Insurers expressed their shock to the highly anticipated investment of insurance fund directive that was reviewed by the National Bank of Ethiopia (NBE) recently.
The new directive that amends the 16 years old ‘licensing and supervision of insurance business investment of insurance funds directive no. SIB/25/2004’ highly disappointed insurers. The insurers had anticipated for better amendments that in turn would boost the sector’s investment in the economy.
The sector actors claimed that the NBE’s new directive indicated that the government was not intent for the insurance business and furthermore did not consider the actual economic situation and inflation parameters.
About 18 months ago the central bank drafted an amendment to improve the insurance fund investment on none cash (Treasury Bills and bank deposits) sector.
On the draft directive NBE had proposed that the general insurAance business be reduced, that is, the requirement to preserve 65 percent liquidity to 50 percent of the total asset of insurers and the balance for other businesses.
It has been proposed that from the total admitted assets of an insurance company, the company shall invest 20 percent in company shares from 15 percent of the 2004 directive.
At the same time the December 2018 draft directive stated that 25 percent of the asset would be invested in real estate contrary to 10 percent in the old directive.
Meanwhile, the recently issued amended directive, reverted both the former proposal of NBE and recommendation of insurers and put the Treasury Bills and bank deposits at 60 percent with only five percent reduction from the previous directive.
At the same time the highly anticipated percentage share approval on investment on real estate (purchase or construction of buildings) will not change from the previous 10 percent of the total assets shares. The draft was tabled to make it 25 percent.
The asset that shall be invested on company shares has increased by five percent and is now at 20 percent.
Besides raising their frustration on the amended directive, they claimed that the directive was carelessly done since 10 percent that was always allowed for free choice investment was left out in the directive.
“The new directive only stated the 90 percent of asset investments. I am confused why the 10 percent was not included in the new directive,” one of the long-serving insurance leader told Capital.
On the long term (life) insurance business the new directive did not change anything except excluding the article that stated that the insurance company shall invest 10 percent of its asset on investment based on its choice like the general insurance sector.
While on the draft proposal for the life insurance sector NBE had proposed to make 40 percent of the total asset to be liquid and insurers had recommended it to drop to 30 percent from the existing 50 percent.
“We have seen only five percent reduction on general insurance but the amended directive does not totally look at the life insurance sector,” the insurers stated as they expressed their anger.
“The government insisted that assets remain liquid than be actively invested in the economy,” one of the insurance presidents said, “this is an indicator of how the government shows no interest to improve the insurance business.”
Another insurance president that spoke with Capital expressed his feeling by stating, “it is ridiculous to spend time on discussion on the draft document if the actual amendment does not consider any of our recommendation. Why therefore should we spend our time on discussions that are not impactful?”
Similarly another insurance leader who demanded anonymity said, “at the current market condition putting the asset on T bills or bank deposit exposes the investment to be consumed by inflation and make zero/ cancel out the assets of insurers.”
“The new directive totally discourages investment that shall create not only wealth for companies but also massive job, but NBE did not understand this.”
The insurers have held discussions about the directive last week and have decided to pursue their anger to the NBE via a letter that will be written by their association, the Association of Ethiopian Insurers.
In a nutshell, insurers had eagerly awaited the revision of the directive, that they expected would be considerate for the current economic condition than the one issued to effectiveness about 16 years ago. They expected that the new directive will give them more room to expand their businesses on investing in different sectors mainly in the real estate business.
Recently NBE has amended different directives in the insurance sector. From the latest insurance business directives amendment NBE has also changed one sub article of the ‘Prohibition of Issuance of Certain Types of Bonds by Insurance Companies Directive no SIB/24/2004’ thus indicating a possibility for allowance of giving unconditional bonds.
The previous directive issued in 2004 prohibited insurers from issuing any unconditional bond.
Insurers left unassured by NBE directive
The Addis land grabbing menace
Recent reports showing concern with regards to land grabbing in Addis Ababa has rendered the city administration to hold up the services of land management indefinitely.
At the beginning of this week Ethiopian Citizens for Social Justice (ECSJ) has disclosed that in the past few months thousands of square meters of land had been illegally taken.
According to Dereje Kassa, Deputy Head of Office of the Mayor and Cabinet Affairs, for an interim period, clarified that on the basis of land grabbing the city administration had decided to suspend the services of land management for the time being.
As he stated land banking and transferring, land development and urban renewal, construction permit and integrated land information services has been held up until the concerns are cleared up.
The study conducted on the matter concludes that illegal land grabbing and transforming of condominiums by politically motivated decisions has reached a critical high.
Key placed, road and public areas have been fenced illegally in five sub cities with officials in the Oromia region playing as the major actors in the land grabbing as per the report.
“The land grabbing and illegal transfer of condominiums was done by organized groups and individuals in the presence of security forces and with the involvement of officials and employees of the city administration,” states the report of ECSJ. The study accused officials of the city as they remained unconcerned as the grabbed lands were sold to a third party while police officers provided protection as ethnic Oromo youth fenced key places and vacant areas.
The former mayor has defended that the so called illegal transferring of the condominium units were decided by the cabinet affairs a year and half ago to those who were displaced from their land in order to build the condominium units.
“The condominium units were transferred to 20,000 of them who were in a worst situation from the 67,000 families who were forced to leave their land” said Takele in his Facebook page.
Recently the former deputy mayor Takele Uma announced the commencement of the land audit and registration scheme in a bid to tackle land grabbing issue and begun issuing title deeds to farmers starting from August 10.
The Deputy Mayor of Addis Ababa City Administration has told city officials to take immediate action in granting farmers, who own farming lands in the city’s surrounding areas, with a legally binding land title deed.
The city Administration will give title deeds to lands owned by farmers after they are registered as they are prone to be affected by land grabbing.
The land audit and registration drive will be backed by technological advancements in partnership with Ministry of Science and Innovation, according to Mayor’s Office.
The registration of lands owned by farmers will be completed till October 10, 2020.
NBE to receive dormant account liabilities
The National Bank of Ethiopia (NBE) issued a directive to execute article 52 of the 2008 Banking Business Proclamation No. 592/2008 that enforce banks to transfer dormant account of liabilities to the central bank.
The directive titled ‘Management of Unclaimed Liabilities of a Bank Directive’ indicated that a bank shall transfer the unclaimed liability, which are dormant for 15 years and more, starting from five birr to NBE with all supporting documents.
Before the transfer of the liability banks should have taken several measures to address the claimant.
The directive article 4, sub article 4.1, indicated that a bank shall publish a notice of unclaimed liability within one year from the date it becomes unclaimed. It added that the notice shall be open for 90 days in order to communicate with the owner via different communication methods including phone, message and mail. The bank is also expected to communicate via newspaper notice that should be published for three consecutive weeks, on a weekly basis. Furthermore banks shall post it in their respective bank websites and branches that hold the unclaimed liability.
Sub article 4.2 of the directive stated that, “If the claimant does not show up within 90 days from the final date of publication of the notice, the bank shall transfer the unclaimed liability starting from five birr to NBE.”
Banks shall have full responsibility to supply any information of the claimant whose unclaimed liability has been transferred to the National Bank, including during claims after transfer to NBE. In addition, they shall provide public access to all information related to the unclaimed liabilities transferred to NBE on their website for 10 years.
Regarding interest of unclaimed liabilities sub article 5.1 stated that prior to making the transfer to NBE, a bank shall capitalize interest for the first 15 years on the unclaimed liabilities as per the pre signed agreement.
Article six sub article two stated that NBE shall open ‘unclaimed liabilities account’ for crediting unclaimed liabilities transferred by banks.
The same article in sub article 3 allowed claimants of the transferred liabilities to NBE account to be accessed from the central bank without interest.
“Upon presenting of a claim and fulfillment of required evidences, the National Bank shall pay the balance transferred to it to the rightful claimant, but no interest shall be paid on such claims,” sub article 6.3 reads.
Article six, sub article 6.6 indicated that NBE may loan the fund transferred to it and not claimed by rightful person to deposit in various insurance funds using different modalities deemed appropriate.
A bank which fails to comply with the provisions of this directive shall be penalized in accordance with article 58 sub article 7 of the banking business proclamation.
Banking Business Proclamation No. 592/2008 article 58, sub article 7 stated that any person who contravenes or obstructs the provisions of this proclamation or regulations or directives issued to implement this Proclamation shall be punished with a fine up to 10,000 birr and with an imprisonment of up to three years.
The same proclamation, article 52 with its five sub articles talks about unclaimed liabilities. The 12 year old proclamation article 52, sub article one for instance stated that a bank holding any account of liabilities which have not been claimed, the principal balance of which has not increased or decreased, for which pass-book or other records have not been presented or any correspondence has not been made, for 15 consecutive years shall transfer the fund in such account to the National Bank.
Meanwhile the proclamation had been issued over a decade ago but the required legal frame work that allows exercise of the directive was not in effect for over 12 years.
The latest directive signed by Yinager Dessie, Governor of NBE, has become effective as of August 24, 2020.
VOICELESS AFRICA
Decades after the formal decolonization of Africa, the countries of the continent lack plenty of things to be considered independent or sovereign. If truth be told, flag independence brought more dependence than anything else. African economies are now firmly integrated into the lopsided world system, without much hope towards self-reliance. The so-called ‘democratization’, which was launched in the early 1980s, proved to be a monumental farce! Every few years, hundreds of political parties vie for state power with the clear intention of leveraging high offices to engage in serious looting. In Africa, major businesses cannot be envisioned without the blessing of political power, and political power cannot be envisioned without obsessing ethnicity. The routine is now well established. In fact, multiparty politics created fertile grounds for increased conflicts. ‘It is our turn to eat’ is Africa’s current Magna Carta and presupposes a rotation of looting by groups bent on identity politics (ethnic, religious, etc.) The chronic grand political corruption in Africa is now labeled the ‘AIDS of Democracy’!
Good governance is no more the driving force of African governments/countries. Since parasitic accumulation leveraging identity politics is the main pillar of Africa’s modernity, an integrity system that upholds transparency and accountability has become anathema to governments. Critically inclined individuals questioning systemic corruption are/were quietly removed from public discourses. At times, they are removed from the planet altogether, period! Our zombified elites or ‘useful idiots’, as Lenin used to call them, are not in a position, intellectually, emotionally, financially, etc., to challenge the ongoing protracted public looting! In the meantime, the sheeple, (human mass) rudderless as ever, still awaits for ‘Godot’, so to speak, while, intensifying polarization is taking its toll on the continent. The ideology of neoliberalism that obtains all over implicitly condones corruption by way of favoring crony capitalism over free market economic activities. The continental / regional / country wide destabilizations are reactions to the prevailing abusive governance. It seems The Sahel, North Africa, The Great Lakes region, The Horn, are in the process of slow motion fragmentation.
We feel it is instructive to examine the history of a once progressive party, which was enticed to degenerate into utter decadence. After taking state power, the TPLF led EPRDF (of Ethiopia) allowed grand political corruption to penetrate every nook and cranny in the country, citing the proverbial excuse of regional devolvement (read ethnicity). As a result, Ethiopia’s once respected and relatively capable bureaucracy became a mere pawn in the hands of political goons. This project of fostering intentional decay created a culture of mediocrity and corruption unseen and unheard in the history of the country. Connection to the power that be, rather than uprightly upholding laws, became the new modus operandi. At this point, it is worth mentioning how the goons of the party frustrated a civil society initiated grass root anticorruption movement. EPRDF’s unethical leadership successfully fought, tooth and nail, to stop this mass based organization from taking hold of the sheeple’s imagination! This column repeatedly advised EPRDF and its leadership not to take the paths of the Mafiosi, but to no avail. EPRDF became a den of well-known corrupt elements from all walks of life. By pushing policies that alienated it from the masses, EPRDF became the visible protector of various criminalities. The rest is history. Again, nothing new here!
Without a clear salvation plan, Africa is speeding towards its demise. To some extent, this quagmire is self-inflicted. Quality leadership with a potential to articulate as well as maneuver a relatively independent path, was systemically mowed down, to help facilitate the emergence of a strata of ‘useless idiots’, eager to blindly serve the callous interests of transnational capital. Again, nothing new here! Unfortunately, the way we are going about it, it seems ‘failed and failing states’ will become the norm in our expansive continent. To this end, the lack of independent media, to say nothing about tangible democracy, is and will continue to impede the ushering of liberating narratives! See Liedong’s article next column.
The sheeple needs continuous guidance and illumination. Institutions that could potentially forge such a milieu are not encouraged in Africa, as they can positively impact the sheeple’s conscience. For instance, the paid media (state, private, NGOs, etc.) is not in the business of enlightening the African sheeple. On the contrary, its intention is to make sure we become mindless consumers as well as promoters of useless policies, ideologies and culture. The main objective is to make sure we do not develop reality-grounded self-awareness, as that can potentially lead to self-reliance and independence of thought! Naturally, one of the main objectives of the state media is to continuously lie, so that incumbent politicos will remain in power for prolonged looting. By and large, Africa’s so-called private media is not really private, it is a direct or indirect subsidiary of the global MSM (Main Stream Media), which in turn is under the thumb of transnational capital. Many of these so-called African media do not even have their own editorials. They tend to parrot what is given to them by their paying masters, albeit in the various local dialects; nothing more! Oligarchs also use private media to misguide/indoctrinate the sheeple so that they can get away with murder. At the end of the day, the MSM is the amalgam of private and state media. In the words of former assistant secretary of the US treasury; the MSM is a presstitute! We say no more; except to mention that all attempts to establish independent media outlets in Africa have been thoroughly frustrated, by all sorts of interests (Pambazuka, et al.) Again, nothing new here!
Obviously and particularly at this point in time, ignorance and silence are not what suffering Africa needs. What Africa desperately wants is leadership with transformational vision. Unfortunately, committed and capable generation would not come to the fore as long as Africa’s institutions are only too eager to worship mediocrity and corruption. It is clear that independent attitudes in all spheres of existence have become threatening to the insecure and power hungry politicos, determinedly thriving on identity politics based ineptitude. The selection criterions for all posts in Africa, particularly in government agencies, are no more based on merits, even in the critical professions where skill remains crucial. That is why we say: “It is not what you know and what you do, but rather what you are, ethnologically, that will accrue you benefits in Africa”! Good Day!
