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.
Banks using LC requests to mobilize deposit
SIGNS OF DECAY
It has been a while since the prevailing world system fully adopted formal cheating as one of its premiere operating principles. Unfortunately, this vice, like many other vices, has managed to deeply penetrate the citizenry’s psyche, particularly in the powerful states of the system. Systemic cheating, camouflaged by bureaucratic processes/procedures/manipulation, etc., is one of the most coveted assets of the system’s cronies. Don’t forget; late modernity is fully anchored by crony capitalism. As is well known, in any given human society it is (by and large) the established economic order that dictates values, norms, mores, etc. As a result, cheating is now condoned or even celebrated by the ruling psychopaths of the world system! See the article next column and others on page 36, 37 & 38.
It seems the current nation states of the world have to rely on systemic cheating to prevail, both internally and externally. To institutionalize cheating, it has become imperative to lie, systemically! To this end, a hidden power behind the formal power is established in the powerful countries. It is labeled the ‘deep state’. Recall that our definition of the ‘deep state’ also includes the media. Deep State = the military-intelligence-industrial-banking-media complex. In this entity, the significance of the media cannot be overemphasized, as it is the preeminent institution of systemic cheating/lies. Lies are effectively employed by the status quo to zombify the global sheeple (human mass)! Just like the ‘banking’ component of the deep state includes all that is financialized, the media component also incorporates the so-called entertainment media (movies, etc.) To be sure, this kind of systemic lying is not in the category of ‘white lies’! Politicos cheat/lie on a daily basis and sadly the sheeple has resigned to this pathetic reality of the oppressive order. Electoral democracy is utilized as one of the most convenient venues to instill systemic cheating/lies across the globe. Since electoral democracy has delivered untold benefits to the cronies of the system, the global status quo enshrines it as the ultimate manifestation of democracy itself!
The world economic system is based on massive fraud. The built-in cheating of the global economic system includes Fractional Reserve Banking (FRB). This fraudulent system of banking is one of the pillars of the globally structured cheating regime. See Zeus’ articles on page 36. It is generally assumed that banks loan money from a pool of deposits. This is a lie! The so-called deposits are mere decoys! This lie is used to hide the criminal principle that underlies FRB. FRB is when banks lend money that is created out of thin air into the economy. These loans accrue financial rents or interests. In other words, it is this ‘fake money’, which is not earned a priori by anyone in the economy that continues to create the massive inflation afflicting the world’s sheeple. For the most part, it is this fake money that is minting fake millionaires and billionaires on a daily basis, including the fledging oligarchs of poorer countries like ours! See Bonner’s article next column. To cover up this massive criminal operation from the global human mass, protracted/systemic lying had to be instituted. The various institutions of indoctrinations (schools, universities, etc.) are leveraged to give credence to the blatant lies/cheating that propels the prevailing polarizing globalization!
Geopolitics is another of the arena where lies are employed to cover up the underlying perennial criminality. It is now acknowledged that the Main Stream Media (MSM) is only a mouthpiece of the establishment, and brings hardly any genuine information of value to the table, so to speak! For example, when countries are systemically destabilized, the MSM is there giving a helping hand by pontificating narratives that are intended to sound rationale, but are in actual fact distortions of massive proportions. Examples abound; Libya was destroyed so that democracy can flourish there, so we were told! Iraq had to be destroyed because it was harboring weapons of mass destruction, so we were told! Syria, Ukraine, etc., etc. the list goes on! In all of these countries, lies had to be fabricated to justify the hidden criminality of the globally entrenched cheating system! See the article (Swiss Propaganda Research) on page 37.
“Next the statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutations of them; and thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception.” Mark Twain. Good Day!
Controversy arises after two title deeds appear for one plot
A couple of residents of Yeka Hill located around Megenagna claimed that a real estate developer is going to evict them from their plots while having a title deed.
The residents stated that they are threatened by the real estate developer who claimed she has received the land deed for 40,000 meter square at the hill which is well known by its luxury residential houses.
They argued that they have legal document for their plot and the rest of the empty plot is green area covered by trees.
According to the residents Birhan Goh Real Estate owner Tsehay Bogale, verbally told land owners that 17 plots are included under her development title deed, even though they have title deed and construction permit to develop the area.
Samuel Ahmed, one of the 17 land owners told Capital that about four months ago he secured construction permit from Yeka Sub City and commence construction immediately to erect three floor residential houses but on the footing stage he is ordered to suspend to construction.
“Getting construction permit has several preconditions including soil test and selection process after this long process we have secured the permit and commence construction but within one month that is about three months ago the sub city wrote a letter to halt the construction,” he said.
The letter issued in October 2019 by Yeka Sub City Land Banking and Transferring Office and Capital obtained indicated that the construction on the plot should be suspended as per the order from the Land Development Management Bureau.
“Initially the letter stated that the decision is given to the sub city from the bureau,” Samuel explained his claim.
He stated that he has been trying to get detailed explanation about the decision from the sub city which insisted him to claim the case for the city administration, “meanwhile I went and ask for details at the city administration the Land Development and Management Bureau head did not give me any information about the decision,” he expressed his frustration.
A week ago during the meeting of Yeka Hill Residents Association the case was one of the top discussed issues and most of the participants claimed that the case should be filed for Takele Uma, Mayor of Addis Ababa, since their effort to solve the challenge with relevant offices could not brew fruit.
Some of the participants stated that as far as their knowledge the plot that is covered by trees is protected as a green area.
However sources told Capital that the company got a green light from Environmental Protection Authority to clear the trees and also paid compensation for clearing the trees.
Sources told Capital that some of the land owners have been talking with Asfaw Legesse, head of Yeka Sub City, on Friday March 6 at his office. “Meanwhile he accepted the case is unfair he told us that the decision was coming from the city administration that the sub city should implement,” they said.
According to sources the real estate developer claimed that the plot was given for her over a decade ago.
Tsehay Bogale owner and manager of Birhan Goh Real Estate declined to give comments.
Ethiopia’s internet penetration less than half the African average
The Internet Society together with its partners conducted the first Ethiopia Internet Development conference that took place from 3-5 March 2020. The multi-stakeholder event aims to prepare the country for the new era of liberalized telecom sector and start developing the Internet ecosystem for the benefit of citizens and businesses alike.
Internet penetration in Ethiopia is currently 18.6 percent which is less than half the African average. Considering the country is one of the fastest growing economies in the region, holding a strategic geographic location and having a young population of over 105 million – more than 60% of whom are under the age of 30– connecting and expanding Internet access is a key part of Ethiopia’s Government Strategy to tackle a number of its acute problems such as youth unemployment.
While Internet penetration increasing about 45 percent annually, it has yet to catch up with its peer nations in Africa. The gaps in Ethiopia exist in large pockets of no network zones in rural areas and 4G is only available in the capital. Moreover, Ethiopians are not yet benefiting from the many Internet-related services that other countries have to develop their economies as well as to improve the lives their people.
The conference aims to create awareness amongst policy makers, regulators, businesses, technologists and potential entrepreneurs about the Internet model and technology and create the foundation for a robust Internet ecosystem in Ethiopia in this new post-monopoly era.
“With less than 20% of the population connected, Ethiopia has a tremendous opportunity to expand Internet access and to use it to improve the lives of its people. As one of the oldest nonprofit organizations dedicated to the Internet, we have a long history of working with governments and other partners to help bring connectivity and its benefits to countries around the world. We appreciate the support of the Ministry of Innovation and Technology in this event and look forward to working with them to help expand Internet access in Ethiopia for the benefit of its population, whether they are in big cities or in remote areas” said Dawit Bekele, Regional Vice President for Africa, Internet Society.
