Monday, January 24, 2022
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Tele privatization faces setback

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The telecom privatization which grabbed the attention of significant players under the Expression of Interest (EoI) stage has faced yet another extension in the biding process. The process was previously expected to be floated during the course of this month.
It’s to be recalled that the government floated the bid to sale 40 percent of Ethio Telecom shares to interested foreign investors at the beginning of January 2022.
As sources told Capital, several companies had submitted their proposal however the actual number of the companies was not revealed. For certain reasons, the government has given extensions for further preparation with the exact date yet to be indicated.
As part of the home grown economic reform programs the government had laid out the frame work for the privatization of public enterprises under the public enterprise proclamation no 1206/2020 in order to broaden the role of the private sector in Ethiopia’s economy. In line with the program, the government proposed a partial privatization of Ethio telecom by selling 40 percent of the equity share capital of the company and to that regard September 14, 2021 saw the Ministry of Finance (MoF) requesting eligible bidders to submit their proposal.
The Ministry which is responsible for the follow up process alongside the Public Enterprises Holding Administration Agency had issued the expression of interest on mid-June that closed after a month and issued a request for proposal on September inviting interested parties who can add value to the Company by bringing in best practices in terms of operations, infrastructure management, and next-generation technological capabilities.
“The objective of this strategy is to broaden the role of the private sector in the Ethiopian economy, improve the efficiency of public enterprises, enhance their competitiveness, increase access to capital, and enhance the quality and accessibility of services,” stated the investment teaser released in association with MoF’s announcement for EoI for Ethio Telecom, the century and quarter telecom monopoly. Ethio Telecom at the time stated that the enterprise’s total equity and liabilities was over 79.8 billion birr.
The Investment Teaser ‘Project Nigat’ was conducted by Deloitte Consulting Limited, which was hired by MoF to consult on the partial privatization.
Of the stated amount, the current assets were 38.9 billion birr and the remainder 40.9 billion birr was noncurrent asset.
The enterprise equity that was stated on the investment teaser’s balance sheet was 25.29 billion birr, while the noncurrent liabilities and current liabilities were 27.2 billion birr and 27.3 billion birr respectively.
The balance sheet showed that the mobile network equipment was the largest non-current asset class constituting 42 percent of property, plant and equipment as at 31 December 2020.
As per the investment teaser, Ethio Telecom has over 7,400 tower sites (700 plus sites in Addis Ababa); of which 96 percent are greenfield towers and remaining are rooftop towers with the length ranging from 2 metres to 102 metres and an average height of 36 metres, while it has 7,777 real estate properties. Moreover, insights showed that it had over 21,000 km of fiber network spread across Ethiopia to which about 85 percent is buried.
As part of breaking up its monopoly hold over the sector, Ethiopia last year also issued a tender to award two licenses to private telecommunication operators.
In late last May, one license was awarded to a consortium led by Kenya’s Safaricom, which offered $850 million and promised to invest $8.5 billion over 10 years.
In related news, last month the Ethiopian Communications Authority (ECA) announced that the process of selecting the second telecom operator had been postponed.

Ethiopia’s roasted coffee sells out within seconds of debut on Alibaba

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Ethiopia’s coffee under the brand of Arada set another record on the Alibaba online shop, Tmall Global.
The Ethiopian roasting company Arada Coffee, which offered its price at a promotional rate, said that the sold price of coffee was about five folds to that of the green coffee price.
On the live stream event organized by promoter Li Jiaqi, a prominent live streaming e-commerce influencer, almost five tons of Ethiopian coffee was sold within five seconds.
It is to be recalled that when Jack Ma, founder of the giant e- commerce platform, Alibaba, visited Ethiopia, he had promised Prime Minister Abiy Ahmed that his platform would facilitate Ethiopian goods and services to be sold on the online platform. However, this faced a setback owing to several reasons but primarily due to the global pandemic.
However, recently the relevant government bodies including the Office of the Prime Minister and Ministry of Trade and Regional Integration have created a conducive environment in collaboration with Alibaba for the Ethiopian major export commodity, coffee, to be sold in different trading platforms of Alibaba. For trial, selected companies have started selling their roasted beans through Alibaba’s trading platforms mainly on Taobao and Tmall.
On the live-streaming online event that was held on Wednesday January 19, the product of Arada Coffee which was established in 2016 as a value added coffee producer and exporter sold within record durations for the volume of Chinese customers.
Addis Belay, CEO and founder of Arada Coffee, said that his company and other two local roasters had sent their trial product. “For the upcoming Chinese New year market, the influencer’s team selected our coffee for promotion and in three weeks’ time we have shipped five tones or 12, 000 bags of packed coffee through Ethiopian Airlines,” Addis explained.
He told Capital that 11,292 pieces coffee that was in stock sold in about ten seconds.
“The previous record was seen when Rwanda’s 3,000 bags of coffee sold in two minutes. Now our product sales speed surpassed the record seen in 2010,” Addis said.
On his twitter post Teshome Toga, Ethiopian Ambassador to China who attended the live event, said “Surprised that more than 11,000 bags (a single bag is one pound or 454 gram) of Ethiopian coffee in stock were sold in 5 seconds in Shanghai in a live-streaming online event where the most influential promoter, Li Jiaqi and I promoted Ethiopian coffee via Tmall Global platform.”
Wu Peng, Director-General, Department of African Affairs at Chinese Ministry of Foreign Affairs, twitted that, Teshome Toga (Amb) participated in a live-streaming event and 11,000 bags of Ethiopian coffee were sold in 5 seconds. “From January to November 2021 China’s import of Ethiopian coffee has increased by 196 percent. In coming years, China will import more African agricultural products,” stated Wu Peng.
Addis disclosed that his coffee was sold at a promotional price with a 30 percent discount to that of its regular price. “Even though we provided the product on discount; it is still 500 percent higher in value as compared to green coffee,” Addis expressed.
He stressed that the current success is beyond value adding that, “the incident promotes the country and Ethiopian coffee.”
Addis, who previously was engaged in network engineering as his profession at one of the corporate companies in the US, said that starting from 2008 on his return to Ethiopia he engaged himself on agriculture, transport and other investments. “I have a deep love for coffee but the coffee taste that I got from my parents’ home was not consistent with what I was having, and often i would carry the roasted coffee beans with me on my visits. It is for this reason that I embarked on the journey of producing high standard value added coffee from the top quality beans that we provide to the world,” Addis said whilst he disclosed the reason for his entrepreneurial journey.
“I started the business as a responsibility to uplift our quality product for the international customers and to show that we can provide better,” he explained.
He said that it was difficult to run the business due to different reasons, “Ethiopians are drinking coffee and they also like to roast it by themselves which makes it difficult to crack such a strong culture.”
He added that despite this, his product has got acceptance on international markets like Germany, US and Philippines, although the COVID 19 pandemic has totally crushed the market.
“Now we are getting orders from Germany,” he said by adding the latest online sales is a compensation for his tireless effort to promote value added Ethiopian coffee.

Forex service charges balloon inflation

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The skyrocketing of service charges and other fees in the foreign exchange transaction has been stated as one of the contributors to inflation. To combat this experts have pushed forth recommendations to the regulatory body in order to find a way to pause the upward trend.
Experts in the banking sector said that the fees that are added on the foreign currency market have increased gradually, further expressing that in the past few years the amount has doubled.
Experts in the International Banking Division (IBD) said that charges to access foreign currency through banks has increased and on average it has reached about ten percent of the amount.
The financial experts opine that this has contributed towards the price hike on commodities which have gone on to affect the mass public, who are the last price takers of commodities and services.
“The commission and charges to buy foreign currency is jumping from time to time to which the National Bank of Ethiopia (NBE) ought to apply some sort of solution,” an IBD director of a private bank told Capital.
He said that the situation particularly in the past couple of years has totally changed and every time banks are revising their rates which impose on the foreign exchange sales service.
“In my view they are also contributing towards the inflation which has to be stopped at some point,” another expert on the sector remarked.
“It might be a market economy which is governed by the market but when it is becomes a challenge for the general economy of the country the regulatory body should make necessary interventions,” he added.
He recommended instruments like maximum threshold to be imposed on the foreign exchange, which is a national resource meanwhile banks should be involved on facilitation to earn it.
Experts said that the old established regulation of NBE indicated that in every foreign currency sales, NBE has a 1.5 percent exchange commission that has not changed for about five decades, while few years ago on average the general sales charge at commercial banks was not more than four percent, “but it has extended up to ten percent at the moment.”
The 1.5 percent exchange commission for national bank is applicable for every foreign currency sales transaction except for foreign currency account holders, who demands the foreign currency from their foreign currency savings.
Banks have service charge commission, opening commission and sometimes margin charge if it is connected with margin facilities like credit.
Banks argue that service charge and commission fee has expanded because of different reason but mainly due to costs that occur in operation.
They said that they have different costs to get the hard currency which is supposed to be compensated. However experts argued that banks are only focusing on profit maximization rather than contributing for the community.
“Our banks are competing with each other on profit maximization rather than service provision and other activities that are a good indication for the issue on discussion. Their behavior is flaming the inflation more,” one financial expert argued.
They said that because of the shortage of the hard currency, whatever it costs buyers or importers, they are willing to pay the amount requested by banks as long as they are able to access the foreign currency “and buyers compensate the cost from their import goods or services selling price.”
Experts recommended that if banks would not have ways to reduce the charges on hard currency service; at least they have to play alternative roles like providing generous credit facility for sectors like agricultural activities to scale up productivity and at least to slash the inflation that is seen on basic commodities.
Fikadu Digafe, Vice Governor and Chief Economist at NBE, told Capital that the regulatory body does not have a plan to involve itself on the matter.
“Yes it has a contribution towards the inflation but we have no a plan to involve and govern the system,” he said.
In his brief response Fikadu said that it is a free market economy and banks shall govern and engage responsibly as per the markets as opposed to being commanded by the government.

Diaspora homecoming records huge impact

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Around 100,000 Diasporas respond to the Prime Minister’s call for the great Ethiopian home coming challenge within a space of one month.
Aimed to minimize the increasing pressure of the western governments on the government in connection with the war in the country, Prime Minister Abiy Ahmed called Ethiopians and friends of Ethiopia to visit Ethiopia for the Ethiopian Christmas and Epiphany after completing the first phase of the war.
As reports from the government officials shows, a hundred thousand Ethiopian Diasporas and friends of Ethiopia responded to the challenge within the short period of time with the organized events reeling in success.
Throughout the month, the government hosted various events to engage the Home Comers in the reconstruction process and peaceful protests against unnecessary external pressures on the country and different events have likewise been held by the private sector.
Some of the notable events include those by the likes of the Ethiopian Investment Commission which promoted various investment opportunities, the grand dinner hosted by the diaspora agency and diaspora community, amongst other different exhibitions.
“The home coming challenge has four goals; diplomatic, economic, political and social affairs,” said Wondwossen Girma, Public Relations Manager at Ethiopia Diaspora Agency, adding, “The home coming challenge has been successful as one of the main goals is fundraising and support for the reconstruction as well as aid for the war victims.”
Many of the participants who have already arrived have brought very useful medical consignments that are to be used to equip the hospitals and other health service providing institutions across Afar and Amhara. Moreover, as reports show, the Ethiopian government has earned around 800,000 dollar from the dinner.
“The Diasporas and friends of Ethiopia have been successfully defending Ethiopia’s stance in the international arena to dismantle internal and external enemies’ conspiracies,” said Wondwossen stating that the event shows government’s belief on its diaspora community to which the diaspora have reciprocated the same through their rise to the call.
As government officials inform Capital, around one hundred thousand of Ethiopians responded to the Prime Minister’s call. “The number does not really matter, the weight of the impact matters most and in our case we have seen the huge impact that it has brought,” said Wondwossen indicating that the agency has asked the Immigration Nationality and Vital events Agency for full information with regards to the exact figures.
This homeland exodus by hundreds of thousands of Ethiopians is not an ordinary home coming. The challenge takes place amidst the struggle that is being conducted by heroic Ethiopians and foreign nationals of Ethiopian origin here and in the diaspora as well as by the National Defense Forces and Amhara Security Forces, and by the entire Ethiopians against the terrorist TPLF.
The Great Ethiopian Homecoming Challenge from the onset aimed to draw one Million people home ahead of the Ethiopian Christmas holiday. This historic homecoming event is the first of its kind only seconded by the home coming event that was conducted during the Ethiopian Millennium celebrations. The Ethiopian Airlines, Ethio-telecom, private and government-owned hotels, and other service giving institutions announced discounts on their services to make the challenge attractive.
A huge number of tourists and Ethiopian Diasporas have thronged to the celebration of Ethiopian Christmas in Lalibela and in the historical town of Gonder to celebrate the colorful Ethiopian Epiphany.
As Wondwosen said at a future time, the agency will organize an assessment to see the economic impact of the event.