The private sector is raising concerns that just rescheduling loan settlement will not have a positive effect for the endangered economic condition because of COVID 19.
Some of the business people Capital spoke stated that financial institutions should consider the cut up to half of the loan interest rate at least for three months to keep the health of the private sector.
They said that it is common that banks rescheduled loan settlement framework for their clients, not only on this bad time.
“It is one good decision that some of the banks rescheduling the loan settlement period,” they said.
But they added, “we are highly suffering on the situation that the country faces that we are also looking for loan interest minimization to pass this situation.”
They claimed that big businesses are already approaching for a huge crisis because their business is highly affected.
“We are expecting from banks to cut the loan interest by half for this coming three months,” one of the business elites, who runs several big investment and businesses, told Capital.
He said that it would be difficult for banks to cut all interests since they have also huge costs, but they have to consider easing the rate that they are now calculating on the loan.
Business elites recommended that now is the time to help each other and save the country. “We are paying wages without active business environment and provide support for those in need that might be directly related with the effect of the COVID 19. At the same time banks should play their role to contribute to calm the situation and support the post coronavirus economic shock,” they said.
Two weeks ago during their virtual meeting bankers request the National Bank of Ethiopia (NBE), to relax the loan rules to mitigate the economic effect that they face in relation with the outbreak of COVID-19.
Yinager Desie, Governor of NBE, told bankers that they have to consider slashing their interest rate.
“Banks should look their interest rate for loans that have its own role for aggravating the inflation in the market,” he said but it was not clear that his address is directly related with the current case or general recommendation.
Since the government decided to lift the 27 percent NBE bill that banks were expected to buy from their every fresh loan approval, banks minimized their interest rates on some credit facilities, however, the country’s loan interest rate is one of the highest.
Currently banks are providing several schemes to play their part to mitigate the adverse effect of COVID 19 besides direct donation for the fund mobilization committee of the government.
Economic experts supported the idea of the reduction of interest rate besides rescheduling the loan settlement. “Companies fixed cost is not reduced, while their usual operation has dropped. Due to that financial institutions should halt some of the interest rates for their customers,” they said.
Coronavirus has significantly affects the economic condition of the country like any other country who reported the global pandemic in their home country. The situation does not only affect the home country trade but the international business like export.
According to the recent policy working paper of the Ethiopian Economics Association the service and manufacturing sector would be highly affected by the outbreak of the virus than the agriculture, which is mainly carried out on household small scale level.
Banks asked to cut loan interest rate by half
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 new 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. ‘By a continuing process of inflation, the governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.’ John Maynard Keynes. Good Day!
Ministry of Education set temporary timetable for classes, exam
The Ministry of Education set a temporary schedule for National University Entrance Exam of grade 12 to July 14-17. According to a notice posted on all sub cities of the City Administration, the ministry has programmed the schedule hoping that normal classes would resume by June 7, 2020.
On March 16, 2020 Prime Minister Abiy Ahmed ordered to close all schools across the country and for university students to remain where they are deterring mobility for two weeks for fear that the virus will spread.
And on March 27, 2020 the government decides to extend the closure for two more weeks and students from higher education to go back to their home, while the duration of school closures remains uncertain.
Although, the ministry has set the schedule hoping that the government could contain the spread of the virus as soon as possible. For grade 1- 11, the ministry has scheduled to start school before May 17 and to continue up to the end of June. The ministry has differentiated different subjects which should be focused to all grade starting from grade one up to grade 12 to finish the academic year as soon as possible.
At the beginning of current academic year the ministry was planning to conduct the national entrance exam from June 1 up to June 3. Moreover the printing of exam materials, which is done at Berhanena Selam Printing Enterprise, is still put on hold.
According to Zelalem Mulatu, Addis Ababa Education Bureau Head, the plan may not be feasible unless the government removed the state of emergency and control the spread of the virus.
Ethiopia has around 20 million pupils in Ethiopian schools and nearly a million in the 50 public universities and more than 250 private academic institutions, all of which represent high potential transmission sites.
The Ministry also announced that private schools should keep paying their employees and also negotiate with parents of students on reduced tuition fees.
As the ministry suggested private schools should cooperate with parents in different options including giving time to parents who can’t afford to pay the monthly payment on time because of Covid 19 and to cancel for those who can’t afford at all; however schools should not stop paying monthly fee to their employees.
Ministry of Education has announced that parents of private school students should only pay 75 to 50 percent of their monthly payment.
The Ministry of Science and Higher Education that is responsible for Universities across the country announced that it is considering making instructional materials available online for students.
Dechasa Gurme, Communication director of the Ministry of Science and Higher Education said “if things get back to normal and if the government announces that students can go back to their schools in the coming one month, students may go to their particular university but if this cannot happen, students may be obliged to start their education in the coming year.”
Ministry of Science and Higher Education and ethio telecom are working to start giving online educational courses to postgraduate students without internet charge.
Ethiopian Embassy in Djibouti helping Ethiopians in need
Ethiopian Embassy in Djibouti announced that it is providing direct support for needy Ethiopian community to alleviate the challenges they face due to COVID 19.
The Embassy told Capital that it has mobilized finance from staffs at the mission and other sources to provide support for those in need.
Abdulaziz Mohammed, Ethiopia’s Ambassador to Djibouti, said since the outbreak was announced in Djibouti the embassy was engaged on awareness creation in different platform for the Ethiopian community based in the country.
“Besides that we have been working with different organization here (in Djibouti) to keep the safety of Ethiopian drivers who transport cargo from and to Djibouti, which is the main sea outlet for Ethiopia,” Abdulaziz told Capital.
To control the outbreak the government of Djibouti has lockdown the country that made Ethiopians; most of them are living in very poor condition, vulnerable. “To tackle the challenges on Ethiopian community we have been engaged on mobilizing finance from Ethiopians based in Djibouti and organizations to provide support,” the Ambassador says, adding “the mobilization also targeted the call from Ethiopian government to participate the Ethiopian community in the world to support the country to solve the same problem in Ethiopia.”
So far 4,000 Ethiopian community members are getting support via the embassy in two ways; direct cooked meal for those who are living at the street and monthly food rations for those that resides in shelters.
“We are working tirelessly to address those who need support,” Abdulaziz said. The support is delivered in seven sub cities, and different areas in Djibouti city like Balbala, Arhiba and PK 12.
Ambassador Abdulaziz appreciated the effort of the Ethiopian community that are giving priority for the situation than their works and engaged on the activity to support those who need support.
Djibouti is a corridor for illegal Ethiopian migrants that transfer to the Gulf nations.
The embassy in Djibouti said that that it is working with IOM to return migrants based on their willingness.
Abdulaziz said that there is no forced measure by the government of Djibouti to return Ethiopian migrants and refugees particularly in relation with coronavirus.
“Regarding the port service everything is going smoothly as the past,” he concluded.
