NBE hands out USD 300M, but forex thirst continues

0
541

The National Bank of Ethiopia (NBE), has announced that it provided USD 300 million via the state owned Commercial Bank of Ethiopia (CBE) and private banks for the manufacturing sector this week. However, local industries still claim that the hard currency disbursement is unfair.
Early this week the Central Bank official who met with members of the chemical industry stated that the government is making a valiant effort to provide foreign currency but the hard currency shortage is still challenging the manufacturing industry.
“This week we have provided USD 300 million to the manufacturing industry so they can import materials they need to make their products.”
However the manufacturing industry, particularly local manufacturers argue that the allocation is almost nothing. They say the disbursement excludes local investors. For instance, a single foreign investor has secured up to USD 200 million in one year. This amount is two thirds of what the government stated it allocated for industries just this week.
They told Capital that industrialists and bankers know the suppliers’ credit scheme affects local investors, who are carrying a huge debt burden; but the government has not addressed the issue.
During its latest meeting with bankers, NBE announced that it would start providing foreign currency for private banks to provide to their customers. On Monday it stated that the central bank would provide USD 100 million for all 16 private banks.
Sources in the sector told Capital that from the total USD 300 million two thirds is provided via CBE, the state owned bank.
The local investors have expressed their disappointment with the suppliers’ credit scheme, which is a means to provide foreign currency on a future payment system, only targeting the foreign investors. It gives them a priority when obtaining hard currency and the private sector is managed on a traditional first come first serve scheme.
They claimed that the scheme is ‘apartheid law’ because it excludes the local investors from being part of the game.
During his last meeting with the media Yinager Dessie (PhD), said the government will continue with the suppliers’ credit scheme. He said that the foreign investors came to the country though the trust that the government gave.
The central bank announced that it has started providing foreign currency to private banks. The new system was targeted to address the hard currency demand not only by the state firm but private actors and encourage them to generate hard currency.
Even though the hard currency shortage is not new for the country the challenge in the past two years has become serious and industries have been forced to drop their production rate significantly and some of them have already closed their industry.
According to industry actors, even though the government stated that it allocates millions of USD, in the actual terms industries receive a few thousand dollars. “If you see my industry it received only USD 1, 800,” one of the industry actors who wanted his name and business not to be mentioned told Capital.