The government has announced to include local manufacturers under the suppliers’ credit scheme to access foreign currency for their production, however, experts express that it may not be as helpful in comparison to foreign investors benefits of the past.
Last fortnight, Eyob Tekalign, State Minister of Finance, told media that the suppliers’ credit directive of the National Bank of Ethiopia (NBE), external loan and supplier’s credit directive that was amended in 2017 was re-amended to include local manufacturers to access hard currency on credit for their raw material and accessories input.
When the directive was amended in October 2017, the Central Bank included foreign investors to benefit from the credit import of input and machineries or parts besides exporters, who contributed to generate foreign currency.
Since then, local manufacturers, who engaged on the produce of import substitution products and similar products that foreign investors produce, expressed their grievance by stating that the directive forced them to halt their production whilst making them incompetent with those who have the chance to benefit from the suppliers’ credit.
In the past three and half years, the local manufacturers have been accessing the foreign currency under letter of credit (LC), which takes several months or years to get a permit from banks.
However, recently the government has decided to include the local investors on the suppliers’ credit directive in order to benefit the foreign currency for their production. However, the manufacturing sector leaders and bankers have expressed their concern that the government’s decision might not touch the ground.
They argued that the resource is not available like the previous period.
A bank president who demands anonymity said that the amendment of the directive, which is waiting NBE board of directors’ approval, is an appreciable decision. “But it is difficult to say that the investors will get benefit as the foreign investors,” he expressed his expectation.
He reminded that the scheme is giving an opportunity for the manufacturers to import input on credit that is supposed to be paid in 180 days’ time by local banks. “While banks are still required to generate ample foreign currency for the credit settlement within the sated period, it remains burdensome during this period,” he elaborated.
Other bankers argued that at under the current circumstance the hard currency earning is dire than the trend in the past few years.
“The government considered to include local producers at the time where the resource is not there,” both bankers and manufacturers claimed.
Under the suppliers’ credit directive, banks are responsible to give a permit for investors to import requirement items when NBE approved the request and order banks to give a permit.
However, now banks argue that the permit shall only have life if the banks have viable foreign currency generations, which is difficult to determine at this stage. “At the end of the day, banks are supposed to settle that credit but the question is that from where they will play,” one of the biggest banks president told Capital expressing his suspicion on the effectiveness of the under amendment directive.
Recent Developments
National Bank of Ethiopia (NBE) is aggressively approving suppliers’ credit for foreign investors, financial sectors leaders revealed.
It is to be recalled that the government determined to include foreign direct investors (FDI) since October 2017 on access to hard currency on the suppliers’ credit scheme besides the traditional, that is, those, who contributed for the generation of foreign currency like exporters.
Since then, the FDI had benefited from the scheme besides securing foreign currency on the letter of credit (LC) like other businesses who use it to import input, accessories, goods and other materials for their business in the country whether manufacturing industry or the service sector including trade.
According to sources in the banking industry, in the past couple of weeks the number of approval letter for accessing via suppliers’ credit has increased.
They said that the number of FDI that secured approval from NBE for dollar or other major hard currencies has increased. Capital had also got a chance to view some of the approval letter copies that was sent to banks ordering them to allocate the foreign currency for the FDIs.
Sources said that the foreign investors are getting millions of dollar under the approval of NBE for the import of raw material or accessories and machineries. They said that a single company may get about USD 10 million under the approval of NBE at a single bank.
“We are not aware why the frequency increased this time around,” one of the bank leaders, who demands anonymity, told Capital.
The benefit of the suppliers’ credit scheme is that the foreign companies shall get the foreign currency without delay since they secured the approval from NBE, while other investors like Ethiopians, who may be involved on the same investment as FDI, would wait for the LC for months or years as per the rule of NBE.
An Ethiopian investor who is aware of the latest activity of NBE regarding the suppliers’ credit claimed that case is only decided by NBE leadership, which he argued may have some sort of interest.
He expressed his concern that the recent swift move of approving suppliers’ credit is coming following the information that the government would on the process include other manufacturers to be part of the scheme.
Banks leaders have also said that they cannot refuse the order of NBE, a regulatory body, for giving the foreign currency under suppliers’ credit.
Bankers said that under the scheme a single company shall get huge amount of foreign currency from different banks at the same time.
The spur of the suppliers’ credit directive
ESLSE, Djibouti’s port management harmony pays off
strong coordination between ports management in Djibouti and Ethiopian Shipping and Logistics Service Enterprise (ESLSE) accelerates the cargo handling and has further improved lifting capacity.
47.2 percent of the 1.8 million tons of fertilizer cargo procured for this year has already reached at the port and almost all of them are transported to the destination in Ethiopia.
Ethiopia, which is the biggest population without sea outlets in the world, is mainly using ports in Djibouti which is connected by three roads and a railway network for cargo import.
Roba Megersa, CEO of ESLSE, said cargo shipment and handling in ports and moving to a central destination has massively grown in the past couple of years. This operation is marvelous despite COVID 19 affecting the logistics industry he expounded.
He said that the current management at the ports in Djibouti has strongly improved its leadership quality which has helped the two sides to understand each other thus accelerating the activity on the logistics sector. “They listed us and tried their best to fulfill our demands. They are working strongly to solve any problem that may occur,” he told Capital explaining the reasons that led to the registration of achievements in the sector.
“The leadership in Djibouti is now highly qualified and eager to achieve more. Its delivery time in Djibouti and the leadership mainly in Doraleh Multipurpose Port (DMP) has dramatically changed,” he praised the partnership.
He said that the performance in Djibouti this year is in very good hands, “We are not surprised since in the past we shared our plan in advance which helps them in preparation and handling of the cargo properly.”
“On our part, we have also improved our coordination to move cargos as soon as possible. They have also hosted us on the ports when we demanded, which is a good leadership of the port management.”
“Dispatching trucks and vessels on our side has also improved which helps to accelerate the logistics activity in general,” he said reminding that the procurement scheme, time and the poor supply chain were a problem for congesting ports in Djibouti that is now improved.
He showed the improvement of the procurement and import of 200,000 tons of sugar that concluded prior to October 2020.
Traditionally, the government bodies procured goods in similar time when the budget released on the period like in October making the port very busy for some period since several vessels arrive at similar time and ports become ideal in other months.
“Unlike previous trend similar to that of sugar, huge amount of fertilizer cargo have been procured early,” he said expressing the appreciation of the improvement of procurement approach. He further explained that some government offices managements help to boost the activity of ports and ESLSE.
With regards to the delay of wheat procurement which ESLSE had expected the government would buy the 750,000 metric tons but didn’t follow through except few amounts procured through CFR scheme (Which suppliers cover the cost and freight up to the buyers’ destination which consumes significant amount of foreign currency) in comparison to FOB scheme, he recommended that, “It is supposed to be improved.”
Regarding fertilizer, the country has bought 1.8 million ton, which was 1.1 million ton and 1.45 million ton a year before and last year. Roba explained the reason for the increment of fertilizer consignment by stating that, “Besides the new irrigation based agriculture activity, the demand of fertilizer increased since the cultivation land is expanded.”
In addition to the volume increasing massively, the handling of discharge from port and dispatch to the center has also increased significantly.
“The discharge to silo from vessels has shown frequent records in this year unlike the past that helps to shorten the anchorage time of vessels,” Roba explains, “the reception facility for vessel on the discharge of fertilizer or wheat is supposed to be silos, while in the past we have been using trucks for the discharge in the past, that halted this time.”
Recently, Djibouti Port SA (PDSA), which manages DMP and others in Djibouti, reported by mentioning that Djibouti’s port operations have set a new delivery record of 17,444 tonnes of fertilizer loaded onto 392 trucks and 22 railcars, without addressing the operations of unloading huge volumes into silos. “We are delighted with the performance of Djibouti’s port facilities,” PDSA explains.
“It is a good motivation for us to receive your recognition. I am also very happy to extend my special thanks to all of our operational, technical teams, ESLSE and the Ethiopian transport companies. We are now all one team and that is our strength,” Director General of the DMP-PDSA, Djama Ibrahim Darar, said.
PDSA said that it should be noted that this is the first time that such good figures for the delivery of bagged products had achieved within the two port entities.
It added that this fast flow comes from the back of a new global operations strategy, put into effect for the 2021 season, which will have the impact of significantly reducing the stay of ships at the quayside. This strategy includes unloading on fixed conveyors and delivery on trucks but also by rail.
“They have a capacity to discharge over 20,000 tones of fertilizer per day,” Roba told Capital.
“Mainly for this year and last year, I am grateful on Djibouti ports’ leaders,” he applauded
He said that besides the discharge dispatching, the cargo have increased since the price of trucks have improved which encouraged them to participate on fertilizer transport, while controlling the dispatch and contract administration which have been successful.
“The railway has also been operating in a good manner with regards to fertilizer shipment. In two months it has transported the cargo that it initially used to transport the whole year, last year,” he added.
Every day a single railway which translates to 67 trucks is transporting 2,560 tones of fertilizer to the centre form port.
So far 850,000 tones of fertilizer have arrived at the port and 92 percent of it moved to the centre.
“Traditionally vessels have to stay at the port for 28 days on average which is now less than one day because of planned procurement and FOB scheme, which is a system where the freight is carried out buyers,” he said.
According to Roba, the activity on the Djibouti side is very impressive not only on ports but on other transit and relates service.
“Port of Tadjourah is mainly giving a service for our vessels and others that we chartered for the import of steel and coal,” he says, “the whole coal cargo are imported via Port of Tadjourah.”
The slowdown of cargo activity of containers has also registered a recorded low, rather than the history of conjunction in the previous trend. “For the first time the container consignment in Djibouti has registered below 10,000, which is new,” the CEO says, “for instance today (Thursday March 25) the number of full container cargo in Djibouti is lower than 8,000.”
There are different reasons for the drop but the two main reasons are the impact of international trade slow down, which is mainly affected by the global pandemic, and the second reason is the activity of lifting container.
The market share of ESLSE has taken 73 percent regarding containers consignment, which shows that the increment of the multimodal scheme.
ALTERNATIVE MONETARY SYSTEMS
That the current global monetary system is inherently deficient and needs a complete overhauling is no more in doubt, at least amongst critical thinkers. However, the empty suits or banksters for short, who have been instrumental in dismantling the productive segment of the global economy, in favor of rent seeking crony capitalism, might not agree. After all, it is they who created ‘fiat currency and ‘Fractional Reserve Banking’, which are at the root of, not only polarizing globalization, but also ecosystem destruction. The ongoing globalization that is promoted as if it were manna from heaven is on track to deliver the most polarized world humanity has ever seen. Thanks to the criminal enterprises of fiat money and fractional reserve banking, the 1% will soon own two thirds of global wealth!
The phony system of fiat money (money that is backed by nothing except the perpetual lies of states), which has removed even the slightest semblance of responsibility from the whole monetary equation, is probably on its last leg. A number of the core principles of ‘sound money’ are violated when ‘money’ is issued privately without any real backing. All the currencies we use in our daily lives are not backed by anything, except the words of the states and their accomplices, the notorious banksters. And we all know what that means! No wonder prudent people still hang on to precious metals, like gold, silver, etc. to preserve the value of their hard earned wealth, however meager that might be. These metals tend to hold their values or even appreciate over time vis-à-vis paper currencies. Other forms of investments (like real estate) are also used to hedge the continuous value-losing propositions of fiat currencies. The current vigorous initiative to replace paper currencies with crypto-currencies stem from this protracted problem of continuous printing of valueless papers. Inflation is one of the byproducts of the current global monetary system. Governments use inflation as a tool to bring down their (usually local) debts, but the effect on the unsuspecting sheeple has always been disastrous. When inflation becomes intolerable, riots and more, tend to be the order of the day!
Another of the foundational problems of modern finance is ‘Fractional Reserve Banking’. In a nutshell, it is pure scam, a fraud of grandiose proportion. As we never tire of repeating; ‘Fractional Reserve Banking’ is the biggest non-violent crime of the millennium, according to our holy book of honest money. The reason for this assertion is quite simple. When a bank creates money out of thin air and disburses this phony money as credit/debt into the larger economy (with interests), this very action dilutes the real money earned by labor, mental or physical (think those on salaries and wages, informal sector, etc.). It is this fraudulent act that is significantly contributing to the extreme polarization of the modern world system. By and large, the modern day wealth of the parasitic oligarchs is derived from this gimmick, not from actual tangible work! Amazon has never made a profit in its entire existence, but has managed to disrupt whole sectors of an economy. The US Mail loses about $1.50 for every package it delivers on behalf of Amazon. On the other hand, Amazon is expanding without bound (literally), and it is not because of organic growth. It is growing because it is allowed to leverage the easy money regime of global finance, so that it can buy out competitors, (potential and actual). Soon, it will end up becoming a monster that monopolizes all and sundry. May be then it might be interested in real moneymaking operations; ditto many of the giant tech firms (Tesla, Uber, Twitter, etc.)! Even the poorer countries of the world system have become quite adept at this financial contraption. Just look at our mini oligarchs, so-called ‘investors’. How did they come up with so much money without (hardly) ever lifting a finger? Billions and billions of birr is systemically transferred from the present and future earnings of the working stiff, (including genuine entrepreneurs) to the current cronies connected to TPTB (The Power That Be). State created oligarchs are now the movers and shakers of Ethiopia’s highly speculative and consumption-oriented modern sector. Henry Ford once said; if people only knew how banks create money, there will be a revolution tomorrow’!
The sheeple sweats and bleeds to secure its meager livelihood. What it earns is hard earned money. By continuously creating money out of thin air, banks are stealthy appropriating the real earnings of the sheeple. They might not acknowledge it yet, but they are digging their own graves, so to speak. What is holding back the masses from pouncing on banksters is the usual ‘bread and circus’ game. Even in those ‘rich’ countries, the number of people living below the poverty line has been on the increase since the 1970s. Of course, there are all sorts of statistics and lies to camouflage/hide the reality that obtains on the ground. By delivering ‘free’ food and plenty of ‘entertainment’, the sheeple is kept at bay. One would think the parasitic elites of our world system would take notice and try to ameliorate the situation. No, no, no! What they are actually doing is; they are doubling down on their old gimmickry. Don’t be surprised if major wars break out soon, after all, ‘all wars are bankers wars’!
Critical thinkers are proposing different systems of honest money to be used across the board. But dominant interests, including banksters, are fighting tooth and nail to thwart off any proposed change to the existing system. After all, current banking is ‘rent seeking’ par excellence! Many alternatives to the existing monetary system have been proposed throughout the years and decades. One is community issued money. Another is a system of money where credit is created only by the state, under very stringent conditions, like the ‘gold standard’, etc. Multiple currencies, even in a somewhat closed community, (a city, state, etc.,) have also been contemplated. Gladly, there are a number of people in the world who are actively engaged in trying to change the foundational principles of the existing system, with a view to replacing them with a more equitable and resilient alternatives. There are many pilot projects under experimentation in many countries of the world system!
Here is a word of wisdom from an old entrepreneur: “A business that makes nothing but money is a poor business.” Henry Ford. Good Day!
Mapping a digital health blueprint
Developing policy and strategic road map for digital health has been recommended to expand the sector development with the engagement of the private sector.
Under consultations that evaluated to identify the opportunities and challenges in private health sector development, particularly along with; policy, regulations, standards, and procedural impediments for market entry and expansion, a recommendation has been put forth for the government to design a policy framework along with a strategic road map to boost the social sector with the latest development in the global arena.
The consultation that identified three critical areas of interventions for deep-dive analyses, included; the need to review health facility standards and licensing, the need to develop a new standard for office medical practice such as “doctors’ plaza”, and the need to review and expand private sector engagement whilst leveraging on digital health added that the need of paving a clear way for effective governance in digital health technology, is a necessity.
It has also recommended the establishment of a strong digital health platform, an Integrated and standardized digital innovations for health, cultivation for the digital health financial sources and investments, and enhancements on the digital health capacity and literacy.
Besides that it added the alignment of digital health policy and strategy to global, regional and national goals including developing a patient-centric digital health ecosystem.
The priority pillars to address for Ethiopia’s digital health ecosystem policy and planning process are: expand the literacy, integration of private sector under self organization and public sector integration initiative, and promotion of entrepreneurship via financial and other instruments to expand the sector for innovation.
“The two key building blocks for successful digital health ecosystem implementation in Ethiopia are; an effective, resourced inclusive digital health policy dialogue platform, and data integration and analytics to inform policy making that includes end users and providers,” it said.
The consultations confirmed that despite the country’s significant progress across key health indicators, the private sector in health remains small with limited engagement. “More needs to be done based on the known advantages of strategic private sector engagement in other countries to support and scale public health and government responses,” it amplified.
It added that the expansion of digital health have several initial strengths to achieve the expected goals, while weakness like not including the sector on the digital transformation and small private sector innovation, lack of skilled professionals and brain drain, financing and others derail the progress of the sector.
The consultations that were led by Precise Consult International also highlight in an outcome document, the various opportunities and possible threats like health data complexity that shall be seen on the implementation process.
