Freight forwarders express burden over NBE’s directive


Logistics operators argue that the amended directive of the National Bank of Ethiopia (NBE) on foreign currency earnings and retention is not putting in to account the services they are handling.
It is to be recalled that on March 9, 2021, NBE had amended the ‘retention and utilization of export earnings and inward remittances’ under directive no. FXD/70/2021.
One of the major changes on the revised directive was that exporters of goods and services as well as recipients of inward remittances shall have the right to retain only 45 percent of their export earnings and remittances in foreign currency indeterminately in a retention account after deduction of 30 percent surrender to NBE from the total earnings. These meant recipients shall use only 31.5 percent from the total amount they earned for unlimited timeframe after the deduction of 30 percent for NBE from the total amount and 55 percent after the deduction of NBE amount to banks. The banks share was an overall 38.5 percent from the total earnings.
In contrary, after the NBE deduction the previous directive gave a right for exporters of goods and services as well as recipients of inward remittances to retain thirty percent of the account balance for an indefinite period of time and the balance for up to 28 days. After the 28 days, any balance shall automatically be converted in the next working day into local currency by the customer’s ban using the prevailing buying exchange rate.
Logistics actors, who are mainly working on freight forwarding with their foreign investors, are arguing that the directive has induced an unnecessary pressure on their charge settlement that is supposed to be due at Djibouti.
One of the sector leaders told Capital that there are some logistics companies which are working with those investing in Ethiopia as foreign investors. He said that these logistics companies prefer to flow the service charge, which is in foreign currency, into Ethiopia than direct cost settlement for logistics charges. “We prefer to settle the charges via Ethiopian banks because we shall use the remaining amount for other local partner customers who are paying on birr to settle the cost in Djibouti,” he explained.
As a principle, NBE has a special arrangement for the allocation of foreign currency for port charges. It gives a right for the freight forwarding sector to access foreign currency and transfer port charges within seven days after the application, while the foreign currency shortage at banks push it up to three and more months.
Due to that logistics companies which are working with customers who are paying on foreign currency receive the commission via local banks and settle the port charge by themselves.
They reminded that more than 90 percent of the logistics service payment is not the earnings for Ethiopia. The amount is paid directly by clients to port and when payments are done via local banks freight forwarders are using the foreign currency reserve in order to settle the service charge for a given client and the balance for other local customers.
“After paying the due for port charge at Djibouti the balance which is a small amount is to be saved at local banks and shall be paid for other birr customers’ in the port service payment,” the sector experts said.
“However, the new directive has significantly reduced the amount that the hard currency generates thus placing them in pressure for extended arrears,” they claimed.
“After the NBE 30 percent deduction in the past we shall use the 70 percent for charges fee and for the remaining small amount we may save it under the 30 percent retain account for an indefinite period of time for the payment of other local customers payment at Djibouti,” they explained.
“Based on the new scheme for instance form USD 100 earnings the government (NBE and banks) totally deducted USD 68.5, which affects the logistics sector,” the sector operators added.
“Currently the amount we are using is reduced to 31.5 percent from the total earnings that is indirectly burdening the country on accrued foreign currency settlement for the port,” they say, adding, “the operation we used to follow was helping to ease the pressure on banks, while it has cut by the NBE new directive.”
The freight forwarding actors expressed that they are to put forward their expectation through their association, Ethiopian Freight Forwarders and Shipping Agents Association, in order to inform the matter to the NBE so as to arrive at a solution.