month. However, the traders suggested that due to certain involvements that the city administrations have made in the last few months, the prices have been showing a slight decrease.
Prices for table salt jumped up to 20 birr a kilogram last week, around a third higher than the going rate earlier this month as the city administration suspend 3 distributers. Salt traders blame the price surge on the interruption of transport services as war spills over into Afar Regional State, which is the source of almost all of the country’s salt, while government officials claim it is the result of market speculation and misinformation.
The bureau is taking different measurement to control price hikers, said Abdulfeta adding that until now 80 traders have been taken to court.
As the Mayor said, the city administration has launched a task force which will be set up to monitor and control the market.
Gov’t decides to consider convertibility guarantee for PPP
In a major policy shift the government now decides to provide a convertibility guarantee for public private partnership (PPP) projects.
The decision that is taken by the government has been considered as a big deal for those who are interested to be part of huge projects under PPP.
After massive study and legal document development through Ministry of Finance (MoF), the government enacted the PPP 1076/2018 proclamation that makes it formalized for private sector involvement through public projects for the benefit of both sides.
The February 2018 proclamation allows establishing a favorable and binding legislative framework that promotes and facilitates the implementation of privately financed infrastructure projects by enhancing transparency, fairness and long terms suitability.
Since then the PPP Director General (PPP-DG) was also established under MoF to harmonize the operation between contracting authority from the public side and private party.
PPP-DG that is looked after by the board combined by directors; seven from public and two from the private sector has also a responsibility to sort projects, mostly mega projects, that shall be included under PPP or not as per the proposal of contracting authority that may include state owned enterprises or public offices.
Under the PPP; efficiency on project handling, innovation, and knowledge transfer and using as alternative financing to reduce government project financing has been stated as the pillars.
As per the initial stage the government has designed the PPP to be financed through a scheme that has never been backed by the government guarantee.
It was recalled that the first PPP bid for Scaling Solar schemes at Gad and Dicheto had been opened in September 2019. Then the first PPP solar energy project had been awarded to the Saudi based Acwa Power, which offered the lowest independent power purchase (IPP) tariff compared with similar projects on the continent and one of the lowest globally.
As per its financial offer the company gave USD 0.252/kWh for the Gad scheme in the Somali region and USD 0.0598/kWh on the Dicheto scheme in the Afar region.
However, as per the bid requirement the company had also promised that it would come with the finance from Chinese sources without the government guarantee, since access to foreign currency in Ethiopia is not easy.
Tilahun Tadesse, PPP-DC Secretariat, said that project that was awarded to Acwa has delayed up to now due to different reasons but mainly because of the impact of COVID 19.
After the COVID 19 impact, the financiers who promised to finance the 125 MW each solar projects had come up with changes on its operation and stated that it has paused some operations because of the pandemic impact. The 250 MW power project is expected to consume USD 250 million.
Due to that the Saudi company was forced to look for other financing sources, while most of the interested financers have set convertibility guarantee from the government as a precondition.
However, based on National Bank of Ethiopia (NBE) foreign currency guideline it has stated that the government would not give convertibility guarantee and based on the country law there is not convertibility guarantee for the private sector investment.
Tilahun said that most of companies that are interested to engage on PPP highly insist that the government gives them the guarantee to realize the projects, “we have assessed different alternatives to solve the concerns of companies or financiers to come up with a way out for their demands. We are now considered that we have to come up with some degree of flexibility on the up coming project.”
“For instance currently 6 solar projects are on bidding process under PPP and most of interested bidders are requesting to get convertibility guarantee,” he added.
As per the assessment to solve the challenges three optional areas have been evaluated; saving some amount of foreign currency that Ethiopian Electric Power generates from power export in order to use it for services and other payments, to establish a revolving fund under a pool, and the third option being for any public projects to give guarantee from the government (MoF).
“These projects are renewable power projects. Whoever the government of private sector develops these projects have their end goal in generating power due to that guarantee may be considered on it for the private sector,” he explains, adding, “by itself generating energy is a means of earning foreign currency due to that the only thing we have to be is cautious and to use the crucial alternatives to tap the needed development.”
As per the evaluation of PPP-DG, the government shall consider to give convertibility guarantee and the case has been evaluated in depth up to the senior level at the Office of the Prime Minister.
Tilahun told Capital that the government has considered that in order to operationalize the PPP some sort of flexibility for few periods should be required.
MoF, which is responsible to give guarantees, may select projects that would get guarantee.
According to Tilahun, the Scaling Solar schemes would be the first project to benefit the government first policy shift that has come to effect about two weeks ago.
Acwa is expected to come up with financiers from South Africa and Europe, while Tilahun said that they have not disclosed it. “We are waiting for them,” he remarked.
The company might manage the project for twenty years with an optional five year extension.
The financial close that was postponed for more than two times mainly because of the pandemic would be ended early October. 23 projects have been identified under PPP from over 100 proposals, while from the selected project some shall not be executed under PPP as per the recommendation that came from detailed studies. Roads, energy, housing, and health are included on the selected projects.
Except in some special cases, the PPP project threshold is USD 50 million and above.
As per the government’s projection, 25 percent of all projects will be covered by PPP.
