Following the move of National Bank of Ethiopia (NBE) banning some financial firms from issuing letter of credit (LC) the week was catalyzed by a rush for those commercial banks on clearing their problems.
Reliable source in the financial industry told Capital that NBE suspended about seven banks including some of the biggest from issuing fresh LC.
Fikadu Digafe, Vice Governor and Chief Economist of NBE, said that the regulatory body is focusing on supporting local banks than take measures, “When necessary, such kinds of measures that are implemented recently, are taken.”
Meanwhile, the reason was not clearly stated while sources indicated that it has been surly aligned with hindering of the settlement for the required sum with correspondent/ go-between partners abroad.
Experts on the sector said that some Ethiopian banks are alleged by their delay to clear up their undertaking to provide eventual payment for drafts drawn as per the timeframe despite the commodity supplied by sellers.
The foreign currency shortage seriously affects the country’s economy and foreign trade which then in turn forced the central bank to regulate the sector closely.
The current ban imposed on some banks is related with the shortage, according to sources.
Some banks are not hesitating to issue the LC; despite them not really having the resource on hand, which has become a growing challenge for the sector.
One of the bank leaders that Capital talked to about the matter said that the strong measure and close follow up of NBE is crucial for the sector security in general and assuring of trust for corresponding banks abroad, who are working with the issuing banks.
“If such kinds of delay happened frequently, the interest of correspondent banks to be a partner with a local financial firm will be eroded or the commission charge will be high, which then directly affects the country foreign trade in addition to unnecessary fees,” the source added.
The source explained that the problem is mainly seen on some banks. Banks are expected to settle payments within the maturity time that is up to three days.
He said that top leaders of the banks should review and insure overall foreign exchange exposure to ensure that it is maintained at practical levels and is consistent with available resources.
Late this week, Capital was informed that about five of the seven banks have settled their arrears and are back to the normal operation.
“My personal estimation is that banks get in this problem in relation to the issue of their internal management. When they get in to commitment they are supposed to look in to the inflow and out flow of their resource,” Fikadu commented explaining the reason why banks get in difficulty regarding defaulting on the settlement of LC or other payment modalities.
He said that some correspondent banks may not show interest to work with some local banks, which doesn’t have good reputation on settle their commitment, “that is the reason we are controlling banks with directives, not to get on commitment against their capacity.”
“As a country we don’t have a given default rate, but some banks are now being seen getting in trouble. We have advised them to correct the new trend, while if they tried to continue we will be forced to penalize them as per the regulation,” the Chief Economist told Capital.
He said that these banks shall focus and undertake domestic businesses that would allow them to continue on profitability.
About the latest measure that NBE taken on some banks, Fikadu said that the regulatory body preferred consulting them to correct the operation before taking measures. “While at some point we have to act and taking measures on those who are abusing the rule of the system more than once and are unable to retract,” he explained the reason as to why NBE takes measure on some banks.
Fikadu added that the sector is supposed to be followed closely to assure that the relation with correspondent is healthy.
The World Bank Group private wing International Financial Corporation last year estimated that every year, Ethiopian banks end-up with outstanding LC accrued between USD 200 to 300 million payable to foreign banks. However, no defaults were recorded by Ethiopian banks except for the eventual delays.
Some banks prohibited from issuing LC
LACKING LEADERSHIP
As we never tire of repeating; the modern world system is in its final disintegrating phase. Bifurcation is what the original articulators of the ‘world system analysis’ expect to happen. The elites who have been running the modern world system are now in disarray. In the core countries of the west, incoherence, particularly within the power elites, as well as deepening frustration in the world of the sheeple (human mass) have become vividly visible. Structural fissures of the system (including in the areas of economics, politics, etc.) are graduating to disruptive status. For instance; succession is in the offing even in the core countries like Spain, Scotland, etc. The EU is also at the crossroads. The US is witnessing unprecedented disjointedness within its traditionally homogeneous ruling political class, with consequences unknown!
Realignment is taking place in the UK’s political scene. The Labor Party, under the leadership of Jeremy Corbyn is reasserting its traditional policies. Voters seem to like the new leadership. By trying to go back to its roots, the labor party is forcefully redefining the interests of the sheeple, i.e., outside the make believe world of the notorious ‘deep state.’ As a result, the Labor Party is increasingly attracting the silent and disgruntled apathetic majority. By coming up with a clear manifesto, it has clarified current issues as they pertain to the interest of the majority. This is leadership! On the other hand, the Conservative Party, by trying to muddle through, as usual, without convincing narratives, has started to alienate the sheeple. We believe the recent election in the UK is an indicator of things to come in Europe. Greece, Spain and others, even though they have brought new movements to power, the parties were not able to implement their own agenda. The global institutions of economic governance (TROIKA=EU Commission, EU Central Bank, IMF), as usual, managed to frustrate the newcomers’ pro-people policies. Consequently, it is still austerity left, right and center and the countries are in limbo, an indication of failed leadership!
Trumpism is also trying to carve its way through the minefields planted by the most powerful ‘deep state’ of the world system. Hardly a day goes by without some element of the deep state accusing the President of the United States of some alleged wrongdoing. The fact is; the US ‘deep state’ doesn’t want to acknowledge Trump as an elected president, since he seems to be challenging some of the deep state’s activities! Once Bernie Sander’s campaign was successfully frustrated, a good portion of the US electorate decided to cast its protest votes to support trump against those affiliated with the D.C. swamp, to use Trump’s phrasing. The battle between the ‘deep state’ (and its cohorts) and the populist movements, like the ‘Tea Party’, is probably just beginning! One thing is clear; unlike those days, when such a person/movement can (easily) be sidelined by some cleaver means, political or otherwise, the current situation might not allow such indulgences, since the sentiment of the governed is not all that forbearing! Given such dramatic developments in the core countries of the world system, will there be an opening for those of us who perennially suffer the awful governance of the ‘Mafiosi States’?
Even though many of the African countries boast formally constituted political ideologies, as expressed in their state constitutions (democratic, republic, federal, etc.) their governments’/bureaucracies’ operations are much closer to that of organized crime than anything else. Just as the ‘deep state’ is the real and perennial government in the rich countries of the west, the ‘Mafia State’ is the one calling the shots behind the façade of federalism, republic, blah, blah, in many of the African states. The sad fact is; neoliberalism, marshaled by monopoly capital, has created plenty of parasitic oligarchs and rent seekers under the auspices of the African states. The polarization thus created continues to destabilize African societies to the point of irreversible collapse. No wonder the number of completely failed and failing states in Africa keeps on increasing! For example, all the three Federal states of Africa, namely the Republic of South Africa, the Federal Republic of Nigeria and the Federal Democratic Republic of Ethiopia are facing protracted problems, mostly on the account of bad governance (and not always as a result of their federal structures)! Whatever forms of government a country adopts, if the operationalizing tools don’t include effective democracy, lived ethics and impeccable justice, situations won’t be conducive to peaceful coexistence and soon it will be back to the future where primordial instincts (identity politics) will gain the upper hand. However, unlike the recent past, the international political environment seem to favor open dialogue between protagonists in the African political landscape.
Sadly, it is now decadence and grand/political corruption rather than decency and good governance that pass as traits of civilized culture in our vast and fast fragmenting region. The current motto of Africa’s ‘strong men’, (not many women) seem to be just like that of a well-known oligarchs of yesteryear: ‘Claim everything. Explain nothing. Deny everything.’ (Prescott Bush- 1966, oligarch, father and grandfather of US Presidents). By now we should unhappily acknowledge that truth is a crime to those obsessed with power. In addition, we should resign to the fact that our current leaders are probably incapable of transcending tribalism and will soon lead the continent to “make nothing from everything.” PJ O’Rourke. Good day!
MoH considers re-starting public isolations for infected cases
As the third wave of the pandemic across the globe hit, COVID-19 cases and deaths have dramatically increased in Ethiopia to which the government has started to consider re-starting public isolations for infected cases. Despite the efforts of all parts of the stakeholders, the new cases are alarmingly increasing. Still, some measures have been declining due to the hectic nature of the stakeholders day to day activities. Currently, Ethiopia confirmed that COVID-19 cases are reported in all parts of the country.
Currently, isolation centers are dedicated for patients who need oxygen and ventilation, however as result of the increasing number of cases and critical patients, the Ministry of Health has decided to re-organize public isolation centers for the infected patients. “Also the fear of the high spread of the new variants of the pandemic in the society which is still unidentified behavior has forced the ministry to re-establish Isolation centers,” experts explain.
A year after Ethiopia recorded its first case of Covid-19; the virus has been spreading at an alarming rate. The number of people entering the intensive care unit (ICU) and the number of deaths have increased in the last few weeks. While the virus is spreading across Ethiopia, shortages of oxygen supply have been recorded in different locations across the country.
As of April 23, 2021 Ethiopia has reported 249,292 positive cases which is the fourth highest number in Arica and has also recently reported 1303 new cases with a cumulative total death of 3,511 in the country.
The public health preparedness and response during early outbreak used different risk communication and community engagement activities during the early outbreak. The government had been implementing strict and stringent contact tracing after the first case reports and measures such as isolation as well as care, obligatory quarantine, and treatment were provided. Its recalled that the government mobilized the public universities’ dormitories and other buildings to increase the capacity and number of quarantine centers to over 50,000 beds. The government also established additional isolation centers with a total of 15,000 beds. Moreover, the government arranged several treatment centers with a 5000-bed capacity.
On similar news, in April 21, 2021, the International Clinical Laboratories (ICL) launched the free Covid-19 testing program for 50,000 people in Tigray. The Laboratory kicked off the massive campaign earlier this week in collaboration with Tigray Health Bureau and Mekelle Hospital after securing permission from Ethiopian Public Health Institute (EPHI) and Federal Ministry of Health (FMOH).
The testing campaign is expected to reach other health facilities in the region, and in addition to the Public Health Facilities in Tigray, ICL is partnering with other private health facilities to offer free Covid-19 testing for individuals who cannot afford the test.
Vaccine expiry dates
In other development the World Health Organization (WHO) has urged African countries not to destroy Covid-19 vaccines that may have passed their expiry date.
Countries have been told to keep hold of them and wait for further guidance.
The appeal comes after Malawi and South Sudan said they would destroy more than 70,000 doses of the Oxford-AstraZeneca jab because they expired in mid-April.
But the Africa Centres for Disease Control (Africa CDC) said it had been assured the doses were safe to use.
“Africa CDC subsequently received concerns regarding the 13 April 2021 expiration date, and took swift action to resolve. The Serum Institute of India, from which the vaccines were procured, advised and sent a formal letter indicating an approved “shelf-life extension” for an additional three months, through 13 July 2021,” it said in a statement.
Many vaccines can be used up to 36 months after manufacture, but because Covid-19 jabs are so new there is not enough data to prove their effectiveness over longer periods.
The final decision on whether to use expired jabs rests with national drug regulators.
The rollout of coronavirus vaccines across Africa has been slow, partly because of supply issues and wider scepticism about the jab.
“My appeal to member states is: if we are doing our part to mobilise these vaccines, you do your part and use the vaccines,” John Nkengasong, director of the Africa CDC, told a news conference on Thursday.
Malawi said it planned to destroy more than 16,000 doses of the AstraZeneca vaccine, which were manufactured by the Serum Institute of India (SII), because their expiry date was 13 April.
South Sudan, meanwhile, planned to discard some 59,000 doses for the same reason.
The vaccine doses were donated to 13 African countries through a partnership between the African Union (AU) and the telecommunication company MTN Group.
The AU bought one million doses of the AstraZeneca vaccine from South Africa, which had stopped using the jab amid doubts over its effectiveness against a new variant that had become dominant in the country.
The Africa CDC sent the doses to countries in late March, a few weeks before they expired.
BGI Ethiopia joins the road to remove Inboch from Tana Lake
BGI Ethiopia joins the road to remove Inboch from Tana Lake by handing over 5.8 million birr worth of cutting machine. BGI’s cutting and removal machine is made by local experts to remove the weed invading Lake Tana in Amhara region.
On Monday April 19, 2021 BGI delivered the machine developed by Mulat Industrial Engineering to Amhara Regional Government in the presence of senior officials and invited guests.
Lake Tana, which is connected to the Grand Renaissance Dam, is a source of income for the farmers around it. Lake Tana is also one of UNESCO’s World Heritage Sites, although it has been infested with weed since 2003. Through different effort 85 percent of the lake is currently free from the weed however as experts suggested unless efforts are continued to fully removed the weed it will come back.
