The wholesome sustenance of the reigning global system was and still is predicated on the assumption; given time, all of us will be better off, economically, socially, culturally, etc. Nonetheless, this critically unexamined assumption of the world system, which has been facing turbulent headwinds for decades, if not centuries, is now thoroughly unhinged from anything that looks sane and rational. The global economic regime that anchors all the rest of the other societal superstructures has also been in a flux for quite a while now. But since the 2007 crisis, its underlying problems have become intractable and almost unmanageable!
For a start, global social existence has become more and more confrontational. And unlike the narrative of the status quo, the ascendance of repetitive violent episodes are not only due to emerging non-state actors, but are also results of the state actors themselves! The larger natural world, in which all lives thrive, is threatened with aggressive destruction, thanks to the system’s excessive greediness & shortsightedness! In other words, the established narratives of the world system, which have been the ideological pillars of the system, in one form or another, are clearly losing their credibility. Moreover, the suffocating shallowness of established discourses have rendered even mild reforms unacceptable. As a result the world now threads on the throes of violent revolutions of all kinds. At the same time, those who have been at the forefront of the whole debacle continue to hold sway over the lives of all humanity.
Naturally, such an arrangement cannot be expected to hold for long. But nothing doing! The filthy rich and supremely stupid are still at it trying to sustain the unsustainable. Even their hired goons/brains will not be able to come up with convincing gimmicks to continuously contain the anger that is on the verge of gushing out all over the world. Before long, we believe the sickening reality imposed on the sheeple by the parasitic clowns (.01% of the global population) of the system will face the music!
Hired brains (Ivy league clown types) in the service of entrenched interests, who knew all along the system’s obvious weaknesses, but were not bold/confident enough to allow logical/rational critics/reflections to emerge, are now so scared of the emerging concrete reality on the ground, they can hardly muster the intellectual strength to utter any sensible comment/remark in regards to the prevailing chaotic situation. Be that as it may, the collapse of the whole unsustainable edifice cannot be postponed any further! The various institutions (IMF, WB, WTO, NATO, UN, universities, etc. of the status quo) made sure that all critics are systemically muzzled and ridiculed so that the gullible & hardly thinking beast can still be moored to its traditional but unfulfilling grazing fields (entertainments, sports, etc.) Currently, the sheeple rightly resents its pauperization & complete marginalization, though it lacks the intellectual/mental wherewithal to deconstruct the reality, sanctioned by the prevailing global narratives! This is where the need for ‘organic and committed intellectuals’ comes in, alluding to Gramsci’s phrase!
Hired goons include those who are willing to eliminate any sensible soul from the face of the earth, not on basis of humane and higher principles, but for crumbs thrown at them by the parasitic butchers of the system. Without a doubt, these charlatans of the ‘deep states’ are the most dangerous unthinking lackeys of the global order. For us, the deadly operational and structural nexus of the Military-Intelligence-Industrial-Banking-Media complex characterizes the prevailing ‘deep state’ of the prevailing undemocratic world! Don’t forget; it is because of deepening structural crisis of the modern world system, humanity is witnessing the proliferation of deep states across the world. Prescribed by the super elites of the global population, which only number the miniscule 700,000 individuals (less than .01%) the core states of the system have now acquired a fully Frankenstein form! Thanks to their operators (goons/brains), ‘deep states’ have superciliously eschewed almost all democratic dispensations, rhetoric aside!
By relying on the old and proven tactics of manipulation, indoctrination, surveillance, fear and persecutions & prosecutions, the goons of the ‘deep states’ are fomenting chaos all over the world! The beast across the world is being mobilized to support the political demagogues in their beastly and monstrous adventures. Inculcating hatred of all kinds (racial, religious, etc.) to support aggression all over is being employed systemically and efficiently. False flags have become so common that even the uninitiated have started to become sharp observers of such malicious events! Remember the downed Malaysian plane over Ukraine, or the weapon of mass destruction (chemical) allegedly used in Syria by the Syrian government against its own people? Etc. etc!
From the sheeple’s point of view, what must be attempted is the wholesale rejection of establishment dogmas.
Rethinking Established Narratives
NBE’s intermediary directive thrives
The intermediary directive of National Bank of Ethiopia (NBE) bears fruits for banks. Ethiopia announces that it expects further fund from the supranational financial institution, African Export-Import Bank (Afreximbank), which this week disclosed the allocation of half a billion dollar for all commercial banks through Afreximbank Trade Facilitation (AfTRAF) Programme. In related with the roadshow event that was held for three days starting from Wednesday September 15, Afreximbank announced that it has allocated for all commercial banks including private banks to facilitate USD 500 million to boost their activity on the international trade with their customers.
It is the first time in the history of Afreximbank, which commenced operations in 1993 and based in Cairo, to make funds available for private banks in Ethiopia.
Rene Awambeng, Global Head, Client Relations, Afreximbank, commended the tremendous effort and transformative measures, which are impacting Ethiopia’s financial sector development the macroeconomic stability of the country, the growth and the foreign exchange management, “despite the external shocks and internal challenges, including the emergence of the pandemic catastrophe, the financial services sector in Ethiopia remains quite resilient and its position to grow in the right direction with the slowdown of the pandemic.”
In the past couple of years, NBE has introduced massive changes in the financial industry that would pave the way for the country on the process to join World Trade Organization (WTO) and support for doing business in the country beside direct support for commercial banks to engage on massive activities including to access finance from foreign sources as intermediary for their local customers.
Regarding the latest allocation of half a billion dollar, despite him not mentioning the name of the firm he stated that one bank has already enjoyed over 200 million dollars of this facility, “so this new facility comes to improve and increase amounts. The facility approval is expected to be complete by the end of September and in the last quarter, banks should begin enjoying the benefit of this facility that trade finance programs,” he explained.
Ethiopia is one of the founding members and the shareholder of the bank, through NBE, Commercial Bank of Ethiopia (CBE) and Ethiopian Insurance Corporation.
“However, we have not seen a significant comparison in the size of the support of the Afreximbank, to the Ethiopian economy over these last years; and this is one of the reasons, why we want to address the situation by having this road show with the financial sector and looking at intermediation with the financial sector so that we can improve the support of the bank to you as intermediaries and consequently to the small and medium-sized companies to the large corporates, and to the public sector in the Ethiopian economy,” Awambeng says, adding, “We are not here to compete with financial institutions. We are here to complement financial institutions. Our work is not principally driven by profit. Our work is driven by development and impact. We need to show a difference. If a commercial banks in Ethiopia is capable of doing a transaction. There is no need to interfere, we’re not going to come and take customer or displace that client from the Afreximbank.” he added.
Yinager Dessie, Governor of National Bank of Ethiopia (NBE) told Capital that his government is expecting more similar facilities from the continental trade bank to support Ethiopian business.
He said that the bank has provided some support for Ethiopia but it was not that much “I have told them (the continental trade financer) to improve their facility for Ethiopian financial sector.”
Awambeng recalled that Ethiopia benefited about USD one billion from the bank mainly through the state owned bank.
It was recalled that about a year ago NBE approved a directive ‘Foreign Currency Intermediation by Banks Directives No. SBB/77/2020’ that allow local private banks to play intermediary role to access loan from foreign sources to granting credit to local borrowers in foreign currency. The current instrument facilitated by Afreximbank is part of the latest move NBE, which allows banks to improve LC settlement and payment of banks.
Yinager said that the NBE directive help banks to access such kind of funds from foreign sources that was not impossible before.
The Governor furthermore emphasized that the bank ought to open its office in Ethiopia as other international financial organizations on the aim to accelerate the benefit of the country.
Afreximbank stated that though the Bank’s Ethiopian interventions have traditionally been executed through its relationship with the country’s largest financial institution, CBE with whom it has existing facilities as well as an operating AfTRAF programme Afreximbank aims to develop strong partnerships with all commercial banks in Ethiopia, and is actively pursuing its target of signing up, and providing the AfTRAF Programme to 10 other commercial banks in Ethiopia by the end of 2021.
The Global Head has also introduced different financing instruments that Ethiopian banks shall utilize on their operation with customers.
“We also have project and asset based financing to support your growing industry. Such as the tourism sector, the medical sector the airline sector, the beverage sector, which are booming sectors in the economy,” he explained.
Awambeng said “commercial banks play an important role in facilitating and promoting trade a core ingredient of economic growth. Today’s forum serves to demonstrate the Bank’s commitment to support Ethiopia’s efforts to expand its trade capacity and establish the knowledge, infrastructure and resources by which this will be achieved.”
Under the roadshow representatives from the commercial banks received in-depth training in trade finance from Afreximbank, as part of its ambitious capacity-building exercise in the country.
According to the statement of Afreximbank the forum took place in the context of far-reaching reforms undertaken by the government of Ethiopia to open up its economy for the participation of the private sector.
It added that central to this economic liberalization, it is the work of the National Bank of Ethiopia to reform the country’s banking sector. These changes are expected to strengthen the capacity of Ethiopian institutions, including commercial banks, to accelerate the development of the Ethiopian economy through trade and investments. The reforms are also expected to increase Ethiopian trade with Africa and the rest of the world.
The continents commercial banks actually account for about 60 percent of Afreximbank financing as they are intermediaries to be able to extend support to public, private sector and local financial institutions.
There are currently 51 participating member countries in the African export-import bank group and family, and only Libya, Algeria and Somalia have not ratified the establishment agreement of the bank.
At the end of 2020, the Bank’s total assets and guarantees stood at USD 21.5 billion, and its shareholder funds amounted to USD 3.4 billion. Afreximbank disbursed more than USD 42 billion between 2016 and 2020.
Besides it’s headquarter in Cairo it has offices in Abidjan-Côte D’Ivoire, Abuja- Nigeria, Harare-Zimbabwe, Kampala-Uganda and next week it will open in Yaoundé-Cameroon for central Africa regional office.
He assured that Addis will host a representative office of Afreximbank in the next five years time.
AfTRAF Programme incorporates various products devised to increase intra-extra African trade volumes, diversify the character of this trade, and assure the confidence of trade partners in the settlement of international trade transactions for critical imports into Africa. Specifically, the programme is designed to enable and escalate trade activities and investments through, among other measures: the provision of bank-to-bank Reimbursement Undertaking facilities; issuances of promissory notes and bills of exchange aval facilities; issuances of bonds, guarantees and indemnities (BGI) facilities; and issuances of trade confirmation guarantee facilities.
The bank leaders have also introduced the MANSA, a pan-African customer due diligence repository for financial institutions, corporate entities and SMEs, developed to address the perceived risk of doing business in Africa and with Africans, for bankers to use it, which was launched by the continental bank about ten months ago. It was launched to ease banks’ engagement with global partners.
MANSA is a single source of the primary data required for Customer Due Diligence (CDD) and Know Your Customer (KYC) checks on African entities, including financial institutions, corporates and SMEs, in accordance with best practices.
Spotless posterity
The World Cleanup Day has been marked in Addis Ababa at all schools in the capital with with the motto ‘Neat & Tidy Schools for Posterity.’
The event was noted to help motivate students in COVID 19 prevention and work for keeping premises and environments alike clean.
Pictured here; Education Minister, Getahun Mekuria, Urban Development and Construction Minister, Ayisha Mohamed and other officials marking the day with students participating in the cleanup at Yekatit 12 Menen Preparatory School.
Insurers furious over gov’t bond stance
The insurance industry express their anger on the decision of the government that forces insurance firms to buy 15 percent bond from Development Bank of Ethiopia (DBE) from their total net profit. They said it seems like a command economy behavior that the government has passed a decision on private property in that manner.
Recently, the government through National Bank of Ethiopia (NBE), a financial industry regulatory body, amended existing rules and directives or introduced new monetary policies and directive to control the inflationary behavior in the market and improve the financial industry.
Similarly, 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.
Under article 4.1 of ‘investing in Development Bank Bond Directive No.SIB/54/2021/’ NBE order all insurers except the state owned Ethiopian Insurance Corporation, 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 Bond shall have a maturity period of three years and shall pay a bond rate 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 that on this rate the DBE Bond interest rate is nine percent.
The directive that becomes effective as of September 1 stated that DBE Bond shall be paid annually.
However, the sector commentators and CEOs of insurance industry did not accept the decision that the government took. Capital learnt that the association, Association of Ethiopian Insurers, would discuss the issue and pass its statement in the near future.
One of the oldest and biggest insurers CEO told Capital that the directive may not have bold and direct effect on insurance firms compared with its outcome on shareholders.
“As per the directive of NBE the amount that would be invested Bond is the property of shareholders who may secure through annual dividend, due to that it is significantly affects our shareholders,” a senior insurance industry export and CEO elaborated.
According to another big insurance CEO, the effect on shareholders like who invest their dividend on other investment activities or for those who are using their annual profit from their share to lead their life would be much higher.
Those who have big share on the insurance company and shall get significant dividend may invest their profit on other investments that is vital for the economy, he says “but the current decision would affect their investment activity directly and by large the economy.”
Similarly those who have small share but use their dividend to lead their day to day life as a pension would fall victim to the NBE directive.
“In general it is a decision that would be seen on the command economy. The government shall not pass a decision on private property but if it happens it is a tendency of socialist mindset,” an expert on the sector said.
An insurance CEO said that the decision has disappointed shareholders, “it would be better that the government shares its view and convinces shareholders on their assembly to surrender the amount of money to invest on the Bond rather than pass such kind of decision.”
“The government may say that the government has this and that project and it needs investment like bonds which investors in the insurance industry shall invest,” the CEO added.
On the other hand, the new decision was also described as a directive that would have pressure on insurance industry expansion.
It is common that at the general assembly the board of directors and the leadership of a given insurance company tabled a proposal of capital expansion from annul profit, experts in the sector explain, “at this point of view the expansion rate shall be reduced or capital expansion payment would take more time since the volume of dividend shall contract because of DBE Bond investment that have a maturity of three years.”
Similarly under ‘investment on DBE Bonds Directive No.SBB/81/2021/ NBE introduces that commercial banks shall annually invest a minimum of 1 percent of their outstanding loan and advance in DBE Bond until the aggregated bond holding equals 10 percent of their outstanding loans and advances.
In its meeting on August 27, 2021, the Board of Directors of the National Bank of Ethiopia decided to modify the reserve requirement, the interest rate on individual banks’ lending facility, the forex surrender requirement, and the forex retention rights.
The statement announced after the meeting stated that outstanding credit to the private sector grew at 40.8% (year on year) in July, and disbursement during the month grew at about 125 percent, compared to the same period of last year.
“Such a rapid growth of credit poses significant risks to price and financial stability, in the context of a rising inflation which reached 26.4 percent (year on year) in July. Consequently, the Board has decided to raise the reserve requirement on birr and foreign currency deposit liabilities held by commercial banks to 10 percent, from the current level of five percent, effective on September 1st, 2021,” it added. Banks are given a transition period of 3 months to meet the 10 percent reserve requirement.
Regarding interest rate on banks’ individual lending facility, it says that while the purpose of the individual banks’ lending facility is to help commercial banks meet unexpected liquidity needs by borrowing from the NBE, some banks are seen repeatedly accessing the facility to finance their aggressive lending, “hence, the Board has decided to increase the interest rate on facility to 16 percent, from its current level of 13 percent to discourage overutilization of the facility for lending purposes.” According to the NBE board statement, the measures are expected to contain banks’ ability to lend aggressively, bring the growth of credits to a healthy level, and help control inflation.
