The 2018 Addis Ababa City Cup brings together eight teams including Quarry United from Nigeria. With a new Federation President, Engineer Haileyesus Fisseha in the helm and the games on live TV, this year’s City Cup promises to be exciting.
Even though Saint George has not done as well as hoped, the Addis Ababa Football Federation had done a good job of organizing the annual event. Winning the good will of the Gondar based side Fasil has saved the tournament. Ethio Electric, Mekelakya and Ethiopia Bunna are the Capital’s flag bearers while Premier League defending champions Jimma AbaJifar, Adama, Wolayta Dicha and Fasil are invited guests.
The major coup is inviting a Nigerian side, Quarry United to take part in the annual tournament and the signed and sealed contract agreement with Walta Television to transmit some games live including the opening and closing matches.
Ethiopia Bunna, Mekelakeya, Electric and Adama are in group one with Ethiopia Bunna versus Mekelakya and Electric against Adama the opening matches. The second group brings together Quarry United, Amahara region representative Fasil, last season’s knock out cup winners Wolayta Dicha and Jimma AbaJifar. Who, despite winning the championship is going through a rebuild.
According to the Federation’s news release the participants are to share forty percent of the money collected in the tournament with 15% going to the winners ten percent for the runner ups and the remaining to be divided at seven percent each.
Addis Ababa City Cup games to be televised live
Saint George supporters want Carlos Pinto’s head
A one year contract remaining with the club Portuguese Head coach Carlos Pintos stay with Saint George is in question after the knock out loss to old rivals Mekelakya. This is the first time in six seasons that the record Ethiopian Champions will be absent from international fixtures and many of the club’s supporters are voicing their anger about the Coach. “We finished the season with nothing to show for our big spending in signing big name footballers as well the hard work. It is time to see off Pinto for he failed to deliver what is expected of him,” A longtime supporter remarked after the defeat. “If not a second season with no trophy is eminent,” he added.
Though arguably the second most popular side in Ethiopia claiming a strong financial resource, in command of the most talented footballers and signing the highest number of foreign players, Saint George returns home with no trophy for the first time this season. Throwing away a fifth consecutive Premier League title to new comers Jimma AbaJifar followed by a penalty shootout defeat to the humble Army side, supporters are in sheer frustration at the presence of Pinto in the new season.
“His mission was to help us achieve something at the African Champions League. Yet let alone achieving better, we are no longer taking part in this season’s international fixtures. I want him replaced before a second season without any silverware,” suggested a frustrated fan.
The Army sides’ penalty shootout victory appeared to be the last straw but many are also not happy about Pinto’s losing the title to a team promoted that very season and the squad built under him undermining veterans the likes of Degu Debebe and Adane Girma.
Development Bank Non Performing Loans at 40%
Even though the ratio of non-performing loans (NPLs) at the Development Bank of Ethiopia (DBE) has been sharply soaring, the bank’s management is optimistic this will change now that several problems have been addressed.
The policy bank that mainly supports developmental projects in the country has been going through rough times when clients defaulted on loans they received for development projects mainly involving rain fed commercial farming.
At a press conference held on September 28 to review the past fiscal year’s performance the management of the bank disclosed that the bank’s NPL ratio grew to almost 40 percent for the year.
They explained that in the 2016/17 fiscal year ratio of NPLs stood at 25 percent, which at the time was the worst performance the bank had experienced. This fiscal year, however, NPLs escalated even more to 39.4 percent, according to a report presented by DBE management.
“The National Bank of Ethiopia’s standard is that NPLs not to be higher than 15 percent, which is in line with other international trends,” Haileyesus Bekele, the recently assigned president of DBE said.
He believes that if the hard currency shortages are solved then NPLs will decrease significantly.
Over the past year NPLs have grown rapidly primarily because of problems with rain fed agriculture investments and the shortage of hard currency. Power outages and damage to investments during periods of political instability were secondary reasons for the increase as well.
Haileyesus told Capital that DBE will take action including legal measures to get its assets however he declined to spell out in detail what this would entail.
The bank has been affected by the failure of rain fed commercial farming mainly in Gambela region.
Haileyesus said that when it came to rain fed agriculture investment, 471 projects throughout Ethiopia secured loans from the bank and out of this number 25 percent invested in their business but failed to profit.
There are 298 projects or 60 percent that DBE claims they partially invested in which also contributed to the growth of the NPLs, according to the president.
“The remaining 56 projects were not totally invested in and the bank is taking actions to solve the problem,” he added.
He was critical of how the bank handled rain fed agricultural investments. “They were applied without undertaking a detailed and scientific feasibility study,” he added.
“Some of the rain fed investments failed because there was no study on the plantation like sesame at Gambela, which failed because it had too much rain and the land was not suitable again because it was not properly studied,” he told Capital. He said that lack of coordination with relevant bodies has been another problem with the rain fed projects.
The bank has also hinted that it may find ways to improve its capacity by reforming the existing loan policy, hiring an international consultant and increasing the bank’s capital.
“Currently, our paid up capital stands at 7.9 billion birr but the bank’s capital adequacy ratio has reached its maximum rate of 15 percent as per the central bank rule,” he said.
“Because of this and handling the level of the investment growth volume the bank capital will definitely grow this year fiscal year,” he explained.
For the past fiscal year the bank has dispersed 39 billion birr from the total of 59 billion approved. DBE has total assets of 78.2 billion birr and has registered a net profit of 367 million birr after taxes and provisions. A year ago the profit stood at 324 million, but in its heyday in the 2014/15 fiscal year the profit reached 678 million birr.
IMF praises privatization, debt reduction, predicts 8.5% growth
The tone of the IMF’s annual report, which was well known in the past for criticizing the government’s policies; sounded different during its annual evaluation this year.
On September 26th, immediately after two weeks of discussions with top government officials and relevant bodies, led by IMF staff Julio Escolano, the international financial organ issued a statement lauding the government’s reduction, of the external current account deficit, and the ambitious reform agenda announced by Prime Minister Abiy Ahmed (PhD) aimed at opening up important parts of economy to competition and encouraging private sector investment.
At the end of this past fiscal year the ruling party decided to privatize some major public enterprises and several international companies demonstrated an interest in buying shares in Ethiopian Airlines, Ethio Telecom, the logistics sector and other companies.
The IMF said the strategy to shift the engine of economic activity to private sector development while the public sector consolidates is appropriate to maintaining strong growth and the report appreciated the reduction of the external current account deficit rate this past fiscal year. However, the IMF warned that external imbalances and indebtedness remain a source of macroeconomic risk.
The government succeeded in reducing the external current account deficit to 6.4 percent of GDP in 2017/18 through policies to constrain public sector imports and borrowing and tightened monetary policy to reduce external imbalances and contain inflation, according to the report.
In the year fiscal 2016/17 the deficit was 8.2 percent of GDP and 9.1 percent a year before. Since the country’s external debt increased significantly international actors and local experts expressed concern. However, the government has applied strong budget management and is closely following the projects led by public enterprises and by the government itself. Besides that some of the expected projects for execution have also been postponed and some of loans like external commercial loans were significantly reduced in the past couple of years.
In addition the government via the Ministry of Finance and Economic Cooperation (MoFEC) has implemented a new directive that reframed the rate of providing guarantees for public projects.
MoFEC’s Public Sector Debt Statistical Bulletin issued in December 2017 indicated that the country’s outstanding external debt has reached USD 24.22 billion.
From the stated amount the debt secured via government guarantees is over USD 7.11 billion, while the growth trend has significantly reduced compared with the preceding period.
In the 2016/17 fiscal year the country/government guarantee ratio stood at USD 6.94 billion. From last year’s amount the current year’s rate as of the end of the third month of the fiscal year only grew by USD 169 million.
The mission encourages the authorities to maintain an appropriately tight monetary and fiscal policy stance, along with a more flexible exchange rate regime, and implement reforms aimed at developing the financial system and markets. “These macroeconomic policies, combined with the announced reforms, will improve competitiveness, reduce external imbalances and rebuild buffers, while raising the growth potential of the economy over the medium term,” the statement added.
According to the IMF, prudent budget execution led to a lower than planned fiscal deficit, estimated at 3.7 percent of GDP, although tax revenue continued to disappoint.
The government has undertaken strong budget management for the last fiscal year. Last fiscal year the Ethiopian Revenue and Customs Authority secured three fourths of its tax collection target. The public relation head of the authority, Efrem Mekonnen told Capital that with the collection of 150 billion birr the tax GDP ratio stood at 12.5 percent, which is below the projection under the GTP II plan. By the end of the five year plan the government looks to increase tax collection 17 percent of the GDP.
According to the estimation of IMF in 2017/18, real GDP grew by 7.5 percent, supported by a strong harvest and rapid growth in air transport and manufacturing exports. However, political uncertainty, foreign exchange shortages, and weak prices for traditional exports hampered economic activity.
This year the IMF expects serious issues that have plagued Ethiopia like the shortage of foreign currency to improve and for the economy to continue to grow.
Growth is expected to step up in 2018/9 to 8.5 percent, supported by stronger confidence as the uncertainty of the previous year recedes, and the availability of domestic and foreign direct investment improves, the report reads.
The authorities’ strategy to shift the engine of economic activity to private sector development while the public sector consolidates is appropriate to maintaining strong growth.
The final report is expected to be issued within a few months.
