Awash Bank welcomes the Central Bank’s decision to cease the NBE Bill and announced the slashing of interest rates worth half a billion birr in bank revenue.
A week ago the National Bank of Ethiopia (NBE) with its latest directive MFA/NBEBILLS/004/2019, has repealed MFA/NBEBILLS/003/2018 directive forced banks to buy 27 percent of bonds on every fresh loan and advance.
It was a debated issue between the government and the private sector including the business community and international partners based on the claim the private sector would be affected with access to finance and banks would retreat to provide loans due to the directive.
They also stated that the NBE Bill hiked the cost of funds boosted the loan interest rate which contributed to inflation.
Banks have long complained the NBE bills shrink their liquidity and smash their capacity to provide loans for clients. They have also argued the 3 percent interest rate, which was attributed when the directive was issued and later increased to 5 percent in October 2017, was far below what banks pay as interest for the deposit. When the directive, ‘MFA/NBEBILLS/001/2011’, became effective, the minimum interest rate was 5 percent and then increased to 7 percent a year ago when the birr was devalued by 15 percent.
During its latest press conference Awash Bank stated that due to lifting of the NBE Bill it was encouraged to reduce interest rates in all sectors from 0.5 to 4.5 percent.
Desalegn Tolera, Credit Analysis and Portfolio Management Deputy Chief at Awash Bank, said the bank was undertaking a study on loan provisions and how to accelerate the business which had observed a slowdown. “In the meantime, the decision of NBE to lift the 27 percent bond purchase bill encourages us to improve our loan interest rate in favor of borrowers,” Desalegn said at the press conference held on Thursday November 28 at the headquarters.
Since NBE introduced the NBE Bill Awash bought 17.1-billion-birr worth of bonds and currently the amount NBE holds is 12.1 billion birr, while the balance was paid on their maturity started in 2016.
Awash is the second biggest NBE Bill bond buyer after Dashen Bank, both of them are competing for the highest profit, currently Awash appears to be slightly leading.
Desalegn said due to the lifting of NBE Bill the cost of funds has declined. High interest reduction mainly applies to agricultural processing and manufacturing.
According to Desalegn, the service industry like hotels and tourism which contributes a lot of foreign currency will receive preferential treatment in the current loan interest rate reduction. The other priorities are health, education and agricultural.
“Based on our study the bank shall lose 500-million-birr worth of revenue from loan interest by reducing the interest rate,” Desalegn said.
Tomas Fikadu, Commercial Credit Appraisal Department head, said Awash Bank’s interest rate was ranging from 8.5 percent to 17.75 percent and now the maximum range has declined to 15.75 percent.
“The current reduction depends on the sector for instance one received a reduction of 4.5 percent but another three percent,” he added.
According to bank officials, the interest decrease means inflation will go down because it helps borrowers access credit at a lower cost.
Since the introduction of the NBE Bill banks have increased their interest rate to accommodate their cost of funds. Experts argued the interest rate had escalated up to 20 percent in the past few years. Desalegn said banks were forced to transfer the lower interest rate of the NBE Bill to customers.
Awash responds to NBE move by lowering interest rates
Cepheus Capital invests in Tabor ceramics
Cepheus Growth Capital Partners announced an investment into Tabor Ceramics Products Share Company, Ethiopia’s leading domestic producer of ceramic products.
With this investment, Cepheus Capital will hold a significant minority ownership stake and provide strategic, managerial, and operational support to the company. Tabor Ceramics, based in Hawassa, is in the midst of a major expansion to increase all four of its main product offerings, which include tiles, sanitaryware, tableware and ceramic insulators used in electricity distribution lines.
The equity investment by Cepheus Capital will support the company’s planned expansion and also help launch the production of new higher quality and higher value product line being manufactured in Ethiopia for the first time.
Teshome Belamo, whose family owns Tabor Ceramics, said they are excited with the partnership with Cepheus. “We are excited to partner with Cepheus Capital as we are at the beginning of a major factory expansion and are also aiming to improve our management systems and internal operations to be in line with international standards. We have a very close alignment with the team at Cepheus Capital and look forward to working with them in the years ahead.”
Cepheus Capital’s Managing Partner Berhane Demissie also said that they invested in the company because of the bright future. “We see Tabor Ceramics as a promising investment opportunity that is very much aligned with the growth trends and trajectory of the Ethiopian economy—including urbanization, infrastructure expansion, and the rising numbers of middle-class consumers. The company has seen growing demand for its products in recent years, and we anticipate this will continue over the coming years, reflecting large on-going housing developments as well as the expansion of the country’s electricity network. The mix of products manufactured by the company—covering retail, residential, commercial and industrial customers—also offers multiple growth and diversification opportunities.”
Tabor Ceramics is a well-positioned import-substituting business that can replace a range of ceramic-made products currently supplied almost exclusively via imports.
Cepheus Capital is a private equity firm that invests in Ethiopia’s most promising businesses and entrepreneurs. Besides providing capital, the firm also delivers management and operational expertise to its portfolio companies, and assists them in the adoption of strong environmental, social and governance standards. Cepheus Capital is finalizing the fund-raising for its first USD 100 million fund that will be deployed across the manufacturing, agro-processing and service sectors.
ENLN forum unleashes nutrition potential
The first Ethiopian Nutrition Leader’s Network (ENLN) held its first annual forum on November 24 with the theme “unleashing nutrition leaders’ potential to accelerate multi-stake holders’ nutrition action in Ethiopia.” Ethiopian leaders’ network is working to the development of both individual and organizational leadership capabilities in the broader area of nutrition to support the government and public in reduction of malnutrition.
Israel Hailu, initiator and founder of the Nutrition Network, said “since the network is new we didn’t set specific plans and objectives for the last one year; however we have achieved many things in creating awareness about the network, an increasing number of members, in giving international training for our members.”
Ethiopia nutrition leaders network (ENLN) was launched on February 8, 2019, at the Golden Tulip Hotel in Addis Ababa, with over 60 professionals from various backgrounds Committed to ending child malnutrition by 2030. The nutrition network which is lead through Save the Children’s nutrition program currently reached its members to 150 over the country.
Israel said “the network has participants from different sectors as nutrition is every one’s concern.” Members are obliged to work eight hours per month with the network. The network is working on to be established as a legal organization to stand by itself, preparing specific objectives, plans and legal manuals on nutrition.
Malnutrition is a critical health problem in Ethiopia. Stunting is a largely irreversible result of chronic undernutrition that leads to weaker immune systems and diminished cognitive capacity. Furthermore, one in ten children in Ethiopia is suffering from acute malnutrition, which is a leading cause of death in children under five. The result is hundreds of thousands of children dying and millions who will never reach their full potential from a condition that is preventable. Israel suggested that “the government is having lots of measurements actively to reduce malnutrition and stunting” however she added, “still lots mobilizations are needed to accelerate the movement.” Child stunting rates in Ethiopia have fallen from 58% in 2000 to 37% in 2010.
Ethiopia has signed the global scaling up nutrition movement for a collaborative process to end malnutrition in all its forms and for the development of the national nutrition framework. The country has prepared its first nutrition policy on 2018 to ensure that all Ethiopians secure adequate nutritional status in a sustainable manner, which is an essential requirement for a healthy and productive life. Ethiopia has now approved its Food and Nutrition Policy (FNP) and is moving forward in creating food and nutrition council and a Secretariat, a governing body for all food and nutrition-related issues and the technical arm of the governing body respectively, which requires a huge number of talented nutrition leaders that could be part of these structures and be able to provide nutrition leadership across the country. Hence, this platform, which is hoped to eventually mature into an institution, is further intended to mobilize resources on nutrition leadership in Ethiopia from various disciplines to equip new generations of excellent and visionary nutrition leaders capable of meeting the nutrition leadership demand in the country.
Somaliland, migrant consolation prize for Middle East dreams
Life seemed comfortable for Abiy Aschalew, when he found himself in the self declared state of Somaliland. Born in Abergeleë a small wereda in Amhara Regional State, Abiy initially dreamed of arriving in a Middle Eastern country.
Human Trafficking in Ethiopia occurs internally and externally in the form of adult and child labor and sex trafficking. There are also reports of organ trafficking and other related human rights violations, like child marriage, and exploitation.
Abiy, now in his mid-20’s, was unable to continue preparatory education due to poor grades so he chose to move to Addis Ababa to work and support himself and his family.
His father gave him 1,500 birr for transportation and other accommodations after convincing him to continue his education in an extension program and work during the day time.
Economic insecurity and poverty often push families to look for alternative modalities to support the family, and demands for workers in weaving and farming have pulled children and women into human trafficking to meet these demands.
An international organization has reported that most traffickers are small local operators, often from the victims’ own communities, but that well-structured, hierarchical, organized crime groups are also responsible for irregular migrants becoming highly susceptible to trafficking. Labor recruiters target young people from Ethiopia’s vast rural areas with promises of a better life.
According to the study made by IOM, labor trafficking is the most common form of exploitation in Ethiopia, although sex trafficking has also been reported, and some researchers suggest that transnational adoption and organ harvesting should be investigated as a form of external trafficking including extensive concerns over the trafficking of women for domestic labor to countries east of the Horn of Africa.
“You can learn your class there, I will recruit you in the best café’ where you can earn handsome tips up to a hundred birr in half a day,” said a broker in his area who worked for two years in Addis Ababa and then moved to the gulf states after collecting money for the next journey.
For external trafficking, Saudi Arabia, Lebanon, Kuwait, the United Arab Emirates, Yemen and of course Europe are the destinations. However, the routes are in Sudan, Kenya, Djibouti, and Somaliland.
For those who are not successful at having a settled life in Somaliland, like Abiy, human trafficking is common. There are around 50 victims a day.
“The delay in implementing a legal agreement with UAE on overseas employment contributed to the problem and benefits human traffickers,” said Feleke Belay, from the Hargeisa Consulate of Ethiopia, adding that they are gravely concerned over the increasing number of illegal migrants entering Somaliland.
People are heading to United Arab Emirates, via air Arebia and fly Dubai. Large numbers of Ethiopians are being deceived and lured by illegal agents so they flee the country and become engulfed in life risking journey, adds, Deputy Consul, Feleke Belay.
According to Feleke, just a year after, the journey which is mostly from eastern part of the country they commonly are lured by false promises of smugglers, borders of Somaliland accommodate hundreds of Ethiopian migrants every day.
The plan to send Ethiopians to UAE is a short-term measure to reduce unemployment in Ethiopia and to cope with increasing job demands, sending employees to one of its closest allies UAE, even if, the agreements have not been realized so far. However, while many more Ethiopians were waiting for the official agreements of the two countries, to travel to the gulf nation, the delay has created another loophole that the system to be easily exploited by human traffickers. Several networked brokers extended from Ethiopia to UAE are becoming major players in facilitating the visa application for the draw-in job seekers, by processing from the UAE Embassy Addis Ababa, said the deputy consul. Feleke indicated that a few weeks ago, the Somaliland Ethiopian Consul received information of at least 90 Ethiopians flying through the Hargeisa Airport via Air Arabia and Fly Dubai, due to official prohibition of Ethiopian women traveling to UAE via Addis Ababa.
Feleke thinks the big headache is not about people who are flying illegally through the Hargeisa airport by means of the human traffickers. However, there is another harsh situation where ethnically organized smugglers are torching Ethiopians by dropping a piece of melting plastic on their body to let their families know the terrifying painful sound so they will send the money. Surprisingly, there are smugglers settled in Somaliland in a place named Yogori and that is the place where migrants are held hostage and torched until they have received money from their relatives. Some of the smugglers are armed and, Feleke, noted that the latest rumble was between security forces and human traffickers.
Accidents are common on the route, some weeks ago, at least 11 people died while the driver filled up 28 people in a minibus with a 12-person capacity.
“Human traffickers are networked and camped in one of the border areas plus the money they receive from the hostage families through the bank.”
Such acts are known by the government of Ethiopia and there are times when the police force demolishes their temporary shelters in the boarder
Travelers don’t have sufficient information regarding the issue. What they said is: “there is no job at home and we don’t have any other choice but to stay, said the Deputy Consul, noting that the desperate voices that he has heard while talking to travelers. The exact number of Ethiopian refugees and migrants heading to Somaliland is unclear, but large numbers of people are fleeing.
Ethiopia has recently been identified as a country with a burgeoning human trafficking problem, although accurate rates of the number of trafficking victims are difficult to find the U.S. Department of State said.
The exact size and extent of the problem is not known, but media, government, and advocacy groups have increasingly raised concerns over human trafficking in Ethiopia in recent years.
Families continue to play a major role in financing irregular migration, and may force or coerce their children to go abroad or to urban areas in Ethiopia for employment.
The year 2019 has also seen a spike in arrivals of East African refugees and migrants there. Latest estimates show that the monthly average of migrants arriving in Yemen this year is 18,500, the highest number since data became available in 2006.
Abiy and other Ethiopians living in Somaliland say they are content as the people of Somaliland are friendly and respectful considering Ethiopian gratitude during bad times of civil war but they still dream of traveling to gulf states.
