Development Bank of Ethiopia has floated the first auction to sell the giant Ayka Addis textile after it was decided to be managed by the development bank. The banking system has also stated that the once giant company will come back to operation in short period of time.
In total the Turkish company which was floated on auction for the sixth time, had failed to repay its loan from the bank and as a result it has also failed to attract bidders. An Integrated Textile Factory building, machineries, Equipment & furniture, vehicles, Auxiliary tools, various spare parts, Raw Materials/ inputs, Work-in progress, finished products /fabrics, and some other related items are set to be auctioned with close to 1.82 billion birr with negotiation.
As officials form development bank said, the bank took over the factory coercionary. However, the process of making the factory operational is finished and will be operational in short period of time. The officials explained that administering the factory to make it operational will help the factory to attract buyers. Therefore, the group A once projected thriving textile company that became bankrupt is set to make a comeback.
As from the last fiscal year, the state-owned bank had ratified the annual budget to manage some companies that failed to attract buyers, including Ayka Addis.
Apart from Ayka Addis, DBE also is in attempts to the auction four companies in total that failed to repay their loan from the bank. The four companies which significantly the state policy bank seeks billions of birr from are: Ayka Addis textile group, Omo valley corporation, Alsi Addis industrial group and Angeles cotton and textile production. The four companies were put up for sale by the DBE for failing to pay their debts.
The company, Ayka Addis Textile and Investment Group was established in May 2012 with a total capital of 1 billion and a paid up capital of 679 million birr by Turkish investment groups. The factory has been out of business for more than a year and has been paying its 4500 staff for free work due to lack of operation.
Due to the inability of the company to repay the 3.2 billion birr loan that was provided by the Development Bank of Ethiopia, the development bank had made attempts to auction it. The loan was provided at the onset of 2008 with the expected loan repayment time provided till 2013, which of course was unsuccessful.
Ayka Addis Textile & Investment Group is the first company to be auctioned, and it failed to attract bidders who can offer 1.8 billion birr. The company failed to attract bidders primarily because of the high price set by the development bank as well as its competitiveness with regards to its marketing.
Ayka Addis Textile Factory is located on a 20.1 hectares piece of land with 4,500 workers and it is said to have the capacity to employ more than 10,000 workers.
Ayka Addis was once considered to be an anchor investment that Ethiopia succeeded to attract. However, it did not take long for the company to face the dreadful realities of shortages in raw materials mostly cotton, lack of skilled labor and power outages. The political crisis also contributed to the malfunctioning of Ayka Addis. At first, Ayka Addis seemed to be doing well but failed to sustain the momentum and since 2014, it was operating on a loss until it declared bankruptcy in 2017. The company is believed to have created 7,000 jobs at the time.
A month ago, officials from the Ministry of Trade and Industry, officials from the Development Bank of Ethiopia and the Confederation of Trade Unions visited the factory to discuss issues that will enable it to start operations soon.
“In the future, short, medium and long term plans will be prepared and the workers will be able to return to work and the factory will be operational in a short period of time,” stated Melaku Alebel, Minister of Trade and Industry.
DBE floats Ayka Addis for auction, again
The return of exhibitions and bazaars
After a year of silence due to the Covid-19 global pandemic, exhibitions and bazaars have started to get under way.
Currently two large exhibitions have started in the capital; one at ‘Mechare Meda’ organized by Jorka events and at Gion hotel organized by Grove Garden.
Following the surge of the novel Corona Virus, many businesses were placed at risk in this industry. As a result, holiday season bazaars and exhibitions which were very vibrant and familiar were banned due to the public gathering restriction ever since the outbreak set foot in Ethiopia.
The exhibition that is now organized by Jorka events at Mechare Meda is set to start from December 27 staying up to Wednesday January 6, that is, until the eve of the Ethiopian Christmas.
Tadesse Tamrat, the marketing manager of Jorka, explained that the exhibition is expected to host more than 250 traders as participants and up to 3000 visitors are expected on a daily basis.
Tadesse explained that Jokra for the past month were in keen preparation for the exhibition in accordance with the current situation of the global pandemic and public health protocols.
He expressed that after accessing the situation, the city administration gave the go ahead to Jorka which has an experience of 6 exhibitions under its belt.
Last year’s Christmas exhibition and bazaars was the last gatherings before the pandemic outbreak in Ethiopia. As a result of the pandemic, Mawlid, Easter, Ethiopian New-Year exhibitions did not take place due to the restriction of public gatherings. Usually, on Christmas, Mawlid, Easter, New-year holiday sessions, exhibition and bazaars take palace in different parts of the city.
Around the world, many authorities have begun allowing exhibitions and business events to take place again, given certain preconditions and protective measures are put in place.
As part of the meetings industry, exhibitions are both very much affected by protective measures as they are a vital means to support industries in challenging times.
Similarly, on the exhibition that grove garden organized at Gion hotel, about 125 traders are expected to participate. As Melat, sales executive of Grove garden, said the exhibition will stay for 13 days starting from Friday December 25 of which 5000 visitors are expected to visit.
Both organizers have indicated that they have highly prepared to manage Covid 19 transmission during the exhibition. Tadesse from Jorka emphasized that they have deployed large amount of human resource to prevent visitors from getting infected and Melat from Grove Garden echoed the same by saying that they have prepared necessary appropriate precautions to limit transmission.
In recent periods, Ministry of Health have gone on record by expressing that the Covid spread in Ethiopia is on the rise as well as dramatic increase of the intensive care hospitalizations.
Public Infrastructure developers call for national dialogue
Public infrastructure developers’ call for national dialogue to come up with a common understating and accelerate upcoming investments, otherwise, it would be difficult to meet the public development demand.
On the Urban Development and Construction Standing Committee meeting to hear Federal Integrated Infrastructure Development Coordinating Agency (FIDCA), Almaw Mengiste, head of FIDCA mentioned several mismatches regarding coordinated development, exaggerated and conflicting compensation rates from one area to other for similar assets, besides damaged on developed infrastructures and others that he said costs the country.
At the discussion, Shiferaw Telila, head of Ethiopian Electricity Utility, representatives of Ethio Telecom, and Habtamu Tegegne, Director General of Ethiopian Roads Authority (ERA), and members of the standing committee expressed their concern on the damage and extraordinary compensation demanding behavior that they said it would make difficult to continue like that.
They said that the situation has become above and beyond the capacity of FIDCA, which is responsible to manage the coordinating development platform for roads, water and sewerage, electricity, and telecom infrastructures as per the establishment proclamation of 2014.
At the meeting held on Wednesday, December 23 at Parliament, Ahmed Shide, Minister of Finance, said that the situation is damaging the country’s resource since some of them are secured from foreign loans. He said that the situation would make the poor country poorer and is supposed to be corrected immediately.
He said that it is not about law and regulation, this needs commitment from all government apparatus for mutual understanding.
“The lower tiers of a government body is expected to support projects that come on their area than engaged with misdemeanor behavior and support for exaggerated compensation request and delayed the right off ways,” Ahmed claimed.
But he appreciated some regions that are truly focused on developmental works than creating problems.
Shiferaw said that lack of coordination costs the country huge amount of money including the foreign currency besides cutting services.
Similarly, Ethio Telecom representatives have expressed their claim that their service is frequently interrupted because of other projects that are carried out on their infrastructure areas without their knowledge accompanied by theft.
The frustrated ERA head, Habtamu, said that lack of commitment on lower tiers of the government body and regions has forced projects to be delayed. He insisted the government to suspend budgets and redirect for development work if they are not willing working amicably for projects that come to their area.
“It would be better if regional leaders were in this meeting. It is beyond the power and mandate of FIDCA that regions should seat down and discuss for common solution,” he said.
“I am wondering that there are massive infrastructure development demands in the country, but the situation in the reaction is very different when the government comes up with response,” he expressed his confusion on the situation at the ground.
“In the past there were claims that the farmers are not properly engaged on compensation, now I am afraid it is interpreted wrongly and on the reveres,” he added.
He said that development is coming for those specific areas but actual commitment and support from lower government official is very reluctant.
“For instance for project with 5km the compensation has become very high compared with the project cost,” he expressed his concern on the behavior of demanding inadequate and exaggerated compensation.
He said that the responsibility of lower government bodies, which are in charge to engage on identifying individuals for compensation, should be defined.
According to Habtamu, in the past budget year alone ERA has paid more than four billion birr that he said based on the current behavior it would skyrocket up to nine billion birr, “How can we continue like this?” he asked.
He claimed that because of different challenges including delaying on right off way issue and compensation and access to natural resource like sand and quarry projects are delayed.
“We and contractors are accused for projects delay but one ought to identify details for the reason than blaming,” he added.
He mentioned several projects that have been suspended or delayed because of right off way and exaggerated compensation. ERA’s head suggests that the government should annul these kinds of projects and invest the resource on other areas for who really demand their areas improvement; otherwise it will be difficult to run like this.
“Currently we have 300 active projects that now we are concerned how we finished them on integrated manner. National strategy should be emplacing to complete existed projects and elevate some illegal acts that sometime stand against the constitution and proclamations on accessing natural resources. We have to insure on enforcement of laws to accomplish projects,” he said and recommended regions to come for discussion to elevate challenges and accelerate the projected developments set in the coming ten year development plan besides the existed ongoing projects.
At the meeting, most of the participants appreciated inclusive discussion at national level for similar concusses to going on smooth manner.
Ahmed of Ministry of Finance proposed the formation of technical taskforce at higher level to solve problems.
Aisha Mohammed, Minister of Urban Development and Construction, shared the idea of other leaders and said that regions are coming with public demand for development but when projects come to effect massive problems are created.
According to her, regarding law enforcement, the draft amendment of the proclamation has been tabled at the Council of Ministers.
She said the value estimation work should be undertaking by responsible entity, which should be formed for this purpose, than the trends that are seen in most of the regions, who conducted the estimation on temporary committee that is not viable to come up with accurate value estimation.
“Uniform compensation price index is under drafting process,” Aisha added.
Finally she called for immediate discussion that includes regions on the aim to solve problems.
Enat bank surpasses the ‘billion birr’ mark in total income
Enat Bank’s total outstanding loans and advances have continued on its massive expansion in the past financial year. In the 2019/20 financial year, it has surpassed by 27 percent with almost 1.5 billion birr increment.
The annual report of the bank indicated that the outstanding loans and advances have reached at 6.5 billion birr. In the 2018/19 financial year, Enat’s total outstanding loans and advances were 5.1 billion birr which climbed by 1.7 billion birr compared with the 2017/18 financial year.
The deposit mobilization for the year has also grown by 17 percent and reached at 8.4 billion birr, while the depositors have reached more than 120,000.
The other major move for the bank was the income that it secured in the reported period. In the year, the bank income had surpassed a billion birr which is a first for Enat, which is one of the latecomers in the financial industry.
The annual report indicated that the total income that it secured for the 2019/20 financial year was over 1.3 billion birr which is an increment of 35 percent. The report explained that the income growth is mainly attributed to interest income earned on loans and advances extended to customers. In the 2018/19 financial year the total income was 983 million birr.
As the income registered significant increment in the stated period, the expenses have also skyrocketed due to the operational and interest expenses increase. The report indicated that of the total 1.1 billion birr, the expense in operational and interest expenses constituted 60 percent; the report explains the reason by quoting that, “The growth in total expense was mainly driven by growth in interest-bearing deposit, which massively expanded for the year.”
In the 2018/19 financial year, the bank expense stood at 751 million birr that increased by 45 percent or 338 million birr in the 2019/20 financial year.
The annual report indicated that in the 2019/20 financial year Enat’s profit increased by four percent and reached 240 million birr before tax. The profit after tax for the year has been 208.6 million birr up from 201.6 million birr in 2018/19 financial year.
Due to the expansion of paid up capital, the earnings per share for the year has reduced to 161 birr from 185 birr of the 2018/19 financial year. 
As of June 30, 2020, the paid-up capital that turned a billion birr in the 2018/19 financial year has reached 1.4 billion birr, which was 1.2 billion birr a year ago.
The annual report shows that Enat’s total asset is at 11 billion birr from 9 billion birr a year ago. In related development, the long serving president of Enat Bank, Wondwosen Teshome, has resigned from his post, he will however continue as advisor based on the request of the Board of Directors the bank.
Wondwosen, who has a four decade experience in the financial sector, served the bank for about seven years. Ermias Andarge, Vice President for Corporate Service is expected to replace Wondwosen.
