The one and only mortgage bank, Goh Betoch Bank, concludes the financial year with bright books, meanwhile it in fact operated for few months.
The bank which officially opened its doors on October 25, 2021 disclosed that the financial year that ended on June 30, 2022 was primarily used to finalize the formation process and create operational capacities like recruiting personnel, providing trainings, emplace core banking and data centre facilities and others.
In the first months, the mortgage bank was also fully working on a five year strategy that was conducted in collaboration with HST Consulting PLC, a prominent consultancy firm.
“Mostly in the first few months, we have been running the foundational works including fulfilling some policies and strategies that the regulatory body demanded. So it is difficult to say the banking services were fully commenced in the financial year,” Mulugeta Asmare, founding President of Goh Betoch Bank, said, adding, “We have also provided services to customers and have been able to mobilize deposits, provide loans, as well as facilitating some other operations like forex.”
He reminded that as a new entrant there have been some challenges like securing oversea correspondents and having SWIFT membership, in addition to adopting and synchronizing its system.
The bank that has four branches including the one in Dire Dawa began providing loans in the fourth quarter of the financial year and disbursed over 300 million birr in this short period, while the deposit mobilization was about 260 million birr.
62 percent of Goh’s deposit mobilization is tending to savings for mortgage, which is its specialization even though it provides other basic commercial banking services.
“As our core business model, we have special attention for those who have savings for housing schemes. The long term funds and financing is our priority due to that we have different incentives for those customers,” Mulugeta, who is often praised over his former successful leadership at the Bank of Abyssinia, explained.
“Our facility is providing solutions for depositors, who are looking for houses through various means such as constructing their own plots of land, or access from developers and other alternatives,” he explained the inner working priorities of the bank.
He added that the demand is very high in terms of loan access for a housing scheme “the bank is currently responding as per its capacity and different approaches.”
He said that the bank expects preferential treatment from the regulatory body, National Bank of Ethiopia (NBE) unlike other commercial banks, “we have officially provided our expectation to NBE and we hope for a positive response from the regulatory body. As far as my knowledge, they are delighted about the service we want to provide to the public and we expect a directive that shall support the mortgage initiative.”
He also added that the interest of foreign partners is very high, “we have approached overseas partners who shall invest in different schemes with us, and we hope that it pay dividends in future.”
“We evaluated the year as being very successful since it’s the inception period, and we look to soar our wings higher in the current and upcoming years,” he said regarding the operation for the past financial year, adding, “in the current budget year we shall run on full capacity.”
In the financial year under review, the bank was able to conclude under a positive balance sheet, which is not common in the sector, “Compared with the period where we commenced our real operations, such types of success is quite rare.”
“We have been working to manage our expense. Thus for the closed period, we have attained to cover our costs including organizational expenses that were incurred starting from the under-formational processes, which started in 2019,” the President said.
“Despite working for a few months under limited scale, our income has surpassed the expenses, reeling in profits of 6.3 million birr,” he explained.
As a mortgage firm, the bank may not have a priority to run extraordinary ways of opening branches and in the current financial year it has targeted to double its branch number to including major cities like Hawassa and Bahir Dar.
Currently, the bank that has 127 staffs has four branches in Addis Ababa and Dire Dawa.
Goh is the first mortgage bank after a long while, that dates back to the state owned Housing and Saving Bank (HSB) that was formed by the merger of Imperial Savings and Home Ownership Association and the Savings and Mortgage Corporation of Ethiopia mid 1970 during the Derg period. HSB was also reconstituted to Construction and Business Bank in 1994 as a commercial bank before it became defunct and merged under the state giant Commercial Bank of Ethiopia in 2016.
Housing is a major challenge in Ethiopia particularly in cities. One of the major challenges for the sector is that it is almost neglected from financing.
According to a study conducted a year ago there are one million residential houses in demand in the capital which are bound to spike to 4.4 million in the coming ten years across the country.
A year ago Getahun Nana, Chairperson of Board of Directors of Goh, cited the study and stated that to ease the current accumulated housing demands, at least 1.2 million houses ought to be built as soon as possible, “besides that every year 100,000 houses have to be constructed to cover fresh demands.”
According to the Getahun, who served as the vice Governor at NBE, 70 percent of the existing houses in cities is under standards and actually need reconstruction.
Ethiopia is the second most populous and the fifth least urbanized country in Africa. At present, 21 percent of Ethiopia’s of 112million residents live in urban areas (23.5 million people), according to the national definition which is significantly below the Sub Saharan average of 40.4 percent. There are over 950 towns and cities in the country.
According to figures from the Ministry of Urban Development and Construction, currently, in the country there are over four million houses in the country, but 30 percent are sub standard and 74 percent of them require crucial renovation.
Goh Betoch’s first year financial stride
AU-ILO-IOM-ECA jointly launch national program
The Catalytic Actions of the Joint AU-ILO-IOM-ECA Programme on the Governance of Labour Migration for Development and Integration in Africa (JLMP Action) project was launched in Ethiopia on July 25, 2022.
‘JLMP Catalytic Action’ is one of several projects making up the AU-ILO-IOM-ECA Joint Programme on Labour Migration Governance for Development and Integration in Africa (JLMP) and was launched in 2015 to implement the 5th Key Priority Area of the Declaration and Plan of Action on Employment, Poverty Eradication and Inclusive Development adopted by the Assembly of Heads of States and Governments in 2015. The Programme aims to strengthen the governance and regulation of labour migration in Africa, in line with the First 2023 Ten Year Plan of the AU’s Agenda 2063 and of the UN Sustainable Development Goals (SDGs).
This was the latest national launch for selected African Union Member States and Regional Economic Communities (RECs), following similar unveilings in Malawi, Cote d’Ivoire and Cameroun over the past few months.
The ceremony was attended by officials of the African Union Commission (AUC), the government of the Federal Democratic Republic of Ethiopia, the Embassies of German, Switzerland and Sweden, who are funding the Programme, as well as the International Labour Organization (ILO), International Organization for Migration (IOM) and Deutsche Gesellschaftfür Internationale Zusammenarbeit (GIZ), who are implementing partners. Also in attendance were representatives of the Intergovernmental Authority for Development (IGAD), the Common Market for East and Southern Africa (COMESA) and various labour organizations.
Huawei renders cyber security training to communications authority
Huawei Ethiopia has provided Ethiopian Communications Authority (ECA) with a three-day cyber security training, with Huawei’s top cyber security experts leading the training.
The Ethiopian Communications Authority Director General, Balcha Reba, attended the opening of the training and in his opening remarks appreciated and acknowledged Huawei’s efforts into building a digital Ethiopia. “A security issue is not something provided by an external body to us, it is a system and a strategy we have to develop internally. It is not only a tactical or technological input; it is also policy and strategy as well. So, all the leaders as well as the vendors, the industry all together needs to work on accountability,” remarked the communications authority head.
He also added that when discussing cyber technology, it is important to understand the; who, how, and what. He underlined that it is a must to understand who the hackers are that affect our systems by stealing data, how viruses work, and which components of our software and systems must function effectively to safeguard our systems. “Therefore, such trainings are beneficial in learning more about cyber security issues and acting accordingly,” Balcha stated.
CEO of Huawei Ethiopia, Chen Mingliang, expressed his gratitude and respect to the Ethiopian Communications Authority for the efforts made to coordinate and to build a better-connected Ethiopia and for the endeavors that makes Ethiopia to enter the 5G era.He also emphasized that we live in a highly interconnected world, where the physical and digital worlds are increasingly converging, and the network boundaries are blurring.
Cyber security and privacy protection are increasingly important. And Huawei has established 7 cyber security transparency centers around the world, including 2 global centers located in Brussels and Dongguan (China), with 3,000 employees working full-time on cyber security Research and Development (R&D). Each year, and about 5% of its R&D budget are spent on cyber security and privacy protection related to R&D. By the end of 2020, Huawei held more than 100,000 active patents across over 40,000 families, among which 2,963 are related to cyber security and privacy protection.
The training covered global cyber security challenges and analysis, introduction to cyber security governance standards, introduction to Huawei’s end-to-end cyber security assurance system, 5G security technologies based on 5G security considerations, and a virtual tour exhibition in the Cyber Security and Privacy Protection Transparency Exhibition Hall.
The public relations director of Huawei Ethiopia, Ye Liming, during the final day session, said “With the knowledge you learnt these days, I believe that all of you will put what you learnt into practice and be devoted into digital Ethiopia building.”
The training took place from July 25 to July 27, 2022 and was attended by 20 experts.
Clients in outrage over railway tariff
Clients who have a freight service contract with Ethio Djibouti Railway SC (EDR) are in outcry over the company’s imposition of a new tariff prior to the deadline they had signed for their consignment. On the flip side, the logistics firm has dismissed the claim.
On the notification letter via email, EDR disclosed that it has revised the consignment tariff as of August 1.
According to the contract amendment that EDR sent to its clients, the new tariff has an increment of over 16,000 birr per container and unlike the past the new rates are in USD.
An exporter that Capital spoke to explained that he has a contract rate with the firm with his set duration yet to be complete, and with the new rates kicking in, he expressed his worry, stating, “it will affect my export since I am running the business as per the existing logistics expense that I agreed with EDR.”
Another exporter who signed a six-month contract agreement with EDR and has so far used the first three months, explained that the rate he had agreed upon was 24,960 birr from Indode Terminal and 22, 512 birr from Mojo for a forty feet container, “I have an active contract that does not mention any price revision but they have revised the rate to USD 744 for a forty feet container that shall be loaded from Indode.”
Both exporters have similarly argued that the contract agreement they signed was not inclusive of any tariff revision.
They expressed that the service that EDR provides is seamlessly perfect and incomparable with truck operations, while such sudden rate revisions will erode and diminish the trust with the service provider, they opined.
They also reminded that the logistics sector is crucial for trade and competitiveness in the global market.
The revised contract that was sent by Teshome Eshete, Chief Operation Officer (COO) of EDR, said that the price of container transportation from Indode railway freight yard to SGTD container railway freight yard shall be USD744 per 40ft container and USD 753 per two TEU containers.
“If the client makes payment in Ethiopian Birr, the exchange rate from USD to ETB shall be the prevailing exchange rate of Commercial Bank of Ethiopia at the date of payment,” it added.
Teshome said that the railway company has neither revised the price nor increased it, “from the inception as per our operation the rate is stated on USD, but we have been giving a price at lower exchange rates that was converted years back, which is against the latest official exchange rate.”
“Issuing the daily rate is the mandate of the National Bank of Ethiopia, because of that the relevant government body ordered us to use the proper exchange rate rather than using our own rate,” he explained.
“Revising the rate is the responsibility of shareholders; we don’t have a right to put new price,” the COO told Capital.
He reminded that the rate that was mentioned on foreign currency was set in 2017 when the Ethio Djibouti Electric Railway system commenced service, “we are saying that the dollar rate was not properly exchanged that is now corrected.”
The COO added that the operation cost is growing due to different reasons including the price hike on petroleum that EDR is using for shunting, which is a process to transfer cargos at loading/unloading sites that are not connected with electricity.
“As far as my knowledge, only one person has complained regarding the latest payment change on foreign currency,” he added.
He argued that the railway consignment rate is still very fair compared with the road transport.
“The road transport for two TEUs is in minimum 120,000 birr that is about 80,000 birr at the railway transport. We have a minimum of 40 percent lower rate than road transports,” he elaborated.
He added that the rate is also lower compared with regional markets, “compared to Kenya, we have at least 15 percent lesser pricing.”
EDR has over 800 customers, who use the line to transport their cargos.
In the ended budget year, EDR said that even thought there is constrain on global cargo schemes it stated that it accomplished the budget year with the best performance in terms of lifting cargos on time and other operations.
