The National Bank of Ethiopia (NBE), the financial sector regulator, imposes restriction on money transfer from account to account to only five individuals or entities in a week than the past open experience.
Since the beginning of demonetization, mid-September 2020, the central bank has imposed a total restriction on depositing money on behalf of another account.
However, transferring from account to account that can be undertaken directly by visiting bank branches or technology based was not restricted until this Friday.
On Friday December 8, NBE has issued a circular to all banks under the subject ‘limits on one to multiple accounts transfer.’
The circular that was signed by Solomon Desta, Vice Governor of Financial Institutions Supervision, stated that with the exception of account transfers made for the purpose of effecting utility payments including mobile top ups, salary payments by employer organization and transactions effected by financial institutions (including financial cooperatives) from their accounts, it is prohibited effective from January 8, 2021 to undertake one to multiple accounts transfer from a single account exceeding five transactions per week by any deposit account holder in a bank.
“Meanwhile, in a bid to sufficiently ascertain the purpose of such account transfers, CEOs of banks or their formal delegates shall exceptionally approve one to multiple accounts transfer above the aforementioned weekly limit on a case by case basis,” it said.
Experts in the financial sector speculated that the latest decision of the central bank is targeting to curb money laundry and terrorism financing. “It will play its own role to halt some illegal acts and instabilities in different pockets of the country,” they told Capital.
NBE imposes more money transfer restrictions
UNIC pays huge claim to Ethiopian Roads Authority
United Insurance Company /UNIC/, one of Ethiopia’s oldest and largest private insurance firms paid out the highest claim to Ethiopian Roads Authority.
According to the statement UNIC sent to capital newspaper, United Insurance has paid 54.6 million birr to Ethiopian Roads Authority based on its agreement performance guarantee for Tibeb construction PLC.
As the contractor, Tibeb construction failed to fulfill its contractual obligations on the project of ‘Sanja-Kirakr’ road construction and on its agreement Ethiopian Roads Authority has taken the situation to arbitration. As sources from Ethiopian Roads Authority explained, the situation has been solved by negotiation between the two parties. The sources highlighted that the project was awarded to Tibeb seven years ago.
Meseret Bezabeh, CEO of United Insurance, informed Capital that United has paid all of the 54.6 million birr within one week after the authority submitted the legal evidence of the failed project. “Paying our agreement with in one day shows the strength and capacity,” the CEO explained.
In 2013 the company has also settled a 52 million birr claim for the Ethiopian Roads Authority. Last year United has also paid out 24.12 million birr in compensation, a loss suffered by East African Tiger Brands Industries PLC soap factory located around Bishoftu.
In the 2019/20 financial year, the insurer registered gross earned premiums of 597.4million, which is an increase of 12percent compared with the preceding year’s performance. The firms’ net claims also increased by six percent to 240.6 million birr whilst the total assets of United increased by a modest rate of seven percent to 1.6 billion Br
United Insurance, which celebrated its 25 years in business, amassed 124.3 million birr in net profit last year, a 17 percent rise from the previous year.
United did well in both the insurance business and investment activities. Interest on savings increased by 19 percent to 54.9 million birr, dividend income went up by 14percent to 22.7 million birr, and rental income rose by 99 percent to 34.3 million birr. Commissions earned from reinsurers also jumped by 42percent to 46.7 million birr.
The intricacy of Ethiopia’s debt management
In the first quarter of the budget year Ethiopia did not service USD 72.65 million under Debt Service Suspension Initiative (DSSI), while from July 1 to September 30, 2020 the country serviced USD 483 million for external loan that it received previously.
The country’s total outstanding debt took more than half of the country gross domestic product (GDP).
The quarterly public sector debt statistical bulletin published by Debt Management Directorate of Ministry of Finance (MoF) indicated that in the first quarter of the 2020/21 budget year the country had serviced USD 483.26 for external loan.
However, due to the COVID 19 pandemic that imposed massive social and economic challenges globally, the country has benefited to extend the service of USD 72.56 million under DSSI agreement that the G20 countries agreed to support eligible countries.
Due to the pandemic effect on poorer countries it was recalled that the World Bank and the International Monetary Fund urged G20 countries to establish the DSSI that is helping countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of the most vulnerable people.
Since it took effect on May 1, 2020, the initiative has delivered about USD 5 billion in relief to more than 40 eligible countries. The suspension period, originally set to end on December 31, 2020, has been extended through June 2021.
MoF quarterly report stated that during the quarter as an eligible country of DSSI initiative, has suspended the external debt service payment of central government to its bilateral creditors amounted to USD 72.65 million, out of which USD 47.78 million was principal payment and the remaining USD 24.87 million was interest payment.
“The country is one of the eligible countries for the G20 DSSI, and has signed MOU with Paris Club countries on the DSSI related to the Paris Club countries; currently we are not making any external debt service payment for our bilateral creditors of central governments as per the G20 DSSI. DSSI agreement had been signed with the government of France on debt service suspension amounting to EUR 3.7 million (Debt Service payment suspension for the period May 1, 2020 – December 31, 2020),” it said.
Under DSSI Ethiopia, which described by the World Bank as high risk external debt distress country, has benefited service extension for a total of USD 472.9 million or 0.5 percent of the GDP that it borrowed from central governments.
According to the quarterly bulletin, the country debt from bilateral creditors as of September 30, 2020 has stood at USD 8.44 billion, which is 29.1 percent of the total external debt. From the stated amount the Paris Club countries share is USD 838 million and the balance USD 7.6 billion is from non-Paris Club sources.
On the other hand during the stated period that the total external public sector debt USD 483.26 million the country settled the USD 41.05 million is made by central government while the remaining USD 442.21 Million was made by state owned enterprises (SOE’s).
From the service made by SOE’s USD 274.67 million was settled by owed on government guarantee and the balance USD 167.53 million repaid by borrowers that do not have government guarantee.
The SOEs that do not have government guarantee are mainly Ethiopian Airlines and Ethio Telecom.
Government guaranteed outstanding external debt as of September 30 stood at USD 7.06 billion, while non-government guaranteed debt is USD 3.48 billion.
Both government guaranteed and non-government guaranteed outstanding external debt have dropped by USD 183.4 million and USD 129 million respectively compared with the figure as of June 30, 2020.
Meanwhile there was no new external loan agreement signed during the quarter, a total of external public debt disbursement during the first three months of 2020/21 budget year was USD 215.62 million.
According to the MoF quarter bulletin, the total public sector debt stock as at September 30, 2020 stood at USD 54.71 billion.
Compared to the last year the same period, revised June 30, 2020, debt stock which was USD 55.06 billion it has shrunken in terms of USD.
“Domestic debt in terms of USD declined as a result of a relatively higher rate of depreciation of birr against USD, while in terms of birr the total domestic debt increases compared to June 30, 2020,” the bulletin explained.
Out of which total public external debt is USD 28.99 billion and total public domestic debt amounted to USD 25.71 billion.
From the total Public sector debt outstanding that included external and domestic USD 30.6 billion, which is about 56 percent is owned by central government and the balance USD 24.1 billion (44 percent) is owed by SOE’s.
From the external debt 64 percent is owned by central government while the remaining 36 percent is by SOE’s. Out the total public domestic debt the share of central government is about 47 percent while the remaining 53 percent is that of SOE’s.
The total external outstanding debt that is USD 28.99 billion is 26.93 percent of the GDP, while the total public debt is 50.8 percent of the GDP.
DMP sets special livestock terminal to ease export
Doraleh Multipurpose Port (DMP) is facilitating to make ready the USD 400 thousand worth exclusive livestock terminal for Ethiopian animal exports.
For questions that Capital inquired through email to the maritime giant in the region, the giant in response explained that the livestock terminal work had been carried out by the port’s staff on an in house project.
The information gathered from DMP indicated that the project was commenced in April 2020 and it had consumed USD 400,000.
The exclusive facility has a capacity to handle 2.5 million heads of animal per annum.
“Regarding site capacity per day it shall manage 1,000 heads of camel, 500 heads of cattle 4,270 heads of goat or sheep,” the response of the port explained.
It added that the operation is now open for potential export of livestock cargos.
“DMP terminal is ready to start operations as soon as the livestock arrives,” it says, “Doraleh will receive all transit livestock into its dedicated terminal while services like quarantine, water and resting area until loading into ships will be provided.”
It said that the new facility is viable with the railway system of Ethio Djibouti Railway, “Of course, EDR is making all endeavors to transport livestock by train.”
DPM informed Capital that Port of Djibouti SA/DMP CEO had worked in close collaboration with the Ethiopian Embassy of Djibouti, the Ethiopia Ministry of Agriculture, Djiboutian Ministry of Agriculture and the leadership of Ethiopian Shipping and Logistics Services Enterprise as partners to embark operation.
Inaugurated in May 2017, the Doraleh Multipurpose Port was designed to relieve congestion at the former port of Doraleh: in under a year, waiting time to discharge goods was reduced from weeks to days.
The DMP accommodates vessels with up to 100,000 DWT and boasts some of the most modern facilities in Africa.
The facility that consume USD 590 million in investment cost has a range of terminals that including bulk, break, container and RoRo, and it has 1,200 meters of quay line, accommodating 6 berths with a depth of 15.3 meter.
Djibouti is undertaking massive port and related logistic investments in different corners of the country on the vision of being one of the leading actors in the continent.
