The financial giant, Commercial Bank of Ethiopia (CBE), has approved the long awaited massive foreign currency requests despite clients welcoming the decision with confused responses.
Some clients claimed that it has imposed stringent access to the letter of credit (LC) but others argued that the decision of CBE should be appreciated and the preconditionals are not new on the system.
Capital learned that on July26 the state financial enterprise had approved the stranded LC request which was waited upon for one and half years.
However, some exporters told Capital that the approval was followed by stringent preconditions that were issued on July 29.
Clients explained that the latest approval that came from CBE is a big relief for importers who were waiting for over a year, while the precondition like depositing 100 percent to open LC and refusing to change unit price was noted to be a challenge.
The internal memo that was issued on July 29 indicated that all importers must block 100 percent to open LC or get purchase order approval for utilizing this foreign currency (FCY) approved currently.
Experts on the sector explained that up to 50 percent shall be blocked for approval and the balance may settle when the document has arrived.
The memo added that change in items of proforma invoice including unit price increase is not allowed, “But reduction in quantity maintaining the total price (amount) is permitted as far as the quantity reduction does not imply increase in unit price by more than 5 percent.”
Some importers argued that global price is volatile let alone for approval of LC that waited for over a year price which might be changed in days. “In the past at least one year the commodity unit price of course changed due to that the precondition that CBE imposed is unfeasible and does not consider the changed time,” exporters told Capital.
“Such kind of decision is encouraging under invoicing since exporters accept the unchanged unit price but actually, he or she buys the product by the changed higher price, thus he or she is pressed to look at the gap from other sources like the black market,” one of the exporters claimed.
However, some other importers have rejected the argument of those that claimed CBE has refused the unit price change. They said that although the bank refused the change on unit price, it has given space for quantity reduction, “that means the unit price change shall be accommodated by volume reduction.”
These importers accepted that price might be changed particularly in the current global situation that affects by COVID 19, inflation and freight price increment and lack of containers. “I think the importers who have argument on CBE decision may have import of a single commodity like machine that would be difficult for them to change price on unit price,” one expert elaborated the condition.
According to experts on the foreign trade, CBE only imposed limitation of unit price and is to reject for the revision of total LC request.
CBE has also given approval for one proforma for those who have two or more requests, “CBE may select one request number B in good sense that for instance it may have higher amount of foreign currency than request A but the importer may demand the import of commodity that is requested under A,” an exporter said.
“It is one of the gaps I have seen on the latest approval,” one of the big importers told Capital.
CBE’s LC approval receives mixed reactions
Unleashing Addis’ growth potential
The World Bank’s inclusive development framework plan shows that Addis Ababa would need close to USD 9 billion in the coming ten years period to be a competitive city.
The World Bank document, ‘Addis Ababa’s Strategic Development Framework’ was released late this week with the objective of the plan being to make the biggest city in Ethiopia more sustainable, livable, and inclusive and to make competitive city.
It added that the framework objective aims to; address complex challenges that require integrated interventions, shift the approach from sector specific to spatially integrated challenges and solutions, coordinate multi-sector efforts to maximize development synergies and impacts, indentify prioritized interventions for key binding constraints, and contribute to the city’s 10 year development roadmap towards more competitive, livable, sustainable and inclusive city.
The Framework was built through multiple stakeholder engagement processes, involving more than 100 key sector representatives and experts.
“Addis Ababa is the largest, fast growing, demographic, economic and political center of Ethiopia, leading the country’s socio economic development. While leading Ethiopia’s socio economic growth, Addis Ababa faces significant challenges to cope with rapidly growing demands for jobs, housing, infrastructure as well as increasing hazards and risks, affecting the city’s competitiveness, livability, sustainability, and inclusivity,” the preamble of the document said.
Empower land markets and promote integrated planning, foster interagency collaborative arrangements, enhance sustainable municipal financing, and establish city data governance and management, leveraging digital technology are stated as fundamentals under the framework.
Enhance an enabling business or investment environment, foster growth in high value-added industry clusters using skilled workers and innovation, and connect culture and innovation has been stated as the objective for competitive city pathway.
Under livable city pathway it has targeted to attain enable housing market and upgrade information settlement, improve access to infrastructure and basic services, ensure equitable access and quality of social services, and develop walk-able and green neighborhood.
For sustainable city pathway, it has been stated to improve environmental and ecological quality and to promote climate resilience through green development, while it has also been set to make inclusive city that will include to; foster more and better jobs and social activities to youths, women, reinforce human capital, social safety net, and inclusion in public services, and strengthen citizen engagement.
For institutions and system improvement that includes integrated land planning, inter-agency coordination, sustainable municipal financing, and data governance and management it estimated the budget of USD 191 million for short term that is up to two years and USD 546 million for medium and long term.
Under a competitive city that includes business environment, skills and innovation, and cultural assets the cost estimated USD 73 million and USD 245 million respectively in two different terms mentioned above.
Similarly for the pathway of livable city that considered targets including housing, basic services, social services, walk-able and green neighborhood the budget might be USD 1.113 billion and USD 3.83 billion for short and mid long term goals respectively.
For projects like environment and ecology, and climate resilient green development that was included under a sustainable city pathway, USD 66.5 million and USD 2.214 billion was required for short term and mid and long terms.
For projects like gender, human capital, safety net, public services, citizen engagement that was included on inclusive city of the framework, USD 236.7 million and USD 457.5 million is required respectively in the stated different periods.
In total, USD 8.97 billion would be required in the two implementation period for project to be run in the coming years.
Key reform actions to break policy impediments and unleash Addis’ growth potential are fostering to regularize properties, adopt market-based compensation, reinforce formal transaction, increase land auction, expedite cadastral updates; and simplify lease to enable easy and fast transfer and use of lease as collateral, and emplace advance evidence-based city planning and management by integrating land use, disaster risk management, transport, housing and infrastructure planning and monitoring systems; increase the capacity to tighten compliance monitoring, development control and enforcement measures; build the capacity to understand and implement integrated plans in a coordinated manner.
It added that for the establishment of an enforceable incentive mechanism for vertical and horizontal coordination for spatial planning, infrastructure development, and implementation monitoring; and develop advanced knowledge and practice in developing and maintaining city-wide integrated data and IT system, and improve public investment management; reinforce property tax; and leverage the value of existing assets to finance public infrastructure and introduce land-based financing such as land value capture, land readjustment, development gains restitution, betterment levies as further key reform actions.
EIAR to seek license of field trials for GM false banana
The Ethiopian Institute of Agricultural Research (EIAR) is going to file its request to introduce confined field trial (CFT) for genetically modified (GM) enset (Ensete ventricosum/false banana) in two different locations.
Ethiopian researchers have been collaborating with the International Institute of Tropical Agriculture on a project that is using genetic engineering to develop varieties of enset that are resistant to the devastating bacterial wilt disease.
After getting approval from the relevant body, EIAR has been engaged on testing the transformed type of the plant that is resistant to bacterial wilt xanthomonas on contained laboratory research.
Tadesse Daba, Director of Biotechnology Research at EIAR, said that for the last over seven years the Institute as been engaged on testing the GM enset at laboratory level.
Starting mid-1970s, the Institute’s scientist Getachew Hirgu had identified the problem faced on enset.
He said that the main reason for starting the test was that the plant, which is one of the key food security crops, has been affected by bacterial disease, “so far sustainable solution is not found for the problem, while it has been effective by the genetically engineered type of plant.”
Scientists in Taiwan had identified the gene which comes from green pepper shall be used as a solution and the tools of modern biotechnology will successfully be tested on banana. “Similarly our scientist conducted the transformation on enset in Kenya and the technology has become fruitful,” he reminded.
The research at contained laboratory has been also successful.
“We have secured fund through Ethiopia Biotechnology Institute to conduct the research on CFT, while it needs permission from the regulatory body, similar to the process of getting approval for laboratory level test,” the scientist explained.
Currently EIAR is developing a document for the request to approval to get a license for field trial.
“In this budget year we will file our request for approval and if we are allowed, we expect to commence in the coming season at the field on suitable areas for the plantation,” he said.
The CFT is expected to be at Areka and Wolqite, “In Areka, we have Agricultural Research Center specialized on banana and related plantations and Wolqite is popular on enset cultivation.”
Enset is a staple food for millions of Ethiopians mainly in the southern central part of the country.
Tadesse said that COVID 19 as global problem has affected researchers here, for those who are engaged on ground and practical works all together, “we are also working with such kind of works with international partners with regular meetings, while it has been slowed down because of the pandemic.”
After long CFT, which represents Ethiopia’s first field trial of a GM food crop, for GM maize dubbed to drought tolerant and insect resistant EIRA had filed to get approval from relevant body, Environment, Forest and Climate Change Commission, who have already accepted the application and referred to the National Biodiversity/ Biosafety Advisory Committee that is comprised of senior experts from 13 institutes who are in charge for final approval.
Tadesse said that the response from the independent committee that was formed by the Office of the Prime Minister has been delayed because of COVID 19 effect. He expected positive responses to come soon that will allow EIAR to undertake further trials.
“Multiplication variety trials that may take up to three years depends on the number of trial areas will be the next step for GM maize to get final approval from National Variety Release Committee for environmental release or commercialization,” the Director of Biotechnology Research explained.
The GM maize CFT was conducted at Melkassa Agricultural Research Center, 110 km south east of Addis Ababa for drought resistance and Bako Agricultural Research Center, 250 km west of Addis Ababa for the test of resistance for insects.
Ethiopia pulls USD 3.9 billion in FDI
Ethiopian Investment Commission has indicated that the country has attracted 3.9 billion dollars in foreign direct investment during the just completed year 2020/21. Agriculture, manufacturing ICT, power are said to be major investment sectors in the budget year, while the manufacturing sector is the largest in terms of attracting foreign investment.
“Improving institutional frame work, modernized service and infrastructure including access to water, telecom service and power both in and out of industrial parks lead to this huge success to the country,” said Lelise Neme, indicating that during the year the commission has done successful activities regarding motivating multinational investors to join investment in industrial parks and has in addition facilitated all the necessary preconditions timely.
As said by the commission, the stated 3.9 billion dollar FDI includes the recent Telecom investment which the global consortium was awarded by the government to operate in the telecom sector following a payment of 850 million dollar to the Ministry of Finance.
“This FDI inflow has been registered amid Covid-19, global inflation, and internal stability challenges on the investment sector,” said the commissioner. During the 2020/21 Ethiopian budget year, 132 new giant investors from European and other countries have already received license and commenced production in the country
On Thursday, July 29, 2021 EIC held an investment dialog with different international investors to promote potential investment opportunities, and on the stage Lelise, EIC commissioner has called potential investors to invest in existed and newly developed industrial parks. “To attract investors in our economy we are working to make our investment policies less restrictive and more transparent and accountable,” said the commissioner.
As Lelise said, even if the Law enforcement in the northern part of the country has affected the sector, the exaggerations of international medias of the situation has more harm to the sector.
Agriculture, textile and apparel, leather and leather products, pharmaceuticals, agro-processing, ICT, power generation, mining, tourism, among others are the strategic sectors for investment as identified by the government. Ethiopia’s natural and various riches such as vast arable land, favorable climate, diverse agro-ecological zones that make it possible to grow almost everything, cheapest electricity per kilo watt hours, and trained and affordable human power combine to make it an incredible hub for investment.
Currently, the country has given due priority to realize smooth transitions to industrialization through promoting the private sector engagements and privatizing many of the state-owned businesses. The new home-grown economic reform aspires to address foreign exchange challenges and sought to generate tangible revenue by boosting export volume.
According to the recent World Bank Report, Ethiopia tops East Africa in attracting FDI, with almost half of the inflows to the East African region. The existing suitable development policies, the government’s special attention to the sector, competitive and trainable labor force are among the major factors that enabled the country to become successful in attracting FDI. As one of the largest recipients of FDI in Africa, Ethiopia has attracted several global brands highlighting competitive investment opportunities.
“The country is a strategic destination for multinational investors following its diversified investment opportunities and various investment incentives by the government,” insists Lelise.
The Ethiopian government provides various investment incentives to local and multinational investors. This includes capital incentives, industrial raw material supply, construction and laboratory as well as effective transportation service provisions. The Ethiopian government is aggressively working towards increasing transport, electric power, and telecom, among other infrastructures access.
