Lighting Africa is closing out its lighting Ethiopia program. The overall goal of the project was to work with clients/companies working in the off-grid lighting sector to develop a commercial market for high quality solar lanterns and kits that enable access to cleaner and safer off-grid lighting for 11.8 million people by December 2019. Lighting Africa/Ethiopia piloted a new market development approach that sought to address the entry barriers and other challenges impeding the growth of the sector.
Thus far, the program has successfully electrified about 12 million people with quality verified solar technologies, trained over 300 solar technicians, Solar distributors, retailers and 14 MFIs. In addition, the program reached over 20 million people with Consumer education campaigns.
Lighting Africa, a joint IFC-World Bank Program, aims to enable access to off-gird lighting and energy services for those not connected to the grid, by mobilizing the private sector to build sustainable markets for affordable, high quality, modern off-grid solar products. Lighting Africa Project in Ethiopia activities kicked off in October 2015. The program works with solar product manufacturers, distributors and retailers, government agencies, finance institutions and other stakeholders to improve market systems and address a range of market barriers that include regulatory constraints, market spoilage from poor-quality products, low consumer awareness levels, and financial bottlenecks.
According to the world bank, the electrification program in Ethiopia will require an estimated USD 1.5 billion over its first five years. The government has hopes to provide electricity to all Ethiopians by 2025. Currently, only 44 percent of the country is electrified, around 60 million in Ethiopia alone lack access to electricity. Since an overwhelming part of the country’s power is generated through hydropower plants, the solar energy sector in Ethiopia is still in its earliest stages of development
With energy demand expected to grow by around 10% annually and an estimated population of around 110 million, Ethiopia has power generation capacity of around 4.5 GW at present, most of it hydropower. The government intends to install more large hydro as well as renewable as it chases the unlikely target of hitting 17.3 GW of capacity by next year. Ethiopia’s state-owned utility the Ethiopian Electric Utility (EEU) has issued an in a process of bid to seek developers to deploy solar mini-grids in 25 villages, with the projects financed by the African Development Bank and has 12 ongoing mini grid solar projects. 80% of rural households rely on fuel-based light sources, predominantly kerosene, The three main energy carriers in Ethiopia are oil products, electricity (from solar radiation, water, wind, heat) and bioethanol (from sugarcane).
Program to help electrify off-grid places
Nyala Insurance registers the highest gross profits
Boosts paid-up capital to 530 million birr
Nyala Insurance S.C (NISCO) announced that it amassed a gross profit of 184.3 million birr, an amount said to be the highest from the Ethiopian private insurers, in the 2018/19 fiscal year.
Kemal Mohammed, Chairman of the Board of Directors, presenting the company’s annual performance report to the shareholders who attended the 25th Shareholders’ General and the 18th Extra Ordinary General Meeting held at Sheraton Addis on 21st December 2019, declared that NISCO has advanced its profit margin by 15 percent compared with the preceding fiscal year.
The chairman in his report outlined that the company’s total income has also increased from Birr 498.1 million to Birr 547 million, a 10 per cent jump as compared to the previous fiscal year.
Despite loads of economic and political challenges happened to the nation during the captioned fiscal year, Nyala Insurance has recorded the top profit margin from the private insurers for a third time in its history.
The board chairman also revealed that the total asset of the company reached Birr 2.1 billion, depicting an increase by 7.5% over similar period last year.
Yared Mola, Chief Executive Officer of Nyla Insurance S.C., on his part said that the significant achievements realized for a couple of years are the results of thoughtfully designed business development strategies and risk management techniques that NISCO has already put into action.
Despite year- to- year insurance claim rise in the Ethiopian insurance industry, NISCO was overwhelmingly able to maintain its total claim expenses just by deploying a variety of operational techniques, providing basic safety-related trainings to its customers and applying other business strategies.
To that end, Yared added, the total claim of the company was maintained at Birr 162 million in the 2018/19 fiscal year, which is a lesser amount as compared with the preceding year.
On the other hand, the shareholders unanimously agreed on their 18th Extraordinary Meeting to boost the company’s paid- up capital from Birr 416 million to Birr 530.4 so as to firm up the company’s level of competiveness and role in the nation’s insurance market.
As far as the human capital is concerned, Yared said NISCO has devised a Graduate Training Program (GTP) by screening and training fresh graduates from multi-disciplinary fields to solve scarcity of skilled human power in the insurance profession, and he added, so far more than 80 young people have joined the company in three rounds. He also mentioned the fourth round of GTP (GTP-IV) has already been launched.
Yared went on to say that Nyala Insurance is exerting utmost efforts to enhance its level of competitiveness by introducing new insurance products, revamping its business process and customer service delivery levels with innovative ideas and technology-based service provisions.
In conclusion, the board chairman acknowledged the shareholders, management, staff, business partners, regulatory bodies for their unconditional contribution for the positive achievements Nyala Insurance S.C realized.
ECX starts warehouse receipt finance
Ethiopian Commodity Exchange (ECX) introduces warehouse receipt financing (WRF) in collaboration with the Commercial Bank of Ethiopia (CBE).
The collateralized commodity finance project that initially was introduced by maize at the center at Nekempt and Bure warehouses supported by International Finance Corporation, a private sector wing of the World Bank.
Wondimagegnehu Negera, CEO of ECX, will help maize farmers, cooperatives, traders and processors to store the grain at the electronic trading platform warehouse as collateral to access credit.
The scheme would be managed by CBE, the state owned financial giant that it’s the first financial partner when ECX commence operation 11 years ago, who will provide the finance without any additional collateral when clients handover the good receiving not (GRN) that issued by the branch warehouses at the current stage at Nekempt and Bure.
Yinager Dessie, Governor of National Bank of Ethiopia and Board Chair of ECX said that expanding access to finance is one of the major strategies of the government and the current initiative is part of that.
He reminded that the government decision to provide finance on movable assets as a collateral, a proclamation that ratified by the parliament recently, and the current new initiative of ECX is additional opportunity for access to finance than the traditional unmovable asset based collateral.
“It will support the country agriculture sector and farmers,” he added.
The WRF is expected to solve the working capital shortage that currently actors face.
This is particularly important for farmers who often lack bankable collateral and are therefore forced to sell their crops immediately after harvest when prices tend to be at their lowest, according to the statement of ECX. The loan would be give on three and two months refund period for suppliers and buyers respectively.
According to the statement cooperatives are also expected to be a major beneficiary as they can utilize the warehouse infrastructure to offer improved finance and marketing solutions to their member farmers.
It added that large scale agribusinesses will benefit as well because they can use their inventories to unlock the additional liquidity that can help increase output, product quality and competitiveness.
International Laws
Ethiopia began economic reform and liberalizing the economy to attract huge investment. Following this, the country is working on revising various laws including investment and commercial law. Emmanuel Gaillard, prominent practicing attorney, in a leading authority on international commercial arbitration and a law professor was here in Addis to advise the Ethiopian government.
Gaillard is Partner in Shearman & Sterling LLP, Head of the International Arbitration Group where he has represented major corporations, States and State-owned entities in over 250 international arbitration cases. He has acted as sole arbitrator, party appointed arbitrator or Chairman in more than 50 international arbitrations.
Prof. Gillard advised Ethiopia to sign the the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, as it gives investors’ confidence to come and invest in Ethiopia as such conventions is taking as a symbols of commitment. Capital met with Prof. Gillard to share his view.
Capital: What is the purpose of your visit?
Emmanuel Gaillard: The purpose of my visit is to see how the government and state owned entity are doing and help them to develop and to give them advise about dealing with foreign entities and governments.
Capital: Did you meet government officials? And what was your theme of your discussion?
Emmanuel Gaillard: I met a few officials from the Ministry of Finance and Investment Commission. Ethiopia wants to make it easier for foreigners to invest so we are trying to come up with better laws to encourage this. Sherman and Sterling represents financing, development, contracts, acquisitions, investment. I work on resolving conflict and disputes. I want to show people it’s better to be careful and handle conflict in the early stages rather than waiting until arbitration.
Capital: What needs to be improved with regard to commercial law?
Emmanuel Gaillard: I think, the main steps in commercial treaties are the ratification of New York Convention. This was signed in 1958 and made standards for enforcement of arbitrary laws and, by ratifying this convention, Ethiopia would show that it is following the general rule of law. The convention is binding in 161 countries in the world and Ethiopia is one of the few countries with big economies which has not signed the convention. This would be great PR for the country.
Capital: So, you mean that it doesn’t affect Ethiopia’s attracting foreign investment? What does it mean to investors?
Emmanuel Gaillard: I mean, you are doing that in 1965 civil code in the procedure that is already said in The New York convention. So you don’t ratify the New York convention if you have the same rules in the 1965 code of civil procedure. However, ratifying the convention will be the signal to show the rest of the world that we are open for doing international commerce. Symbols are important. I know that you are on an economic reform that is the major trend in the country, and should go together with the rule of law. Signing international investment treaties shows the bigger commitment for investment as it means I will protect your investor and you protect my investor in bi-lateral or multi-lateral investment treaties.
I think it is too bad not to do it, because it just a simple thing and helps in creating a climate of confidence with investors. If you create confidence in the country, it will bring more foreign partners and investors.
Capital; Ethiopia is on the way to join the World Trade organization (WTO), what should we do in advance with regards to various laws?
Emmanuel Gaillard: Training and awareness. Such as doing the investment arbitration, commercial laws/ arbitration, anti- corruption rules all that are needed to create an environment which is favorable to trade, and do investment in the country. The notion that the country has in to play a bigger role in increasing trade and investment. In addition to symbols which is vital for investors. The symbols are like, Ethiopia is Member of WTO, and Ethiopia is signatory of New York convention etc shows that the country cares for the investors.
Capital: What do you think of the country’s civil code?
Emmanuel Gaillard: I am confident in Ethiopian laws, they are good even though they were made in the 1960’s, you have excellent rules, and there is no need to change substantively publicizing it is the areas where you should do more. You have a lot of assets, economic, cultural and historical but more needs to be done to attract investors.
Capital: You said arbitration is a key to development, how do you correlate this?
Emmanuel Gaillard: A contract is worth nothing if you don’t have judges, who implement it correctly, If you are an investor and a good contract it means nothing without having good judges whom both parties trust to be neutral.
