National Bank of Ethiopia (NBE), the financial institution regulatory body, has placed a fixed percentage on the hard currency allocation for private banks on the letter of credit (LC) approval for priority areas.
The central bank’s new directive that replaced the 2016 directive stated that 40 percent of the LC’s must go to the imports of the priority sector.
Based on the new directive private banks are responsible for allocating 40 percent of the hard currency for the imports of the priority sector.
The 2016 directive stated that the priority imported items shall get preferential benefit when they need access to hard currency. The currency then will be allocated on a first come first serve basis.
The reset of the imported items and services that are not mentioned on the priority lists can also access the hard currency.
The previous directive did not mention about the rate or percentage of hard currency allocation for these priority areas.
The import of petroleum, fertilizer, agricultural machines, inputs, spare parts, medicine and related items, industrial inputs and accessories, supplement food for babies, are mentioned as a priority for the hard currency allocation.
Experts in the financial industry said that the new directive will give more benefit for the priority sectors. While the business sector mainly those who engage in import and wholesale may not get hard currency as was the previous trend, according to experts.
“The directive may have additional benefits for the industry, which was previously complaining about a hard currency shortage,” an industry actor said.
Recently, NBE issued a directive forcing private banks to transfer 30 percent of their hard currency to the central government.
“They have to share the burden of the Commercial Bank of Ethiopia, a state owned,” Teklewold Atnafu, the central bank governor recently said.
In relation to the hard currency shortage the central bank replaced the rule on LC allocation to tackle unfair distribution of hard currency and revoke illegal acts.
Both the 2016 rule and the revised one strongly mentioned that the banks’ management, board and IBD officers must undertake business carefully.
Even though there is an increased demand for hard currency, the foreign currency earnings, particularly the export sector is not growing as expected, making foreign currency access very scarce.
NBE fixes hard currency allocation
Sinotruck assembly plant opens in Addis Ababa
NA Metals, Industry and Engineering invested 250 million birr to open a truck trailer assembly plant in Addis Ababain partnership with the National Heavy Duty Truck Group Company (SINOTRUCK), a Chinese state-owned truck manufacturing firm.
The site NA Metals is using lies on 12,000 square meters and is located around Haile Garment. The factory, which took two years to construct, can assemble 1,200 trucks per year and should create around 400 jobs. Assembling the trucks here will also save foreign currency and help local workers develop skills.
At the inaugural ceremony, held on November 25, NebuyuAssefa, owner of NA metals said, “for many years Sinotrucks were brought into our country, now it is time for us to assemble the trucks here.”
The company is asking for an additional 25,000sqm from the Addis Ababa City Administration to expand the assembly plant.
“We are expecting to get the land in less than two months, when we expand we can double production and produce some of the materials here in Ethiopia.”
He added that the new plant should save Ethiopia a lot of foreign currency used to import heavy duty vehicles and plans to eventually export the trucks to other countries.
Chinese Sinotruck International is also sharing their experiences with the company. According to Zhang Yuzong, the Africa Division Sino International Manager, the company transfers its technology for free.
He added “I hope that the Ethiopian government can help support truck sales.”
NA Metals Industry and Engineering was established 10 years ago. At first it produced metal products and field tankers, but now the company has enlarged its capacity to assembly Sino Trucks for the first time in Ethiopia.
Ethiopia is a major market for SINOTRUK products. Founded in 1956, SINOTRUK is the largest exporter of trucks in China, accounting for 19 percent of the total trucks exported out of the Asian country in 2014. The company’s revenue from overseas sales was nine billion Yuan (USD 1.45 billion), accounting for about 13 percent of the total sales.
Epiphany to be registered by UNESCO
The Authority for Research and Conservation of Cultural Heritage (ARCCH) is preparing a document to send to the United Nations Educational, Scientific and Cultural Organization (UNESCO) to register the Epiphany (Timket) celebration as an intangible cultural heritage. Timket has been celebrated in Ethiopia for over 1,500 years.
The document which encompasses videos and photos of Epiphany celebrations in addition to a public acceptance signing is expected to be sent to the UNESCO office.
If UNESCO approves Ethiopia’s request, the major Timket celebrations which are observed widely in Gonder, Lalibela, Axum and Addis Ababa will be registered as intangible cultural heritage.
The eve of the celebration which is called Ketera, the major celebration, Timket, and Kana Ze Gelila which is celebrated after the day of Timket are incorporated into the document.
UNESCO’s Convention for the Safeguarding of the Intangible Cultural Heritage defines the intangible cultural heritage as the practices, representations, expressions, as well as the knowledge and skills (including instruments, objects, artifacts, cultural spaces), that communities, groups and, in some cases, individuals recognize as part of their cultural heritage.
According to Gezahegn Girma, Intangible Heritages researcher at ARCCH, the Timeket celebration meets the criteria of UNESCO and will increase tourism if it is registered.
“Before we send the documents to UNESCO we will register it locally as an intangible heritage and we hope that if the celebration is registered will become well known.
The festival of Timket falls on January19 every year. It is observed in commemoration of Jesus Christ’s baptism in River Jordan. The celebration of Timket starts on the eve of the main festival. The eve is known as ’Ketera’ and taken from the Amharic word ‘ketere’ meaning to make a dam; it is usual to make a dam in some places where there is no enough river water for the celebration of Timket.
In the afternoon of Ketera the tabots (Arks) from each of the churches are taken to a significant water body. Accompanied by a great ceremony, each tabot is carried overhead by a high priest. It is taken to spend the night there, an activity that helps in performing the Timket ceremony, usually done early in the morning the time Jesus Christ was baptized. The ceremony extends throughout the night and the next day early in the morning the Timket celebration start. The ceremony begins with the pre-sun rise rituals which include the Kidane (Morning Prayer) and the KIdasie (the divine clergy). These rituals are followed by the blessing and sprinkling of the blessed water on the assembled congregation in commemoration of Christ’s baptism.
So far UNESCO has registered Fiche Chenbelala, Meskel and Gada as intangible cultural heritages.
German delegation led by Baden-Wurttemberg International visit Addis Ababa
A German business delegation that consisted of over 10 companies from the state of Baden Wurttemberg visited Ethiopia and Kenya this week. The delegation included companies that functioned in sectors such as consulting, manufacturing of electronics, chemicals, architectural and interior design and construction companies, among others.
“Ethiopia and Germany have more than a century long relationship. They are strong partners in peace and security, migration, climate change as well as sustainable development. Despite the already strong relationship, Ethiopia believes more can be done in the area of business to business relations,” stated State Minister of Foreign Affairs Aklilu Hailemichael during the opening session of the meeting.
The State Minister further said that the delegation’s visit would be one of the biggest steps towards bringing the business communities in the two countries together to form new partnerships.
Ethiopia has been working intensively in expanding the infrastructure to promote regional economic integration. The role of infrastructure such as railway, telecom, electricity that have connected us with our neighbors not only has made the relationship between countries stronger, but also boosted trade and investment and economic ties and created better understanding about the business environment.
He assured the delegation that Ethiopia continues to provide a conducive environment for investment. He underlined that Ethiopia offers a strong internal market with having the second largest population on the continent.
“This advantage is even more attractive with the several national projects that are in place. The country is attractive due to its growing manufacturing sector that is supported by a reliable power sector,” he also said.
Schmidt-Eisenlohr, CEO of Baden-Wurttemberg International, an institution that supports state enterprises Kai said that the delegation was looking forward to possible areas where the two business communities could work together on. “We support in all ways possible when our members want to go abroad and look at new opportunities and find new partners to unlock new markets,” he stated.
