The United States and the National Elections Board of Ethiopia (NEBE) signed a memorandum of understanding on Friday February 28, for a new USD 30.4 million program to support the upcoming national elections. United States Agency for International Development (USAID) Mission Director (R) Sean Jones and NEBE Chairwoman Birtukan Midekssa jointly unveiled the new USAID Ethiopia Election and Political Processes Program, which will help strengthen the capacity of NEBE officials to organize, administer, and conduct free and fair elections.
Coffee associations to form one strong association
Different associations in the coffee business are going to merge as a single entity to boost the benefits in the sector, but some are opposing the idea.
Currently there are several associations in the coffee sector; such as coffee exporters associations, coffee growers and processers association, coffee suppliers association, women in coffee and coffee roasters associations.
Coffee sector actors stated that if interested groups run in different paths the sector will not improve and they could not attain the benefit that they are supposed to get from it.
It claimed that if they collaborate and form a single and strong interest body they can benefit and the sector actors including the wide farmers would benefit highly.
They argued that the benefit from the coffee sector reform brew fruit after an all rounded discussions were conducted that indicates that the associations have to work together.
Ethiopian Coffee Associations’ Alliance/Federation would be the name of the association that would manage the associations under its umbrella in the coming two years and in the stated period the association will be dissolved.
Hussien Ambo, President of Ethiopian Coffee Growers, Producers and Exporters Association said that dissolving these legal entities needs time and that is why they will continue to operate in the coming years.
“So far we drafted a memorandum of association and memorandum of article to realize the association and it may be real in the coming few weeks,” he told Capital. He added that all actors including farmers will be members of the new body.
Few years ago the coffee sector has been in massive reform under the leadership of the Office of the Prime Minister and included all actors involved on the bean business, research and administration.
One of the results under the reform is the re-formation of the separate government body for the coffee sector, which is historically a hard currency source for the country and major export item, Coffee and Tea Authority. “Since then the sector get more attention by the government,” the sector actors said.
According to sources, currently the coffee sector associations are revising the way on how to go ahead with the formation of a single body that represents all the coffee business and its interest.
According to Minilik Habtu, President of Ethiopian Roasted Coffee Exporters Association and General Manager of Typica Specialty Coffee Exporter, he expected the single association to become a reality in the coming two months.
He said that the issue was in discussion for years to form the single body that will include business actors in the sector.
“By default several coffee traders are coming as a single body representing their businesses,” Minilik told Capital. “For instance there is several green coffee exporters that are also engaged on roasting or farming that makes their interest is interlinked with different associations on the coffee sector. So if the single association becomes effective their interest will get attention perfectly.”
“As far as my knowledge most of our members are welcoming the idea,” he added.
Sources in the sector told Capital that under the reform about three years ago the issue was discussed and even few months ago under the Macroeconomic Reform program that is held under the PM Office the progress regarding this was one subject.
“The government is eager to see a single association for the sector,” a source said.
“The merger of the associations might help us to be strong and work for the benefit of the sector with government policies and laws,” a source told Capital.
According to the sector actors the experience of other countries shows that one and strong association is effective than weak and many associations.
“If you see Brazil, Colombia or Kenya there were not a single association before but on process they merge and will work for the benefit of themselves strongly,” Minilik said on his part.
We all are working on the same bean so we have to work together and all the problems are interlinked so if we work together problems will be solved. For instance we are roasters and we need quality and standard product to export to the international competitive market so we have to have stake from the grassroots’ level.
At the same time there are actors engaged in the coffee business that oppose the idea of the merger of different associations to become one for different kinds of reasons.
They claimed that the idea of forming a single coffee association will disburse the motive and interest of every association. “When all problems are looked under a single body that might reduce adequate attention for problems in different sectors,” one coffee exporter told Capital.
“My interest could not be similar with producer or supplier so the problem that I face may not get the proper attention,” the exporter said.
“I have concerns on the new process to merge the coffee associations” one of the pioneer roasting company representatives told Capital.
He shared the idea of the green coffee export who argued that the new idea might reduce the attention on his sub sector problem.
Capital has learnt that members of different associations in the sector are sharing their views about the restructure of their association into single body that the coffee authority is overlooking.
NBE issues directive that allows the diaspora to buy shares in banks
The highly anticipated directive that enables the diaspora community to invest in the banking business in the country is issued by the National Bank of Ethiopia (NBE) on Thursday and become effective as of Friday February 28.
The directive ‘Manner of Equity Investment by Foreign Nationals of Ethiopian Origin in Banks Directive number SBB/73/20202’ allows implementing the proclamation that was amended in August last year by the parliament.
The directive will give the right for the Ethiopian born foreign nationals or organizations owned by the diaspora and companies owned by Ethiopians and the diaspora to buy shares on existing or newly formed banks.
The directive also allowed Ethiopians who will change their nationality after this directive to pay their existing subscribed share in birr.
“An Ethiopian national, who after acquiring shares in a bank changes her/his/its nationality after the effective of date of this directive, may continue holding the existing share and can also pay existing subscribed share in birr,” article 4.3.6 states.
The directive also allowed the diaspora that shall repatriate his or her dividend generated from other investments in Ethiopia shall buy share at banks by local currency.
Article 4.3.1 indicated that dividend generated from investment activities of the diaspora or organizations in other sectors and deemed eligible for repatriation by the National Bank can be used for the purpose of share purchase in a bank or a bank under formation.
Article 4.1.1 of the directive stated that all subscriptions as well as initial and subsequent sales to foreign nationals of Ethiopian origin or organizations shall take place in the geographical territory of Ethiopia.
Regarding share sales, the directive indicated that transfer of foreign currency made by the diaspora or organization for the purpose of share purchase through foreign payment cards, cash whether declared or not international money transfer organizations that cannot generate credit advance at individual level showing the identity, amount and purpose of the transfer, shall not be allowed.
The directive stated that banks who sale share for the diaspora would deduct the 30 percent of the foreign currency and transfer to the central bank.
Article 4.2.2 indicated that a bank that is under formation instructed by the National Bank to unlock the foreign currency escrow account of a newly licensed bank shall surrender 30 percent of the foreign currency amount to the national Bank within five working days and the article 4.2.3 added that NBE shall credit the payment and settlement account of the same bank for equivalent amount of birr at the prevailing mid exchange rate.
The same article sub article 2.4 also stated that a bank already in operation and that intends to sell share for the diaspora or organization of the diaspora shall have separate foreign currency (mirror account) for accepting share payment and for collection of share premium. it added that the 30 percent of the foreign currency collected to be paid for NBE in accordance with the FXD/54/2018 directive that forced banks to sell 30 percent of the hard currency earnings to NBE on prevailing mid exchange rate.
NBE issues directive that gives life to warehouse receipt financing
The National Bank of Ethiopia (NBE) issued a directive that gives life for the Commercial Bank of Ethiopia (CBE) and Ethiopian Commodity Exchange (ECX) to commence the warehouse receipt financing (WRF) scheme and the Movable Property Security Right Proclamation that was ratified by the parliament last year.
The directive issued on February 26 by NBE mainly focuses on the collateral and risk management on the movable asset, according to experts in the financial industry.
Experts told Capital that as a pioneer the effectiveness of the directive gives life for the implementation of WRF than other sectors since WRF was on the process to commence by the state owned bank and some others, who are on the pipelines.
Recently Yinager Dessie, Governor of NBE, told Capital that the new financing approaches will broaden access to finance and the directive for the implementation of the extraordinary credit scheme to expand the financial inclusion of the country.
On the new scheme the warehouse receipts introduced by Ethiopian Commodity Exchange is the first, according to Yinager, while others will be effective in the near future.
In December last year in the presence of Yinager, ECX and CBE, the state owned financial giant, launched the collateralized commodity finance project that initially was introduced by maize at the center at Nekempt and Bure warehouses supported by International Finance Corporation, a private sector wing of the World Bank.
Despite the initiative that was publicly launched a couple of months ago it was not in effect until now that some claimed CBE may not have interest to embark it.
However CBE disclosed that the delay mainly occurred because they are waiting the directive from the financial industry supervisory body, NBE.
Muluneh Aboye, Vice President for Credit Management at CBE, said that the financial giant is internally prepared and the system is already in place.
“The data and information exchange, which is electronic, is in place,” Muluneh told Capital.
He said that in the coming days it will start registering beneficiaries and commence operation.
Awash, Cooperative Bank of Oromia, Oromia International Bank, United Bank and Abay Bank are also on the way to be part of the WRF scheme under the trading platform at ECX.
CBE is not new for the WRF at ECX. About nine years ago it has provided credit under WRF that is worth about 36 million birr until ECX issued a directive that products at the ECX warehouse could not be stored for not more than 45 days.
Wondimagegnehu Negera, CEO of ECX, told Capital that WRF is an optional facility that farmers opt to deposit and get credit facility to get price, but currently maize’s current price is encouraging that farmers were not forced to speculate besides harvest is being financed recently.
Article 27 of the movable property proclamation defines movable property that includes; inventories, agricultural products, incorporeal assets, corporeal assets, the right to use land unless prohibited by pertinent laws; a security right under a hire-purchase agreement, security trust deed, trust receipt, commercial consignment, mortgage of a business, sale with ownership reserved, sale with right of redemption, security rights in certificated securities, and security rights in warehouse receipts, motor vehicle, trailer, agricultural machinery, construction machinery, industrial machinery, and other properties excluding land, house and building.
The International Finance Corporation (IFC) financed the proclamation drafting process which is based on United Nations Commission on International Trade Law.
The proclamation is part of the financial inclusion strategy (NFIS), launched in 2017 with the support of the World Bank, to increase the percentage of adults with a transaction account from 22 percent in 2014 to 60 percent in 2020.
The proclamation is expected to benefit several small business and rural communities.
