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DBE used machines no longer acceptable for equity

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The Development Bank of Ethiopia (DBE) decided to exclude used machines as in-kind contributions for equity after facing many challenges from investors who abused the privilege.
The Policy Bank introduced a new loan policy in 2017 which changed many things including the ration of loan investments for local and international investors.
For local investors investing in industrial parks, the loan to equity ratio was minimized from 85 to 15 percent respectively.
The bank decided to finance an international investor to the maximum of 50% and remaining should be brought by the company on the new policy replacing the previous 70% and 30 % financing ration respectively. The equity contributed from the investor could be in different forms including a machine, building, or vehicle.
The in-kind contributions, which consist of first-degree collateral by the bank, can still be extended to up to the extent of the minimum equity requirements or more if they are brand new, according to the policy.

The Bank was strongly hit in the head with the undervaluing of machines in the case of foreclosure.
“We faced several challenges to recover our investment which includes import of non-functional and outdated machines by the investors,” said Kifle, Public Relations director at the bank. “Previously revaluation of used machines consumed most of our energy”.
Also, the high consumption of energy and high demand for the spare parts was given as another reason for considering used machines by the bank. Import of outdated machines is also marked to decrease production and led to the loss.
The nonperforming loans (NPLs) of the bank was about 25% in the 2016/17 fiscal year which the bank stated that it was the lowest of all times. The bad loans were 15% higher than the previous year, the bank stated.
“We didn’t evaluate if the policy is bringing any change as it is just a few months since its operation and the injection of new loans takes a few months,” said Kifle. “But after the projects are fully functioning we hope we will observe changes.”
The Bank which changed its collateral coverage policy last year states that financing should be equivalent to the assets of the company.

Detailed treaty governing Ethio-Eritrea Port finalized

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Four checkpoints established

A draft of a detailed treaty governing the port and logistical relationship between Ethiopia and Eritrea is in the process of being finished and will soon be presented to the Eritrean government.
The treaty which includes custom and transport protocols also has a post utilization strategy.
The two committees, steering and technical presented their action plan to the Prime Minister.
The steering committee is chaired by Hirut Zemene, State Minister of MoFA. Its members include the Ethiopian Revenue and Customs Authority (ERCA), Ministry of Transport (MoT), National Bank of Ethiopia (NBE) and Maritime Affairs.
The technical committee is comprised of all the steering committee member representatives in addition to the freight forwarders, logistics, and freight transport associations. The technical committee has 15 members. It assessed the market and recommended tariff rates.
“A delegation of four from Eritrea came to evaluate the logistics and related matters in Ethiopia and they returned back to establish a similar committee with us which will deal with the proposal,” said Temesgen Yihone Logistics Director at the Ethiopian Shipping and Logistics Service Enterprise. “We are waiting for their response and based on our action plan each member of the committee is undertaking preparatory measures.”
“A legal transaction couldn’t happen if we didn’t sign a treaty,” said Temesgen “We had to do this quickly because Massawa Port is already providing service. We expect the deal to be signed within a maximum of two months.”
ERCA is working to resume four checkpoints from Eretria.
The Bure Gate, located in the Afar Region, will serve the cargo from Port Assab. Zalambesa and Rama Gates which are separated by 100 kilometers in Tigray Region will serve cargo from port Massawa. The Zalambesa gate is located close to the city of Adigrat and Rama in Adwa town.
All of the gates are expected to be customs stations except for Humera Gate which is going to accommodate movement from Sudan and Mawassa Port.
“We send a team to assess the situation and we will decide which are going to be checking points and which are going to be custom stations,” said Gaim Yibrah Director of the Customs Procedure Program at the Authority. “The team will evaluate the office equipment, telecommunications and human resource needs.”
Mekelle which chartered a shipment of Zink from Eretria to China marked the resumption of the port relationship between the two nations. The ship docked at Massawa in the presence of the leaders of both nations. The ship made more than USD 618 thousand for transporting 11,000 tones.

Agency to move people from flood zones

Tesfaye Getnet
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The Addis Ababa Housing Development & Administration Agency  plans to move people out from areas prone to flooding. The Agency will then help them rent condos at a low price.
Starting a week ago the Agency began registering people living in the areas to rent condos for as little as 320 birr for a studio or 720 birr for a one bedroom in condos located on the outskirts of the city.  This will mean people will have to move far away from their current residence.
Selsehi Tesfaye , Addis Ababa City Fire and Emergency Prevention and Rescue Agency communication officer told Capital that  the agency has transferred  the list of homes vulnerable to flooding.
“Our job is to identify the houses which are vulnerable  to floods and disasters  and in our recent study we announced to the city administration  that  there are 20,095 households  located in the places where there is a high risk for floods and disasters and it is up to the administration to find  houses and to remove them.’’
A recent study by the agency disclosed that  900,000 different government and private institutions are vulnerable to flood disaster.
The report   identified 1,435 places at high risk of flood disaster and stated that if the necessary relocation or reconstruction does not occur a disaster may kill thousands and damage  4.2 billion birr in property.
Among the places 66 are located along the river side and 26 places are found  where a high possible land side may occur.
Most are located in Gullele and Nifas Silke Sub city, where homes are built along the river.

University lecturers must meet tougher requirements

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The Ministry of Education (MoE) is changing the standards for people employed as lecturers in an attempt to improve the quality. Now their contract renewal will be depend on performance based on an assessment from students and their supervisor. They also must publish at least one piece of research.
This will not apply to academic employees who have served ten years or have reached the level of associate professor.
In other countries most university teachers are assessed every semester, according to Samuel Kifle (Ph.D.), State Minister for Higher Education. Previously the lecturers received a pension when their contract was terminated regardless of performance.
Currently, the Higher Education Proclamation states that a tenured academic can’t be fired unless they commit a serious breach of discipline.
“When the parliament returns from the recess the proclamation will be amended,” said Samuel. “When lecturers think they can remain in a job regardless of their effectiveness it negatively affects the quality of education.”
The new policy will reform other aspects of the lecturers’ jobs. It will allow, for the first time, graduates of alternative education institutions such as extension, summer, night or private colleges to become eligible to apply.
Samuel expects this to alleviate the current shortage.
“The grade requirement is not the only criteria. After institutions receive the non- regular applicants they can evaluate via writing, interviews, lecture demonstrations and other means. So it opens up competition for the positions,” Samuel argued.
University representatives agree meeting such standards is not difficult for non-regular and private graduates, however some smaller schools are having difficulty finding qualified lecturers.
“We called applicants once to apply based on the MoE’s criteria but no one responded. We are conducting a second announcement and if the response is similar we will be forced to reduce our standards because we don’t want empty classrooms, students have the right to learn,” said one academic vice president.
Capital spoke with representatives from two universities. Both said they had difficulty finding lectures that met the new standards.
The new directive raises standards in a number of other areas as well. Lecturers now must have a minimum GPA of 3.75, a Master’s Degree and an approved thesis. Each position must receive ten applications and if the university doesn’t get enough after the first posting they must make a second announcement.
It increased the length of the Master’s program to two years from one this is a reverse of what is occurring in other countries as many accept one year programs.
Ph.D. requirement will be regulated by the universities themselves. Normally the Ministry regulates lower degree requirements.

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