The National Bank of Ethiopia (NBE) issued a directive to execute article 52 of the 2008 Banking Business Proclamation No. 592/2008 that enforce banks to transfer dormant account of liabilities to the central bank.
The directive titled ‘Management of Unclaimed Liabilities of a Bank Directive’ indicated that a bank shall transfer the unclaimed liability, which are dormant for 15 years and more, starting from five birr to NBE with all supporting documents.
Before the transfer of the liability banks should have taken several measures to address the claimant.
The directive article 4, sub article 4.1, indicated that a bank shall publish a notice of unclaimed liability within one year from the date it becomes unclaimed. It added that the notice shall be open for 90 days in order to communicate with the owner via different communication methods including phone, message and mail. The bank is also expected to communicate via newspaper notice that should be published for three consecutive weeks, on a weekly basis. Furthermore banks shall post it in their respective bank websites and branches that hold the unclaimed liability.
Sub article 4.2 of the directive stated that, “If the claimant does not show up within 90 days from the final date of publication of the notice, the bank shall transfer the unclaimed liability starting from five birr to NBE.”
Banks shall have full responsibility to supply any information of the claimant whose unclaimed liability has been transferred to the National Bank, including during claims after transfer to NBE. In addition, they shall provide public access to all information related to the unclaimed liabilities transferred to NBE on their website for 10 years.
Regarding interest of unclaimed liabilities sub article 5.1 stated that prior to making the transfer to NBE, a bank shall capitalize interest for the first 15 years on the unclaimed liabilities as per the pre signed agreement.
Article six sub article two stated that NBE shall open ‘unclaimed liabilities account’ for crediting unclaimed liabilities transferred by banks.
The same article in sub article 3 allowed claimants of the transferred liabilities to NBE account to be accessed from the central bank without interest.
“Upon presenting of a claim and fulfillment of required evidences, the National Bank shall pay the balance transferred to it to the rightful claimant, but no interest shall be paid on such claims,” sub article 6.3 reads.
Article six, sub article 6.6 indicated that NBE may loan the fund transferred to it and not claimed by rightful person to deposit in various insurance funds using different modalities deemed appropriate.
A bank which fails to comply with the provisions of this directive shall be penalized in accordance with article 58 sub article 7 of the banking business proclamation.
Banking Business Proclamation No. 592/2008 article 58, sub article 7 stated that any person who contravenes or obstructs the provisions of this proclamation or regulations or directives issued to implement this Proclamation shall be punished with a fine up to 10,000 birr and with an imprisonment of up to three years.
The same proclamation, article 52 with its five sub articles talks about unclaimed liabilities. The 12 year old proclamation article 52, sub article one for instance stated that a bank holding any account of liabilities which have not been claimed, the principal balance of which has not increased or decreased, for which pass-book or other records have not been presented or any correspondence has not been made, for 15 consecutive years shall transfer the fund in such account to the National Bank.
Meanwhile the proclamation had been issued over a decade ago but the required legal frame work that allows exercise of the directive was not in effect for over 12 years.
The latest directive signed by Yinager Dessie, Governor of NBE, has become effective as of August 24, 2020.
NBE to receive dormant account liabilities
VOICELESS AFRICA
Decades after the formal decolonization of Africa, the countries of the continent lack plenty of things to be considered independent or sovereign. If truth be told, flag independence brought more dependence than anything else. African economies are now firmly integrated into the lopsided world system, without much hope towards self-reliance. The so-called ‘democratization’, which was launched in the early 1980s, proved to be a monumental farce! Every few years, hundreds of political parties vie for state power with the clear intention of leveraging high offices to engage in serious looting. In Africa, major businesses cannot be envisioned without the blessing of political power, and political power cannot be envisioned without obsessing ethnicity. The routine is now well established. In fact, multiparty politics created fertile grounds for increased conflicts. ‘It is our turn to eat’ is Africa’s current Magna Carta and presupposes a rotation of looting by groups bent on identity politics (ethnic, religious, etc.) The chronic grand political corruption in Africa is now labeled the ‘AIDS of Democracy’!
Good governance is no more the driving force of African governments/countries. Since parasitic accumulation leveraging identity politics is the main pillar of Africa’s modernity, an integrity system that upholds transparency and accountability has become anathema to governments. Critically inclined individuals questioning systemic corruption are/were quietly removed from public discourses. At times, they are removed from the planet altogether, period! Our zombified elites or ‘useful idiots’, as Lenin used to call them, are not in a position, intellectually, emotionally, financially, etc., to challenge the ongoing protracted public looting! In the meantime, the sheeple, (human mass) rudderless as ever, still awaits for ‘Godot’, so to speak, while, intensifying polarization is taking its toll on the continent. The ideology of neoliberalism that obtains all over implicitly condones corruption by way of favoring crony capitalism over free market economic activities. The continental / regional / country wide destabilizations are reactions to the prevailing abusive governance. It seems The Sahel, North Africa, The Great Lakes region, The Horn, are in the process of slow motion fragmentation.
We feel it is instructive to examine the history of a once progressive party, which was enticed to degenerate into utter decadence. After taking state power, the TPLF led EPRDF (of Ethiopia) allowed grand political corruption to penetrate every nook and cranny in the country, citing the proverbial excuse of regional devolvement (read ethnicity). As a result, Ethiopia’s once respected and relatively capable bureaucracy became a mere pawn in the hands of political goons. This project of fostering intentional decay created a culture of mediocrity and corruption unseen and unheard in the history of the country. Connection to the power that be, rather than uprightly upholding laws, became the new modus operandi. At this point, it is worth mentioning how the goons of the party frustrated a civil society initiated grass root anticorruption movement. EPRDF’s unethical leadership successfully fought, tooth and nail, to stop this mass based organization from taking hold of the sheeple’s imagination! This column repeatedly advised EPRDF and its leadership not to take the paths of the Mafiosi, but to no avail. EPRDF became a den of well-known corrupt elements from all walks of life. By pushing policies that alienated it from the masses, EPRDF became the visible protector of various criminalities. The rest is history. Again, nothing new here!
Without a clear salvation plan, Africa is speeding towards its demise. To some extent, this quagmire is self-inflicted. Quality leadership with a potential to articulate as well as maneuver a relatively independent path, was systemically mowed down, to help facilitate the emergence of a strata of ‘useless idiots’, eager to blindly serve the callous interests of transnational capital. Again, nothing new here! Unfortunately, the way we are going about it, it seems ‘failed and failing states’ will become the norm in our expansive continent. To this end, the lack of independent media, to say nothing about tangible democracy, is and will continue to impede the ushering of liberating narratives! See Liedong’s article next column.
The sheeple needs continuous guidance and illumination. Institutions that could potentially forge such a milieu are not encouraged in Africa, as they can positively impact the sheeple’s conscience. For instance, the paid media (state, private, NGOs, etc.) is not in the business of enlightening the African sheeple. On the contrary, its intention is to make sure we become mindless consumers as well as promoters of useless policies, ideologies and culture. The main objective is to make sure we do not develop reality-grounded self-awareness, as that can potentially lead to self-reliance and independence of thought! Naturally, one of the main objectives of the state media is to continuously lie, so that incumbent politicos will remain in power for prolonged looting. By and large, Africa’s so-called private media is not really private, it is a direct or indirect subsidiary of the global MSM (Main Stream Media), which in turn is under the thumb of transnational capital. Many of these so-called African media do not even have their own editorials. They tend to parrot what is given to them by their paying masters, albeit in the various local dialects; nothing more! Oligarchs also use private media to misguide/indoctrinate the sheeple so that they can get away with murder. At the end of the day, the MSM is the amalgam of private and state media. In the words of former assistant secretary of the US treasury; the MSM is a presstitute! We say no more; except to mention that all attempts to establish independent media outlets in Africa have been thoroughly frustrated, by all sorts of interests (Pambazuka, et al.) Again, nothing new here!
Obviously and particularly at this point in time, ignorance and silence are not what suffering Africa needs. What Africa desperately wants is leadership with transformational vision. Unfortunately, committed and capable generation would not come to the fore as long as Africa’s institutions are only too eager to worship mediocrity and corruption. It is clear that independent attitudes in all spheres of existence have become threatening to the insecure and power hungry politicos, determinedly thriving on identity politics based ineptitude. The selection criterions for all posts in Africa, particularly in government agencies, are no more based on merits, even in the critical professions where skill remains crucial. That is why we say: “It is not what you know and what you do, but rather what you are, ethnologically, that will accrue you benefits in Africa”! Good Day!
In whose interest?
PM Abiy is getting closer to privatizing Ethio Telecom. I don’t know if this should be a cause for celebration for Ethiopia. For the buyer it’s a boon.
On a whole a sizeable number of urban elites agree on the basic shortcomings and, in some cases, the dire position of Ethio Telecom, and have concluded that ownership transfer of Ethio Telecom from the government to foreign private owner(s) is the only right policy for Ethiopia.
The World Bank, the IMF, other western development institutions also agree with the ‘privatize now’ approach even though conditions in Ethiopia are currently not conducive for the market to work efficiently. Their approach is privatize and things will go well reminds us all of the disastrous Russia and Eastern Europe approach.
I have repeatedly argued for caution on the “easy route” to privatization; once you start selling your prized assets, your growth ambitions become fantasies. What do you tell your children, that you got rid of your telcom infrastructure to develop …what? I still believe the problem of Ethio Telecom is not ownership, but rather misplaced goals and objectives, and not letting the company to operate in a competitive market. The Singapore Telecom case, for example, supports the position that ownership change is not in itself important or sufficient for high performance. Yes, as long as Ethio-Telecom is maintained as an entity to generate income and security control rather than as a strategic resource in a modern economy the company will not generate growth and efficiency.
If there is a real crisis in Ethiopia (and I am limiting myself to the economy), it is the crushing burden of inflation, structural barriers at microeconomic level (excessive regulations, access to land, finance, foreign currency etc), bad laws, failure of imagination, subscale businesses and woefully unproductive SMEs, not Ethio-Telecom.
I claimed earlier that conditions in Ethiopia are currently not favorable for tinkering with Ethio-Telecom? Let me just mention one key technical challenge: the absence of an effective regulatory body.
Privatization that pushes excessively for rapid ownership change while neglecting or insufficiently emphasizing the institutional foundations on which good privatization must be based can lead and has led to failures. Indeed, privatization is more likely to result in increased efficiency and improved equity outcomes if it’s embedded in a set of conceptually appropriate, functioning legal and economic institutions that support and guide market operations. These include: The definition and protection of property rights; contract enforcement and commercial dispute settlement through lawful, peaceful means, or, more broadly, court decisions that are timely and based on the law; a high degree of regulatory capacity; functioning bankruptcy or insolvency regimes; and a public administration that meets minimum standards of predictability, competence and integrity and thus lowers transactions costs. If these institutions are not in place and working effectively, privatization will produce sub-optimal, perhaps negative outcomes.
By default most of our institutions are faltering on all these issues. It is unclear as to precisely how these institutions will attain a state of effectiveness. Nor is it clear just which ones are crucial in what particular circumstances, or in what sequence they should be introduced.
So where does that leave us?
At this stage it is unlikely that the government and its supporters will hold off on the privatization until Ethiopia’s regulatory capacity is enhanced. I suppose it’s going to be “privatize now, regulate later”. In so doing the government conveniently abandons its responsibility to regulate the sector, leaving the field to the foreign firms to regulate their way.
Dear Reader, if this doesn’t strike you as a problem, please check back in a few years.
Institute blasts banks that allocate foreign currency for import of steel
Metals Industry Development Institute (MIDI), blasts on banks that allocate huge amount of foreign currency for import of finished products and recommends the involvement of Ministry of Trade and Industry (MoTI) on the letter of credit (LC) approvals.
The institute has also expressed its disappointment on public enterprises and offices who favored the import of finished products than using local products, which is supported by different government policies.
Tilahun Abay, Planning and Information Management Directorate Director at MIDI, said that the government policy and National Bank of Ethiopia (NBE) has clearly stated that the priorities for local investment on the foreign currency allocation.
He said that it is confusing that meanwhile the country has created ample capacity on rebar industry and fast growing is observed at the engineering sector, to import finished products is the major foreign currency spender.
The sector experts that Capital interviewed said that the import priority is given for medicine, oil and food items at first place and followed by strategic sector like manufacturing industry but at the ground the reality is totally different.
Tilahun supported the claim of the sector actors and said that the central bank directive clearly stated that industries have priority than traders for access to foreign currency.
“Lack of access to foreign currency has become another burden for manufacturers who employs massive jobs.”
“According to the information we secured from Ethiopian Customs Commission (ECC) the import of finished goods with raw material is incomparable,” he added.
“The information shows that the manufacturing sector is totally neglected from access to foreign currency despite the country’s policy and direction that supports it on paper,” he expressed his frustration.
He accused the public enterprises and offices who are importing finished goods; meanwhile the goods can be easily manufactured locally.
Finished goods importers including public enterprises are openly accessing foreign currency from banks to import finished goods that are available in the local industry, who are working with about 5 percent of their capacity.
“Local steel industries like bar manufacturers run less than five percent of their capacity due to that they cannot get foreign currency to import raw material like billet for their production,” he said.
“In the first 11 months of the past budget year 775,415 metric ton of rebar worth USD 334.2 million was imported.”
He said that foreign currency allocated at the stated period for the import of billet, which is an input of rebar, was USD 186.7 million for the import of 372 thousand metric ton of billet, “it shows how the local industry is totally neglected from the foreign currency allocation, meanwhile the local production capacity for rebar is at 5.5 million metric ton per annum.”
“We are really disappointed by public offices, which import rebar, than support local industries, which is a key sector for any country’s development,” he expressed his grievance.
Even though Tilahun did not mention the public enterprises or other offices, one of them is Ethiopian Construction Works Corporation (ECWC) that procured 15,400 metric ton of rebar at the cost of USD 8.5 million recently.
The sector experts argued that procurement of ECWC is not only importing finished goods but it has big price difference from local market.
“The corporation bought a kilogram of rebar by 43 birr that it can get by 36 birr from local manufacturers,” a sector actor says “they paid highly exaggerated price for the import of rebar.”
If the foreign currency allocated for ECWC was given to local manufacturers to import billet they can produce 23,400 metric ton of rebar that will come to an additional 8,000 metric tons besides creating job opportunities.
According to the sector observers besides giving high price the importing process cost the country huge amount for demurrage.
“As the sector actor I estimated that the corporation rebars import costs up to USD 5 million because of extra payment and port demurrage,” a sector expert who demands anonymity explained.
He insisted that the government should re consider its strategy on the import of such huge amount of commodities that consumed the scares hard currency.
Tilahun reminded that in the past public enterprises and government offices have imported steel products for the housing scheme and other projects.
He argued that the government policy force public organizations to give priority for products that are available locally before they look to foreign suppliers.
“We consider the problem is at banks when they allocate letter of credit (LC). As per the direction we have given the list of the industries and their foreign currency demand for MoTI, which is the higher body of MIDI, that transferred the documents for bank,” he explained.
According to the director, the initial problem is lack of transparency at banks, which are not interested to provide a detailed report of their foreign currency approval, “it shows that there is lack of transparency and misbehavior at the financial industry.”
“According to NBE directive after priority import items like petroleum and medicine strategic sectors should get attention but it is not done at the ground,” the sector experts said.
Currently MIDI is undertaking a study that will be tabled for relevant government body to tackle the challenge.
