Dashen Bank has mobilized one billion birr just in ten months in the Sharia non interest banking scheme.
Dashen is one of the top two most profitable private banks in the country. In the Islamic banking sector, they are now among the top six deposit collectors.
Asfaw Alemu, President of Dashen, told Capital that the bank delayed introducing the Islamic banking product to conduct a complete assessment. They determined that it required increased security since it concerns religious rules.
“We are the 10th bank to commence the business. First we had to look several things for instance other countries’ well known bank experience, then we identified potential products that the market needs,” Asfaw said.
A Sharia committee or board with relevant qualification has been formed to observe the activity of the Islamic banking and if they should follow Sharia law or not.
Dashen introduced non interest banking at its 400 branches at the beginning of the budget year. The President says it has been well accepted.
The bank has also introduced ATM cards called Sharik for all non interest free banking users and an Annissa card that is exclusive for women. At the event held on Sunday April 21 Dashen also introduced an Islamic gift card, Hibah. The bank has become pioneer by introducing Islamic cards in the country.
On the day the committee and bank officials explained the activity of the Islamic banks of its customers. According to Asfaw, such kind of activities are being held throughout Ethiopia and internationally.
The president stated that in the past almost year the bank focused on deposit mobilization. “Currently we are receiving proposals to finance projects in Islamic business,” he explained.
About a decade ago, the government allowed the formation of Islamic banking in the country followed by the formation process of Zemzem Bank.
The banking sector then added Islamic banking scheme at a separate window. Oromia International Bank is the pioneer of introducing the Islamic financial business followed by the state owned Commercial Bank of Ethiopia, which is now leading the deposits in the non interest banking sector.
Experts in the financial industry and religious scholars claimed that the government misunderstood the concept of Islamic banking that is why it is very poor in Ethiopia.
Such kind of financial business is common and popular not only the Islamic world but other countries.
Mahamud Hassan, one of the committee members, said that Islamic banking is not only giving service for Muslims but it is open to all individuals. He said most religions don’t allow charging interest. “For instance, most of our customers in Kibet Branch are Christians,” he explained.
Experts argued that the sector is better at project financing besides several unique services, but the country has not tapped the sector properly.
Currently 30 billion birr is mobilized from the sector since its commencement in the past few years.
Dashen mobilizes one billion br from Islamic banking
GERD to begin generation by December 2020
The Ministry of Water, Irrigation and Energy (MoWIE) says the Grand Ethiopian renaissance Dam (GERD) will begin generating 750 MW of electricity by December 2020.
According to Ferhiwot Weldehanna, State Minister of MoWIE, the 2 out of 16 turbines will soon be in operation. All 16 turbines should be working by 2022.
The dam, was launched in April 2011. It was initially expected to be completed in 2017, but it was delayed due to a change in design, leading to generation capacity and delays in the electromechanical works.
The State Minister is confident about support from Sudan despite the recent change in government.
“We are constructing the dam based on a win-win situation, without taking any advantage one over the other.”
Any government in Sudan will understand the benefit of the GERD even for the people of Sudan,” said Frehiwot.
According to official estimates, the dam is now 65% completed. It is Ethiopia’s most important project, and will transform the country’s energy profile by adding 6.4 GW to its generating capacity.
The Ministry also presented a nine-month report on irrigation. They plan to use irrigation to create jobs for youth and boost agricultural productivity by shifting from rain fed agricultural practices. Three irrigation projects will be inaugurated next week. They will develop over 8,000 hectares of land.
The other State Minister, Abreha Adugna says the ministry has completed construction of Megech – Seraba, Ada’a Bacho, and Meki-Zway irrigation projects that are located in Amhara and Oromia regions. An irrigation project in Amhara Regional State, Megech Seraba, which pumps water from Lake Tana, the largest lake in Ethiopia, has also been completed.
The project costs over 220 million birr. It is expected to develop up to 4,000 hectares of land using irrigation. The dam developed 500 hectares of land last fiscal year as a pilot project. It also developed over 1500 hectares this fiscal year.
Ada’a Becho, another irrigation project built in Ada’a woreda in Oromiya Regional State will be inaugurated. The project was finished last year but the inauguration was delayed.
“The issues are solved and the Oromia Water, Mineral and Energy Bureau will be responsible for administering the dam as it needs close follow up, maintenance and professionals to run the pumping generator,” says Abrha Adugna.
The Ada’a Becho, irrigation project is designed to develop 2,000 hectares of land. Meki-Zway irrigation project is built by pumping from Lake Zway. It is the third project to be inaugurated. It is expected to develop about 2000 hectares of land.
“The ministry plans to finalize irrigation projects at hand and will entirely focus on adding more to modernize the agricultural sector,”Abrha said.
Investors wary of instability pass in Oromia
The Oromia State Region is the hub for Ethiopian investors but in the last nine months there have been few licenses issued to investors.
Oromia provided 2,668 hectares of land to rural investments during the previous fiscal year. This year, however they have only given 259 hectares.
Last year 171 plots of land were given to agro processing and service investments in rural areas, however over the last nine months only 22 plots of land have been given out; a dramatic decrease.
The urban investments which are mostly projected to be along the outskirts of Addis Ababa, Adama, Bishoftu, Dukem, Jimma, Sebaeta, Gelan, Bureau, Ambo, and Welega are also experiencing a big slump.
In addition to the hard currency shortage, some of the manufacturing and hotel projects are also progressing poorly.
In these areas, only 30 plots of land are in the process of being used for investment and ten plots of land were given to the government’s power, electricity, water and telecom service providers through the direct decision of Lemma Megerssa, who was President of Oromia Region at the time.
During the last fiscal year the region approved 167 investment projects worth 5.37 billion birr. Over 81 percent were in agriculture and agro-processing.
An expert who requested anonymity told Capital that the on and off political instability is affecting the investment.
“We have not seen burning factories like a year ago, but the displacement of people, the clashes, the protests occurring throughout the country are affecting the investment inflow. The instability takes the government’s attention and like any other region, the Oromia Region’s Cabinet has been busying itself stabilizing the regions.’’
“Insecurity discourages business investment, its scares people. This is because it accelerates the cost of doing business either through direct loss of goods and properties or the cost of taking precautions against business risks and uncertainty. These costs could have a negative impact on business development and progress” the expert added.
Prime Minister Abiy Ahmed who was asked about the growing concern of investors at a recent press conference stated that investors should work harmoniously with local communities.
So far, there are over 790 investment projects in the region with a capital of 3.5 billion Br. These projects provide employment opportunity for 52,000 employees. Additionally, the region accounts for 52 percent of the crop production, 45 percent of the area is cropland and 44 percent of the total livestock population in Oromia.
Last Capital reported that Adama youth are blocking containers filled with high-tech apparel machines and equipment, located inside the Adama Industrial Park. They are asking for a hefty sum of money before they are willing to leave. The trucks were blocked for over a week.
Youngsters are lying under the truck blocking the movement, just waiting for money. They want to be paid per container and even per single machines.
Antex Group president Quian Anuha says, they repeatedly reported the problem to government agencies with no avail. The manager said that he told Abebe Abebayehu, who runs the Ethiopian Investment commission, Lelise Neme, CEO of Industrial Park Development, the Major of Adama and Adama police station but no one responded.
Corteva Agriscience enters Ethiopia
Corteva Agriscience, a company built on the foundation of more than 200 years of combined experience from US companies like Dow Agro Science, Du Pont Crop Protection, Pioneer Hybrid and PANNAR enters Ethiopia to work on improving agricultural productivity.
The company is believed to bring to increased agricultural output for the benefit of both producers and consumers as it is innovative and holds deep expertise.
According to the data from Ethiopian Ministry of Agriculture, 79 percent of the country’s population is employed in the agricultural sector, and improving productivity is a key to unleashing the economic potential of Ethiopia’s rural population.
Previously Corteva was involved in Ethiopia through the ongoing US government investment in the company known as Dow DuPont Pioneer in first phase of feed the future agricultural capacity partnerships program for five years.
With the improved hybrid maize seeds of the company, Ethiopian farmers were able to harvest 42 quintals of maize which tripled their average production and annual income.
Corteva’s launch in Ethiopia offers tremendous opportunities to build upon the US Government’s ongoing investments in Ethiopia’s agricultural capacity” said Michel Raynor, US Ambassador to Ethiopia during the launching ceremony.
According the data from the ministry of Agriculture, maize is grown by over eight million Ethiopian farmers which is one of the most important cereals interns of production.
“Engagement from companies like corteva will create opportunities for private sector and create job and increase agricultural output which ensures food security by supporting many Ethiopians on their path to self-reliance, Raynor adds.
The company is working across the global agriculture value chain to create a more efficient food system and believed to plays an impactful role in Ethiopia’s broader society as well, by encouraging sustainability and corporate social responsibility.
“Corteva presence is kinds of win-win commercial activity that benefit both our countries by bringing meaningful job creation; respectful and responsible labor practices; strong training and skills-development programs; technology transfer; and sound environmental practices to bear”. said Raynor.
Previously, the company constructed a 2500sqm modern seed processing and storage plant near Addis Ababa in 2014.
As Ethiopia’s youth accounts for over two –third of its population and pressures for job creation and economic opportunities U.S companies like Corteva understand that they only succeed when their host communities succeed as well.”
Corteva Agriscience is the company agriculture arms brought together from Dow and DuPont when they merged after Dow, DuPont split into three companies, one focused on basic materials, one on finished products, and one on agriculture, according to their website.
