Football’s world governing body Fifa has postponed its Congress in Ethiopia, scheduled to take place in June, by three months owing to the outbreak of the coronavirus.
The Congress has been set to take place in the capital Addis Ababa with events between 3-5 June, the day on which the Congress had been set to take place.
This has now been postponed until 18 September. Meanwhile the body’s council meeting will now be held in Zurich or as a video conference in June or July.
Should Addis Ababa stage the event later this year, which will be at the headquarters of the African Union, it will be the fourth time Congress has been held on the African continent in 70 years.
Marrakesh in Morocco was the first African city to host a Congress in 2005, followed by South Africa in 2010 and Mauritius in 2013.
The first Fifa Congress was held in Paris in 1904, with just five member associations attending, and returned to the French capital this weekend with a full house of 211 members present.
The Congress meets every year, where statutes can be amended; where officer bearers are elected and where members can be accepted or expelled. (BBC)
Fifa postpones its congress in Ethiopia
Ethiopian air transport market set to grow 226% by 2037
Ethiopia air transport market is expected to expand by 226 percent over the next 20 years.
The International Air Transport Associations (IATA) latest study indicates that Ethiopian air transport and tourism through the air transport will contribute 14.9 billion dollars to the overall GDP of the country by 2037.
The report launched by assessing three different ways of air transport measures impact to the economy; which are jobs and spending generated by the airlines and their supply chain, the flows of trade tourism and investment resulting from users of all airlines serving the country and the other is the city pair connections that makes these flows possible; “all provide a different but illuminating perspective on the importance of air transport” according to the report by the association.
Currently 1.1 million employees are supported by air transport and tourists arriving by air and in the next 17 years the number is expected to be 2.2 million.
The supply chain is estimated to support 1.5 billion dollar of the GDP and spending by foreign tourists supports a further 2.61 billion dollar to the GDP totaling the sector contribute 4.1 billion dollars to the economy which will be 5.7 of the overall GDP. “If things go well and the government continues to support the sector the number will grow to share the 14.9 billion dollar with the annual passengers journey increasing from 7.2 million in 2017 to 23.5 million a year by 2037,” the report states. Africa is the largest passengers flow trough Ethiopian air lines sharing the 60 percent of the total passengers.
The most important benefits from the air transport passengers, shippers and spillover impacts on the business. Economic flow stimulated by good air transport connections is foreign direct investment creating 18.9 billion dollar FDI to the nation.
“The Ethiopian government’s recognition to the air transport is one of the key drivers of the sector to play significant role on the economic growth of the country,” said Raphael Kuuchi, IATA’s special envoy to Africa.
To increase the contribution the report suggests that the government needs to act at least on four focus areas to further and promote aviation growth and bring more value to the country
Implementation of single African air transport market (SAATM) among Africa will provide a significant boost for aviation in Ethiopia and throughout the continent.
To ensure further infrastructures and investments to maximizing the benefits of the sector, the country should increase investments align with industry growth are demand fit for purpose and deliver required service levels at acceptable costs for users.
The other recommendation set by the association is that Ethiopia needs to improve its Air cargo facilities. Ethiopia facilitation to air cargo throughout its customs and borders regulations ranks 86th out of 124 countries in terms of the world wide air trade facilitation index.
“This rank is not bad but it cannot be said good, the government needs to work on it” said Raphael Kuuchi, “by implementing policy facilitation, friction less movement of air cargo, the country will be able to strength its position as a leading Cargo hub in the region”
“If Ethiopia continued prioritization of air transport long with the four government intervention IATA is providing, the association will help the country to achieve the 226 percent forecast growth,” Raphael Kuuchi added.
Tewolde GebreMariam, CEO of Ethiopian Airlines said “our main challenges include the attitude to aviation by African governments. We need support from governments, taxes need to be reduced and infrastructure needs to improve. We depend on aviation to connect ourselves and the world. For trade, business investment and tourism, other modes of transport cannot serve us well, governments have to support aviation.”
Ethiopia to develop new port in Sudan
Ethiopia is to complete the formal possessing of acquiring land at Sudan to develop its own port.
In different occasions the two countries agreed to develop a port in Sudan that will be an optional sea outlet for land locked Ethiopia.
After Abiy Ahmed come to the premiership the two countries have strengthened the idea of developing a facility at Port Sudan, a major sea port town in Sudan.
In the latest dialogue, Addis Wog, organized by Office of the Prime Minister on the logistics sector Matios Enser (PhD), lecturer at Addis Ababa University, said that the country should develop its own port in the region.
On the discussion held on Friday March 6, he recommended Ethiopian Shipping and Logistics Services Enterprise (ESLSE) to develop ports in the region as seeing the experience of others like DP World.
“When the country normalize relations with Eritrea, the Ethiopian Freight Forwarding and Shipping Agents submitted a document for the PM to consider developing ports in a joint manner with Eritrean government,” he told Capital.
“Expressing interest is not enough, action is required since it is a serious issue for the country,” he added.
He further said that there are alternatives in the region that the government will really consider.
Dagmawit Moges, Minister of Transport, told Capital that owning a port is part of the Ten Years National Logistics Strategy issued few months ago.
“We are interested to develop ports and it is one of the interventions in the logistics strategy,” she says adding “but it should be determined by the deal with countries.”
Regarding securing the plot at Sudan she confirmed for Capital that the issue would be one of the areas that will be discussed in the latest meeting with the delegation led by her counterpart from Sudan this week.
A delegation that was led by Dagmawit paid a visit to Sudan and port facilities in the country early this year. Sources said that the current Sudanese delegation visit is the follow up of Ethiopian delegation visit.
Mekonnen Abera, Director General of the Ethiopian Maritime Affairs Authority (EMAA), told Capital that finalizing the ownership of the plot in Sudan will be done in the near future.
He said that the two countries have already agreed to give the plot for the port development, while the remaining process will be finalized in the coming few months.
“I will write a letter for our embassy in Sudan to finalize the process in the near future and I hope the case will be done soon and the embassy will receive the plot,” he added.
He added that ESLSE will be the mandated body to develop the port facility in Sudan.
Roba Megersa, CEO of ESLSE, told Capital that the plot securing process will be developed in the current year but the development might not start soon.
“Developing the area might commence in the coming year,” he added.
Some sort of consignment is coming via Sudan Port currently and Ethiopia also export limited amount of oilseed products through Port Sudan.
Ethiopia’s major port outlet is Djibouti, which enabled to develop the facility significantly compared with others in the regions. Ethiopia has also interest to get stake in Djibouti and the two countries agreed to swap shares on mega facilities in their countries.
Ethiopia also took a 19 percent share on the new development of Berbera Port but it was reported this week that the project is fully suspended.
Ethiopia has also interest to work with Kenya and Eritrea in developing port facilities.
Banks using LC requests to mobilize deposit
Private sector actors claimed that they are expected to show up to 500 percent deposit on banks for their letter of credit (LC) request.
The private sector actors told Capital that in the past few months, their effort to get hard currency for their business they are requested by banks to deposit three to five fold of the equivalent of the hard currency they requested at the bank in birr.
“If we do not have the stated percentage of birr deposited the bank will not approve the hard currency request,” one business man who is frustrated with the situation told Capital.
He said that accessing the hard currency by itself is very strange and the new scheme at banks put the business in another challenge.
“Currently the cash shortage is affecting the private sector, even accessing our own money that is deposited at banks is becoming very hard,” another businessman who demanded anonymity, claimed.
The sector actors argued that the current precondition mainly affects industrialists that do not have cash at hand.
“Most of the industries have capital to cover running costs,” one of the sector experts explained, “but the current precondition from banks that are expected to see up to 5 fold cash deposit on their facility from LC demand has become strange for the factories to run their business since they are unable to deposit the expected amount.”
The new precondition on looking the saving amount to give foreign currency initially commenced at the state owned, Commercial Bank of Ethiopia (CBE), which is the main source of hard currency for the private sector since the central government is releasing most of its hard currency via CBE.
The financial sector experts said that the private financial institutions follow the scheme of the financial giant. “Now private banks are also insisting their customers to show significant amount of money deposits on every hard currency requests,” he said.
Experts speculated that looking the saving rate to allow the LC is the result of the cash crunch at banks seen in the past couple of months.
Recently one business man claimed that he could not access about 3,000,000 birr from his account meanwhile he has over 75 million birr in his saving at the same bank.
He said that the cash shortage affects all banks including the financial giant that is why CBE insisted foreign currency buyers to save up to 500 percent of equivalent of their hard currency demand in birr.
“This is the mechanism to increase the deposit mobilization of the bank, while it affects the industries that do not have much cash except covering their operation cost and import of raw material for their production,” he added.
One of the industrialists told Capital that due to the precondition of banks most industry operators that could not fulfill the demand are forced to look to another option to get hard currency to import raw material, spare part and other products.
“We are getting hard currency in indirect and expensive way that would escalate the price of finished products,” the industrialists said.
They claimed that they are forced to buy the hard currency of exporters which highly contributes to exacerbating the already rampant inflation.
According to senior bank expert, CBE’s despot mobilization shrunk significantly recently forcing the bank to assess the way to improve the rate. “The current scheme is one of the ways to boost its deposit mobilization,” he said.
CBE’s deposit mobilization for the first six months of 2019/20 finance year stood at 24.6 billion birr which is 71 percent of its target. The performance in the first half of the past financial year, 2018/19, was 29.8 billion birr, which is 5.2 billion birr higher than this year first half.
In related development mid this week Bacha Gini former President of CBE is replaced by a previous president, Abie Sano, who led the bank from January 2006 to November 2008. Abie was replaced by Bekalu Zeleke now president of Bank of Abyssinia.
Abie is mentioned as a visionary leader and laying the stone for significant growth CBE saw in the last decade.
In the past decade the bank enabled to expand its branches aggressively that allowed CBE to boost its deposit mobilization dramatically.
Abie is also founding president of Oromia International Bank (OIB), which is one of the late coming banks, and served as president until he returned back to CBE. Despite OIB is younger the bank’s actual performance has become almost similar with the oldest private banks.
In its recent Article IV Consultation the International Monetary Fund (IMF) recommended that immediate asset quality review is required for CBE.
It stated that the state-owned CBE has experienced tighter liquidity conditions.
“The CBE’s liquidity ratio dropped in 2018/19 due to a persistent asset-liability mismatch: the CBE has been prioritizing the financing of long-term projects undertaken by state owned enterprises (SOEs) by investing in SOE bonds and extending loans, drawing on its deposit base,” it mentioned on the consultation report.
“Credit to the SOEs has expanded in line with significant growth in SOE investment in recent years, which tightened liquidity conditions of the CBE and exacerbated the maturity mismatch. The CBE’s credit exposure to the SOEs is also highly concentrated in the energy sector, accounting for about 40 percent of its total asset portfolio,” it added.
The IMF consultation indicated that commercial banks reported a risk-weighted capital ratio (RWCR) of 19.2 percent in June 2019, well above the statutory minimum of 8 percent, while the Commercial Bank of Ethiopia in particular, had an RWCR of 34.7 percent, and private banks reported capital levels well in excess of the regulatory minimum.
IMF has been also stated that the CBE also has large exposure to foreign exchange risks as the bank plays central role in foreign exchange transactions.
