Financial firms are informally mobilizing capital to stabilize their liquidity crunch.
People thought that banks’ liquidity would improve after the National Bank of Ethiopia (NBE) stopped requiring them to buy 27 percent of every loan disbursement.
However, this has not been the case as sources report that banks including the public, Commercial Bank of Ethiopia (CBE), are experiencing a liquidity crunch. These sources report that the situation has pressured financial institutions (including the state-owned bank) to informally approach their corporate clients to get cash.
A head of one financial firm confirmed the lack of liquid assets to Capital. “In the recent past there has been a high demand for cash and banks have actively worked to meet the needs of their customers but this has led to a cash flow problem,” the bank president said.
In addition, this time of year is when corporations settle their taxes and as a result take money out of banks to pay the government.
“Billions of birr in taxes flow to the government around this time, as a result banks face a liquidity crunch,” a banker said.
Experts in the financial industry think that even though NBE started the Treasury bill at an attractive interest rate that follows the market economy with the goal of attracting financial firms like banks and insurance companies, sources said that banks will not get involved in this right now.
As of this Wednesday December 4, NBE has rebooted the weekly T Bill market with an attractive interest rate with the goal of attracting the attention of banks that had participated once in a while in the weekly auction because the rate was very minimal.
“Even though it has launched the market based modern T Bill, I doubt banks participate in this week’s auction because of their liquidity shortage, in the future when they have a high amount of liquidity the T Bill will be a good option for them,” another bank president told Capital.
Currently bankers are busy mobilizing sufficient liquidity instead of participating in the bill market (primary market), which is considered the way to commence the secondary market. “Currently we (every bank) are focusing on convincing corporate customers to deposit cash in our banks, but when we have enough liquidity we shall go on the Central Bank bill,” he said.
On the way to modernizing and transforming the financial sector the government is undertaking several changes including lifting the NBE Bill and introducing attractive T-bill s, which financial firms applaud.
Cash shortage stifles banks
Conference looks into the future
Ethiopian professional associations in collaboration with well-known experts from the diaspora and higher education institutions will host an international conference with the theme: ‘Ethiopia 2050: grand challenges and opportunities’.
The objective of this conference is to identify the key challenges and opportunities as a starting point for national conversation amongst policy-makers, political and economic leaders, professionals and various stake-holders and provide key points towards formulation of concrete and actionable sets of policies that could turn these challenges into opportunities.
During the two day event that will be held at Ethiopian Skylight Hotel from December 19 to 20 sessions, papers, policy recommendations and possible options will be presented.
During the press conference at Sheraton Addis, representatives of Ethiopian Engineers Professional Association, Ethiopian Academy of Sciences, Ethiopian Economics Association and Unity University, in partnership with the Association of Ethiopian Architects gave a preview of the upcoming conference.
The statement of the organizers indicated that the hosting institutions have recognized the fact that Ethiopia’s population continues to grow and is expected to reach about 200 million by 2050, “it is also expected this will bring about a multitude of potentially destabilizing societal threats in terms of providing adequate food-security, energy, housing, transportation, and health-care, if well thought policies, plans and actions are not put into place ahead.”
According to the statement that the joint organizers dispersed at the press conference, it is the conviction of many scholars and hosting institutions that unless proactive efforts in predicting these massive needs are carried out early and thoughtful plans to address these are prepared accordingly, it will be hard not only to eliminate poverty but also to avoid the threat of the accompanying highly destabilizing societal problems.
“Arguably, the next set of potential conflicts in our region could be driven by the competition for valuable resources such as water that will be further exacerbated by pressure from population increase and adverse effects of climate change,” the statement added.
Ethiopia 2050 will be opened by senior government officials and it is expected to be attended by about three hundred individuals: cabinet members, parliamentarian, policy makers and influencers, representatives of development partners, experienced leaders and young professionals, world class scientists, educators, researchers, high end practitioners and industrialists, medics, agronomists, engineers and architects as well as planners environmentalists, lawyers and others gather from across Ethiopia USA, Europe and other countries. 
Tesfaye Workineh, President of EACE said that half of the participants will be local.
Conference speakers include experienced technical and policy advisors in various disciplines, industrialists, educators and researchers, top-notch finance and insurance specialists, ICT and digital infrastructure & economy personnel, among others.
The conference is expected to lead to a comprehensive report that highlights the key challenges and opportunities together with recommendations for decision-makers at all levels.
According to the organizers some of the discussion topics on the two days conference includes integrated water resources management, large scale urbanization, food security, sustainability and environment, meeting energy demand, advanced manufacturing, transportation infrastructure development, ICT infrastructure expansion, access to health, and ESTM education, workforce and employment.
LIES BASED GOVERNANCE
Almost all nation states, as components of the global interstate system, depend on lies for their very survival. Yes, blatant and outright lies sustain the global status quo. The global status quo is anchored on the rigid and unflinching doctrine of accumulation. Everything else is secondary, including life itself. Accumulation at any cost and by all means necessary is the driving force behind the current monolithic interstate system. The prevailing world system, in its very essence, still remains unsustainable and antilife! Unless the better part of humanity stands up to this antique worldview, demise is inevitable. Stupid fixations like ‘infinite growth on a finite planet’ and soul destroying ‘meaningless consumerism’, need to be interrogated, particularly by the global sheep (human mass)!
Given our increased understanding of natural processes, one would think humanity would be more humble and cautious in its dealings with the planet’s ecosystem. Instead, our psychopathic/sociopathic elites running the global system continue to intentionally neglect the obvious consequences that were brought about by modernity’s complex societal organization. The continuous project of leveraging science and technology to manipulate nature and subjugate humans, (all over the planet) is hitting the wall, despite establishment rhetoric. The techno-sphere has already developed its own rationale for existence as well as reproduction, and might not be manageable by mere mortals going forward. It is advisable to reflect on studies that have repeatedly pointed out the fragility of complex societies. In fact, almost all studies conducted so far have reached same conclusion: All complex societies will ultimately collapse! Such findings force us to study and revisit the foundational principles of the existing order!
Externalization of costs, in other word, the built-in system of wasteful production, is one major irrational obsession’s of modernity. Innate ‘human greed’ and the ‘rational individual’ are ideas that are woven into the modus operandi of the existing order. How is it possible for species, particularly those who have been communal for eons, like the Homo sapiens, to continue to evolve and flourish without significant cooperation from within and without? By cooperation we certainly don’t mean the subjugation of the collective will to the whim of the individual. Obviously, entrenched interest and their tricksters use all sorts of seductive/sophisticated tricks to tell us otherwise. Why should the whim of an individual override/subjugate the efforts of the collective, which has more at stake in the survival of the species than the delicate individual (prone to mental sickness and more) organism? We admit; the consequences of ‘rational individualism’ might not be perceptible to the uninitiated, but it underlies the current theory of modern economics. Needless to say, this archaic ideology that anchors the existing system is also the one that is fuelling the even more distorted version of capitalism, namely crony capitalism. Crony capitalism is now at the heart of the global system. We reiterate: old form of productive capitalism is no more, and has been systemically undermined by speculative finance-financialization. Recall; it is the parasites and not the workers, who are benefiting from collapsing senile order.
This current mode of existence, which came about (relatively) recently, is thoroughly unsustainable. As a result, lies, lies and more lies are needed to sustain/maintain it. Once we are very clear as to the real intent of the greed/ destruction based world system, we can understand why the system has to rely on continuous lies for its reproduction. Again, our modern African elites, who are made to measure by the malicious global order, have been instrumental in (literally) destroying our indigenous proclivity for organic thinking and living. Tying to install (society wide) numbing consumption, based on inequity, is one of their stupid objectives. Forging creative alternatives is not on their agenda. Our elite’s motto seems to be; ‘monkey see monkey do’ and not monkey trying to create a new form of comprehensive social organization, away from existing polarization and unsustainability!
Some label this column left, while others think it is right. These days and frankly speaking, we cannot tell left from right. What we consistently try to do however is tell the truth, against all odds! Of course, those who are trying to preserve the global status quo do not welcome such efforts in truth telling. Even though more resilient developmental trajectories are urgently needed, unfortunately, the general public’s collective attitude is still to go along with the status quo and repeat more of the same. Here are few well-considered perspectives, seemingly from opposing political spectrum! See Smith’s article next column and others on page 42.
And if the cloud bursts thunder in your ear
You shout and no one seems to hear
And if the band you’re in starts playing different tunes
I’ll see you on the dark side of the moon.
Brain Damage, Pink Floyd. Good Day!
Cement at lower cost
The Ministry of Trade and Industry has authorized the Ethiopian Industrial Input Developmental Enterprise for the first time to distribute cement through its 87 centers over the country to stabilize the market.
As stated by the Ministry the enterprise will purchase cement from the local cement manufactures up to 20 percent of their production and distribute it with a fair price. As Eshete Asfaw, Sate Minister of Trade and Industry said that one of the mandates of the enterprise is to ensure supply of industrial inputs whenever necessary for trade and industry, the profit rate of the enterprise is much lower than the retail market “the lower rate of the profit would have better crack on solving the challenges facing the construction sector.”
The Ethiopian Industrial Inputs Development established as a Public Enterprise in 2014 under the Ministry of Industry. The enterprise mainly establishes, administers and transfers, whenever necessary, enterprises which ensure supply of industrial input, to supply industrial inputs by manufacturing domestically and abroad, to export industrial inputs which are in excess of the domestic industry consumption, to work jointly with enterprises which are engaged in producing and supplying industrial inputs and raw materials, work in collaboration with local and international governmental and nongovernmental institutions having similar objectives, sell and pledge bonds and to negotiate and sign loan agreements with local and international financial sources.
When cement producers are tackling a long list of challenges, unfavorable supply-demand balance, higher cement prices, escalating production costs, low utilization rates, social unrest, and a lack of foreign currency; The price of cement has been on a rollercoaster ride. The government showed strong determination to create a conducive business environment, to raise efficiency and competitiveness of the industry. The ministry has been making manufactures set constant prices and pursue their distributers.
According to the ministry, in the retail market cement is sold around 350 birr per quintal, however they buy it from 214 to 228 birr per quintal from the manufactures. The enterprise will sell it with a margin of profit about 1.5 to 2 percent per quintal.
Ethiopian cement capacity grew at an annual average rate of 6.8 percent between 2013 and 2018, according to date from Cement World Group. The growth in capacity came as a result of the government’s five-year Growth and Transformation Plan, as well as federal incentives to attract local and international cement producers. Cement known as the back bone of the construction world typically a heavy-consuming cement market, Ethiopian cement production had proven insufficient to meet demand.
CW Group expects Ethiopia’s cement consumption to grow through 2023, driven by a strong economy which is expected to be the fastest-growing in Sub-Saharan Africa.
