Ethiopia plans to celebrate its national day on March 2, 2022 at the Dubai Expo, in relation with the Adwa victory day. At the Dubai 2020 Expo, so far 200,000 people have visited Ethiopia pavilions in the past two months, according to the Ministry of Trade and Regional integration.
“From this, 3,800 people have been interested in visiting Ethiopia while 17 companies are looking in to investing in Ethiopia,” said Assefa Mulgeta, Deputy Commissioner for Expo 2020 Dubai Commission under the Ministry of Trade and Regional Integration.
He said Ethiopia has been promoted as a destination to the land of origins, coffee, tourism and convenient business and investment. Ethiopia also has a showcase of the Lucy’s fossils, traditional coffee brewing rituals, and investment opportunities at the pavilion.
Organizers of the expo expressed that they will celebrate the Ethiopian Day in a way that reflects Ethiopian culture and values.
Assefa said the expo will continue to promote Ethiopia’s image as well as investment and tourist destinations over the next four months. It has been two months since the Dubai Expo 2020 opened and 192 countries, including Ethiopia, are participating.
The Dubai 2020 Expo, which is expected to attract more than 25 million visitors, opened in October. It will run for six months until March 2022. The Dubai Expo 2020, the first in the history of the Arab world, has been underway for more than 10 years.
Ethiopia to celebrate national day at Dubai Expo
NBE eases directive to attract foreign financing
National Bank of Ethiopia (NBE) relaxes the ‘foreign currency intermediation directive’ aiming to bring life for access to credit from foreign sources.
It is recalled that NBE, the financial sector regulatory body, issued a directive that allow banks to pay an intermediary role to facilitate foreign currency credit for business activities in Ethiopia under foreign currency intermediation by banks directive No SBB/77/2020.
However, the directive which became effective starting from August 2020 was not able to gain traction because of its strict conditions and terms that could not attract foreign finance providers, explained sector experts to Capital.
They said that in different occasions, bankers had provided their comments and recommendations to NBE to look into the matter in order to make the directive effective.
One of the bankers that Capital spoke to said that NBE has now included and revised some new points replacing the former terms to make the directive applicable.
Experts in the banking sector told Capital that access to loan risk grading which works for any individual or country, the rating is often determined by long or short time access to financing under commercial terms.
The interest of foreign financers is aligned with risk rate of the country and companies, “So foreign financers shall not be encouraged if the financing is a long term,” one of the financial experts said.
Now the directive has reduced the grace period and repayment period.
Bankers told Capital that partners had expressed their concern that if the grace period is extended, it would not be attractive for them to facilitate finance under the new scheme.
“We recommended the central bank to ease the grace period and repayment time so that the directive is effective as per the demand of the government,” one of the bank presidents that Capital interviewed said.
Now experts expressed their hope that the directive now shall give life to access to foreign loans on behalf of companies active in Ethiopia.
According to the information Capital obtained from bank leaders, no financial firm is accessing the foreign currency under the 2020 directive, due to the strong terms stated on the directive that is not considering the risk rate and reality in the country.
“We have made different efforts and created communication with potential partners but it did not bear fruit,” a bank president explained.
The new amended directive No SBB/82/2021 stated that the grace period for principal payment to be at least six months, reducing it from three years as per the previous directive.
The new directive has also reduced the repayment period to two years that includes the grace period. The previous directive article 4, sub article 3.2, stated a repayment period of at least six years including grace period.
The former directive article 4, sub article 3.3 has been fully revoked on the latest directive that has become effective as of December 1, 2021.
The revoked part of the former directive addressed the interest rate for the external loan that banks accessed on behalf of their customers here.
The article read ‘the all in cost of the loan shall not exceed 6 months respective currency LIBOR plus 5 percent; USD LIBOR shall be used when the loan currency does not have LIBOR rate’, while the amended directive did not disclose about the interest rate.
LIBOR (London Inter-Bank Offered Rate) is the benchmark interest rate at which global banks lend to one another for short-term loans. The rate serves different currencies with seven maturity periods from overnight to 12 months.
The new amendment has also added a sector that shall access the foreign currency secured under the intermediary directive.
It stated that priority goods shall utilize the foreign currency acquired through external borrowing, besides foreign currency generating activities that is mentioned in the previous directive.
Article 4 sub article 4.2 of the new directive indicated that ‘facilitating import of priority goods as per National Bank’s Directive on Transparency in Foreign Currency Allocation and Foreign Exchange Management’ shall utilize the opportunity.
It is known that the Transparency in Foreign Currency Allocation and Foreign Exchange Management Directive of NBE stated essential goods in three priority categories.
The amended directive article 4 sub, article 5 added that foreign currency acquired through external borrowing can be utilized for facilitating imports of priority goods as per sub article 4.4.2 of this article only with the prior approval of NBE.
Experts on the sector elaborate that the priority sectors that included on the new directive shall only access the foreign currency loan, which is secured under the intermediary scheme, as per prior approval from NBE.
The practice for those engaged on foreign currency generating activities in Ethiopia that is mentioned on article 4 sub article 4.1 on both the old directive and the amended is not expected to get the green light from NBE.
The amended directive article 4 sub article six stated that the prior approval request shall be made to the Banking Supervision Directorate of NBE.
The directive has also included some changes and added further elaborations to make effective the directive and enable banks to make active the motive of the law that targets to boost the foreign currency flow to the country.
The intermediary directive enables local banks to borrow from foreign banks in USD, pound sterling, euro, Chinese Yuan, Canadian dollar and Japanese yen.
General inflation up 33% from last year
The November general year on year inflation rate hits 33 percent as the month-on-month food inflation rate for the same month decreased by 1.8 percentage point compared to the preceding month of October 2021.
During a similar period, the non-food inflation rate increased by 1.0 percent. Historical long-term seasonal inflation trend shows that food prices during the next 3-months of harvest period is expected to decline.
The country level overall inflation rate rose by 25.5 percent in November 2021 as compared to a similar period a year ago. Food inflation increased by 30.1 percent as compared last year same period, Non-food inflation rate increased by 19.4 percent in November 2021 as compared to the one observed in November 2020.
In comparison to last month’s country level general inflation, November 2021 has showed a decline of 0.6 percentage points while the food inflation declined by 1.7 percent as compared to the preceding month of October 2021. During the same period, non-food inflation showed 1.0 percent increase.
Last month, the general inflation rate recorded was 34.2 percent while the food inflation was 40.7 percent with non-food inflation being 25.3 percent in October 2021.
As the report said, the November 2021 General year-on-year inflation has increased by 33.0 percent as compared to the one observed in November 2020. The year-on-year food inflation has increased by 38.9 percent in November 2021 as compared to the one observed in November 2020.
In the current month as the report shows; cereals, vegetables and pulses showed a decline in most case, rice, teff, wheat, barely, maize and sorghum showed a decline in their prices. Meat, milk, cheese and eggs, and spices (mainly salt and pepper), cooking oil and butter prices slightly declined in the current month.
Besides as the report indicates, coffee beans and non-alcoholic beverages prices have also increased during the current month.
The Non-Food inflation showed an increase which stood at 25.2 percent in November 2021 as compared to the one observed in November 2020. The rise in non-food Inflation was mainly due to rise in the prices of alcohol and tobacco, stimulants (chat), clothing and footwear, housing repair and maintenance (house rent, cement and corrugated iron sheets), and energy (firewood and charcoal), furniture and home furnishings, medical care and jewelry (gold).
In November, region wise, Addis Ababa city, Amhara, Oromia and SNNP showed a declining price situation than the other regions.
This increase in the General Consumer Price Index is attributed to the rise observed in the indices of Food and Non-alcoholic beverages 38.9 percent, Alcoholic Beverages and Tobacco by 29.5 percent, Clothing and Footwear by 25.5 percent, House Rent, Construction Materials, Water and Fuel and Power by 18.5 percent, Furniture, Furnishings, Household Equipment and Operation by 42.8 percent, Health 50.9 percent, Transport 23.3 percent, communication by 16.0 percent, Recreation and Culture by 44.1 percent, Education by 27.1 percent, Restaurant and Hotels 24.0 percent and Miscellaneous Goods by 24.6 percent.
As the agency report indicates, most of the components of Food index showed increase as compared to similar month last year. Bread and Cereals , Meat (27.5 percent), Fish and Seafood by (28.2 percent), Milk, Cheese and Eggs (30.9 percent), Oil and Fats (85.0 percent), Fruits by (39.6 percent), Vegetables and Pulses, Potatoes and Tubers by (26.5 percent), Sugar, Honey and Chocolate declined by (22.4 percent), Other Food Products and spices by (37.2 percent) and Non-Alcoholic beverages and Coffee by 45.8 percent.
WHITE SWANS & WHITE ELEPHANTS
About a decade ago the idea of encountering a ‘black swan’ was again brought to mainstream discourse by Nassim Nicholas Taleb’s bestseller, the ‘Black Swan’. This time around however, the black swan notion was employed to illuminate unexpected scenarios that can come about from within or from without the human collective. Taleb used an analogy from the old zoologists of the 18th century. At the time, the fixation within the community of ornithologist was; ‘all swans are white’! The intent of Taleb’s ‘Black Swan’s’ was to shake up established routines. As a player in the securities market, his interests were mostly focused on such matters as; survivorship bias, blindness to randomness, fat tails etc.!
Most of the strategies currently employed in the financial markets have innate pitfalls. They have tendencies to follow what others are doing, the ‘herd mentality’. In addition, these models rely on abstruse mathematical derivations with dubious results/values. To start with, mathematics cannot really be trusted in the feeble world of humanity. Yet, econometrics insists that it is better positioned to understand what is going on in the real world of exchanges; commodity, financial, labor, etc. We beg to differ! To those who are befuddled with this, we suggest listening to those who actually know what they are talking about. ‘As far as the laws of mathematics refer to reality, they are not certain; as far as they are certain they do not refer to reality’ Albert Einstein. The shortcoming of economics is not limited to the excessive utilization analytical methods and brute quantification. On this point Taleb has something to add. ‘Taleb has called for cancellation of the Nobel Prize in Economics, saying that the damage from economic theories can be devastating. He opposes top-down knowledge as an academic illusion.’ To be sure, Alfred Nobel did not bestow a Prize for economics. It was the Bank of Sweden in 1968, who took it on its own, to concoct an annual prize in economics, bearing the name ‘Nobel’. What bankers do to look respectable!
One must clarify the ‘Black Swan’ animal before the establishment completely abuses it, like the above story of ‘Economics Nobel’. For example, the current Covid-19 pandemic is not a black swan event according to Taleb. This is because it has been anticipated by many long before its actual occurrence. Just because the MSM (Main Stream Media) and establishment pundits are not interested in issues, it doesn’t mean things have not been studied or anticipated. For instance, there are plenty of Yemeni children who are currently dying because of the ongoing war of aggression. Yet, the MSM is not interested in covering such cases, while fully engaged in massive propaganda campaigns about all and sundry! There are plenty of laboratories in the world that are fully engaged in the research and production of bio-weaponry. They employ thousands of scientists whose main occupation is to come up with man-made pestilences/WMD. Almost all of these pestilences are intended to do considerable damage to some (ethnic specific) or even all of the human species! So if an incident involving a bioweapon happens, either by accident or by design, can one honestly claim it to be a black swan event? To those familiar with the workings of the existing world order, projects of these nature are a dime a dozen. The nuclear weapons program of the USA, reinvigorated by the Nobel Peace Prize winning president, Barack Obama, is a case in point. Incidentally and like many other international treaties, the USA has also withdrawn from the bioweapon treaty, which it signed in 1972. Humanity cannot remain naïve to the potential consequences of such ongoing evil projects.
In the business world, white elephants are defined as those capital wasting useless investments or mal-investments. We cite some examples from the real estate industry. There are about 90 million vacant housing units in China all brand new and still waiting for occupancy, in a country that is now undergoing depopulation! There are many brand new ‘ghost cities’ in China that await massive residents who will be eager to engage in the business of family formation. There are about 30 million residential units unused in the USA. Even though many such properties in the world do not earn incomes commensurate with their asset prices or even their initial investment costs, they continue to significantly appreciate in value, albeit vacantly. If these assets are seriously devalued, there might be a top down revolution, this time to be led, paradoxically (don’t laugh) by the upper classes (asset owning classes) of the world system! Even the African cities (Nairobi, etc.,) are full of such white elephants; after all, we Africans do not make our own policies, but only follow, rather blindly, what is ordered by the masters of the world system!
White elephants can easily give rise to white swans, trivially. For example, there is now an impending catastrophe of sand shortage all over the world. It is already studied and is sufficiently anticipated. Can the climax of this disaster be labeled a black swan event? There are plenty of other mal-investments on the planet, primarily caused by the global fiat currency system. The overextended industry of travel and tourism, which is now the largest industry in the world, has become an epitome of mal-investment. From Miami Beach to Mombasa Beach the number of white elephants (hotels, condos, guest houses, airbnb, etc.) are so mindboggling, one might be forced to doze into the world of pink elephants! Since investment capital can be had for a whistle in a fiat system (so long as one is connected), every Tom, Tori and Tinny can become a respected investor, by the measure of crony capitalism, compliment of the bankster-cum-state cabals. The built-in inflation of the global system discourages savings and keeps the sheeple (human mass) pedaling on a fixed bicycle or running on a conveyor belt of real estate investment. What the ongoing depression will bring to inflated asset prices (everything bubble; such as the global real estate, securities, etc.), is something that remains to be seen.
