Insurers argue that despite the National Bank of Ethiopia (NBE) ordering insurers to buy 15 percent bond from the Development Bank of Ethiopia (DBE), the bank ought to replicate the same by working with private insurance firms.
A few months back, NBE imposed on insurance companies to buy 15 percent bond from the stated owned DBE from their total annual net profit.
However experts in the insurance industry argued that the bank should also work with private insurers. They claim that DBE is only engaged in business with the state giant, Ethiopian Insurance Company (EIC), which is unfair to the private insurers.
One of the insurance sector expert said that insurers shall accept the decision of NBE that ordered them to buy the bond under the directive ‘Investing in Development Bank Bond Directive No.SIB/54/2021/’, “However, on the reverse, DBE must give business for insurers who are investing on the policy bank,” experts opined.
Under article 4.1 of ‘investing in Development Bank Bond Directive No.SIB/54/2021/’ NBE ordered all insurers except the state owned EIC, stating that an insurance company shall invest an amount equal to a minimum of 15 percent of its net income in DBE Bond.
Article 4.2 of the directive says an insurance or Ethiopian reinsurance company shall invest the amount stated under article 4.1 within 90 days after the close of its financial year.
“The directive excluded the state insurers but it is the only company that works with DBE,” experts said, adding, “Since we have partnership and investment with DBE at least the policy bank should include us as an alternative service provider for its customers.”
The Bond will have a maturity period of three years and will have a payment of bond rate of at least two percent points higher than the minimum interest rate paid on saving deposit at the time of issuance. Currently, the minimum deposit rate is seven percent that means on this rate the DBE Bond maturity rate is nine percent.
The directive that becomes effective as of September 1 stated that DBE Bond shall be paid annually.
Recently, the government through NBE, a financial industry regulatory body, amended existing rules and directives or introduced new monetary policies and directive to control the galloping inflation.
The NBE Board announced that it will continue to closely monitor economic and financial developments and stands ready to utilize all available policy tools at its disposal to ensure price and financial stability consistent with its legal mandate.
Insurers seek two-way cooperation over DBE bond
After a decade, AU grand hotel inks new owner
Westin Hotels and Resorts takes over the management of the new African Union Grand Hotel with an agreement being signed with Midroc Ethiopia PLC on Friday November 12, 2021.
Officials from Midroc Ethiopia PLC inked a deal with Marriott International for the African Union Grand Hotel located adjacent the African Union headquarters in Addis Ababa to operate under its Westin Hotel brand. Starting from 2012 Westin Hotels and Resorts has been negotiating with MIDROC Ethiopia to manage the hotel when the hotel was still under construction in the compound of the headquarters of the African Union.
Jamal Ahmed, CEO of Midroc Investment Group and Yasin Munshi, Director of Lodging Development East Africa for Marriott International signed the deal.
“As we build on our long-term relationship with Marriott International, we look forward to bringing the Westin brand to Ethiopia,” remarked Jamal Ahmed, CEO of Midroc Investment Group.
Yasin Munshi, Director of Lodging Development – East Africa for Marriott International commented, “we are delighted to strengthen our relationship with Midroc Ethiopia and further enhance our footprint in Ethiopia with this landmark project.”
The Hotel was expected to launch operations staring from 2013 during the 50th anniversary of the African Union.
The hotel which has 14 stories is located in the premises of the African Union head quarter. The speed of the construction project was as a result of a loan grant of 850 million birr, by the Commercial Bank of Ethiopia. The total expense of the construction of the hotel is estimated to be about 1.2 billion birr.
The design of the hotel calls for a complex, multipurpose and standard construction that is designed for presidents, diplomats and business travelers. It is expected to include meeting rooms, suites, swimming pool and spa, restaurants and bar, grand club, multipurpose ballroom, business center and parking.
Westin Hotels and Resorts brand which will take over is an international hotel brand and an American upscale hotel chain owned by Marriott International, part of Starwood’s Hotels and Resorts Worldwide since it was acquired by Starwood in 1994. Recently Westin has focused on expanding global market, owning 250 locations in 40 countries over the world.
Marriot International has also the management of Sheraton Addis hotel with its most global brand within the Marriot portfolio which also is owned by Midroc Ethiopia.
Pre-power generation of GERD to start soon
“Ethiopia is in preparation for the pre power generation of the national flagship project, the Great Ethiopian Renaissance Dam/GERD/ within the maximum time cap of five weeks,” proclaims Sileshi Bekele /PhD/, Chief Negotiator and Advisor on Trans boundary Rivers and GERD at the office of the Prime Minister of Ethiopia.
The dam in its pre power generation is expected to generate 700 MW. As Sileshi said, the overall construction progress of the dam has now reached 82 percent.
As officials from the Ministry of Water and Energy explain, when the dam starts the first production of power it will cover 20 percent of the nation’s demand.
Financed by local sources the GERD will be capable of producing as much as 5,000 megawatts (MW) of electricity, ranking it as one of the world’s largest dams and by far Africa’s largest dam by electricity production.
Ethiopia has made the second filling in the past rainy season. The country has made a stand on equitable water use on the Abay/Nile River that is the source of the GERD.
The Grand Ethiopian Renaissance Dam (GERD) is the source of an almost decade-long diplomatic standoff between Ethiopia and downstream nations Egypt and Sudan.
Despite the downstream countries mainly Egypt expressing its concern on its water flow Ethiopia strongly reassured that the project would not have harm on others and the country does not have intention to affect others.
To tackle the concerns, the three countries, Ethiopia, Sudan and Egypt discussed for years, while the negotiation was interrupted majorly from reasons that mainly come from Egypt.
Ethiopia has also been facilitating comprehensive engagements to address the concerns of the riparian countries since the inception of the construction of the GERD.
After discussions on UN Security Council the three countries have come to the AU-led negotiations and perhaps the negotiations between Egypt, Sudan and Ethiopia are still suspended since Ethiopia completed the second filling of the GERD.
“Ethiopia has never and will never accept any mediator and will would never agree with unfair terms that seek to maintain the hydro hegemony of Egypt and Sudan,” said Sileshi, adding, “Exerting unnecessary pressure on Ethiopia by intentionally politicizing and internationalizing the matter will not make Ethiopia accept the colonial-era treaty over the Nile River.”
Ethiopia contributes more than 86 percent of water share for Abay, while the river does not provide required economic benefit.
With some cooperation and wisdom, it was initially possible that the ambitious GERD project could become both a great development project for the Ethiopian people and a model for cooperation between Ethiopia and its neighbors. Instead, the project has become a constant cause for conflict as the various actors vie for regional hegemony.
Food prices expected to decline in the next 3 months: CSA
In its monthly report of the month-on-month food inflation rate, the Central Statistics Agency (CSA) stated that the monthly inflation rate of October 2021 decreased by 1.3 percentage points compared to the preceding month of September 2021. Moreover, as the agency predicts, food prices for the next 3 months of the harvest period are expected to decline as long-term seasonal inflation trend shows while the non-food inflation rate is projected to remain stable.
The month-on-month general inflation on October 2021 stands at 24.3 percent while food inflation increased by 28.7 percent whilst Non-food inflation rate increased by 18.5 percent. In October, region wise, Addis Ababa city, Amhara, Oromia and SNNP showed a more stable price situation than the other regions.
In October 2021, the year-on-year inflation rate decreased to 34.2 percent, which was 34.8 percent in the previous month September 2021.
The month-on-month general inflation on October 2021 has shown a decline of 0.6 percentage points and the food inflation declined by 1.3 percentage points as compared to the preceding month of September 2021. In the month cereals such as rice, teff and wheat showed a slight decline in their prices and were relatively stable. However, maize has shown slight increase. Meat, milk, cheese and eggs, and spices (mainly salt and pepper) slightly declined in the current month, according to the agency.
Also the price of imported cooking oil continued to increase in October while local cooking oil and butter prices declined slightly. Coffee bean prices have also increased during the current month.
Non-food inflation showed a stabilized situation during the month.
The country level overall inflation rate based on annual change of the 12 months “Moving Average” rose by 24.3 percent in October 2021 as compared to the similar period a year ago. In October 2021, the Country Level Consumer Price Index has increased by 34.2 percent as compared to October 2020. The year-on-year food inflation has increased by 40.7 percent in October 2021 and the Non-Food inflation showed an increase of 25.3 percent in October 2021 as compared to the one observed in October 2020.
The rise in Non-food Inflation is mainly due to rise in the prices of alcohol and tobacco, stimulants (chat), clothing and footwear, housing repair and maintenance (house rent, cement and corrugated iron sheets), and energy (firewood and charcoal), furniture and home furnishings, medical care and jewelry (Gold).
This increase in the General Consumer Price Index is attributed to the rise observed in the indices of Food and Non-alcoholic beverages of 40.7 percent, Alcoholic Beverages and Tobacco by 27.1 percent, Clothing and Footwear by 25.1 percent, House Rent, Construction Materials, Water and Fuel and Power by 21.0 percent, Furniture, Furnishings, Household Equipment and Operation by 41.0 percent, Health 43.2 percent, Transport 19.6 percent, Communication by 15.2 percent, Recreation and Culture by 47.8 percent, Education by 23.4 percent, Restaurant and Hotels 24.0 percent and Miscellaneous Goods by 24.6 percent. Most of the components of the Food index showed an increase as compared to similar months last year. Bread and Cereals by (49.5 percent), Meat (27.5 percent), Fish and Seafood by (23.5 percent), Milk, Cheese and Eggs (34.1 percent), Oil and Fats (93.1 percent), Fruits by (33.3 percent), Vegetables and Pulses, Potatoes and Tubers by (21.9 percent), Sugar, Honey and Chocolate declined by (16.9 percent), Other Food Products and spices by (42.0 percent) and Non-Alcoholic beverages and Coffee by 40.0 percent).
