The Cassation Bench of the Federal Supreme Court dismisses the appeal of former Heineken Breweries Ethiopia senior staff, who petitioned the decision of Federal Supreme Court.
The Cassation Bench ruled in favor of the former contractor, Mono 2000 Advertizing Services Plc, which was hired by the beverage company.
The Bench that appeared on Monday August 9 has evaluated the decision that was given by the Federal Supreme Court in May and gives final verdict for Mono, one of the pioneers in advertising firm in the country.
The case was initially filed for the Federal Higher Court 8th Bench in December 2018 by Mono as a plaintiff against the defendant Merid Demissie, who was Sales Director of Heineken Brewery SC.
The plaintiff on its claim stated that the company was hired by the brewery to provide power branding signage service, while the defendant, who used his position at the company, was threatening the plaintiff to give him money otherwise the contract would not be renewed adding that it even faced suspension on the payment that was supposed to be due for its service executed for the company.
The plaintiff claimed that due to fear of losing business and several threats from the Sales Director, who insisted the advertising company to pay 3.95 million birr for Tezeraworq Mekonnen for the deal that was agreed between Merid and Tezeraworq to sell her house for the defendant, the company paid the stated amount via CPO from Mono account at Awash Bank for Tezeraworq in May 2015.
The house sales had been concluded and the titled deed had changed in the ownership of the defendant as of June 2015.
The case filed for the Federal Higher Court indicated that meanwhile the plaintiff requested its money from Merid, while the defendant in contrary demanded additional sum from the Mono. Mono then rejected the demand of the Defendant and disclosed that it will inform the case for higher body of the brewery.
However, the defendant as per his word terminated the contract of Mono and rejected the renewal starting from December 31, 2016.
The plaintiff had stated that it informed the case to the company up to its head quarter in the Netherlands but did not brew positive response from the brewery, which initially seemed to solve the matter amicably and take legal action on its staff here.
The plaintiff claimed that the court should give a verdict to the company for the repayment of the money with 9 percent that ought to be calculated starting from May 2015.
On his testimony the defendant rejected the claim and argued that the 3.95 million birr that was settled by the company to buy the house is the repayment for the loan he gave for Mono 2000 in Nairobi.
Merid claimed that the plaintiff received USD 175,950 as a loan in Kenya’s capital, while he is unable to come up with documents to justify the borrowing between the two parties. He claimed that he burnt the documents when the loan got settled.
On its verdict, the Higher Court which called Article 21/67 (1) of the Civil Code gave a decision in favor of the defendant.
The stated Civil Code Article says that the receiver of the undue payment shall owe no restitution where, as a consequence of the payment, he has in good faith destroyed or annulled his title, relinquished the security for his claim or allowed his action against the true debtor to lapse.
While the plaintiff, who is represented by lawyer Tewodros Getachew, filed its appeal for Federal Supreme Court to get favorable decision against the defendant.
The Supreme Court who evaluated the lower court verdict, which mentioned Article 21/67 (1), annulled the decision and favorable decision for the plaintiff by claiming that the defendant shall not benefit from the Civil Code article without enabling to defend the issue properly and coming up with relevant justified document.
However, the case was not finalized there. The defendant that is represented by the well-known lawyer Million Assefa appealed for the Cassation Bench which mainly sees basic errors of law and facts.
On its verdict given on Monday August 9, the Bench dismissed the appeal and gave ruling in favor of the Supreme Court decision.
As per the decision of the Supreme Court, the defendant is expected to settle the 3.95 million birr with nine percent interest calculated from May 2015.
Currently, Merid is the Managing Director, Bralirwa – Heineken Rwanda.
Cassation bench favors Mono 2000 against Heineken’s top dog
Black market spike shows slight reduction
The parallel market that has shown a sudden sharp spike about a week ago is now registering shrinkage this week, Capital has learnt.
The illegal market that had spiked close to 70 birr per a USD early last week is showing a drop in this week’s comparison according to actors involved on the issue and others who closely follow the case.
One source who is closely assessing the situation told Capital that the demand for foreign currency has decreased, which is a reason for the parallel market rate reduction.
“The government’s effort to dry the smuggling hubs like Tog Wajaale might be a reason for the reduction in the interest of accessing the foreign currency,” one of the sources said giving his evaluation and added that following the demand reduction, the players in town collecting the foreign currency through black market has also shown less interest to buy the currency with the exaggerated rate that was seen in previous weeks.
“We speculate that the rate might be reduced due to that we don’t want to pay the amount that we did in the past days,” one of the illegal market players said.
As of the information Capital obtained from the parallel market players and observers on Thursday August 12 show that the rate has dropped to around 62 birr per a USD.
They added that there is information that states that the amount is not reduced which is quite false as in the market it has bottled from the 70 birr mark to 62 birr per a USD range.
“The reality now is that those who considered demanding the foreign currency through this illegal channels are now not interested due to that the rate is also expected to drop further,” they reaffirmed their speculation.
The foreign currency shortage is stated as one of the major reason for the mushrooming for parallel market and for the widening between the legal markets. According to the sector experts, the gap between illegal currency market and formal bank rate is started to expand for about 8 years. “The economy is growing with out adequate generation of hard currency or the foreign currency earning is not proportional for the economic growth that needs more foreign currencies to build industry, buy machine or undertake any projects since the country local product and supply to the market is very limited,” they said.
The scarcity has forced some legal businesses to see alternative ways to access foreign currency to do their businesses due to that most of them buy the foreign currency through the banking system from exporters with high rate and use illegal transfer sources to access the foreign currency abroad to pay for their import.
Experts argued that the government decision to lift a customs duty for some basic commodities like cloth, housewares and similar items have also played its own role to widen the difference between legal and illegal market. Individuals are making this opportunity as a source of income and business, but they accessing the foreign currency through illegal way including black market and illegal money transfer schemes, “these illegal ways have contributed to expand the gap between form and informal currency markets, while the latest incident is completely unrelated with the cases mentioned above.”
The illegal transfer has also contributed for the scarcity of foreign currency in Ethiopia because it shrunk the remittance that the country is supposed to generate, while the legal hawala is now showing improvements particularly for the past budget year.
Banks back NBE’s decision
The National Bank of Ethiopia’s (NBE) short order to suspend fresh loan approval and disbursement with selected type of collaterals is received with different views from the financial sector.
The text message sent by Frezer Ayalew, Banking Supervision Director of NBE, on Wednesday August 11 for financial firm executives ordered banks to suspend releasing any fresh loan loans for clients who use real estates and similar properties as collateral.
Bank executives that Capital spoke to about the case stated that it would be difficult to comment on the latest measure since there are there is no officially written circular from the regulatory body.
However, they underlined that the decision might be triggered to correct some economic mischievous that directly and indirectly benefit the banking industry and the country in general.
Some of bank leaders also said that despite there being no given timeframe for how long the decision will stay it may affect their activity.
NBE ordered banks to suspended loan provision for clients who use fixed asset as collateral.
According to the sector expert, the service on non fixed asset collaterals like sells contract that exporters mainly using are not prohibited.
“The behavior of dollarization in the economy is observed, the parallel market sudden spike and related issues are questionable that should have answers,” experts in the banking industry explain, adding, “The parallel market all of a sudden picked. Individuals are selling their properties and converted the birr to foreign currency to hoard it or smuggle it to abroad.”
One of the bank executive, who demands anonymity, explained that the major source of money for property sales and purchase is a loan from banks. “It may seem that the bank expands the loan provision that would push its profitability but actually harms the banks,” he explained.
One middle level bank president agreed with the idea that one of the long established bank leader said.
He told Capital that banks may expand their loan but he argued that the money that provided for clients should be transacted in the economy.
“If the loans are spent to buy fixed asset and those who benefited from the sales draw the money from the banking system and make idle by converting to foreign currency at illegal market or smuggled to abroad is staking the market and the economy. It is directly affecting the banking system and the economy,” he elaborated the possible challenges that may come to banks.
He added that in this circumstance rather than waiting directions from the regulatory body banks by themselves have to sense it and keep their business from harm.
Experts said that the rash property sales that may support by financing from banks may also create unnecessary bubble.
“In this condition the property price shall create unhealthy price spike but when situation calm down, it would not express the actual market rate,” they say, explaining that, “when banks are looking to dispose the loan they may be covered by the collaterals.”
They added that the current condition and the decision of the central banks have to be seen in different directions rather than focusing only on the prohibition.
They said that the parallel market’s unusual increment also brings several effects on the general market and may harm the majority of the pubic since traders shall increase price on basic goods as well as hoard them.
“If you know the real estate market is among the reason for the parallel market spike you have to take measures like what NBE has taken,” one of banks presidents said.
Executives said that they are unable to explain the impact at this stage. While they added that normally this agriculture season is a slack period in the financial sector.
In the first three quarter of the 2020/21 fiscal year, the disbursement of fresh loans (including CBE bonds) from the banking system was 123. 6 billion birr, while on the stated period banks collected loans (including corporate bonds) was 118.2 billion birr.
The private banks average share was 65.7 percent and 63.6 percent for disbursed loans and collection in the stated period respectively.
Most of banks that Capital approached expressed that they are now free from liquidity pressure.
Capital’s effort to get further information from Frezer was unfruitful.
Tackling the critical shortage of milk supply in Ethiopia
The Ministry of Agriculture has planned to cut all kinds of imported milk and milk products in the coming five years as the ministry has started a new kind of national milk production development program.
The program under the Ministry is funded by the World Bank to milk production in Ethiopia, the World Bank has financed 4.2 billion birr in loan to begin artificial insemination and improve dairy productivity through cross-breeding.
The ministry is importing 10 million Birr worth of frozen bovine semen from Cogent Breeding Limited, a company based in the United Kingdom (UK). The imported semen will be sexed, a procedure used to produce a specific gender of offspring.
The project will implement for the coming three years at the government level and will eventually supply conventional bovine semen straws to farmers and private industries with a subsidized price to boost milk production.
“The imports of semen are part of a project the authorities in the livestock sector are gearing up to boost milk production through artificial insemination,” said Omur Hassen, minister of agriculture, stating that currently the ministry is working to improve cattle from Horo, Borana, Fogera,and Begait through selection. To begin the implementation of the project, the ministry has bought 200 heads of indigenous Borena cattle with 170 million birr, which are quarantined inside the compound of Holeta agricultural research institute. “After one year this will be used as seed bank,” explained the minister.
Artificial insemination (AI) has been defined as a process by which sperm is collected from the male, processed, stored, and artificially introduced into the female reproductive tract for the purpose of conception. The first successful AI was performed in Italy in 1780 and over 100 years later, in 1890, it was used for horse breeding.
Currently, the milk yield stands at 1.5 liters a day and in the coming five years the ministry is planning to increase production of milk to 12 liters per cow and stop all kinds of import production of milk. The Livestock & Fisheries Sector Development Project (LFSDP) under the Ministry has been tasked to orchestrate the artificial insemination project, which officials expect would boost the milk yield of cows to a staggering 18lt a day.
“When we administer the imported semen to our cows as a pilot project, which are already disease-resistant, they will be able to give more milk, which would, in turn, boost productivity in the dairy sector,” said Thomas Chernet (PhD), project coordinator.
“The new types of the cattle will be disease resistant and more productive, each cross bread cow will give 18 litters of milk per day,” said Fikru Regassa /PhD/ State Minister of Agriculture.
The diary sector has registered significant growth through the last few years; yet there is critical shortage of milk supply in Ethiopia remains a challenge. At the current production rate there is an annual shortage of about 15 billion liters. At a country level in Ethiopia annually 22 billion liters of milk is required for self-sufficiency. However, currently the country has 7.3 billion liters of milk production annually from about 15 million milking cows.
The ministry has planned to enrich the production capacity to 10.2 billion liters in ten years, which translates to 39 liters of milk consumption per capital.
According to the data from ministry of agriculture, the country has paid about 48.6 million dollars to import milk from 2013-2017. Currently, the average milk yield in Ethiopia is 1.5 liters per day.
According to the central statics agency, there are 70 million cattle in Ethiopia. It has been 73 years since cross breeding started in Ethiopia, where modern diary started in 1947. Still now cross breeding is done in research institutes, private companies, and small holder farmers. As the Ministry of Agriculture stated, only 2 percent of milking cows have improved through the cross breeding measures.
