Almost 94 percent of foreign currency allocated to private investors since the beginning of the budget year has gone to foreign companies. Only six percent was transferred to local investors.
The government stated it provided USD five billion to the private sector mainly to import priority products and input for the manufacturing industry. People working in the sector told Capital that over the last year almost all hard currency has gone to foreign investors.
They said that foreign companies here in Ethiopia are benefiting from a separate scheme called the suppliers’ credit condition which was previously allowed for companies engaged in hard currency earnings or exports. Since early last budget year the National Bank of Ethiopia (NBE), has amended the suppliers’ credit directive and allowed foreign investors to be a beneficiary through the credit import of inputs or spare parts for their production here.
Since the directive amended that allowed investors to access guarantee to import products that the payment will be settled in 180 days, they can access hard currency more easily than other local investors, even though they might be engaged in similar investments. Local investors have claimed that the law discriminates against local investors and makes them to wait in a long line for a letter of credit (LC) to access foreign currency for their import, meanwhile they produce similar products.
Last week the government announced that it has made available USD 300 million for the manufacturing sector, which is done almost for the first time in the budget year. “the government stated that it has provided USD 5 billion in the stated period but the local investors got almost nothing, which indicate that almost 94 percent of the total foreign currency dispersed in the past nine or more months is disbursed for foreign investors,” experts in the industry sector claimed.
They complained that the situation pushed them to halt their production. “We are confused that the government may want local investors to be distributer of the products that foreign companies produce here,” they added.
The investors who called the directive as ‘apartheid law’ argued that the law is against the investment proclamation, however NBE officials downs the claim.
During his meeting with the media a few months ago Yinager Dessie, Governor of NBE, said that the government will continue providing foreign currency for international investors via the suppliers’ credit scheme despite the concerns of local investors.
On the other hand the sector actors claimed that the scheme by itself is vulnerable to misdemeanors since the approval is giving separately. “This kind of scheme may highly aligned with corruption,” they said.
Currently there are long queues at banks for LC, since the demand of hard currency does not meet the supply. Experts at banks told Capital that speculators are major challenges for the long line that most of them open LC in different banks. They added that those who really don’t want the foreign currency are engaged in selling their turn to those who want it badly on a commission basis. They recommended that the government shall introduce a new scheme at least to solve the problem and ease the line.
They said that settling some amount of the money as a guarantee that LC demands is genuine or not shall solve the problem. “Putting some money when LC is opened at the banks may only attract real foreign currency seekers and they shall only engage on the process than speculators,” they recommended.
“But the initial solution shall be allowing local investors to be part of the suppliers’ credit scheme like foreign investors. We support providing suppliers’ credit for foreign manufacturers since they have to have smooth operation but the law should not neglect locals,” they added.
Experts explained that currently foreign industries undertake their normal production with economic scale of operation cost, while local industries that produce similar products have battling on high cost of production due to under capacity operation.
“It has also make the foreign companies to handle huge liquidity that lead them to involve on illegal exchange to transfer their earnings to their home country than waiting long line to convert their local currency to foreign currency and send it to home country,” experts said.
Last week the government disbursed USD 200 million via Commercial Bank of Ethiopia and USD 100 million by the rest 16 private banks, which is for the first time disbursing foreign currency via private banks.
Experts said that the amount is very insignificant when disbursed for every private banks. Bankers that Capital interviewed said that even though the volume is very limited the gesture dispersing foreign currency via private banks is good.
However bankers claimed that the difference between local and foreign companies in accessing foreign currency is unfair. “We provide the companies who come with the approval of NBE to access suppliers’ credit but all of them are foreign companies. But local investors who are our customers are expected to wait a long time,” one banker said.
Almost all forex goes to foreign investors
Crazy food prices to be investigated
The Ministry of Trade and Industry, the Addis Ababa Trade and Industry Bureau and the Trade Practices and Consumer Protection Authority have formed a committee to investigate the surprising price rise in basic consumer goods after the Ethiopian Easter.
The committee suspects that there are greedy groups behind the inflation and launched an investigation. They will report the results to the public in a few weeks.
Over the past three weeks prices of meat, milk, Teff, onion, potatoes and tomatoes have increased dramatically.
A half liter of milk previously sold for 14 birr a few weeks ago jumped to 20 birr. Teff prices have skyrocketed to 4,000 birr per quintal from 2,600 birr before Easter.
Many restaurants have raised their prices in response.
Alem Alemayhu a dweller in Addis said, “it is a bizarre condition we are observing now, everywhere you go the food price is increasing and salaried workers can’t afford basic needs with their current income and the market is going mad.’’
Meat has risen by 80 birr per kilo while onions and potatoes have gone up 10 birr per kilo.
Kassahun Abera, Trade Inspection Head at the Bureau told Capital that the prices increase doesn’t make sense.
“There is no reason to escalate prices like this so we have begun investigation. We suspect that some greedy mafia like groups are conspiring to make a huge profit.”
The annual inflation rate in Ethiopia rose to 12.9 percent in April 2019 from 11.2 percent in the prior month, hitting its highest level since August last year. Prices increased faster mostly for food & non-alcoholic beverages (14.5 perecent vs 11.4 percent in March), bread & cereals (16.6 percent), meat (9.5 percent ), milk, cheese & eggs (13.1 percent); and alcoholic beverages & tobacco (14.2 percent vs 1.1 percent), attributable to the Easter holiday season. Meanwhile, cost slowed for housing & utilities (7.9 percent vs 8.9 percent); clothing & footwear (15 percent vs 19.7 percent); restaurants & hotels (12.5 percent vs 13.2 percent) and transport (15.6 percent vs 16.8 percent). On a monthly basis, consumer prices went up 1.8 percent, following a 2.2 percent rise in the previous month. Inflation rate in Ethiopia averaged 16.06 percent from 2006 until 2019, reaching an all-time high of 64.20 percent in July of 2008 and a record low of -4.10 percent in September of 2009.
FRAUD AS A WAY OF LIFE
When a world system collapses it doesn’t always go with a bang, it can also whimper along for quite a while! At times it takes decades, if not more. In the case of the Roman Empire demise took centuries. Nonetheless, the tale-tell signs of impending collapse are/were always there, particularly in the last phase of the dying system. The establishment or acceptance of outright fraud as the modus operandi of the system is one such tale-tell sign. In our prevailing modern world system, fraud is clearly the operating principle cutting across nations, economies and institutions of all kinds. Without the regime of pervading fraud spanning the breadth and depth of late modernity, the system will collapse in no time! See Smith’s article next column.
As an appendage or as a microcosm of the interstate system, the nation state itself has become an embodiment of generalized fraud! To sustain the prevailing global fraud, the interstate system continuously employs, amongst other things, protracted lies all over. For instance, the underlying faulty conviction of the status quo, which assumes that nonstop growth is possible on a finite planet, is one. Once such monumental lies are well established, the little lies follow automatically. Force or coercion is also used to maintain the idiotic narratives. No significant body with a critical mass is allowed to interrogate the fraudulent foundations of the world order. Obviously, the sufficiently numbed sheeple (human mass) as expected, goes along with all the lies that are preached by the establishment. The whole orientation processes, starting from the early years all the way to tertiary education, are all geared to support and reinforce the lies that flow from the powerful and numerous institutions of entrenched interests! One can also mention the other private/semiprivate institutions of indoctrinations, particularly those of the entertainment genre; movies, music, spectator sports, etc. These are some of the staunch cohorts of the global fraud system!
The modern private sector, to a large extent, is a creation of the prevailing global fraud system. On top of the above foundational lie of infinite growth on a finite planet, we also have its associated fraudulent component in finance, which is by far, one of the well-established criminal entities of the systems! As we never tire of proclaiming; Fractional Reserve Banking (FRB) on which the world’s financial/economic system is erected, is the worst (supposedly) nonviolent crime of the millennium. What is FRB? In short, FRB is a financial/banking system whereby money is created out of thin air and is lent to existence. Besides favoring those connected to the money spigot, it widely/globally encourages mal-investments and the utter destruction of the planet’s ecosystem!
The definition or even the very notion of civil society in our modern world system has become problematic. We will not engage that problematic in full, instead, we will contain ourselves within the universe of the common narratives. When a component of civil society is created and supported by capital, in various forms, surely these entities cannot be regarded as civil societies. Since many of these so-called civil society institutions form a portion of the sanctioned entities under the thumb of capital and its states, their independence is bound to remain, at best superficial. Objectively that is what prevails in many of the current nation states. Suffice is to say these entities continue to take active role in the protracted fraud system, lest they lose their direct or indirect support, financial or otherwise. NGOs (Non Governmental Organizations) are nothing more than institutional instruments in the support of the existing global order. In fact, we claim they are WSD, Weapons of State Destruction. This has always been our stand in regards to NGOs unending pronouncements. According to James Corbett; ‘NGOs are the deep state’s geopolitical ‘Trojan horses’! To think that NGOs will bring about positive change to the global system is preposterous! All in all, the major components of modern societies are engaged, directly or indirectly, in furthering the existing global fraud system. Where can one get some respite?
As it stands, the compromised elites and intellectuals of the world system are neither bold nor kosher enough to start widespread integrity systems in support of a resilient existence favoring the global sheeple. It seems the sheeple is on its own in its multifaceted struggle against the prevailing comprehensive fraud, which continues to undermine its welfare. The vacuous ‘good governance’ that is preached all over (by the status quo) doesn’t take into account the myriad consequences of the two fundamental frauds; i.e., that of unlimited growth and FRB doctrines. Therefore, besides lacking credibility, the so-called ‘good governance’ remains absolutely vacuous and frivolous. Luckily, the sheeple has started to take its own initiative to challenge this shortsighted and dangerous system built on lies and fraud. The on going movement of the ‘Yellow Vests’ in France, which just celebrated its sixth months on the streets, is one such sign! Other ascending movements that are dismantling the old guards include, the ‘populists’ (by the status quo). But what is the new populism?
The Princeton dictionary defines populism as ‘a political doctrine that supports the rights and powers of the common people in their struggle with the privileged elite.’ All new movements are still awaiting their organic activist-intellectuals to emerge to the fore and in all likelihood these movements are not going to go anywhere soon. In fact, they might well be the beacons heralding the accelerated collapse of the existing order. “The shepherd always tries to persuade the sheep that their interests and his own are the same.” Stendhal (Marie-Henri Beyle).
Good Day!
Study to be revised to allow foreign investors in commercial housing
The Ministry of Finance, after reviewing the proposal sent from the Ministry of Urban Development and Construction (MoUDT) has expressed concerns over a proposal allowing foreign investors to participate in condo and real estate construction.
The Ministry of Finance said the proposal will cost too much money for both the government and house buyers and will not create enough jobs for citizens. Due to the fact that the ministry recommends that MoUDT take at least three years to make a deep study to provide affordable housing by inviting foreign investors.
MoUDT who accept the criticism to improve this study is currently looking back part of the study on the bid document.
A source in MoUDT told Capital that inviting foreign investors is becoming a hard task for the government.
“Some years ago like the Turkish and Chinese showed interest to participate in the housing construction but the government needed a formal guidance to participate this investors and we conducted a study but the government was not convinced and now we are looking back to the study to answer the government demand in terms of accessing finance, job opportunity that will be created when the work start here.’’
But according to the sources the current demand of house cannot be fulfilled by the current financial capacity of the local contractors.
In the current figure estimation 75 percent of the total population of the city is living in overcrowded houses or dilapidated structures, under unhygienic conditions, lacking basic urban services like safe drinking water and sewage, and in sprawling informal settlements with a growing number of shacks.
Eighty five percent of the housing structures in Addis Ababa are dilapidated and would have to be demolished or rehabilitated which would be expensive. They don’t have the minimum basic infrastructure such as flushing toilets and connection to the sewer system.
An estimated 80 percent of the 150,000 kebele houses have serious maintenance problems and are in a very bad shape. Up to 50 percent of the population is without fixed employment.
The accumulated housing backlog is estimated to be 300,000 units. Moreover, 60,000 units are needed annually to accommodate the population increase of 7 to 8 percent per year mainly as a result of migration from rural areas.
Many other urban areas such as Gonder, Dire Dawa, Harar, Mekelle, Adigrat, Shire Endasillasie, Maichew, Humera and Ambo also have similar housing problems.
