The Council of Ministers during its extraordinary meeting approved the Draft Banking Business Proclamation, allowing Diaspora to establish banks in Ethiopia.
The top government cabinet rescheduled their regular meeting from this weekend to Thursday May 2, during a busy week full of activity at the PM’s office. Because it was World Press Freedom Day, many international figures and global government leaders held talks with the PM. So meeting and making a decision during this busy time indicates the government considers this issue a priority, according to some who closely follow the banking sector.
Since the coming of Abiy Ahmed (PhD) as Premier the relationship between the Diaspora and the government has dramatically improved and significant bonds have been created since Abiy’s tour to North America and Europe.
With recent incidents, banks were forced by the Central Bank to identify Ethiopian shareholders and non-Ethiopians and to then sell the shares of non Ethiopians, who would change their citizenship to another nationality after purchasing shares of local banks or securing inheritances from family when they were not Ethiopian.
During that time the government ordered banks to sell the shares in an opening bid and settle the extra amount of the share value to the government. This meant banks that might consider one share as having a 1,000-birr value, may sell out the value by, for instance, 10,000 birr, and then transfer the extra 9,000 birr to the government by taking the original value which was 1,000 birr even though that money is not as valuable now since ten or twenty years may have passed.
A source at the central bank said that this action was one of the factors that would lead Diaspora to refrain from using legal ways of money transfer in the past few years in addition to boycotting and expressing anger with political suppression in the country.
The boycott has affected the country’s hard currency earning significantly since remittance was a major source of hard currency. In fact, it is even more than the country’s commodity export, which tacked on USD 3 billion, whereas legal remittances are close to USD 5 billion.
During the council meeting three issues were addressed in the draft proclamation.
The most highly anticipated one of these three documents was the amendment on banking business. The oldest proclamation affecting the financial sector excluded all non Ethiopian individuals from being involved in the financial industry whether they were Diaspora or not.
The new banking business bill, sent to parliament for final approval, would create an opportunity for Ethiopian born foreign citizens not only to buy shares of existing banks but create their own new banks in the country. They would be handled like other business that are opened to Ethiopian Diaspora but closed for other nationalities.
The amended proclamation also allows the existing banks to mobilize finances from not only local sources but overseas sources with the goal of expanding the country’s economic growth.
Experts at the Central Bank said that the government’s current strategy is creating a feeling of ownership in the Diaspora community. “The Trust Fund is one such strategy. Other financial sectors like insurance and microfinance schemes will also be opened for the Ethiopian community abroad,” a source at the National Bank of Ethiopia told Capital.
Financial experts explained that the current decision would allow the country to get more foreign currency through investment in the financial sector besides mobilizing deposits of foreign currency at existing banks.
“It will also play a big role in relinquishing the parallel market, which is now affecting the country’s official hard currency earnings,” an expert said.
The proclamation to provide for banking business No. 592/2008 stated that foreign nationals or organizations fully or partially owned by foreign nationals are not allowed to open banks or branch offices or subsidiaries of foreign banks in Ethiopia or acquire the shares of Ethiopian banks.
Sources said that the new proclamation has amended this but it will also include other financial businesses. The new law is considered the start of opening the financial sector to foreign investors, which has been one of the two major areas that members of World Trade Organization wanted Ethiopia to open.
Experts said the Continental Free Trade Area that the country recently ratified to open its market to African products and services with no tariffs will also push the country into such kind of decisions to be competitive in the continental market.
Besides opening the financial sector to the Diaspora the government also lifted the limit on Diaspora accounts, which was USD 50,000 until recently, to an unlimited rate.
Financial sector opens to Diaspora
Rural areas need help improving food security report says
The Global Food Policy Report 2019 has come out saying rural revitalization needs to take place to address persistent crises and improve food security.
According to the, rural people around the world continue to struggle with food-insecurity, poverty, inequality and environmental degradation.
In 2018, many regions of the world faced increasing rates of hunger with global undernourishment continuing to rise for the third year in a row and stagnation tackling malnutrition
“Climate change, deforestation, soil degradation, and pollution increasingly challenge rural productions, sustainability, and well being. Lack of rural infrastructure services and scant economic opportunities have compounded these challenges,” the report reads.
Rapid population growth has exerted increasing demand on small scale agriculture which was had a hard time meeting urban demands. Characterizing rural-urban linkages, identifying value chains, and addressing the constraints of production and productivity are some of the goals the report argues need accomplished.
“The central tenet of this flagship report comes up with a new concept of Rurbanomics which calls for re-thinking the relationship between rural and urban economics as interdependent and integrated.
The concept will promote rural-urban partnership and linkages to empower rural populations and achieve inclusive and sustainable development, said Lamin Manneh, general director, UNDP regional service center for Africa.
He further noted that UNDP supports African countries eradicating poverty and reducing inequalities and exclusion by combining those six signature solutions on poverty, governance, resilience, environment, energy and gender.
The report calls for an action agenda strengthening rural-urban linkages, transforming agro-processing system, scaling up non-farm opportunities for creating jobs for the poor, improving the wellbeing of rural communities and empowering local government. It recognizes Ethiopia and Rwanda amongst other countries in the continent for leading the way and setting notable examples of how the principles of Rurbanomics are realized.
Establishment of integrated agro industrial parks in all regional states presents tremendous opportunities in creating jobs for rural communities and addressing food security in Ethiopia.
The massive rural transformation program in rural infrastructure development, installation of irrigation systems, high value crops, secondary cities development and having a range of agro-industries in rural areas puts Rwanda as exemplary in realizing Rurbanomics.
“Rural revitalization is timely, achievable, and most importantly critical to ending hunger and malnutrition in just over a decade,” said Shenggen Fan.
IFPRI is an international agricultural research center founded in the early 1970s to improve the understanding of national agricultural and food policies to promote the adoption of innovations in agricultural technology and has a presence in 46 countries in Sub-Saharan Africa and 170 countries in the world.
REJECTING THE SYSTEM
The early years of the 21st century have been witnessing uncoordinated resistance arising from diverse groups of humanity. Unlike the late years of the 20th century, the core countries of the system are also embroiled in these uprisings. Globalization of capital (transnational capital), which is free to roam the whole planet, has leveraged the global labor arbitrage to flood the world with relatively cheap products/services, bringing some benefit to humanity. Nevertheless, there are consequences associated with this phase of globalization. Unlike capital, global labor is not free to move around and find a better place to ‘invest’ itself, thereby making ‘profits’, to use the analogy of capital. This truncated globalization (in terms of factors of production) is the source of continuous polarization. That is why radical economists call the current system a polarizing globalization (Samir Amin)!
Today we will look at situations from the perspective of global labor. First of all; labor in the core countries (OECD) is severely undermined, as it has lost its bargaining power to mobile capital. At the same time, the obvious decline in the standard of living of labor is being rejected, in one form or another. The increase in all sorts of low intensity disturbances in the West is a signal to the coming labor insurrection. To be sure, ‘welfarism’ is still in play, but only helps with the bare minimum of life needs. In addition to the arbitrage played by capital, (from the global south) labor in the North is also facing the onslaughts of automation, informatics and robotics! No wonder, the old Marxian slogan ‘workers of the world, unite’ is now cynically rehabilitated to ‘workers of the world, forget it’! Democratic political power might play a significant role in countering the excesses of crony capitalism in countries where genuine democratic processes are still upheld. In fact, it is this resurgence of tangible democracy that is driving old political parties away from political governance! Examples abound. Spain, Italy, Greece, Germany, France, etc.! See the article next column.
In countries where some democratic venues are still available, the populous is showing the propensity to go for the jugular. The US sheeple (human mass) elected a president who is a political outsider who seems to be at a loss when it comes to the intricate functions of state and government. Unfortunately, he also seems to lack basic grounding on many important matters, including diplomacy and global governance. Nonetheless, his very election is a sign of a growing refusal by the sheeple. The Brits decided to leave the EU, thinking they will fare better if they go it alone. Outsiders from center left and center right, are jointly running Italy. The old parties in Germany are also in trouble. Refusal is clearly displayed in Ukraine’s new election. Ukraine now has a comedian as its head of state! However, many of the old European parties don’t seem to understand what is unfolding in front of their eyes. EU has lost a good portion of its credibility, as it is put securely in the pocket of capital. In the current crisis, EU seems to only advocate various austerity measures proposed by the moneyed. Even though the European parliament is an institution without teeth, it is being challenged by the emerging sentiment of the European popular movements or the ‘populists’ as the establishment would like to call them. Be prepared for surprises in next months’ European parliament election. In places where the deep state is very active, there can be dangerous scenarios playing out. Building border walls or sanctioning governments/individuals or changing regimes, etc., etc. will not rectify, but will only aggravate the deeply flawed globalization of our time.
The fate of labor in the global south remains precarious, to say the least. Given advances in technology (labor saving) and the prevailing outmoded economic arrangement between fragmented wage labor and dominant capital, the sheeple in the global south is going to lose out big time! Having sensed the impending unappetizing reality (in the various countries) some members of the sheeple are braving migration, both legal (migrant labor) and illegal (refugees crossing oceans). The majority stuck in their countries of birth, is becoming restless. See the article on Algeria on page 41. Rioting, insurrection, strikes, etc., usually leveraging identity politics, has become the order of the day, particularly in the less advanced industrial countries. Neoliberalism pursued by the compromised states of the south, along with their ‘belly thinkers’, will not secure the future for the sheeple of the global south, including that of Africa! If anything, the far-fetched and unsustainable policies of global dominant interests, far from creating a decent livelihood, will only exasperate the sheeple’s increased pauperization.
As if the above are not challenging enough, the south is now devoid of capable leadership with the wherewithal to understand the various versions of history and economics, let alone the hard sciences, which are the foundations of our lopsided modernity! History, it is said, is written by the winners: so are the dominant economic theories, we would like to add! Today economic narratives are dictated by vulgar capital (oligarchs), not labor (Marx). In the medium and long run, the lack of quality leadership in the south will bring untold damage that might not be readily rectified, without resorting to extreme violence, i.e. revolution! “Education is not a way to escape poverty. It is a way to fight it.” Julius Nyerere. Good Day!
New Commission to improve government standards
Ethiopia’s Planning and Development Commission is preparing the nation’s first ever, ten-year, Perspective Development Plan to assess the country’s economic and social development in order to help medium level plans like the GTP to become successful.
The ten year plan will focus on eight pillars including: macro-economic, agriculture transformation, expansion of manufacturing, transport infrastructure, urban housing, hydro economics and human resource development.
According to Fitsum Asefa, Commissioner Planning and Development, the absence of a long term national plan, cast a shadow on the success of the GTP and other development strategies, including Sustainable Development Goals (SDGs).
“The plan will help us improve key economic sectors while taking into account our country’s limited resources,” she said.
To get information the commission will take a bottom-up approach and talk to stakeholders like investors and civic society organizations. They want to get as many segments of society involved in the process and have prepared manuals to help accomplish this. They will help implement the directive ratified by the Council of Ministers back in October 2018.
In Ethiopia, billions of USD have been wasted in government projects due to inefficient and unprofessional management, corruption and nepotism.
“The finance ministry is getting ready to establish a new directorate responsible for supervising and evaluating Maga and other projects,” said Hajji Ebssa, who handles communication for the Ministry of Finance.
The commission plans to implement measurable criteria to hold executives accountable.
According to Fitsum lack of accountability in government projects costs the nation and contributes to political, social and economic instability.
The Ethiopian government established a National Planning Commission in 2013 in an attempt to make sure its agencies improved the way they served people.
“The commission is also preparing directives to improve the way government projects are implemented,” Fitsum adds.
