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Ethiopian Reporter, Political, Kibir Minister, Editorial….

Ethiopia Country Report Context

Key changes and developments in the newspaper marketplace in the past five years

According to the Ministry of Information, there were 68 newspapers and magazines published and distributed in July 2006. This is an increase from five years ago (though figures for 2000 could not be found). There are 56 newspapers and 12 magazines. Most papers are weeklies, bi-weeklies and monthlies, with only three dailies, all national, in existence. Many of the new papers in recent years have been tabloid weeklies responding to news events, such as the 2005 elections. However, some of these papers disappear when there are no strong news events to cover.

Newspaper in Ethiopia

Daily

Twice a week Weekly

Every two weeks Monthly

Source: Ministry of Information, personal communication, August 2006

The newspaper sector is limited by the country’s low literacy rates, and most titles are said to have small print runs of only about 3,000 copies. At the time of writing this report, no data could be sourced on the percentage of the adult population that reads a newspaper.

At national level, there are three daily newspapers (see Figure 8). The three national dailies are Addis Zemen (Amharic), The Ethiopian Herald (English) and the Monitor (English). The Monitor is the only private-owned daily. There is no information available to distinguish whether the remaining 53 newspapers are national or regional papers.

There are 12 national magazines; 10 published monthly, two published every two months, and two published quarterly. Ten of these magazines are in the Amharic language, and two are published in English, a monthly and a bi-monthly (Ministry of Information, personal communication, August 2006).

7.2 Investment and growth in newspapers in the past five years

There has been a significant increase in the number of papers in the past five years, with new privately-owned papers leading this growth.

However it is difficult to comment on the exact size of the newspaper market, as there is no research available in this area. Anecdotally, however, there was evidence of high demand for private papers during the May 2005 election period, but with a contraction in the number of private papers after the election.

Only a few of the newspapers, such as The Reporter (with Amharic and English editions, owned by the Media Communication Centre) and Addis Admass (in Amharic) are backed by strong private investment. Some papers have folded after not being strong enough to withstand challenges pertaining to legal or other matters. Some complain about delays in getting permits due to delay in finalisation of the provisions of the new Press Law. Another barrier to newspaper sector growth, according to the International Press Institute (IPI, 2005), has been the banning of some newspapers and the detention of journalists following the unrest after the May 2005 elections.

There is a state-owned news agency, Ethiopian News Agency, and a private local one, Walta Information Centre, both of which mainly serve the state media. Walta Information Centre is owned by the ruling party (EPRDF), so is categorised as state-owned in Figure 9. The private media do not have arrangements with these news agencies to provide them with the content they require, and this remains a major challenge for the private media. The other five news agencies operating in the country, such as Reuters and AFP, are all international.

State or government-owned/backed

Plurality, ownership and control

The private newspaper sector in Ethiopia is still very young and, because of lack of transparency around ownership, it is not known whether ownership is diverse or concentrated in a few hands. However, Kifle Mulat, president of the EFJA, states that all newspapers are under censorship and all are pro-government and controlled by the government (directly or indirectly) (K. Mulat, private communication, 1 September 2006). There is strong opposition to this view, however, from one Ethiopian editor and publisher, Mr Amare Aregawi, who argues that there is no censorship in the country because it is unconstitutional and illegal for the government to practice it.

The Minister of Information states that of the 56 newspapers currently being published, six are government-owned and 32 are privately-owned. The remaining papers are owned by Religious Organisations (8), Associations (6), Political Parties (3) and NGOs (1).

Of the 12 magazines published, 11 are privately-owned, while one is owned by a religious organisation (Ministry of Information, personal communication, August 2006).

Figure 10 below lists the 10 most-read newspapers. These papers can be classified into state, private and party papers. Addis Zemen is a daily state paper. Netsanet, Addis Admas, Ethiop, Askual, Minilik and Ethiosport are private weeklies. Party weekly papers include Oromiya, Abyotawi Dimkrasi and Woyin.

The number of newspaper readers is generally thought to be quite low, and there could be several reasons for this. First, it is possible that the culture of reading has not been properly cultivated, despite the fact that literacy has been increasing over the past few years. Another possible reason is that, in the case of the private newspapers, they cannot afford to distribute beyond the capital Addis Ababa, due to both financial and infrastructural constraints.

Newspaper Netsanet Oromiya

Abiotawi Democracy

Addis Admas Ethiop Asmat Minilik

Addis Zemen Woyin Ethiosport

Percentage

Source: Ministry of Information, personal communication, August 2006

7.4 Diversity

The past five years has seen an increase in the plurality of ideas found in newspapers. For instance, there is frequent newspaper coverage of women’s and religious issues, with some papers even published by religious institutions. Private newspapers provide more entertainment coverage than the government ones do.

The majority of the newspapers are in the Amharic language (33), and the second most common language is English (14). There are also several bi-lingual newspapers, publishing in both Amharic and English (5), and there is one newspaper that publishes in Amharic, English and French. There are also newspapers written in Oromifa (2), Tigrinya (1) and Arabic (1). (Ministry of Information, personal communication, August 2006). One interviewee expressed the need for further objective research to obtain more accurate data on readership.

7.5 Quality of newspaper reporting

With the great increase in the number of papers, there has also been an increase in journalistic work. The quality of journalism is highly uneven. Whilst some commentators describe work as lacking in ethics, independence and professionalism, others assert that concerted efforts are being made by journalists to improve standards in the sector.

7.6 Specific challenges

Challenges faced by newspapers in Ethiopia include low reading levels, the high cost of distribution outside the capital Addis Ababa, and a lack of professional journalists.

Key findings

The past five years have seen increased private sector participation in the press sector, but many of the private papers are not financially strong.

The largest group of publications is the national weeklies.

The panoply of challenges facing Ethiopia and its people show no sign of respite. Though active hostilities in the northern part of the country, have almost stopped after the forces of Tigray People’s Liberation Front (TPLF) were pushed back to Tigray from most of the territories they had captured in the adjoining Amhara and Afar regions, the security situation in a number of areas of the nation is fragile owing to the interminable endless cycle of violence that has been racking them for years now. Aside from the death of tens of thousands and the displacement of millions frequent outbreaks of internecine conflicts have led to, the unchecked rise in extremist attitudes, the cost of living, corruption, and land grabbing, among others, have made life an ordeal for the vast majority of Ethiopians. It’s in this backdrop that an incident, whose fallout could potentially plunge Ethiopia into a crisis of catastrophic proportions, recently took place.

On March 29 at least 26 people were killed and several more injured in clashes between armed groups hailing from the Minjar Shenkora Woreda of North Shewa Zone, Amhara regional state, and local militia in the bordering Fentalle woreda, East Shewa Zone of Oromia regional state. The blame game began soon thereafter with both sides issuing conflicting a slew of contradicting statements regarding the incident. Amhara region officials lay the blame on “anti-peace groups” whom they accused of perpetrating the attack. Their counterparts from the Oromia region though disputed the accusation, blaming the attack on “extremist forces operating in the Amhara region”. They also took these forces to task for displacing people and looting property in other woredas of Oromia bordering the Amhara region. It’s surprising that both the federal government and the ruling Prosperity Party (PP) have not made any overt attempt to defuse the tension between the Amhara and Oromia regional administrations even as both escalate the war of words among them.

Ethiopia is a nation that continues to be on the wrong side of the global digital divide. Only a fifth of its over 110 million people have Internet access that is expensive and often unreliable. In cognizance of the imperative to tackle the multi-faceted challenges this poses the government has embarked on liberalizing the telecom sector and adopted Digital Ethiopia 2025— a digital transformation strategy described by the government as a visionary strategy that serves as a blueprint for different sectors and institutions—as it tries to position the country competitive in the brave new digital world. Efforts to open up the telecom industry have had limited success with one international consortium awarded a license to operate telecom services in the country so far while plans to sell 45 percent of the state-owned telecoms monopoly to international buyers have been repeatedly pushed back. Meanwhile, a number of public services have begun to benefit from Digital 2025 through developments like e-government, digital ID, the national payment system, online trade registration and licensing system, electronic single-window customs clearance and electronic tax filing.

As the government ramps up its roll out of various services aligned with the digital transformation strategy, the suspension by the National Bank of Ethiopia (NBE) of digital remittance platforms, namely CashGo and MamaPay, the Bank of Abyssinia (BoA) uses has caused a furore, leading many to question whether the central bank is on the same page as the government in the latter’s quest to create an inclusive digital economy through the national digital strategy. CashGo is an international money transfer system which allows anyone abroad to transfer funds in the local currency to accounts maintained at BoA while MamaPays allows users to request payment from remitters or payment to be settled on behalf of a third party. The reasons cited by NBE to justify its decision are varied. It says both BoA and the developers of the applications behind the platforms do not possess a valid license permitting them to provide remittance services. It also alleges that the applications enable BoA to avail travelers foreign exchange through credit cards in disregard of its regulatory mandate over currency management. The regulator further raised the need to address safety and security concerns, particularly relating to privacy breaches, and ensure that local fintech companies survive the inevitable competition from foreign rivals via a major initiative currently in the works.

The developers of the applications, however, refute the points mentioned by the central bank. They argue that they are authorized fintech companies engaged in developing applications and as such do not require to have a remittance license, adding the applications were vetted by the NBE and the Information Network Security Agency before they were integrated into BoA’s system. They also suspect that foul play may be involved, saying some of the remittance companies active in the Ethiopian market probably conspired with regulators at NBE to close them down because the country would save up to USD 800 million it annually lost to them through steep service charges and redirection of the forex they receive to informal channels. Moreover, they point out that NBE’s compliance and safety concerns could have been worked out while the applications were still running.

While NBE may have grounds it deems legitimate and warrants the suspension of the operation of the digital remittance platforms, its decision is heavy-handed and lacks foresight. In the first place, it did not hold formal consultations on the matter with all the stakeholders involved. If it had demonstrated the willingness to engage them constructively, the dispute between the parties could have been amicably solved. The decision also discourages fintech companies from investing in the development of platforms that help Ethiopia bridge the digital divide. The Digital 2025 strategy aspires to transform Ethiopia’s digital landscape to accomplish such lofty goals as playing a vital role for inclusive prosperity; innovating and applying the culture, practices, processes and technologies of the digital era to respond to citizens raised expectations. The realization of the strategy requires, among others, the collaboration and commitment of everyone including government, non-governmental, development partners and societies as well as a robust commitment to increase infrastructure and put in place an enabling ecosystem. If the government is to succeed in pushing the country through digitalization and making it a viable investment depends on its dedication to reforming the bureaucracy, implementing the right regulation and creating credible institutions. As Prime Minister Abiy Ahmed (PhD) once said leveraging digital opportunities demands a new mindset and leadership style. Leaders at the central bank must take this advice to heart and adapt to the new digital environment.

The feuding between officials heading two branches of the ruling party cannot be confined to them given the party is still ethno-centric despite claiming to be a national party. In fact it has led to spats among major opposition parties active in the respective regions and social media activists, which are spewing a hateful rhetoric that could very well pit the Oromo and Amhara people, the two largest ethnic groups in Ethiopia, in a bloody conflict. The consequences of such a conflict are too horrible to contemplate. From a protracted and destructive civil war in which no side emerges victorious to a total state collapse all the scenarios facing the nation are lose-lose not only for its citizens, but also the Horn of Africa and beyond. It’s not entirely clear whether the protagonists to the ongoing verbal warfare realize that their actions are liable to lead to Ethiopia’s unraveling or are indifferent to the ensuing heavy price.

With three decades of experience in the banking industry, Mulugeta Asmare is known for his successful years at the Bank of Abyssinia. During his five year tenure as the president of the Bank until 2019, the Bank’s profit doubled to over half a billion birr, while its paid-up capital skyrocketed from a little less than one billion birr to 2.5 billion birr.

Last year, he was appointed as the president of Goh Bank, the first self-proclaimed mortgage bank in Ethiopia. The Reporter’s Selamawit Mengesha sat down with Mulugeta to learn about his new journey at Goh and his insights in the banking industry. Excerpts:

The Reporter: Tell us about your experience in the banking industry.

Mulugeta Asmare: I have been working in the bank industry for the past 31 years. I have an all-round experience in the banking industry, meaning I had started work in the banking sector as a clerk and have now reached the position of general manager. I have worked as deputy president of Abyssinia Bank for four years-and-a-half until 2019. I believe that I was able to make a lot of reforms and changes while working at Abyssinia Bank. I was faced with a lot of challenges while working at this bank, since it had a lot of shortcomings at the time.

I believe that I have contributed a lot towards the betterment of the banking system at Abyssinia Bank, for it to get to the stage that it is in now. We started off by inviting global market leaders like Deloitte, PWC, KPMG, and Ernest & Young to participate in a bid to frame a five-year strategy for the bank. Winning the bid, Ernest & Young have done a remarkable job in improving our system-wide operations. We used to have such work done by in-house experts. So, this is the first time that we enlisted the services of a globally renowned company. We have focused on manpower development and raising pay, measures that have surely contributed to the development of the bank.

Following my previous stint with Abyssinia Bank, I used to focus on private contractual jobs here and there. I was informed of this new concept of establishing a mortgage bank system which was unique and different, and it got my attention. After establishing the bank and selling the shares and raising enough capital to establish the bank, we couldn’t find the right person to run it. The 11 founding members are well-known business professionals that have worked for years in the banking system, and they wanted me to take the role. I couldn’t say no to such noted personalities as former National Bank President Getahun Nana.

Before delving into the mortgage bank, I would like to raise a question regarding saving. Most people open bank accounts for saving purposes while few dare to ask for loans. Why do you think that is the case?

The major mission of a bank is to help develop the culture of saving. It is evident that once there is a saving, the next step is to provide a loan. Without savings, there are no loans. Customers can resort to saving for they have some future plans to invest or to purchase something, or it can just be a leftover from their monthly expenses. This saving is directly forwarded to producers and service providers who are planning to expand a business, or who are looking forward to enter into new business ventures. The main job of a bank is to act as an intermediary between the depositor and the borrower.

Banks have advanced and sophisticated role nowadays compared to the old times. I believe that low-scale savings at the banks is the main reason for the small number of loans. The loans are mostly provided to customers that have a convincing project idea with a guaranteed profit. You don’t find such projects every day, not everyone can be a producer, a service provider or a farmer. Banks have a limited access to capital and deposit, which is the reason for setting strict criteria. These are some of the reasons for having more savings while there are less loans being provided.

The last three years have seen a remarkable change in the banking sector. The number of private banks has increased to 23, including Goh Betoch Bank, which is managed by you, and an interesting enterprise at that. Why do you think private banks are increasing at such a pace? Is it because the banking industry is profitable?

It is obvious that the banking industry is becoming more profitable today than ever. All banks are recording a profit since the market demands such service. Even though our economy is underdeveloped, the banking sector is essential to reach the population that is not getting access to the service. Until recently, only 25 percent of the population was banked. But that is changing thanks to the increasing number of banks and the opening of branches in the regions. This shows that the market is still untapped. That being said, the capital requirement to establish a bank is also increasing drastically. The set of criteria laid down by the National Bank is complex. Therefore, I don’t believe that we have banks mushrooming left and right. For a population of 110 million, the number of banks we have is far from enough. I think the main challenge for potential new banks forming is the rules set by the central bank. Allowing specialized banks to open branches in the country is not yet a trend but it’s a must. We have paved the way as a mortgage bank but there can be many others that specialize in farming, industry, housing, import and export, etc.

Goh Bank specializes in the housing sector. I’m sure you’ve conducted a thorough research before establishing the bank, including the case of the then Construction and Business Bank. What is the sustainability plan?

The Construction and Business Bank has its own flaws. During the reign of the Derg, it was taken over by the government and it was functioning under the name of Housing and Savings Bank, the only service provider specializing in mortgage banking. It was later on transformed into a commercial banking system and was named as “Construction and Business Bank.” Keep in mind that both the Constriction and Business Bank and Commercial Bank were providing the same traditional banking service under a different name. The bank didn’t have enough capital. Therefore, it has struggled to keep in the same pace as private banks. The Construction and Business Bank later on merged with the Commercial Bank since it couldn’t stand on its own. This has caused a gap in the mortgage banking system. It provides a service that is in high demand. That is the main reason for establishing the Goh Betoch Bank with a view to addressing the problem. A lot of customers have savings in their account that is not enough to purchase a house without bank financing. These people can opt to switch funds used to rent a house in favor of mortgage payments.

Does the bank provide mortgage service or does it focus on commercial services?

The bank purely provides mortgage services. It is also registered with the national bank as a provider of mortgage services. We are the first bank in Ethiopia to offer this service. We have done rigorous feasibility studies. We haven’t provided any commercial loans to businesses. We only give loans to customers who want to buy a house.

Is there a push from the government to make the service partially commercial?

Actually, we are the ones pushing. That is since the country doesn’t have laws regulating such a specialized banking system. According to the law in the books, all banks are treated equally, be they private or government. But we are demanding a special treatment, and the national bank has lately been cognizant of this fact.

Do you cater to folks lower in the socio-economic ladder, and can you also reflect on the high cost of housing in Ethiopia?

It would take days to discuss issues regarding housing. In Ethiopia, there are many programs that were drafted in order to provide solution to these problems. For instance, the Integrated Housing Development Program was developed by the government in 1997. This condominium-housing project was later on developed into the ‘40/60’ housing. The idea was to construct a lot of housing units and help the general public own their house. A mere 400,000 housing units have so far been built. Many Ethiopians have been into the culture of housing saving schemes for years now. There is a study indicating that 400,000 housing units needed to be built every year in order to meet demand in Ethiopia. Specifically, 100,000 housing units should be constructed in Addis Ababa every year, but a tenth of that is being accomplished.

What is more, the already existing houses in Ethiopia do not meet habitat standards established by the United Nations. Based on this requirement, around 74 percent of the housing units in Addis Ababa need to be reconstructed since they do not meet the standard. The main reason for the soaring price of houses is the ever rising cost of land as well as construction materials. The paucity of hard currency coupled with unbridled inflation has worsened the situation. The current going rate for a housing unit is beyond the reach of middle and lower income citizens.

According to our study, medium income is 30,000 and up, way below the threshold to afford buying a new house. We should also look into our construction system that is backward and traditional. It takes two to three years to build a house. Time is essential; we should be able to construct houses in one year. If we want housing to be affordable, we should look into ways of cutting down the price of land and construction inputs as well as employing modern technology. Financing should also be factored in, and this is where we come in.

Apart from huge outlays by private banks, the government is also spending 50 to 60 million birr to construct condominiums. These houses are designed to be affordable to low-income people, but that’s not the case. How does your bank intend to make housing affordable to middle- or low-income citizens?

The housing problem can’t be solved only by private banks. The main role should be played by the government since having shelter is a human right. The government being a responsible body should provide land at a lower price or for free to the lower and medium income people. What’s more, the government should regulate the price of construction materials besides encouraging their ample supply. Banks as financers should also expedite provision of capital in the form of loans.

Most banks are reluctant to engage in mortgage banking. How come you chose it?

We dared to join the banking sector, especially mortgage financing, because of the need for one on the market. Our shareholders took the initiative to establish a huge institution that can support the country’s economy. The realty on the ground in Ethiopia is such that a 40-year-old individual lives with his or her parents. This is so due to the dearth of financing schemes to own one’s house. Therefore, we are trying to help individuals with limited means.

What is the plan this year as regards providing mortgage loans for customers?

We have started business since October 25. We haven’t provided much service because we just launched our bank a few months ago. But we are planning to provide one billion birr in loans until the end of the year. Based on the outlook of the economy, this might not be attainable, but that’s the plan.

How much would that be per client?

It depends on the customer. Some might take a 10 million-birr loan while others ask for more. Anyways, we are planning to provide 1 billion birr in loans until the end of this year. While framing this plan, we were under the impression that we can go around the country and find deposits, but there were many unforeseen events such as the war that disrupted the economy. Therefore, we might not be able to meet the target.

So there is no plan to provide this service to other regions?

We will cover other regions as well. We might not have many branches like other banks but being a mortgage bank, we are going to employ technology to scale up services. The main branch is in Addis Ababa while the second branch is in Dire Dawa and the third branch is around Lebu. The fourth branch in the CMC area goes online this month. We serve cities that have a high housing demand such as Hawassa, Adama, Bahir Dar,Gonder and Mekelle.

What do you think of foreign banks establishing mortgage banks in Ethiopia? How would they affect the already existing mortgage market?

Although I’m aware that foreign banks are joining, the timeline is not yet announced. A healthy competition is not bad; I don’t believe that they will take over the banking business instantly. The government will surely have some sort of plan in order to institute a gradual change. Some requirements might also be in order such as a fixed amount of capital. They should purchase shares to be able to establish a bank in Ethiopia. For instance, if a foreign bank buys 30 to 40 percent share from a private bank, then it will be perfect since they can invest in human-resource development and bring in capital for the existing bank.

Mortgage bank is no different from other private banks; I believe that foreign banks can help a lot since there is an untapped market. We can assist them in expediting the process of setting up shop. If foreign banks buy shares from us, then they can avoid that hustle. We would like the competition, although we are not sure when they can come to the market; we are preparing psychologically to work with them.

Can you briefly explain what it takes to get mortgage?

Those who seek loan at our bank, we welcome them all. We have started giving service for most customers now. It is required for the customer to save a minimum of 20 percent of the selling price of the house at our bank. And then, we can provide the remainder 80 percent. The other unique system is that we will provide 30 years grace period for paying the loan back to the bank. Our interest rate is lower than other banks’. For instance, Commercial Bank provides loans at 15 to 26 percent rate while we can provide loans for less. Our interest rate is flexible depending on the currency and frequency that a customer would return the loan. This makes us unique.

Customers can’t knock on any private bank and ask for a loan to purchase a house. Most banks provide a mortgage service to their employees, or for selected VIP customers that pay in foreign currency such as embassies, NGOs and exporting companies. We only require that a customer has a fixed monthly salary and that he or she can pay the loan back at the provided timeline. There’s also no need for any collateral since we use the house that will be purchased as collateral by itself. We are trying to reach the public with this information to mitigate the housing problem.

Since the public is very eager to get this service, what can we expect from your bank?

We would like to pass the message that any customer that has the financial means and the interest to purchase or construct a house, we are eager to help. Come to our bank, open a bank account and save the minimum amount of money required for purchasing the house that you want to have. We will advise you on the best option. We are also planning to construct houses by ourselves.

The Reporter: Tell us about your experience in the banking industry.

Does the bank provide mortgage service or does it focus on commercial services?

Is there a push from the government to make the service partially commercial?

Do you cater to folks lower in the socio-economic ladder, and can you also reflect on the high cost of housing in Ethiopia?

Most banks are reluctant to engage in mortgage banking. How come you chose it?

What is the plan this year as regards providing mortgage loans for customers?

How much would that be per client?

So there is no plan to provide this service to other regions?

What do you think of foreign banks establishing mortgage banks in Ethiopia? How would they affect the already existing mortgage market?

Can you briefly explain what it takes to get mortgage?

Since the public is very eager to get this service, what can we expect from your bank?

Shewit Emanuel is the current country director of Farm Africa, an international NGO established 35 years ago. It started out in Kenya but has branched out to Ethiopia, Uganda, Tanzania and the DRC.

Active in majority of eastern African countries, it is a specialized NGO focusing on natural resource management and business development linked to agriculture including livestock. Yosthena Aynalem of The Reporter sat down with Shewit to discuss smart agriculture in Ethiopia. Excerpts:

The Reporter: In a country where agriculture dominates, what would you say you have achieved thus far?

Shewit Emanuel: In a nutshell, one of the biggest achievements so far is that we exclusively work with smallholder farmers. What we are trying to do is to ultimately enable them to move out from poverty and become a commercial farmer who is self-sufficient.

Developing methodologies that are sustainable, inclusive and impactful is also one of our achievements. That’s our own target at the end of the day, when we leave, we want to make sure the work continues and the farmers continue to thrive with the support that we have started.

We operate all over Ethiopia. Unfortunately, some of the projects have ended in some regions, but we have footprints across all the regions within Ethiopia. The biggest achievement starts from increasing the income of the smallholder farmers we supported to reducing deforestation as well as supporting Ethiopia sell carbon credit to the international market. That is actually the newest achievement. We have also supported farmers to sell coffee directly to international markets.

Since vertical intégration is allowed now, farmers don’t have to go to the Ethiopian Ccommodities Exchange (ECX) anymore. If you can connect them with exporters, they can directly sell to the international market. The whole point is to reduce the middle men for the farmers and get the fairest prices for them.

Food insecurity is a recurring problem in Ethiopia and Africa. Many approaches have been applied to reduce food insecurity but nothing seems to avert it thus far. Is there any approach you have tried that is poised to be successful?

Nowadays, everybody’s moving into climate smart agriculture and unless all your interventions are becoming climate smart, you are bound to go back to that vicious cycle of droughts and flooding; which is both damaging to farmers. So, making sure farmers practice climate smart agriculture is the number one thing that we are working on.

One of the things that Farm Africa is actually pioneering and becoming innovative and a champion of is the use of integrated landscape management. This means to look at the challenge holistically, you cannot talk about conservation of land without talking about the livelihood of the people.

The majority of past projects, if you look at them, are about conservation without addressing why the community is damaging the environment? Unless you tackle that, you are not going to sustain it and all your efforts will be for nothing.

It also has to be inclusive of everybody. Most of the time, when a project starts, they focus on the direct beneficiaries. Let me give you a good example. One of our biggest projects is in Bale Eco region, where we’ve been operating since 2016. Initially, we were focusing on the regions communities and when the current drought occurred, the lowland communities came looking for water and resources towards the forest. So, all the conservation that we made, all the protection of the forest become under threat.

So, what we tried to do is expand our support, with the support from the Norwegians and other likeminded donors. It is not just the highland communities, but the lowlands are also included now. We have somewhat built resilience so that they don’t have to come to the forest.

And to be fair, even though 1.6 million people live within Bale, as direct beneficiaries, 12 million people depend directly on the forest. So, to address their need, everything from livestock fodder and irrigation is being provided, moving them into climate smart agriculture to become sustainable. They then become the protectors of the forest themselves, becoming part of the solution.

The approach we advocate for is an integrated landscape management where you can make your intervention impactful, sustainable and more importantly, inclusive of everybody, including women, pastoralists and nomads.

Does Farm Africa give lessons to these people or just resources?

Not exactly. When I say climate smart agriculture, there are different kinds of approaches that we use. Starting from the training itself such as when to plant, how to plant and what type to plant, and everything that has to do with linking farmers is included.

It could be providing improved seeds or making sure that they move to organic fertilizers or connect them to the local market. The majority of farmers’ problem is linkage; they just need to be connected with the agro-dealers so they can get the seed, fertilizers, and safe deliver of their harvests to the market. And once they produce, they can aggregate it and sell it at a good price.

We also support the enabling environment, which means working with the government to make sure that the necessary policies and protection are there. At the end of the day, we need to build the capacity of the government. They are the ones we are making sure we align with, since they will take it forward. We can show it on a small scale for the government to expand it at a larger scale.

The climate smart market systems project in Amhara region that we piloted, is now being rolled out to all over Ethiopia, modified depending on the region and soil conditions. The value chain may be different, but in terms of supporting the full spectrum of the value chain, that’s what we do, so that farmers have the right tools and information on a timely basis.

Urban farming is something that is said will reduce food insecurity and that you are doing something along those lines. Can you tell me more about those projects?

Sure. When Farm Africa was actually set up, our attention was exclusively focused on rural farmers, but what has become very clear is that you cannot address the rural challenges if you are not addressing urban challenges.

Urban poverty is on the rise and food insecurity is becoming as critical as those in rural areas.

The government requested us to support them on how to improve urban agriculture. With that, we started to pilot a project in the Ministery of Planning and Development’s compound because they have the space. We have started testing out the pilot phase, trying to look at what urban agriculture looks like, if it is sustainable, and how the farming methodology works.

We are now actually setting up; the clearing has been done and the design has been finalized. We are left with the planting processes, and we hope in the next couple of months to have the first produce available. It’s not just crops we are producing. We are also piloting fish as well as poultry so that everybody can practice it.

If you were to go to rural areas, there is space, you can do horizontal farming, but in urban areas, we don’t have that space. However, vertical agriculture is the answer. We are coming up with new kinds of innovative ways to produce food at a scale that is required to feed the local community. We are working with around 105 households for now, including women and unemployed youth. We just started that this year. So, it’s still at the early stages.

So what can urban settlers do? Like you said, these projects will encourage them, but considering there’s inflation now, there’s even more food insecurity, which is compounded by the war.

That’s why we encourage the use of your back backyard or whatever space you have. It does not require space. What we are trying to show is that you can do this vertical farming. Within a limited space, you can actually produce enough, to feed your family at a lower cost because inflation is becoming an issue. Families are barely feeding themselves, so at least it supplements their food intake and more importantly ensures nutritional balance.

Scholars suggest encouraging farmers to diversify their source of income to fight food insecurity. One of the options is to promote off-farming activities. Is that being implemented? If so, is it working?

Unfortunately, this concerns the lack of knowledge. The diversity is not as much as you would expect it to be. As part of the business development, we exclusively focus on income generating activities that you can do beyond agriculture. You need to diversify.

The coffee producers used to only produce coffee and farm forests. So, instead of farming the forest and cutting down trees, we showed them they can do forest honey, forest coffee, incense and other products, helping them to diversify their income stream.

A lot of the evaluation reports can be shared on, for instance, income. We increased their income by 143 percent. Not only were they able to increase the volume but also the quality. Now, almost all our projects, be it in Bale or Illu Aba Bora, all of them are now 100 percent export quality standard. And by supporting them change into a cooperative, they could buy better machines and so on, to aid in the quality of the product, instead of using traditional means and do less damage to the product. The coffee they produce now has scaled from grade six to grade one.

But you need to provide them the option and training, ranging from the know-how, all the way to even financial literacy. We do a lot of voluntary saving and loans, by setting them up with associations so that they are able to save money and get loans to buy better inputs and be able to negotiate better with dealers.

Ethiopia has been hit by a drought recently and many cattle have died as a result. There are other east African countries going through the same thing, probably in countries Farm Africa is involved in. So why do you think countries like Ethiopia are being affected by these things more often than the rest of the world?

Unfortunately, we are still rainfall dependent and one of the biggest impacts of climate change is making this cycle of drought more frequent than ever before. It used to occur every 10 years or so but now it happens every two or three years.

So, unless we equip both the highland and the lowlands with the necessary climate smart interventions, they will still suffer. We have a huge project in Borena and mobilized fodder to be delivered as an emergency, because the animals are crucial for their livelihoods. I think it was reported to cost more than five million birr.

The second one was to make sure the ecosystem is protected because that generates the water that goes to the lowlands. The intervention here has a huge impact at the lower catchments. That is why you need to make sure your interventions are holistic. Just by protecting the Bale eco region, you protect 12 million people’s livelihood, livestock and food.

The support is not only in providing materials, but to improve small–scale irrigation, pound point constructions and watershed management, to become drought resilient.

Several projects have been implemented by donors and other NGOs that work on resilience, capacity building and the like. But soon after their launch and brief success, they dwindle out. What do you think is happening in the middle? Why does the impact subside quickly?

The problem lies in the projects design. You have to plan to make it sustainable. When we set up a project, we have to prioritize carefully. If you don’t do that, then what happens is you’ll just be replacing one challenge with another and the impact would be temporary.

Our intervention should be as a facilitator, not actors. If you become an actor, then you are disrupting the market. What we are trying to do is to become the catalytic process, by working clearly with the government, like the Ministry of Agriculture and other stakeholders, so that policies do not contradict.

When we set up the project initially, deforestation was very high. Awareness raising and capacity building campaigns were held not only with the government, but also the communities, on why they need the forest, and understanding why the forest was damaged was very critical.

By introducing a specific blend of coffee, which grows under a shade, to farmers, which fetches a higher market price, the community has started to protect the forest by themselves. By giving them ownership and accountability, when you leave, it will not stop.

That is why you have to be very careful and make sure you have addressed the challenges that surround it.

You mentioned traders usually get more money than farmers, and Farm Africa is doing things to help in this aspect. Could you elaborate more on that?

First, you have to improve their yield per hectare because they usually sell it to the local market due to the low yield of crops they harvest. So, increasing the yield per hectare and then the quality is crucial. Empowering and connecting them with the market also helps them know the market value of their products.

women are paid less in the coffee sector, even though they do just as much, if not more. Is there anything done to empower women into joining the sector?

We assessed where women were involved in the value chain of coffee. The majority of women were found at production sites, such as planting or coffee picking, but you see them less involved as you go higher in the value chain. That is why they earn less because they’re at the lower end of the value chain.

We are trying to build the capacity, knowledge and their participation at the higher end of the value chain and make sure they’re involved outside of the production itself. They must have the power and skills to take their matters to the union and get better prices. And in parallel, find them the necessary financing. That is why around 80 percent of our beneficiaries are woman.

Do you get resistance from the community while doing this?

Not so much. We undertook awareness raising campaigns before we started, to make sure they understand why not everybody had to be part of the growth, but nobody should be left behind at the end of the day either. That’s our principle.

Since the demand for coffee is so high, they don’t see it as competition, they just need more support. It is usually competition that makes you push each other a lot of the time, but now the demand is so much, especially for forest coffee, what’s available is not enough.

Unfortunately, the drought has affected us this season and the amount of coffee we are selling this year is going to be less than last year.

Is there any forecasts as to what the effects of the drought will look like in the coming few months?

No, we have not done that per say, but I know FAO is working around the forecast. We’re coordinating, collaborating and sharing our lessons, not just with likeminded NGOs, but with the government and donors, so that our aggregated knowledge can be able to solve the problem. We are also coordinating with the Disaster Risk Management Commission right now, chaired by the FAO.

Another major problem in Ethiopia’s farming sector is landlessness. Authorities would like to hear recommendations to avert problems arising due to landlessness. What would you like to recommend in this regard?

So, we are not going to solve the issue of land, but what we can do is to come up with ways that we can use the land efficiently and effectively. Once the farmers understand how to increase their yield per hectare, they can increase their labor input as well.

For example, when one of our coffee farmers started working with us, he could barely feed his kids or even send them to hospital. Now, from the coffee sales, he has not only generated substantial income, but has also diversified and is setting up stores in Bale. He also managed to employ 24 youth to help him in the coffee production.

So that’s how we address it by making sure you are climate smart and generating the number of jobs needed to absorb landless youth. Otherwise, you cannot solve the land issue, what you can do is only give access to it.

There are a lot of mechanisms you can do to address the issue. But from Farm Africa’s point of view, what we’re trying to do is to increase the yield per hectare and capabilities of farmers, so that they can hire more people.

From your experience, what has been the hardest thing to overcome in Ethiopia?

We haven’t been able to address or mitigate the impacts of climate change. For me, it’s always been three steps forward and three steps backwards, but we are going in the right direction. Until we address and minimize those impacts and make sure that the farmers move from rain–fed agriculture to a more sustainable climate smart agriculture, it will be difficult.

Access to information and inputs is crucial. We are doing a lot of studies on value chains, different crops and fruits and pulses, and are we disseminating enough information to everybody to make an informed decision, so that they can produce what the market wants.

If you go to speak to most of the farmers in rural areas, they produce using traditional practices. If they do not wait for rain anymore, then they can produce more harvest per year.

Does Farm Africa work on logistics as well?

No, not on logistics, but we try. What we are trying to do is to connect them with the dealers so they can come. The dealers will only come if they can find value. That is why we want to make sure the farmers are organized in cooperatives, so that when they come for the coffee, they can get 40 tons to 50 tons. The volume will make it interesting for the private sector. But, the private sector has to be part of the solution as well.

Do you have any comments regarding the crisis that is going on in the country right now and how it’s affecting the agricultural sector?

As an NGO, we are not allowed to talk about it. We are not allowed to talk about rights. But, Farm Africa is committed to support the reconciliation and recovery process. That’s where we can come in because we are not even a humanitarian organization. So, we can’t even support these kinds of interventions.

What we can do is once stability and security is established, we can quickly go in and support farmers to quickly recover and catch up with the coming harvest season. So, through the post conflict recovery, we have a lot we can contribute, but beyond that, not so much.

Is there anything you’d like to add that would help authorities, individuals or farmers?

Working with farmers is still the solution. They have the knowledge and know-how; you just have to be the catalyst to help them and enable them achieve their goals. We want to make sure the economy thrives.

We need to improve our productivity and production. Everyone including the government, NGOs, beneficiary communities themselves have a role to play to contribute to this. If we do that, we are able to not only feed our own society, but be able to export and help others.

Eskinder Nega is a household name in Ethiopia. Known for publishing newspapers with articles critical of the government, Eskinder has been in the media industry for over 25 years. In 2019, he established Balderas Political Party.

Though he lost the last election to the ruling party, he is still actively participating in political matters. He was among the people arrested in the aftermath of the killing of Hachalu Hundessa and was released a year and a half later on January 2022.

The Reporter’s Amanuel Yilkal and Samson Berhane sat down with Eskinder to understand his journey in the media industry and politics. Excerpts:

The Reporter: Let me take you back to the 90s when you started publishing Ethiopis after your return from the US. How were you attracted to the media world?

Eskinder Nega: I lived in the US for many years. When I returned to Ethiopia, the country was in the midst of changes. There were many magazines, while the only privately-owned newspaper was Eyita. The magazines were not assertive and they feared criticizing the government and its policies. They used to beat around the bush.

I was able to learn a lot from the media environment in the US, which is free to criticize the government without being censored. It is not because I am a daredevil (Jebdegna) as some see me but since I was aware of the media landscape in the US, I wanted to try a new thing.

Then I started publishing Ethiopis, a publication that was ardently challenging the ruling government back then. It continued till October 2006. Ever since I started publishing the paper, I was a target of the Tigray People Liberation Front (TPLF). I was in custody for over 10 years in the period of the TPLF-led government and another one and half years after the then Oromia People Democratic Party (OPDO) started to lead the country.

You were arrested for the first time due to a column dubbed “Fascism in Tigray” that appeared on Ethiopis.

“Facism in Tigray” appeared in the second edition of Ethiopis. The first edition’s cover story was the “killings at Sidst Kilo.” It was initiated after the death of students who opposed the secession of Eritrea from Ethiopia. It was a story that made officials angry. And when we published “fascism in Tigray” in the second edition, we became a target. May his soul rest in peace; Tesfaye Asmare was the Editor-in-Chief of the paper, while I was a publisher back then.

We did the “Fascism in Tigray” story because people in Tigray were not allowed to be a member of a party other than the TPLF back then. Those who did not become a member of the TPLF back then were not only being arrested but were also being isolated from Idir and other social institutions.

Many were isolated just because they didn’t want to be a member of TPLF. We opposed this in our article. The situation in Tigray was no different from totalitarianism, while what was happening in Addis was authoritarianism. The TPLF was controlling every step of the people in Tigray, where there was no freedom of press. In Addis, there was a freedom of press, though it was limited and was a show to create an image that the media landscape is improving after the fall of the Derg Regime.

You are saying the “Fascism in Tigray” column intended to voice the concerns of people in Tigray. However, this goes against what another newspaper of yours was publishing in a column dubbed “Wegid Yihuda”, authored by Tadios Tantu. Articles written under this column were for long criticized for belittling ethnic Tigrayan’s.

Whenever you criticize dictators, they always give you a name. When we were publishing Wegid Yihuda, there was always another article that argues against what was written in it. The column always revolved around the history of Ethiopia. It discusses about King Yohannes IV.

When the British Empire invaded Ethiopia, it was him who received their army at Hamassien. This led to the death of King Tewodros. Tadios Tantu argued this is a betrayal and TPLF is born from such a history.

Do you consider this story as a common history of Ethiopians? Or are you blaming one ethnic group for it?

When Yohannes IV allowed the British to enter Ethiopia, he was not alone. He was assisted by King Teklegiorgis (also known as Wagshum Gobeze) who allowed the British to go through his territory to Mekedella. All of these are a part of our history. Yet I believe we did not learn from it. That is why I allowed the column to be published.

However, I have not gone through each of the words of the articles appearing on Wegid Yihuda. At that time, I was editing stories appearing on three publications with a scarce resource and professionals. We used to call it guerrilla journalism. While fighting the government, we were facing critical shortage of resources. In the midst of such challenges, there were several points that were published, though they were not supposed to be printed.

However, the aim of the article was not to disparage the image of Tigrayans. I never have been an enemy to Tigrayans and I will never be. The same goes with Oromos, even though many accuse me of being an enemy to the Oromo people. We were accountable to the contents appearing on the newspaper. We may have made some mistakes.

I cannot say mistakes were never made when we were publishing articles under the column. I apologize if we made a mistake and for the error. Yet, one thing is for sure, it was never our intention to portray the people of Tigray as our enemy.

You have been given several awards while you were in the media sector. Many also say you have paid a big price for journalism, while some claim that you are an activist rather than a journalist. For you, what are the things you have contributed for the development of journalism in Ethiopia?

Journalism can only prevail in a country where democracy exists. When you try to practice pure journalism in an undemocratic state of affairs, you face several challenges. Undemocratic elements of state target you not because you do not follow the ethics of journalism; rather it is because they don’t want to accept the truth or the reality on the ground.

It is the lack of objectivity that strains your relationship with the government. It is because a dictatorial government doesn’t accept the ethics of journalism. Under such a state, you cannot practice your journalistic profession and when you fail to do so, what you do is fight for your rights. You will also be forced to be an activist, a reality that you must accept because of the situation on the ground. The press in Ethiopia passed through such challenges. Our first aim was to practice journalism.

However, in our second edition, after we published the “fascism in Tigray” story, I was arrested and tortured at Meakelawi Prison. Since then, I was fighting for my rights. On one hand, I was practicing journalism. On the other, I was practicing activism.

We were not able to bring the experiences of the west and practice it here. That happened because we were operating in an undemocratic state, while the opposite is true in the western countries. Of course, when we build a democratic state, it will be the right time to talk about journalism.

Why did you become a politician before exercising what you called “pure journalism?”

In 2006, the TPLF suspended licensing of media outlets. When we got out of prison in 2007, we were hoping everything would go back to what it was and we will be allowed to reopen our media houses.

However, the TPLF-led government refused to give us a license. I then decided to become a human rights activist. I was arrested again in 2012 and remained behind bars until 2018. I then started publishing Ethiopis.

Soon after, the issues of special interest on Addis Ababa became a public agenda. To respond to this, I became an advocate and founded a civil society organization. However, we were not able to get a political party that pushed for the implementation of what we were advocating as a CSO. That forced us to transform the CSO into a political party and I became a full-time politician afterwards.

When you founded the party, you were saying your goal was to fight for the rights of residents of Addis Ababa and even Balderas is registered as a regional party of the capital city.

However, after your release from prison recently, you claimed that your plan from the beginning was to establish a national party. Is that not contradictory?

The problem of Addis Ababa is an outcome of nation-wide problems. Addis Ababa is not facing a challenge of its own. Its current problems are born from a dictatorial form of government. When we founded the CSO, our aim was to avert problems faced by the city and its residents.

We were hopeful that EZEMA [Ethiopian Citizens for Social Justice] will achieve what we wanted for the city, but that failed to happen. When we were opposing against special interest of Oromia in Addis Ababa, we went to the public to sell our ideas. Beyond that, we picked EZEMA to make our objectives a reality.

EZEMA’s closeness to the ruling party did not comfort us. In fact, EZEMA was the flip side of the coin when it comes to the ruling party. As we were not able to get a replacement, the public started to ask how we are going to implement what we wanted at a policy level. As a response, we established the party. However, as there were only four months left for the election, there was no time to establish a national party. That is why we were limited to Addis Ababa.

But as I said earlier, the problems faced by Addis Ababa can only be solved if national problems are solved too.

As a party that claims to fight for the rights of the residents of Addis Ababa, for you, what are the major problems faced by the city’s residents.

Residents of Addis Ababa want to see a democratic Ethiopia, a country with no risk of disintegration. They want a united country. Secondly, what they want is a universal democracy.

It is not a system of government that we create together as the current Prime Minister does. They want a universal democracy that is being practiced in the US, West Europe, India, South Africa, Japan and many other countries. That is what Ethiopians want. It is no different for Addis Ababa, who has the same vision for their country as other Ethiopians do. There are many problems born from a dictatorial government. The issue of special interest in Addis Ababa is also an outcome of such a system.

As home to several ethnic groups, there is a need for the introduction of more working languages in Addis Ababa.

After Prime Minister Abiy Ahmed (PhD) came to power, a new policy has been put in place that aims to increase the working languages of the federal government to five.

That did not follow the right procedure. It needs a legal amendment. The law works for everyone. Especially the government, it has the responsibility to uphold the law. At the national level, we all agree on the need for more working languages.

However, in Addis Ababa, there is no need to add more working languages. Amharic is enough. I never heard the people of Addis Ababa demanding for more working languages.

But there are ethnic Oromos demanding for the addition of Afan Oromo as a working language of the capital, along with the Amharic language. Have you ever conducted a survey to reach to such a conclusion that there is no demand?

I never encountered such a claim. Let alone in Addis Ababa, there was no such a demand even in cities surrounding the capital. Even in rural parts of these cities, residents speak two local languages, including Amharic.

We have not conducted a study. But we did not come across such a demand. I will apologize if I encounter anyone asking for the introduction of more working languages.

Critics say your party focuses on fueling violence. Your party is present wherever there are protests or riots. And you are rarely seen coming up with policy recommendations and solutions for problems faced by citizens. How are you going to address this criticism?

Some say we focus on issues of little importance to the public. That comes from two directions. The first is a concern coming out of kindness. The second is an attempt to silence us. And it is also an action taken to imprison us again.

There are people who believe things that we are giving an emphasis, like demolition of houses, can be solved by taking administrative measures. We have to awaken the public by publicizing and following each problem. We want to make the public aware that a problem that compromises the existence of Ethiopia as a country is happening and they must debate on it.

Supporters of ethnic federalism argue that regions should continue to have the right to secede. However, you argue that secession should not be allowed. Is that not against democracy?

Take India as an example. It is a model of democracy. But it does not allow secession. See the case of Kashmir. The Muslim majority living in the city want to secede from India and be part of Pakistan. That was why they were fighting an armed struggle for the last 80 years. There are also Indian states that want to secede but the law of the country prohibits them from doing so. The same is true in other democratic states, including South Africa and Nigeria.

In Nigeria, the attempt to secede Biafra failed, while the country’s law bans any federal state from doing so. Yet this does not make Nigeria an undemocratic state. The issue of the Catalan’s is no different. The administrators of Catalonia held a referendum and declared independence from Spain. But where are they now? They are in exile in Belgium. So does that mean Spain is not a democratic country? No!

To ensure the existence of Ethiopia and avoid of the risk of disintegration, secession must be prohibited. It is not Balderas that came up with such a rule for the first time. It is based on the experience of many countries across the world.

Agriculture is still the main driver of the economy, whether we like it or not. And we have to make sure it contributes to the GDP as its intended. I think we just have to keep our eyes on the ball.

We have collaborated with other organizations in order to increase our capital as well. Upon our establishment, our bank had one billion and fifty six million birr. Next year, we are planning to raise two billion birr by selling two million shares. We will give first opportunity to buy shares to existing share-holders and then it will be open to the public. The government has set out a rule whereby private banks have to have seven billion birr in capital in the seven years. We have six years to raise the other five billion birr.

Ethiopians have demonstrated on ample occasions that they will never tolerate anyone bent on advancing their selfish political agendas by sowing instability and thereby jeopardize Ethiopia’s very survival. All political actors need to abide by the notion that each and everything they do must be guided by the vital interests of the country. They also ought to realize that Ethiopia is much more about than the trappings of power, bankrupt ideologies belonging to the dustbins of history, manufactured historical narratives, ethnic and religious identities, and obsession with flags and emblems. It’s then that its citizens can embark on the journey to building a democratic nation that is the epitome of strong unity, durable peace, and sustained economic growth.

Two pieces of legislation entailing catastrophic consequences for Ethiopia and its people are meandering through the United States Congress. The first, whose official moniker is H.R. 6600: Ethiopia Stabilization, Peace, and Democracy Act, is pending before House floor after it moved out House Foreign Relations Committee in mid-February. Entitled S. 3199: the Ethiopia Peace and Stabilization Act, the second was approved this week by the Senate Foreign Relations Committee for consideration by the full Senate. The bills require the President of the U.S. to impose sanctions on foreign persons the Administration determines to have “threatened peace and stability, undermined progress toward a ceasefire, obstructed humanitarian assistance, or violated human rights in Ethiopia.” They would also would suspend certain U.S. foreign assistance to Ethiopia and authorize the Administration to help entities investigate and seek accountability for war crimes, crimes against humanity, and genocide in that country. Furthermore, the bill would require the Administration to “develop and implement a strategy to promote peace, reconciliation, and human rights in Ethiopia and to report to the Congress on its actions under the bill and on other related matters.”

Ever since the forces of the Tigray People’s Revolutionary Democratic Front (TPLF) launched an unprovoked attack on the Northern Command of the Ethiopian National Defence Forces (ENDF), the bilateral relationship between Ethiopia and U.S. have broken down following the U.S.’ adoption a series of measures intended to arm-twist Ethiopia into choosing its side over China in the new cold war. Although the two countries have recently shown signs of improvements in their relations with the allocation of additional U.S. funds in support of different regional states and institutions in Ethiopia, the U.S. is still bent on applying more sticks than carrots to accomplish its strategic goal in Ethiopia and the wider region. The passage of these blatantly biased bills is sure to negatively impact Ethio-U.S. relations for they erode the trust, predictability and mutual cooperation on which they should be based.

What makes the contents of H.R. 6600 and S. 3199 more galling is the fact that they place no sanctions or threats of one against the TPLF despite its instigation, expansion and prolonging of the civil war as well as the commission of crimes of atrocities. In addition they fail to give due recognition to the steps the Ethiopian government has taken to bring a peaceful resolution to the civil war. Chief among these measures are the withdrawal of the ENDF from the Tigray region in June 2021 following the unilateral declaration of a ceasefire; the streamlining of aid delivery to the regions affected by the war; ordering the ENDF to not cross into Tigray after TPLF forces were routed from the positions they held in the adjoining regions they had invaded in December 2021; releasing several politicians, including TPLF leaders, from prison in January; lifting the six-month State of Emergency declared after three months; and declaring a humanitarian truce to facilitate the delivery of aid to the conflict-affected people of Tigray. Such inequity only serves to deepen Ethiopians’ distrust of the U.S. and its allies.

Punitive sanctions do more harm than good and seldom achieve their intended outcome. The US has not secured democracy, peace and stability by imposing debilitating sanctions on any country in the world. It is the poorest of the poor, low- and middle-income Ethiopians who will suffer the most by the passage of H.R. 6600 and S. 3199, not the government officials they target. The sanctions will adversely affect regions which have already been hit very hard by the war, including Tigray, Afar and Amhara given they make it very difficult to source the materials needed to reconstruct the health, educational infrastructure the war has ravaged as well as the resumption of other critical services. Moreover, by calling for an independent investigation into conflict-related human rights violations, the bills signal lack of confidence in the Ethiopian Human Rights Commission, whose report on a joint investigation undertaken with the U.N. Human Rights Commission on the war in Tigray, was endorsed and applauded. The debilitating impacts of the bills on a poor nation like Ethiopia will be devastating and apt to linger for years. This would lead to the very instability and fragility of Ethiopia that the U.S. ostensibly wants to prevent.

In a rare foray into engaging Ethiopians in candid dialogues since the advent to power of Prime Minister Abiy Ahmed (PhD) in April 2018, senior officials of the ruling Prosperity Party (PP) have fanned out across Ethiopia to hold dialogues with citizens from all walks of life. The discussions come on the heels of the premier’s pledge at the conclusion of last week’s meeting of the party’s executive committee that party officials would soon be dispatched throughout the country with a view to seek durable solutions to multi-pronged challenges in collaboration with the public. The party said the dialogue has two underlying objectives: informing the public about the decisions of the party’s first Congress held at a fortnight ago and reaching a consensus on the respective roles of the public and the government in the search for solutions. By most accounts the participants were apparently able to voice their views without any inhibition. Time will tell if the party is committed to heeding them.

The topics raised at the discussions largely coincided with the areas of focus PP’s congress vowed to tackle. Chief among these are the deteriorating security situation in large swathes of the country; the debilitating hike in the cost of living; the rise of extremism and exclusionism; and the proliferation of corruption and other forms of bad governance. The crux of the impassioned and sometimes angry views expressed by the public was that the blame for the current state of things squarely lay with the government. While some acknowledged that the plethora of problems besetting the nation and its people predate the government and thus absolve it of some degree of culpability, most did not buy into this line of reasoning saying that the government lacked both the desire and capacity to put paid to them. In fact, they argued, the rank of the government has been infiltrated by duplicitous elements intent on advancing their selfish interest or the sinister agendas of domestic and foreign enemies. The government would do well to take immediate corrective actions for the extent to which it genuinely responds to the demands of citizens will determine if and how long it may remain in office.

The gravest of the grievances voiced by everyone participating in the discussion forums is the cycle of violence that has been rocking Ethiopia for some years now. From the frequent outbreak of internecine conflicts and targeted attacks to the war in the Tigray, Amhara and Afar regions thousands of innocent citizens including children and the elderly have been butchered and injured with millions more displaced from their homes. Though the public has demanded time and again that the government protect its safety and security and bring the perpetrators of acts endangering its welfare, the latter has been found wanting when it comes to ending the recurrence of senseless carnage. The government’s predictable response to the calls for it to guarantee the fundamental rights of citizens to lead a secure life anywhere within the territory of Ethiopia has been to vow that it’s committed to upholding the rule of law. It must stop paying lip service to a matter of grave importance and back up its promise with action.

The second and equally pressing matter that arose during the course of the discussions was the backbreaking cost of living. The interminable escalation of the headline inflation rate has meant that life has become a living hell for the vast majority of Ethiopians and pushed a significant chunk of the population into poverty. There are a host of reasons driving inflation. One of them is the inability of the government to formulate and implement monetary policies instrumental to contain if not bring down the phenomenon. Its failure to allocate sufficient foreign currency to importers of basic necessities and eliminate the predatory behavior of unscrupulous market actors have further contributed to exacerbating the inflationary pressure. Although the government can do nothing to halt a significant contributing factor—the rise in the price of fuel and imported food items—it is incumbent on it to seek both short- and long-term solutions through meaningful consultations with the general public. Undertaking a course of action that does not take into consideration the views of everyone who has a stake is bound to fail miserably and worsen the problem. The serious ramifications of the spiraling inflation, namely stirring widespread public discontent that triggers political and social unrest, is something the government needs to wise up to and take appropriate steps to neutralize them.

As much as the government bears the primary obligation of easing the suffering Ethiopians are undergoing, it cannot succeed if it tries to go it alone. Aside from empowering political parties, religious organizations, educational institutions, civic and professional associations, elders, the youth and women to play an active role in the search for informed solutions, the government is duty-bound to clean its house and purge officials and functionaries in its structures who are complicit in the very problem they are supposed to fix. Important as organizing dialogue forums may be in garnering the views of the public, it’s paramount to ensure that they are inclusive. It’s only then that the government can effectively respond to the demands expressed by the public in the recent discussions.

As some U.S. lawmakers and lobbyists engage in a concerted endeavor to force Ethiopia into kowtowing to the demands of the West, it is incumbent on the government, people and friends of Ethiopia to do everything possible to foil their sinister design. While efforts are underway both at home and in the U.S. to stop H.R. 6600 and S. 3199 from seeing the light of day, they should be ramped up until the bills are defeated. It’s disheartening though to see some citizens and members of the diaspora community side with the sponsors of the bills. Ethiopians should not despair just because the bills have advanced to the House and Senate floors. In order for them to become law they will need a full vote of both chambers and the signature of President Joe Biden. There are several things that can be done in the meantime to ensure that even if the bills pass they are defanged and unrecognizable from their current form. It’s imperative that we keep up the fight to the death and resolutely defend our national interest.

The inability of the political class to resolve differences through discussions and negotiations has for far too long been a hallmark of Ethiopian politics. There is no disagreement under Ethiopian skies, however deep-seated it may be, that cannot be addressed through genuine dialogue. Politicians that truly have the interest of Ethiopia and its people at heart owe the duty to ensure that they comport themselves in a manner that advances the interests of the nation, not their selfish motives or the agendas of adversaries intent on doing the country harm. They need to work together to facilitate Ethiopia’s smooth transition to a democratic order, uphold the rule of law, and enable citizens to have access to justice. Furthermore, it’s incumbent on them to play an exemplary role in terms of, among others, rejecting discriminatory attitudes and practices, creating a mutually respectful relationship amongst themselves, and forging a culture of constructive dialogue. It’s then that the calamitous ramifications of the war of words between members of Prosperity Party can be averted.

Best known for playing a big role in establishing the Association of Chartered Certified Accountant Ethiopia (ACCA), Hikmet Abdella is currently the Director-General of Accounting & Audit Board of Ethiopia (AABE). She has been holding the position since 2019 after replacing Gashe Yemane, the founding DG of the Board.

Hikmet has been tasked to complete the path to full implementation of International Financial Reporting Standard (IFRS) in the next three years.

The Reporter’s Ashenafi Endale sat down with the Director General as she reflects on the path taken to make Ethiopia’s audit and accounting standard comply with internationally accepted principles and rules. Excerpts:

The Reporter: How is the progress of Accounting & Audit Board of Ethiopia (AABE) in professionalizing Ethiopia’s auditing system?

Hikmet Abdella: Financial statement is the cornerstone of any institution, whether they are business entities or NGOs. But Ethiopia had no financial statement standards for a long time and there were also no standards for professionals.

The Accounting and Auditing Board of Ethiopia (AABE) was established under such context. Before the AABE, the Auditor General (AG) used to provide licenses and undertake supreme audits for public institutions. So licensing auditors, accounts and firms was an additional job for the AG, at that time. It gave the licenses but had no capacity to control and regulate them.

A World Bank study in 2007 indicated that Ethiopia’s economy was growing faster and there is no accounting and auditing professionals that matched the growing businesses. The AABE was established based on this recommendation.

The AABE’s task is to license accountants, auditors, firms and regulate them. We also adopt and implement internationally accepted auditing standards in Ethiopia. These professionals undertake audits and submit documents to the AABE. We have a library of firms’ files.

Which companies are difficult to control? Which company structures are more complicated in Ethiopia?

Our prime priorities are Public Interest Entities (PIE) and the AABE is basically established to protect these entities from failing. If a company fails, it might not have much impact on the whole economy but if PIE fail it will have a wider economic impact.

Different countries have varying definitions for PIE.

PIE is defined qualitatively and quantitatively. For instance, financial institutions are PIE with huge numbers of shareholder’s with interests. They collect savings and give loans. So they must be protected from failing. Secondly, SOEs are protected because they are the highest taxpayers.

MFIs and share companies are our next priorities, while PLCs are our last priority. We don’t have to control vendors since they have absolutely no impact on the economy.

Every jurisdiction has its own definition. The AABE is currently developing its own definition for PIE and other business entities but we have to align with international standards.

Currently, a similar international definition for PIE is being debated and we have been participating in such debates virtually, due to the COVID-19. Probably by next year, we will have a new definition for PIEs. But there will not be much deviation from what we are using now.

The AABE’s task also relates to domestic resource mobilization. Big companies have to generate big taxes and the AABE controls big business entities strictly, than small businesses.

Ethiopia’s private sector is very new. It has only been 30 years since the communist regime changed and the only big players are financial institutions, followed by other share companies.

Generational companies, that have passed from generation to generation, have also a big role to play and we must be able to maintain family owned enterprises. They usually lie in the middle, between small and big companies.

Family owned enterprises, if well nurtured, can contribute up to 50 percent of the tax revenue. So they should be considered as PIE. But in Ethiopia, family owned enterprises are dying out currently, due to various reasons.

Scholars argue that the tax base should be diversified in Ethiopia. Is it big companies or small businesses that pay more taxes currently?

It is a matter of context. Large taxpayers have to get incentives in different mechanisms, so they can grow more robustly. A country cannot grow without diversifying its tax base at a small business level.

The number of taxpayers in Ethiopia must grow. Many small companies, pooled together, bring huge sums of tax revenues. But the tax authorities must be careful not to squeeze small businesses through stringent taxes. Small businesses must be relieved from stringent of taxes, so they can grow.

What is the AABE’s capacity in controlling and regulating Foreign Direct Investments since Ethiopia’s economy is integrating into the global economy?

The Prime Minister recently stated that the financial sector will open up. And the ongoing liberalization and privatization, as well as the World Trade Organization accession, need ultimate caution. It is good that big foreign players are coming to Ethiopia. But all regulatory institutions in Ethiopia, including the AABE, must sit down, and discuss whether we can handle it or not.

Ethiopia’s economy and regulatory institutions have been closed for a long time. Even neighboring countries have more capacity when it comes to regulatory capacity. There are also differences but we cannot remain closed. We must look for methods to bridge the regulatory limitations.

The east African block including Rwanda, Uganda, Kenya, have a system in which accounting and auditing professionals can move freely from one country to the other.

When Ethiopia opens up, they will bring their own systems and professionals. Ethiopia must produce its own professionals to control foreign firms. Currently, Ethiopia has no sufficient accounting and auditing professionals to support the economy.

We are currently preparing to establish the Ethiopian Institute of Certified Public Accountancy (EICPA). Hopefully, it will be operational this year and start to produce professionals. If you go to Kenya, there are close to 40,000 professional accountants but Ethiopia has around 250 professionals. We cannot support or handle the opening-up of the economy with such meager figures.

The Capital Market is nearing realization in Ethiopia, which requires precise and highly trained professionals. PIE will be affected if we launch a stock market without skilled professionals. In some countries, only firms listed on stock markets are considered PIE.

As soon as the stock market is opened, banks will be the first to be listed. These institutions must be valuated every three months, instead of annually as before.

Unless we have professionals to value the Initial Public Offerings, public interest will always be affected. Even statements made by politicians can affect the value of an IPO; so the listed firm must be valuated frequently. This is impossible without qualified accounting and auditing professionals.

Officials at the National Bank of Ethiopia are saying it will take three years to create a fully-fledged stock market ecosystem. Can we reach that with the absence of professionals?

Big things can be done in three years. With the EICPA established now, and is backed with a sufficient budget, we can generate 5,000 professionals annually.

There are already many graduates but there is much to be done to create the right stock market ecosystem. Public interest must not be affected, until we try to fill the gap in lack of professionals.

There are many distortions in the commodity value chain and malpractices in the corporate world in Ethiopia. Even recently, importers and wholesalers have been blamed for hoarding edible oil, which has caused a crisis. Do you think the AABE has created a good corporate culture in Ethiopia?

We did not achieve much progress. There is no responsibility. Do you think money laundering is done without the knowledge of accountants? Is the accountant responsible to the public, government, or the company owner?

Ethics is the biggest problem. Accountants can build or destroy a country. The demand for accountants is always up, even at war times. Accountants can change small money into big, or vice versa.

Currently, Ethiopia is negotiating to start the Africa Continental Free Trade Area (AfCFTA) and also the WTO. It should be accountants that represent Ethiopia on the negotiation table. Accountants know what the agreement articles mean. They can tell you what it means ten years from now.

Does the AABE work with the auditor general? Do you have the capacity to take action on accounting misbehaviors?

The Auditor General audits institutions and we produce the professionals. We do not audit public institutions. We do SOEs, private companies and NGOs and the Ministry of Finance reviews the financial statements. Currently, we are reviewing SOEs parastatal financial statements. We will discuss with the PEHA, the MoF and the AG next week.

Ethiopia embarked on the road to privatization and liberalization three years ago to shift the economy from state-led to the private sector. But currently, regional states are building their own conglomerates, while the federal government also establishes the Ethiopian Investment Holding. Do you think this can create productive and efficient firms in the economy?

That is a difficult question. What is for sure is less is done concerning financial statements. Many SOEs, endowments and other firms vanished, or merged, without any consultations with the AABE.

There is a huge problem on this issue. There is no procedure at all in cases of shutting down SOEs, mergers or creating a holding company. Assets, liabilities and other complexities go without proper accounting, especially in mergers. Firms usually close or merge in the middle of the year, before the fiscal year ends and a financial statement is compiled. This is a big problem.

Usually, the Cabinet of Ministers decides on the formation, closure or merger of SOEs.

I have no knowledge on why the government is making changes when it comes to its role in the economy. But strengthening parastatals is common in many countries. We are also seeing progress to accede to the WTO.

Is there capacity to regulate foreign firms like MPESA and are foreign banks allowed? Do you think banks can survive foreign competition?

Ethiopia’s financial institutions are better than where they were ten years ago. If a single foreign bank had come ten years ago, local banks would have never survived, even if they merged into one.

But now, local banks are stronger. The problem is, local banks cannot grow more than they have now. They cannot diversify their products anymore and are very similar. If foreign banks or MPESA come, more products can come with them and support the economy.

But the banking sector will not be opened at once and will be gradual and managed. Unless the regulatory capacity grows parallel and equally, Ethiopia will be in danger.

What do you think is the competitive edge of local banks?

There is not much but their organic growth is very appealing. But the quest for access to finance in Ethiopia is beyond the capacity of existing banks. The economy grew very fast but the access to finance did not.

Even now, we are facing a liquidity problem, which has affected the construction industry due to the lack of credit. The construction industry massively contributes to the economy. But it depends on finances.

The return on shares also remains very positive. But some banks are reaching their ceilings. Many people bought shares because there were no other alternative investment areas at the time. And once the stock market is opened, there will be more opportunities, even for the layman.

Did the new Commercial Code, which was amended after 62 years, bring changes to company structures and accounting systems?

Allowing the creation of a holding company, one person PLC and other minor changes have occurred. The code also allowed foreign accounting firms to come to Ethiopia. The big four, which include KPMG and PWDC, are allowed to operate in Ethiopia.

But these international financial institutions can only partner with local companies. They are allowed to have a 49 percent stake. They are currently requesting us for a license. This is one of the signs that the economy is opening.

The big four will have a big role in capacity building but are very unhappy with the 49/51 proportion. But for me, it is perfect.

So auditing is allowed for foreigners now?

Yes, but this was only made possible after the commercial code was amended.

Recently Ethio telecom’s CEO, Frehiwot Tamiru rejected the 80 billion birr asset valuation of the company. Some say the low valuation is intentional, and conspiracy concerning the valuator has been raised.

I am very concerned of the valuation issue in Ethiopia. Valuation is one input for accounting. In the old days, the value of vehicles dropped every year and on the tenth year, the value gets to zero. The Tax Law also states it must depreciate by ten percent annually. The IFRS states an assets value must be stated in its current market value, which shows the true value of a company.

In Ethiopia, the value of vehicles keeps appreciating. A Toyota bought with 200,000 birr ten years ago is now 2,000,000 million birr. So according to IFRS, the vehicle is worth 2,000,000 birr. But the tax system does not demand depreciation.

Who is the right valuator in Ethiopia? There are only three certified valuators in Ethiopia.

The conspiracy issue when it comes to foreign valuators is not a new issue. That is why I say the opening up of the country must be cautious. Ethiopia has been closed for so long that the process must be done step by step. The reasons why the big four hate the 49/51 ratio is because they want to come at once and manipulate the weak regulatory system.

Whatever your background, you care about your country. But foreign firms care only about their profit. The loyalty of their accountants and auditors is not to the Ethiopian public or the government. It is for their parent company abroad. This is why we must produce our own professionals, to maintain the balance.

Which institutions have shown progress in implementing IFRS?

That would be financial institutions. They have the money and IFRS is expensive. If a company can afford the expensive professionals, it is simple to implement IFRS. There is a huge demand for the professionals, but there are very few. The demand shot-up since the AABE came.

Financial institutions are implementing IFRS because they have the money and managed to engage international financial consultants, but SOEs are the first to bring an IFRS report four years ago.

Banks are blamed for engaging in informal financing including the black market, and informal Hawala services. Do you think IFRS brought transparency to the banking system?

Every time an economic system is closed, informal doors are opened, including corruption. Many problems will be solved, if the economy is opened but as long as it remains closed, it creates many loopholes.

New banks have come into the picture in the past three years. But lately, the PM has said the sector will open up soon. When should it be opened?

When foreign competition comes, it will be all about survival of the fittest. How long will it take for our banks to be fit? If they have to merge to be competitive, let it be. Mergers should be encouraged. It is better to have a few strong, internationally competitive banks than many banks.

So far, Ethiopian banks are not even going into regional states, because they did not even satisfy the urban clients while Kenyan and Nigerian banks are working at continental levels. That should be our direction.

What would be your expectations of the upcoming stock market?

It will engage the ordinary people. Only few have been able to buy bank shares. But in a capital market, people can have a stake in the stock market. Anybody can invest in profitable businesses, in a stock market.

Will the EICPA produce professionals for the stock market?

Yes. The institute will generate mainly certified public accountants, to address the diversified demand of professionals from different institutions.

Various institutions want to install their own institute to produce such professionals. But that would be unaffordable. So it should be the EICPA that branches-out and addresses these diversified interests.

Who will be listed on the IPO first?

Financial institutions, then SOEs, share companies, and family owned enterprises. The last one may need discussions on whether they want to go public.

Cross listing is also possible. For instance, companies like Coca Cola, which are listed in other countries and also operating in Ethiopia, can be listed in Ethiopia.

Why is it still difficult to solve under-invoicing and over-invoicing challenges in Ethiopia’s import-export business?

Our concern is how to address it through a transparent accounting system. But there are varying scholarly debates on this issue.

Lately, the Ethiopian Investment Holding company has been formed to be an umbrella company for SOEs. Do you think such a mammoth holding company, run by a government, can be efficient given that SOEs are known for wasting resource?

I believe such trend of creating holding companies is a good start. If there is a strong accounting and valuations system, SOEs and holding companies can be efficient.

Liability and asset management company (LAMC) was also recently formed to soak up SOEs’ debts. Credit default swaps, or trading credit derivatives, is common in other countries. In Ethiopia too, some banks are buying defaulted debts from prospective enterprises. Do you think the trend is recognized by the AABE in Ethiopia?

This area should be researched. Many new trends are emerging in Ethiopia’s economy and its contribution must be analyzed.

Before the Ukraine war and COVID-19, scholars were saying globalization is invincible. Now, self-sufficiency is becoming irreplaceable. We have been dependent on FDIs, but they abandon industrial parks when they want. Yet, Ethiopia is pushing for privatization and more integration in the international economic system.

Don’t you think it is time to focus on economic sovereignty, including import substitution? I am not talking about closing the economy, but where should be the boundary?

No country is economically self-sufficient, including the US. Their economy was stuck when Chinese supply declined during COVID-19. Many companies closed in the US, because the supply chain was disrupted. Ethiopia cannot think of self-sufficiency with a nascent manufacturing industry.

But I believe it is time to re-prioritize our policies. Especially, our negotiation skills on international economic activities must grow. The level of our negotiation skill determines the level of external debt stress on our economy.

Many countries have long term plans, up to a century. We must be clear and have a realistic plan on where we want to go in the long term, regarding self-sufficiency, import substitution, even on Chinese imports. For instance, we export oilseed and import edible oil at expensive prices. This can be replaced locally.

Many investments were damaged due to the conflict in northern Ethiopia and COVID-19 pandemic before that. Can they be compensated rightly?

Knowing their accurate accounting is critical, to determine their losses and compensations. We also need to produce professionals on investment insurance policies.

How man licensed auditing firms are there?

Basically, the AABE gives two kinds of licenses. Authorized accountants prepare financial statements. There are around 2,000 authorized accountants, at federal and regional levels and there are 162 independent auditors.

What are its challenges?

There are many challenges. The AABE is a regulatory body. We are expected to have much more capacity than those we control. One of the challenges relates to professionals earning more money if they operate privately, than work for the AABE.

Professionals in regulatory institutions, have less incentive. If the professionals have more power than the regulator, it is difficult to regulate. For the time being, the board is using consultants who are paid by the World Bank, with approval from the Ministry of Finance.

ACCA supported us too. Currently, the AABE is in good position. We know how to review audit reports, and control licensed professionals. Some companies take up to four years to finalize financial statements, but we always begin to review from the first year.

The world is celebrating March 8th. Do you think the affirmative actions provided in Ethiopia have really empowered women?

I do not know what incentives are provided. March 8th is good to highlight the challenges women face. But nobody cares about the details on normal days. Those women like us, who have succeeded, should share our experiences and become role models to young people. We have much homework ahead.

The statistics of women in higher corporate and leadership positions, is alarming. I think there is only one bank president currently and this is not because women lack capacity. If you look at the boards of banks, women constitute less than 10 percent. It is the same in SOEs.

Our definition of democracy is distorted. Ethiopians think ideological semblance comes from similar people. That is wrong. Successful women must nurture the young.

Some European banks which survived the 2008 financial crisis, were banks led by women. Do you think making women CEOs is a guaranteed success?

Women have different management philosophy than men. Women lead with humility. It is not because we have more capacity but because we have intense concern for humanity.

Usually women empowerment issues are used or raised during March 8th or elections. When will equal opportunity become embedded in the publics thought?

We live in a man’s world. The existing trend must change completely, to accommodate women. A new world and country that equally accommodates women and men must be created.

Radical feminists argue a new social order should be created from scratch.

That would be good, if it is possible.

But other groups argue the existing world can accommodate women, with some adjustments.

I agree with this one. But I do not think we should try everything foreigners tell us, especially on feminism. Context and culture are very important. Ethiopia has a different context from the west. We can create an indigenous system for Ethiopia.

First, we have to reconfigure what the education system, society and the media tells about equality. The narrations and practice must be seamless, while extremist views on gender issues only harms the efforts.

If completely erasing the existing system and creating a new order is possible, it should have been simple to reshape the country.

For instance, there are some jobs where women earn less for the same position. Can it be solved by policy actions?

There are various challenges posed on women, some to be solved by the government, some by the private sector, or the society. For instance, board compositions can be solved only by policy. Chambers can also do more work to bridge the inequality gap. And some challenges are inherently solved through time.

There is this discussion over equal opportunity versus equal outcome. There is opportunity for all. Both boys and girls go to school. But that equal opportunity does not continue. Women give birth and then must take care of children.

The inequality will change as more women come into leadership roles. No challenge can be solved overnight, through policies or campaigns. For instance, the AABE can play a role in board compositions because corporate governance is one of its tasks.

Sewagegn Chane is director of the Public Financial Institutions supervisory department at the Public Enterprise Holding and Administration (PEHA), which regulates state-owned enterprises. Sewagegn is currently responsible for directly supervising the Development Bank of Ethiopia (DBE) and the Liability and Asset Management Corporation (LAMC). The Commercial Bank of Ethiopia (CBE), Ethiopian Insurance Corporation (EIC), and the National Lottery were also under his supervision, until they are transferred to Ethiopian Investment Holding (EIH) past May.

Working in public financial institutions for 30 years, Sewagegn initiated the establishment of the stock market in Ethiopia, which is bearing fruit eleven years after the first feasibility study. He was also vocal and key in rescuing the DBE, initiating Ethiopia’s first reinsurance company, Takaful (Islamic insurance), among others.

Sewagegn is also researcher at i-Capital Institute and organizer of the East African Finance Summit. Currently, he is leading two teams formed at the institute, studying the establishment of an investment and agricultural development banks in Ethiopia. Although he has been advocating ending state protection over the financial sector for years, he has currently changed his mind, just as Prime Minister Abiy Ahmed (PhD) authorized a policy that envisages opening up Ethiopia’s financial sector to foreign competition. Sewagegn believes the banking sector should remain closed at least for the next few years. The Reporter’s Ashenafi Endale sat down with the public finance guru. The excerpts, does not necessarily reflect PEHA’s position.

The Reporter: What is the progress in reforming public financial institutions, which commenced after Abiy came to power?

Sewagegn Chane: The biggest reform we undertook is in the DBE. In 2018/19, the House of Peoples’ Representatives (HPR) decided DBE cannot continue as a financial institution and debated on how to dismantle it. That year, the bank reported 765 million birr loss so the HPR decided that the bank is not supporting itself, let alone the economy.

Myself, Haileyesus Bekele, the president at the time, and Yohannes Ayalew (PhD) DBE board president at the time, were called by the HPR to explain the issue. At that time, Public Finance Institutions Agency was a separate entity outside PEHA. The agency was led by Sintayehu Hailemichael (PhD) and I was the deputy director for operations. When some 36 SOEs were put under PEHA in 2018/19, the agency was included under PEHA, as a directorate.

The Budget and Finance Standing Committee at the Parliament insisted the DBE must be dismantled, because it was reporting a loss consecutively. The three of us were called to give our final comments on the committee’s decision. The committee was told that the fundamental problem of the bank was the lack of institutional independence.

Everybody was intervening in the bank, and it was unable to operate as a bank. The PM, other ministers, sectorial institutions, and even individuals have been meddling in DBE’s operation. Secondly, the bank gives loans but does not collect. Those who took DBE loans view it as the government’s budget, not as a client. Most of them had the “developmental investors” plate.

They take a loan and divert it to other businesses. Commercial farming in Gambella and Benishangul are good examples. I was in Gambllea for a year and half, to study why DBE’s loans failed there. There are so many rain-fed projects there. Particularly, six of those that took loans completely diverted the money to other businesses, instead of the commercial farming.

I stood before the standing committee, and pledged to give the DBE additional time. I told them if institutional freedom is restored, relationships with clients will be straightforward, and the bank’s loan collection capacity rebuilt, bringing DBE on track. So I asked the standing committee to give us just one year, and if we fail to rescue the bank in that year, then the committee can dismantle it.

Yohannes on his behalf explained how the IMF and the World Bank are happy to see the DBE dismantled because they do not want development banks in developing economies. He also elaborated how important a development bank is for Ethiopia. After a brief tea brake discussions, the standing committee announced it granted the one year time.

Immediately, we embarked on the reform agenda, introducing seven reform pillars. One of the biggest reform pillars was reducing DBE’s Non Performing Loans, which was over 40 percent at the time. If the bank cannot collect the loans, it cannot disburse loans the next time.

DBE’s NPL at the time was weighed in rain-fed agriculture and textile. So, we stopped any further loans for rain-fed agriculture. In textile, many foreign investors took loans in billions but did not pay, so we decided to take over all the projects that are not paying back their loans, and transferred them to other investors.

We also took the contract management of non-performing projects. For instance, the DBE took over the management of Elsi Addis, Etur and other textile factories, for the time being. Except Etur, most of these projects have been transferred to new investors, without reaching the foreclosure stage.

The major project left on our hands to date is Ayka Addis.

The other serious measurements we took were barring any officials from intervening in any loan appraisals and disbursement processes. Before the reform, orders for some loan approvals were given from the Office of the PM. Officials from the Industry, trade, agriculture, and many other ministries used to give such informal orders to the bank. Now, even the DBE board cannot involve in loan disbursement cases, except on strategic issues.

We managed to reduce DBE’s NPL to 30 percent this year, including Tigray loans. It is actually 17 percent, if loans in Tigray are excluded, which are affected by the war in northern Ethiopia. Profit comes from loan interest. If the loan is not collected, there can be no profit.

We managed to generate 1.2 million in 2019/20; just a year after the reform was launched. This year, the bank generated 3.9 billion birr in profit. If we did not put aside 4.1 billion birr provision for the Tigray loans, DBE’s profit this year could have been 7.8 billion birr. The DBE is rescued now and everybody is acting as a client now.

DBE’s source of finance is the guarantees from the Ministry of Finance and the National Bank of Ethiopia (NBE). The capital has increased from five million to one billion. The macroeconomic committee approved a study to allow new DBE bond, effective since January. This is apart from the GERD bond, which is the DBEs source of finance.

Before the reform, all the financial indicators of the bank were negative, and unhealthy. We completely reversed all of that, except for the NPL. Before the reform, there were only expenses and disbursement, but now there is income.

Out of the 31 strategic measurements we stipulated under the seven reform pillars, 21 are aggressively implemented and ten are in the process. Only one measurement has not started, which is the digital technology and modernization initiative.

The PEHA and DBE’s board has contributed for the success of DBEs management. One of the positive factors is the steel-serious discipline of Tegegnework Getu (PhD), the board chair of DBE. As a board chair, he is opaque to any external influence or favor. He never took stipends and incentives allocated for board chairs annually. Even he uses his own car for DBE activities.

Yohannes was the chief economist at the NBE for a long time. How did you believe in him, that he could rescue the bank?

Under past presidents, the bank had many deviations and exceptions. Instead of going through loan approval and disbursement procedures, loan seekers directly contact the president and get the loans, informally.

For instance, after we banned DBE loans for rain-fed agriculture in 2018/19, the bank gave 120 million for rain-fed agriculture project. The president at the time said he was forced because certain officials at the Ministry of Agriculture managed to give the order via the Office of the PM.

Surprisingly, the board chair does not know about the loan. The bank was bleeding. We had to be brutal to stop the bleeding. Most of the bad loans were given during Isayas Bahre’s time. Both Haileyesus and Getahun Nana were unable to save the bank. Our biggest worry was that Yohannes might decline the role to lead the DBE.

Over 200 large scale agricultural projects, and a number of foreign textile investors took loans from the bank and failed to pay. Are you pursuing them legally?

We are trying to acquire the lands currently. Our biggest problem now is with the regional governments of Benishangul and Gambella. The land is the key asset the investors provide as collateral to take the loan from the bank.

After the investors fled without paying the loans they took, the DBE has to acquire the lands, since it is the collateral. Once we finalize acquiring the lands, we will transfer it to other investors. Then we will recover the previous loans.

I heard the Benishangul and Gambella regional governments are demanding it pays taxes on the lands?

We reached agreements on some of the lands in Benishangul. There are ongoing debates on the amount. The bank agreed to pay the tax, if it agreed on the amount. The regional governments usually give one plot for multiple investors, so one certificate is given to multiple investors. The regional agriculture bureau has been reporting to us that the lands were being cultivated by the investors, which was false.

In general, rain-fed agriculture and textile investments have bled DBE.

For instance, Ayka Addis’s investor used informal channels to get the loans, instead of going directly through the bank. It either goes through the PMO or other officials. Solving all this was not simple.

Most of DBE’s clients were unruly. They had the right to take the loan, and the right not to pay. So we disciplined the clients first, and reversed the bank’s practice of negligence. All this was done in three years.

How much is the land leased for the rain-fed projects?

The rate depends on the regions. Basically, tax, lease and anything related to the land is handled by the investors. But since the investors went bankrupt, and the DBE took the lands, now the bank has to pay them. This is the reason why the regional states are asking DBE for the taxes, because it is under the bank now.

The investors who took the land in regional states for commercial farming, left, and the tax holiday period is over. So regional states are now claiming the taxes and the DBE agreed to pay. This is the game.

Did the Gambella commercial farms failed by design?

The loan was supported by policy. The policy of initiating commercial farming and modernizing the agriculture was not wrong. So the DBE prepared policy and procedures.

The major factor for the failure at that point, was the decision to give loans for rain-fed agriculture. This was a mistake because the investors knew the loopholes and abused the loans and failed to return it.

The DBE is on the right track now but business continuity is more critical.

What are DBE’s sources of funds, after the NBE’s 27 percent T-bill is replenished?

The NBE introduced another bond this year, in which banks channel one percent of their loan portfolio to the DBE. In the past six months, a bit more than 10 billion birr has been channeled to the bank from this new scheme. Once we start from insurances, these two schemes will become our biggest source of funds.

The GERD bond and loans from international banks also generate finance. It also accesses external funds like SME loans, through the MoF. DBE’s T-bill is almost zero currently.

How much is the loan interest the DBE is paying currently, when will the rest mature?

The DBE pays interests by adding two percent on the saving interest, which means nine percent. On the other hand, DBE’s interest rate is between 11 percent and 12 percent, the least being for import substituting projects. The margin covers its administrative cost. So the bank is able to pay all its interests duly.

DBE requested to put Tigray NPL’s off its balance sheet. But NBE officials told The Reporter that it is not going to take it off its balance sheet.

If Tigray’s NPL is put-off DBE’s balance sheet, DBE’s NPL could be 12.5 percent. But including the Tigray NPL, which is 10 billion birr, the NPL stands at 30.4 percent. What we are saying is this 10 billion birr in NPL happened by factors out of DBE’s control. We are not asking the NBE to cancel the Tigray loan.

We undertook a detailed study on how the NPLs could be taken off the balance sheet, and presented to the NBE. We do not know why NBE is silent on the issue. The CBE also requested the NBE to take off two billion birr off CBE’s balance sheet. This was also studied and presented to the NBE.

The NBE first said the request should be processed by the Bankers Association but the issue is still in the process. It is illogical to keep inactive numbers on banks’ balance sheet. When unrest occurred in Oromia over the past few years, the NBE allowed loans of affected investors in the region to stay off banks’ balance sheet. The same can be done for Tigray. It is not a big deal. It is NBE’s decision but I do not know why it is reluctant when it comes to Tigray NPLs. Tigray NPL does not represent DBE’s actual performance, which is outstanding.

DBE’s outstanding loan is 63.4 billion birr. Total NPLs stood at 19 billion, of which 10.1 billion birr is created in Tigray since the war. The president of DBE requested to exclude the Tigray NPL but PEHA does not agree, unless the NBE approves it.

Another investor is negotiating to buy Ayka Addis. Will this be the last negotiation?

A number of potential buyers have been trying to buy Ayka Addis in the past but failed. Especially a Chinese investor was very eager to acquire Ayka Addis. Any potential buyer is expected to contribute 50 percent of Ayka Addis’s portfolio. For instance, the initial investment loan was USD 1.7 billion so the buyer is expected to contribute half of it. But the Chinese lacked capital so it requested to contribute only 10 percent of it, which means around USD 200 million, so we refused because we cannot breach the 50 percent law.

If Ayka Addis is sold, DBE’s NPL will drop to around 15 percent, from the current 30.4 percent. Ayka Addis is holding a huge loan. The principal loan is 1.7 billion, a decade ago. Including the interest, probably it is around USD three billion by now. The value of the machines, factory building, raw materials when the DBE received Ayka Addis, is valued at USD 1.79 billion.

By the way, we are still paying the salary of 4,500 employees of Ayka Addis, though it has not operated for years now. It is between 13 million birr and 14 million birr every month. We cannot abandon the employees, after the Turkish investor left. We are carrying all this cost.

There were also other alternatives for Ayka Addis, other than selling it.

There were three major options tabled. The first is selling to a capable investor or buyer. The second is operating Ayka Addis under a management contract, just like Elsi Addis and the third was repurposing Ayka Addis into an Industrial Park. Some three potential investors have been negotiating. The Chinese came last.

Currently, another negotiation is underway. We hope this will be the last one. It is a consortium of local and foreign investors. We will disclose it when it materializes. Ayka Addis’s operation ranges from cultivating cotton to sewing the clothes. It pins the cotton, dyes it, and makes the clothes. It is an end-to-end project. So the potential buyer is expected to specialize in all these value chains.

Will the new buyer pay Ayka Addis’s accumulated tax?

Under Ethiopia’s law, a company does not pay taxes if it declares bankruptcy. After the DBE took over Ayka Addis, the tax authorities are saying Ayka Addis must pay tax, since it did not undergo liquidation. Ayka Addis was not operating for the past eleven years. So, the tax authority is asking for back-taxes for all these years, stating the project did not declare liquidation. So we are arguing with the tax authority.

But the DBE declared foreclosure?

When the Turkish investors left and the DBE started managing Ayka Addis, the tax authority started asking for tax.

Amazingly, Bmet cables, one of the Turkish investments abandoned after taking huge loan from the bank is a good example of how much Turkish investor’s exploited us. Under the Turkish investor, Bmet cables utilized 40 percent of operational capacity but they were not paying their loan.

Now, the local buyer, Tadesse Admasu of Red Star Trading, is operating at 12 percent of its capacity due to different reasons. The buyer acquired Bmet paying 890 million birr. Now, it has paid all the loans owed to Bmet.

How much has Ethiopia lost because Turkish investors left the country without paying DBE loans?

Before, their equity contribution was 30 percent. This means the DBE contributes 70 percent of the investment. Under the previous ratio, a Foreign Direct Investment comes with USD 30 million, and takes 70 million. The foreign investors left without paying the 70 percent loan they took from the DBE. But now, we adjusted the equity contribution to fifty percent, for foreign investors. Local investors pay 20 percent.

FDI is needed to bring technology, capital, forex, and create jobs. It did not meet any of these targets.

One of the other loopholes FDIs has been exploiting is that they highly under invoice export price. They usually have subsidiaries or a mother company operating abroad. So they export the clothes to them, with fake price documents. These investors also import raw materials only from those mother companies or subsidiaries abroad. The FDIs operating in Ethiopia do not want to use local inputs. They export t-shirts with USD 60 cents from Ethiopia. But the buyer abroad, which is affiliated to the FDI, resells it at a much higher price. So the FDIs generate meager forex for Ethiopia. Their bank statements also indicate loss, always. Especially the expats brought by FDI are highly abusive. Bmet’s former CEO has been paid 500,000 birr in salary monthly. This is excluding housing, vehicle and other accommodations. Now we decided to reduce expats inflow.

That is why, just when we started being strict on Ayka Addis that the Turkish investor’s fled Ethiopia immediately, without handing over the project’s properly. I think they left for Burkina Faso.

Are there new public financial institutions planned to be established, particularly to finance long term development projects?

Four years ago when the bank was in deep trouble, we conducted a study to determine its fate. One of our alternative recommendations in the study was to breakdown DBE into three different policy banks; into an industry bank, agricultural bank and an SME bank. Finally, a decision to reorganize and reform DBE as it is was made. In the meantime, we conducted a study to renovate the bank; the ATA was also making moves to initiate the establishment of an agricultural bank.

The initiative to establish a stock market was also conducted by us. We have been trying to convince the government to establish a stock market for the past eight years. It is only realized under Abiy.

Now, the importance of an independent agricultural bank and investment banks is imperative for Ethiopia. In line with the agricultural bank, agricultural insurance and micro-insurance firms are necessitated equally. These firms protect the loans provided by the agricultural bank to farmers.

We conducted the “Proposal of restructuring public banks” in 2014. The proposal included the recommendation to determine the fate of the former Construction and Business bank (CBB). We did not just demolish CBB without a proper study.

The same studies have later been modified for the DBE. The modified study also recommended the vitality of Agricultural Development Bank, and mortgage bank (construction bank). The plan is for the CBE to stop mortgage financing, and transfer the role to the new Construction Bank (CB). In fact, the proposed CB partly takes on the role of the now defunct CBB.

Currently, we have established two working groups at i-Capital Institute, studying on investment bank and the agricultural development bank each. PEHA has the mandate to give birth to new public enterprises, apart from managing the existing ones. It can also decide on mergers, and dismantling of SOEs.

As long as Ethiopia is progressing from an agrarian economy to manufacturing, a stock market is very essential. If we need more robust manufacturing companies, we must build a robust stock market, where the companies are listed, float shares, and mobilize capital. A manufacturing industry cannot grow without a stock market.

The banking sector fears to give loans to manufacturing industries because the banks fear losing their saving capital. Once the stock market is active, the interest in banks will drop. But the stock market will grow faster, hand in hand with manufacturing.

I hope the establishment of an agricultural bank is realized soon. Ethiopia has an agrarian economy. But the economy is currently distorted, as the service sector constitutes the largest portion of the GDP. In a bid to transform Ethiopia’s economy from an agricultural to a manufacturing industry, agricultural development bank cannot be an alternative. Agriculture is not developing due to lack of finance, fundamentally.

The agricultural bank also needs an insurance firm, to cover the risks of the loans. The bank finances tractors for the farmer, and then the insurance firm insures the machines as well as the harvest. It is highly imperative that agricultural development bank and investment banks are essential for this country.

A secondary market cannot operate without an investment bank. Since we are nearing the establishment of a stock market, we also need to establish an investment bank.

For instance, banks are planned to be listed on the stock market. The investment banks will study the banks, as well as other IPOs, inside out. So, the investment banks determine the exact value of shares, and securities. This means IPOs, including commercial banks, cannot determine the price of their shares by themselves, unlike now.

The underwriter preserves the interest of every stakeholder, investor, IPOs, and others. It sets standard but the investment bank cannot be listed on the stock market itself.

Once the two working groups wrap up their studies, the documents will be reviewed by stakeholders. Then, we will present the final documents to the government to decide on whether to drop or implement the study’s recommendations.

A few years back, we travelled to Nigeria to visit their central bank and development bank and took three months of training. I was amazed by their Islamic insurance. We extracted lessons and brought it to Ethiopia.

The government is saying the banking industry will be opened for foreign competition very soon. What is your take on this?

Before, we have been asking the government to open the banking industry. But recently, we have changed our perspective. We prefer the government to delay the opening up for now. I precisely know the exact capacity of each local banking institution.

Before, our assumption was that local banks will merge, at the face of an open up. So we have been advocating for it to open, at each meeting and financial summits.

Basically, banking and insurance businesses in Ethiopia is a captive business. The banks are formed either under religious, ethnic, political sentiments or other bands. So, Ethiopian banks and insurance companies lack the business mentality. If they had a business mentality, they will work with anyone who has a viable business idea. So I believe the government must delay the sectors opening up.

The NBE recently said mandatory merger and acquisitions will be forced on local banks, when the sector is opened up.

That is inevitable once the industry is opened up. Of course mergers can happen even before the opening up. For instance, the NBE raised the paid up capital to five billion. Those who failed to meet will have no option but merge. The NBE can also raise the reserve let’s say to 25 percent, from the 10 percent currently. Many banks could have merged. This way, competitive banks could be created.

Western banks, especially Europeans, strongly pushed Malaysia, Korea, South Korea, and Thailand to open up their financial sector. Once these Asian countries opened their financial industries, the western banks withdrew after joining the sector. The Asian economies were hit by financial crisis as a result.

But eventually the Asian tigers avenged the western banks. The 2007 financial crisis hit western banks, because the Asian tigers suddenly raised their banking capital. They intentionally gave more loans to American banks. Then the American and European banks disbursed those loans to mortgage, and small businesses. The western banks failed to pay their loans to the Asian tigers, taking revenge twenty years after the western banks played foul.

We do not need such turf wars.

The only reason Ethiopia’s economy is doing well after the war in the past two years, is because our financial industry is closed off. Our economy survived because the banking sector is not open.

If banking was opened to foreign competition, the economy could collapse, under this war. And had it been opened before the war, the economy would have collapsed by now. Foreign banks simply close and leave, when there is a war.

Many people say the banking industry should be opened. That is wrong. They do not know the exact capacity of local banks in surviving foreign competition. I have no confidence even in the CBE.

The CBE has a huge NPL owed by the government. The government owes over half a trillion birr. Unless it is fully paid, CBE will face many challenges.

So, I insist the banking industry should not be opened at least in the next three to four years. Local banks need up to four years to prepare. Mandatory merger is simple.

When the Home Grown Economic Reform was launched in 2019, the government promised to reduce the states hand in the economy, and reduce the pressure on CBE and domestic credit. Is there any progress?

The CBE is not giving loans to the government now. State pressure is reduced. The CBE has studied new organizational structure, and is implementing new business strategies. Before, especially during the previous regime, state banks give loans as if it is a budget. They do not collect the loan.

Do you follow up on CBE’s branches abroad?

We evaluate them during reporting. The bank has branches in Juba and Djibouti. The Juba branch is performing very well but the Khartoum branch was suspended while in the pipeline.

Did the CBE move from PEHA’s supervision, after it is placed under the EIH?

Currently, the CBE is in transition process, from PEHA to the EIH.

I heard SOEs will be categorized under three supervisory institutions according to their performance. These are the EIH, PEHA, and the LAMC. Is that true?

What I know is that there are SOEs going to the EIH, and the rest will remain under PEHA. The LAMC by itself is an SOE and is under PEHA’s supervisory. LAMC is under my supervision. The CBE, DBE, EIH, LAMC and national lottery, are under my directorate.

The EIH has recently on-boarded 27 SOEs, out of the 36 SOEs under PEHA. Does that mean they are completely out of PEHA?

The investment part of SOEs goes to the EIH, while the enterprise management aspect remains under PEHA. But so far, there is no definite decision on whether the selected SOEs completely move to the EIH, or partially. This is decided by the macroeconomic team of the PM.

Will all SOEs be listed on the stock market?

The plan was for the SOEs to list a certain percent of their value on the stock market. If SOEs like ET, ethio telecom and others trade 10 percent of their portion on the stock market, it builds the public’s confidence. But SOEs must meet stringent financial reporting systems.

I also hear that five percent of ethio telecom’s share will be sold on the stock market. SOEs that meet the right financial reporting system will be able to float shares on the stock market.

People are facing difficulties acquiring houses because real estate companies collect money from house seekers and disappear. The stock market will also solve this. Everything will take shape under the secondary market.

The government is allowing the establishment of new banks in the last two years. But lately it confirmed the opening up of the banking sector for foreigners. Isn’t this sending mixed signal?

Mergers can be done at any time. Then local banks can consolidate and ready for competition. PEHA is exemplary in merging CBB with the CBE six years ago. Private Banks must follow suit.

Local banks are in a comfort zone, registering lump profit, not because they are providing a class service. They are profiting because they are protected. Under state protection, they do not have to improve service. They survive at the expense of the client. Millions are saving in bank but only a few thousand get loans. All of this will change, once foreign banks come.

Yesuf Ibrahim is a founding member of the National Movement of Amhara (NaMA). He worked as the head of the strategic sector in the earlier stages of NaMA’s establishment. After its establishment, he worked as the head of the strategic sector for two years. After serving the organization as a vice chairman, he is currently working as the head of the party’s legal and ethical regulations and as a manager of the government’s property management authority. He received his LLM degree in law from Addis Ababa University and has worked as a law lecturer at a university. The Reporter’s Selamawit Mengesha sat down with Yesuf on issues concerning the party, region and the country at large.

The Reporter: How would you describe your participation from the time you first started working with the government as an opposition party, and the process until you became the manager of the government’s property management authority?

Yusuf Ibrahim: I have been heavily involved since the establishment of NaMA until its present stage. NaMA’s ideology is not an organization that paints itself as a liberator. It is synchronized with the people and the country.

Because the Amhara people have special problems and are being attacked by the constitution and narrative, protecting the people is one of the political targets. However, we have come to the historical notion that the attack on Amhara people is not something that has a special historical origin but an effort to destroy the country by making the community a victim.

The movement is one that could be traced back to colonialism. Weakening the beliefs, values, and social status of this community can be a way to destroy the country. Its origin is a colonial idea. Because of this ideology, a number of internal anarchist institutions were created.

By establishing such organizations, a political party based on identity has been established over time to save the Amhara people, who have suffered a lot. When the government moves into the phase of “change”, it is important to try because “change” has not yet been seen. When we look at the power alignment in Ethiopia, it is not a place where NaMA makes friends easily. In the course of time, after studying the intricate web of power, we analyzed the power that could become the friend of the enemy.

Compared to that, even if we can’t get along with everyone, we can work with anyone. As for figuring out to what extent and with whom, there are those who are known for backstabbing, so that’s a start. It was a timely analysis that was not particularly favorable to the Amhara. Therefore, it was established to fight anti-Amhara organizations.

Currently, even though it is an institution with many problems, we have an organizational position supported by a strategic document that we must work on together with the government. In general, it is necessary to work together with the government. When elections were planned to be held during COVID, there was pressure from many political organizations. Working together with the government was our own initiative.

We asked ourselves how we could safeguard the long-term interests of our country and people. We are a political organization and we take a position based on who we believe will betray us. We do this within the bounds of the law. It is necessary to work together with the government. They did not try to make it as big as NaMA, but there was pressure from other parties to make NaMA a part of the government, but the government did not want that. Regarding this, we explained to them that Prosperity is a traditional government.

This showed that the government was not proactive and did not identify its partners. As a party, it contributes greatly to the work of saving the country. We believe that we have especially united the people.

During this process, there was a conflict in the nature of misunderstandings between various issues, and because the problems of the parties and the government were not resolved quickly, it started to turn into a war.

With all of that happening, it was important to work with the government during that period. But keep in mind that working together with the government does not mean that we are the government but, in some cases, groundwork needs to be done. We had the idea that politics based on cooperation, not competition, was best suited for the landscape of the country.

Since the NaMA did not have a clear idea about working with the government (that is, we joined the government while the country was at war), we discussed it twice with the government when the issue was raised.

The matter has been tabled at the executive level. But it was fundamentally ignored by NaMA.

When the authority was given, I was called on the phone. I arrived in Gondar at 5 o’clock in the morning and was told that the appointment would be at 7:30. They have their own reasons for doing so. Since the appointment process was during the war, it was completed in secret until the end so as not to overwhelm the government.

On the side of the Prosperity Party, there was a bit of a misunderstanding because I received a call from the Addis Ababa city administration and then, on the same day, I received a call saying that they were looking for you for an appointment in the Amhara region; I made my own decision and chose Addis Ababa.

There is no problem with opposition parties working with the government. In Ethiopia, the process of democracy should gradually develop over time. Democracy needs to be improved by learning to work together.

In fact, it would be great if NaMA worked with the government. It would have been helpful if the lower level of government was more involved in areas such as kebeles and districts.

I made a proposal that if the government does not give us authority on the lower structure, we should give up big authority positions. But the party was not unified and could not consider the proposal.

NaMA is a party established to represent the people of Amhara. The Amhara people want you to be the voice of your party in any way. Working with the government means leading a multi-ethnic population, and haven’t you faced challenges in the middle?

This is also an issue of the reform process that the party intends to follow. The reform will work to clarify which level and which concept we are working on. There might be some changes in concept with the change of leadership.

It is about continuing to explore our strengths and solving our problems. The government does not exist only through the executive branch. The government has three branches and includes Parliament in the constitution.

We have representatives in the federal parliament in the state. The relationship between the party and its members at the top should be defined. As a party leader, when we work with the government, it must be based on the party’s principles. If I am going to move in that way, we should either leave the party or leave the leadership of the government.

There should be a strict procedure. In the current state of affairs, the federal structure that our party and the country are led by all is based on ethnic lines.

The constitution itself rarely even uses the word “citizen.” We want this to be liberal over time. We follow the philosophy that individual citizens should be the foundation of democracy. We want our organization to be a center for correcting the many mistakes made by extremists.

It should not be restricted only to Amhara. It should also be connected with other communities. Once this is fixed, the Ethiopian status will be announced. We believe that when we work as a party and as Amhara, we are operating as Ethiopia.

The Amhara community is the Ethiopian community. It has been pushed by many things. We are not saying it should be paid by revenge. We only remember the past to be able to fix the future. We do not believe that our people would be harmed if equality and freedom prevailed in Ethiopia. This is a modern principle. I do not believe that I am an advocate for the politics of a community at any time. As a company, we believe that we work for all Ethiopians.

It is one of the pillars of our society that it should not be affected by special circumstances. We want to be seen from the Ethiopian perspective. We do not want to separate Amhara. We want it to be governed by justice along with its fellow citizens. Amhara is affected in the same way that the rest of society is, but the incorrect narrative that has developed over time must be corrected. The question of who is the representative of political philosophy is bound to arise. Since NaMA is of Amhara origin, it is organized accordingly.

It is necessary to adapt to solve this problem for the time being. I think NaMA can adapt to all the parties. While working here, I am color-blind. I have neither the capacity nor the desire to take sides by saying who belongs to which nation. I also do not share such political views. We think that the perceptions created on us by the TPLF is in conflict with the people of Tigray. This is because the TPLF has been equating itself with the people of Tigray. But we still see their segregation. We believe that the TPLF is a criminal group. During the century, narcissistic institutions were created to hold back society and live for profit.

A while ago, it was tiring to find the issues that separate the people of Tigray and the people of Amhara. It was bound by various social, geographic, religious, and economic ties. We have to solve the existing problems with different justifiable methods. As it is known in Ethiopia, we do not accept ethnic politics. Therefore, I am running the people’s question in alignment with the government’s work.

Is there a division between the leadership of the government and other members of the party? What kind of situation is NaMA in right now?

Currently, changes are made every time political dynamism changes. The struggle is that when more energy is needed, society needs change. We have gone through many problems in our struggle for organization and society.

As the country’s problems continue to expand, members of the family are always at war. Therefore, leaders and members do not meet regularly. NaMA’s children are dying on the war fronts.

Don’t ask me how a peaceful party can fight with weapons. Since the declaration of seclusion, there has been a call to participate in the war. War has been waged on the Amhara people directly.

There are NaMA members in Raya, Wolkait, and in all the districts where there were members that were killed while in command of the brigade. There are several fighters in the structure. Therefore, the central one, the one at the top of each leadership, and the one at the bottom are not formally connected; we are connected informally.

During the second round of fighting, the party did not have a central committee or executive meeting for four months. Many gaps were created during that time, and it is not possible to update regularly. Politics brings the change of opinion closer to you when you meet and update regularly.

However, the more it is separated, the more the case is defined. So far, we’ve been supporting the idea that had majority support in debates. I have never seen a decision made without the approval of NaMA members.

Because we do not meet regularly, we have lost the opportunity to make decisions through debate and consensus. There were talks of NaMA coming into government appointments without the party’s consent, but in the process, although there were violations of discipline, the matter was adopted at the central committee level and this concept of working together will hopefully continue in the future.

The forces that wanted change were created in NaMA. First, there was a question that you should not lead the party part-time while in government, as the party requires a full-time dedication.

We will restructure. The party is a movement, and a movement needs to open up. It is not just a random party in power. Until the struggle reaches a certain level, the movement will open its doors and attract new talents, and it is not feasible to say that I will remain on the throne of the establishment once it is over. It is not correct, and it is not the principle of our struggle either.

People feel worried if there is no open discussion. There will be people who want to make the party a powerhouse. But in the end, the contradictions could not be easily reconciled.

On the other hand, it has shown differences in the way we see politics. But it is only in the top management that the difference should be noted. A certain difference was created between the Central Committee and the Executive Committee with only 10 to 20 people. There is no difference in the bottom structure of the broad members.

Due to Bahir Dar’s protest, I resigned on my own accord and changed from the position of vice chairman to the law department. What the party wants is not the change of one person or two. They say the movement wants to change from top to bottom. And this is their right.

An inquiring generation should be encouraged. There were misunderstandings with the top management. It deviated from NaMA and the general concept of democracy, which did not accept the reform and were going through a process that did not encourage internal democracy.

It is not a question of whether we like or hate individuals; it is a matter of history. It is the struggle of our people. It doesn’t define division for me. It is fundamentally settled by law. The structure is not split.

The main foundation is structure. I don’t think that the creation of division in the leadership of two or three people will divide the structure. We intend to hold a general assembly by October, which will hopefully restore NaMA.

Will the party become more organized by resolving the controversy within NaMA?

NaMA will come prepared. This happens at any party because it is a massive collection. The party needs time. The fight will then go into negotiations. The negotiation will be based on the concept of transitional justice from our point of view. There are a lot of processes that go through both material and human life. All of that should be resolved.

Politically, where are we going? Where are we going as a country and what is our collective ambition? NaMA must be prepared for this soon.

There are those who have applied what we brought as an idea to Ethiopian politics, which shows NaMa’s power to exert great pressure. After many pushes, debating and explaining to the people of Ethiopia, if politics is about to bear fruit, it will not happen unless the party exists.

There may be individuals with egos within the party leaders. They should be dealt with on the inside first. We were hoping that it wouldn’t show on the outside.

Most of the leadership and central committee members have petitioned the General Assembly’s request. A petition has been filed for reform. Yet undisciplined work is being done against the will of the people and the structure of the organization. That should be corrected. They are all being looked at from every angle.

Let us come to the current national issues. We have been at war for the past two years. Various efforts have been made to resolve the war peacefully, but another war broke out. Can you explain to us the whole political process and what Ethiopia’s politics should be in the future?

NaMA wants Ethiopian politics to be based on citizenship. Ethnic politics means a gathering of extremists where everyone who is offended hides. The TPLF and ONG should be held accountable for the Ethiopian-ism they attacked. It is a country known for caring and living together. Politicians must engage in a certain strategy. The structure should not be manipulated as intended.

NaMA will always cooperate with forces that can weaken the TPLF. As the TPLF has been in politics for a long time and has led the country, it must correct the mistakes of the past by deciding which is the most viable path for the future. They could not think of a way that would benefit the people of Tigray, whom they think they represent.

I do not think that the separation of the Amhara and Tigray peoples, a society that has lived together for many centuries and is bound by religion and culture, will achieve the goal. The people of Tigray must show that they are not enemies to the Amhara community.

During the war process, NaMA has been doing many other things by standing with the defense force, delivering food and coordinating with the diaspora. When the Amhara region was in battle, it gave studies on why they should fight for a purpose. It was heavily involved throughout the war.

How and under what conditions do you think the negotiations should be conducted?

Conflict always ends in negotiation. Even if the TPLF itself thinks that we should be divided, it knows that they will lack both resources and manpower. The TPLF should not go any further on the path of brutality and revenge. Ethiopia should follow the liberal approach and solve its problems. The war against the TPLF was not for revenge but was brought on by themselves.

In my view, I want transitional justice to happen. It is not because I believe transitional justice would calm everything down, but because it is an option. Justice is being served now, not for revenge but to bring harmony and move forward.

Negotiations should be conducted for the sake of peace and justice, with the decision that it will not happen again in the future and that what happened in the past was not right.

But in Ethiopia, it is seen that negotiations are used as a plot resource. It has been observed that only if the power to be negotiated is dangerous and one party wants to survive, is the proposal submitted for negotiation.

That is why I am afraid that the proposal presented by the TPLF might be some sort of treason. The deal requires a genuine broker. Since the war will inevitably end in negotiations, it all depends on who comes up with the better negotiating package. There is a risk that the negotiator who believes in violence may resort to violence at the negotiating table.

The TPLF should not exist as a political force. It is difficult to say that the TPLF is deceiving all these people with mobilization. I think most of them believe it. While the party was scattered, the individuals in the party lined up, reorganized, and attacked the defense force.

Such regeneration should not be ignored. The security guarantees should be adjusted and then they can enter into negotiations. A ceasefire is one way it can be done. But beyond that, there must be other stakeholders. The negotiations that should have been entered into after the collapse of the Derg left us in the situation we are in now. I believe that the Amhara region should have a negotiator on their behalf.

In the end, it should be known what level our politics should be at. Any person should be able to go and live in the area they want without being displaced from place to place because of ethnicity.

The TPLF has the capacity to rebel, not organize and re-enter. War itself should not be based on ethnicity. Who will benefit from this war?

There is no need to pretend like there is a war between two different countries. Both must work together. The negotiations must be conducted in moderation. Negotiations range from a ceasefire to a new proposal.

Although the African Union has little experience, it must mediate. They should all enter into the negotiation with good intentions. The very idea of secession is unethical.

To allow foreign banks, the banking proclamation, banking service code and the investment regulations must be revised. Especially, the code must allow banking for foreigners. The existing commercial code allows banking and insurance only for Ethiopians. Non Ethiopians cannot be investors, or operators.

Do you think the financial sector will be opened before five years?

I think so but I prefer it being delayed. All banks are giving loans to the service sector. Manufacturing and agriculture cannot grow unless we have banks that can give loans for long term projects. There are no consumer loans too.

Insurance companies complained over NBE’s order to direct 15 percent of their profit to DBE bond.

The rate has been reduced lately and the insurance companies agreed.

We must draw lessons from countries that have bridged the gender gap successfully. In some institutions, they say there are no women qualified to be board members. That is wrong.

Circulation of privately-owned papers is small and usually limited to Addis Ababa. Readership numbers are low.

A number of newspapers are now available online.

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ሪፖርተር ዜና Media and Communication Center (MCC) a private limited media company established in 1995. Headquartered in Addis Ababa, Ethiopia MCC is the publisher of “Reporter” a bi-weekly Amharic, “The Reporter” a weekly English newspaper, a monthly Amharic and English magazines in both print and electronic versions.

Mission and Vision

The Reporter’s motto “Free Press, Free Speech, Free Spirit” expresses the ideal of freedom that, journalists and editors, hope to enjoy and promote professional journalism.

MCC believes that it has responsibility to readers, the public, the people in and outside Ethiopia who rely on Reporter for news.

We dedicate ourselves to help our readers in their effort to become an informed citizenry by giving as much information as possible.

We serve as a platform for the public’s thoughts, opinions and ideas by soliciting, accepting, reviewing and publishing letters and comments.

We intend to make our newspaper a model for those in our profession, a guide for novices.

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Amare Aragawi Ethiopian Reporter The Reporter (Ethiopia), also known Amare Aragawi as The Ethiopian Reporter (Amharic: ሪፖርተር), is a private newspaper ሪፖርተር published in Addis Ababa, Ethiopia. It appears in both English and Amharic, and is owned by the Media Communications Centre. The editor in chief and founder of the newspaper is Amare Aragawi. ሪፖርተር amharic news

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Ethiopian Reporter Business News

Policy caps foreigners’ acquisition in local banks to 40 percent

Local banks have less than one year to prepare

With an additional five percent stake allowed each for foreign individuals and foreign non-bank investors, the maximum stake local bank can sell to foreigners is capped at 40 percent.

Nigeria has confirmed that Ethiopian Airlines has been chosen as the core investor and partner for the country’s new flag carrier. Nigeria Air has been in the works for a while now and has slowly been approaching a full launch, pending support from partners. Ethiopian is Africa’s largest carrier and has shown a willingness to invest in new startups recently.

Foreign banks are allowed to acquire up to a 30 percent stake in local banks, according to a policy document approved by the Council of Ministers last month and obtained by The Reporter.

With an additional five percent stake allowed each for foreign individuals and foreign non-bank investors, the maximum stake local bank can sell to foreigners is capped at 40 percent.

Licensing foreign banks and implementation of the policy is slated to kick off in one year’s time from the ratification of the Banking Business Proclamation, whose amendment is already underway.

The highly confidential policy document has been off limits. The policy also excludes insurance and microfinance from the open-up initiative. It allows foreign banks to open a subsidiary firm and open branches in Ethiopia, besides giving an option to buy shares in local banks.

An NBE official that spoke to The Reporter confidentially stated that the window period for local banks until the liberalization takes off might not necessarily be one year.

“The Amendment to the Banking Business Proclamation is finalized and ready to be sent to the Council of Ministers. Most certainly, the proclamation will be approved in the current 2022/23 Ethiopian fiscal year. The licensing of foreign banks will start after the amendment of the banking business proclamation is finalized,” the official said.

The official believes that once the proclamation is amended, regulations and directives will follow, which can take six months or a year.

“We cannot say definitely that a bank will be opened up one year after the proclamation is finalized. It depends on our pace of finalizing the proclamation and the regulations and directives required to implement it,” the official added.

Foreign banks are also authorized to open a commercial representative branch in Ethiopia, a permit that was already given to some multinational lenders like Standard Bank, Egypt’s Commercial International Bank (CIB) and KCB Group.

The opening-up policy document was not revised after the Council ratified it. Comments forwarded by the Council are also not included, according to The Reporter’s sources.

The NBE will decide on the majority of the details regarding the implementation of the opening-up policy with the details to be stated in the upcoming proclamation, regulations, and directives, according to the NBE official.

“The policy is more of a broad perspective. Foreign banks, individuals, and strategic investors are allowed, but the exact ratio will be determined. Changes to investment regulations are not always necessary. The banking proclamation is sufficient by itself,” added the official.

Local banks are already in hot water since the Council of Ministers disclosed the approval of the open-up policy last month. Presidents of local banks The Reporter talked to, who did not have access to the policy documents so far, argued most of the decisions stated in the policy document.

“Of the four modalities, subsidiary and branch will have no benefit for Ethiopia. They are the biggest lunacy of Ethiopian government decisions. They will neither bring foreign currency nor improve the efficiency of Ethiopia’s banking industry. The government is wrong to assume local banks lack corporate culture and skills. I am sure if academicians and banking practitioners see the policy document, they will not approve it,” said a private bank president with two decades of experience.

He says the government committed two major breaches. “First, the government did not identify what it was really seeking to do to open the banking industry. Is it foreign exchange revenue, access to finance, efficiency, technology, or others? Then the government should have done intensive studies to determine which venue is suitable for that objective,” the bank president said.

“Secondly, the government did not discuss it with local banks and other stakeholders. The NBE did not discuss anything with us. The policy document is still kept a secret even after the Council approved it. It must be posted on the council’s website as soon as possible,” the president added.

Another bank president appreciated the decision to cap foreign bankers’ acquisitions. “Capping maximum equity local banks can sell to foreigners to minority shareholding ratios is very good. It will protect local shareholders and maintain the rights of local bankers. The issue with this equity acquisition is that there is no system in place to assess the value of local bank shares.”

“Since there is no stock market in Ethiopia, valuation of local banks is done traditionally. None of the local banks are listed on any stock market. The existing share market valuation system is traditional. Currently, shares of each of the local banks do not reflect the exact values. So there must be a new valuation system,” said the bank president.

On the other hand, he contends that valuing local banks at a time of peak birr depreciation will be detrimental to Ethiopia but beneficial to foreign banks and investors.

“The valuation will be high in terms of birr attributable to the devaluation. But in terms of dollars, the value is not large. Therefore, foreign banks and investors can acquire the stakes at a cheaper price in dollars. The injection of foreign banks into local banks will escalate inflation in Ethiopia because foreign investors will buy the shares with forex. But that forex is injected into the economy in birr, which is high in number. So the immediate impact of the banking opening-up will be higher inflation. I do not understand why Ethiopia keeps devaluing Birr,” he added.

The bank president also appreciated the one-year window period for preparation but questioned why private local banks have to work with the NBE to devise their competition strategy.

However, all the bank presidents rejected the government’s decision to ratify the open-up policy document without consulting them.

“The NBE did not even discuss with us the Banking Business Proclamation amendment underway, let alone the new policy. Many laws were introduced without consultation with bankers and have proved harmful to us. I understand the political and diplomatic benefits of this policy, which is why the Council hurried to ratify it without consulting us,” added the banker with two decades of experience.

For him, the policy is made to appease western countries, which are pressuring the government.

“Banking opening up is not as simple as opening up telecom, aviation, or any other sector. Ghana and Kenya sold their banks and became poor, overtaken by India, Pakistan, the UK and other countries’ banks. Many other countries, including in Africa, opened their banks after intensively deliberating on it and preparing a detailed catalogue of the modalities,” said the banker. “Nigeria, Ghana, Kenya, South Africa, Morocco, and Egypt all opened their banking sectors after much deliberation. Not all of these countries were successful after opening their banks. Unless wisely managed, this opening up will also make Ethiopia poor,” he added.

Ethiopia has canceled its contract with a Chinese company exploring oil and gas in the country since 2013, the government announced on Wednesday.

Takele Uma, Ethiopia’s minister of mines and petroleum, said the deal with Chinese firm Poly-GCL was called off because of its “financial and organizational inability” to develop gas in the Ogaden Basin, a resource-rich area in eastern Ethiopia, according to state-affiliated news agency Walta.

The report said Poly-GCL was issued a letter of ultimatum in March that listed several conditions for the company to fulfill.

“In accordance with the successive notices the Ministry has issued in the past and in full compliance with the PPSAs and the laws of the land, the termination has now been fully effected,” Takele said on Twitter.

“As long as the financing that would enable to develop the oil and gas fields the Ministry is open for mutual and expeditious settlement,” he added.

Takele had previously hinted that Poly-CGL’s contract would be terminated, saying that Ethiopia was actively searching for international companies that could develop the Ogaden’s confirmed reserves of 7 trillion cubic feet of natural gas.

Ready to take off?

According to ThisDay, Nigeria’s federal government has formally chosen Ethiopian Airlines (Ethiopian) as a partner for the long-awaited Nigeria Air. The deal includes a 49% equity share for the airline, joined by 5% from the government since the project is set to be private-public. Notably, Ethiopian is sticking to its policy of not investing cash into a new business.

Instead, the airline will leverage its technical prowess, an abundance of aircraft, and management skills to establish Nigeria’s first flag carrier in years. While yet to be formally confirmed, an initial pool of pilots is set to arrive in Addis Ababa for basic training for certification on the Boeing 737NG.

Ready to take off?

The next few months will tell us more in terms of the airline’s timeline for takeoff. With a fleet of Boeing 737s and Dash 8s, we can expect a domestic and regional focus in the initial months, a market that has no shortage of travelers in Nigeria. Keep an eye out for this up-and-coming carrier in the near future.

Mesenbet Shenkute Re-elected to Lead Addis Chamber for Second Term

The one and only mortgage bank, Goh Betoch Bank, concludes the financial year with bright books, meanwhile it in fact operated for few months.
The bank which officially opened its doors on October 25, 2021 disclosed that the financial year that ended on June 30, 2022 was primarily used to finalize the formation process and create operational capacities like recruiting personnel, providing trainings, emplace core banking and data center facilities and others.
In the first months, the mortgage bank was also fully working on a five year strategy that was conducted in collaboration with HST Consulting PLC, a prominent consultancy firm.

Mulugeta Asmare, founding President of Goh Betoch Bank, said, adding, “We have also provided services to customers and have been able to mobilize deposits, provide loans, as well as facilitating some other operations like forex.”

The bank that has four branches including the one in Dire Dawa began providing loans in the fourth quarter of the financial year and disbursed over 300 million birr in this short period, while the deposit mobilization was about 260 million birr.
62 percent of Goh’s deposit mobilization is tending to savings for mortgage, which is its specialization even though it provides other basic commercial banking services.

In the financial year under review, the bank was able to conclude under a positive balance sheet, which is not common in the sector, “Compared with the period where we commenced our real operations, such types of success is quite rare.”
“We have been working to manage our expense. Thus for the closed period, we have attained to cover our costs including organizational expenses that were incurred starting from the under-formational processes, which started in 2019,” the President said.

“Despite working for a few months under limited scale, our income has surpassed the expenses, reeling in profits of 6.3 million birr,” he explained.
As a mortgage firm, the bank may not have a priority to run extraordinary ways of opening branches and in the current financial year it has targeted to double its branch number to including major cities like Hawassa and Bahir Dar.
Currently, the bank that has 127 staffs has four branches in Addis Ababa and Dire Dawa.

The Reporter Ethiopia

Patrick Hicks is a born-and-bred Texan from Waco. Fasicka Hicks is from Addis Ababa, the capital of Ethiopia. They met in 1997 after she immigrated to Texas.

Both of them liked to cook, and Patrick’s barbecue became a favorite of Fasicka’s Ethiopian family. Seeing her family’s delight gave Fasicka an idea.

The idea soon blossomed into Smoke N Ash, but it remained traditional Texas BBQ until 2019 when Fasicka decided to add Ethiopian options to the menu — and they soon became popular items.

With customers enjoying the two tastes together, the couple decided just having the meal share the same plate wasn’t enough. They decided to combine the flavors in the same recipe.

“And I was tellin’ him, ‘Hey, you know what? We can make money sellin’ this food.’ So we bought a trailer and made some extra money on the weekends. Before we know it, we start forming lines because people look forward to our cooking every weekend,” Fasicka recalled.

To guarantee authenticity, Fasicka’s sister gathers Ethiopian spices in Addis Ababa and ships them to Texas—the result is perhaps the only Ethiopian-Texas barbecue on the planet.

The Texas-Ethiopian platter is the signature dish at Smoke N Ash. American barbecue staples like brisket to catfish to Texas toast, as well as Ethiopian dishes like chicken doro wat are on the menu.

The couple says the success behind their restaurant isn’t the food but what it means to them.

“When it comes to food for me, it’s just about togetherness. You work on it with love and care, and you make it to be the best thing on the plate, on the table,” Fasicka said.

The couple says the success behind their restaurant isn’t the food but what it means to them.

Safaricom prepares to switch on Addis in early October

The amended National Payment Proclamation requires foreign and local fintech operators, including mobile money service providers, to pay a license fee regularly. The proclamation, which was passed by the Council of Ministers last month, is expected to be ratified once Parliament is back from recesses.

Officials at the central bank told The Reporter that “the amount is not fixed. It will be stated in the directives of the proclamation. We are currently finalizing the directive required to put the proclamation into effect.”

The amendment of the 2011 proclamation is necessitated to open the mobile money sector to foreign operators. This came especially after Safaricom Ethiopia requested to bring onboard its mobile money arm, Mpesa.

However, Mpesa, a Kenyan mobile money service provider awaiting the amendment of the National Payment Proclamation, is unhappy with the requirement for a license fee, sources close to the matter told The Reporter.

Mpesa is already undertaking preparations to enter the Ethiopian market after government officials gave the green light last year. Managers of Safaricom Ethiopia also confirmed to The Reporter that technical work is already afoot.

“Mpesa has already started building the backdoor software developments. At the beginning, Ethiopian officials told us there would be no license fee for Mpesa. But now, they are telling us there will be a license fee,” complained an official working with the Safaricom Ethiopia, linking the inconsistency with the ebbing Ethiopia’s forex reserve.

However Tewedaj Eshetu, public relations and communication manager at Safaricom Ethiopia, said, “We are waiting for the proclaimation to be ratified.”

Managers of local mobile money companies believe the license fee is a global trend and the amount is not as large as many fear.

“The NBE consulted with owners of mobile money companies before approving the amended Payment System Proclamation. Comments and complaints were included during the stakeholders’ discussion on the draft document,” said a manager of a local mobile money company.

On the other hand, Safaricom Ethiopia is currently preparing for a wide service provision.

Safaricom will launch commercial service in Addis Ababa at a national level in October, according to Tewedaj, though she refrained from disclosing the exact date.

However, sources close to The Reporter disclosed that the launch date is slated for October 6, 2022. A grand ceremony in the presence of higher Ethiopian officials and top management of the five consortiums of Safaricom Ethiopia Plc is expected to be held on the day.

Safaricom launched its first service in Dire Dawa town last month, with a plan to reach 25 cities, including Addis Ababa, by April 2023.

Ever since the start of a brutal war between the government of Ethiopia and the forces of Tigray People’s Liberation Front (TPLF) following the latter’s unprovoked attack on the troops of the Northern Command of the Ethiopian National Defence Forces (ENDF) based in the northern region of Tigray on November 3, 2020, Ethiopia has been subjected to an unrelenting campaign of hybrid warfare waged by a set of actors with vested interests. The campaign has comprised of different actions including an informational warfare depicting Ethiopia in a negative light, a coordinated diplomatic pressure aimed at coercing Ethiopia into submitting to the demands of the TPLF as well as imposing punitive sanctions on the country and withdrawing its benefits under the United States’ tariff-free African Growth and Opportunity Act (AGOA). Western governments and such institutions as the U.N., Western mainstream media, humanitarian aid agencies, human rights “defenders” and think tanks figure prominently among the slew of actors which have been involved in the grey-zone tactics being pursued against Ethiopia.

The latest example of the diplomatic pressure being brought to bear on Ethiopia is the release this week of a politicized report by the International Commission of Human Rights Experts on Ethiopia (ICHREE). Derided by any Ethiopians as a braze attempt whose overarching goal is to demonize the Ethiopian government, the ENDF, the Amhara Militia and Fano, the report’s “findings” gloss over documented atrocities perpetrated by the TPLF. The report says the Commission has reasonable grounds to believe that the ENDF and Eritrean Defense Forces (EDF) committed a catalogue of egregious crimes ranging from widespread extrajudicial killing and injuring of civilians to rapes and other forms of sexual violence against Tigrayan women and girls, and looting and destruction of civilian infrastructure. It also indicates there were reasonable grounds to believe that the Federal Government and allied regional State governments implemented a widespread range of measures designed to systematically deprive the population of Tigray of material and services indispensable for its survival, including healthcare, shelter, water, sanitation, education and food. As for the TPLF, it says Tigrayan Forces have also committed acts of rape and sexual violence, albeit on a smaller scale, and killed civilians and persons rendered hors de combat, looted, and damaged or destroyed civilian infrastructure and property in two towns in the Amhara region.

The ICHREE report is riddled with a raft of shortcomings that rob it of credibility. As the Ethiopian government says, “… the report was written in breach of all principles of professionalism, independence, impartiality, and standards of proof entailed in any such process under international practice”. The Commission, by its own admission, carried out a remote investigation into selected incidents and themes even as it excluded from its report the serious human rights and humanitarian law violations which could amount to war crimes and crimes against humanity in the Afar region. The omission of an entire region— whether by design, negligence or lack of capacity—from the Commission’s investigative work misrepresents the true state of things in the war-affected northern region of Ethiopia. It also constitutes a clear failure to “conduct a thorough and impartial investigation into allegations of violations and abuses of [international human rights law, international humanitarian law, and international refugee law in Ethiopia committed since 3 November 2020 by all parties to the conflict…] by building upon the report of the Office of the High Commissioner and the Ethiopian Human Rights Commission.” Moreover, the Commission’s use of language implying that the Ethiopian government has engaged in acts that may amount to ethnic cleansing is entirely unbefitting a human rights body and lays bare its political bent.

The Ethiopian government had rightfully condemned the decision to establish the ICHREE from the outset, describing it as being imposed on it without its consent and an unwarranted meddling into its internal affairs under the guise of protecting human rights. The Ethiopian Human Rights Commission also reserved criticism for the decision arguing the creation of a new body was repetitive, counterproductive to the ongoing implementation processes as per the recommendations of the joint investigation it undertook with the UN rights office into the alleged violations and abuses committed prior to the unilateral cease-fire declared by the Ethiopian government in June 2021, and further delayed redress for victims and survivors. In fact following the adoption of the joint investigative report, the Ethiopian government established the Inter-Ministerial Taskforce (IMTF) to comprehensively deliver on accountability and redress measures and initiated an independent criminal investigation. These flaws thus tends to undercut a fundamental principle of international law, namely that the primary responsibility for the promotion and protection of human rights rests with states themselves.

Western governments and such international institutions they control as the U.N. have a checkered history when it comes to the protection of human rights. Although they espouse human rights values in their rhetoric and policies, their excoriation of human rights violations are by and large is dependent on the extent to which other countries (or certain groups) are willing to obey their commands. Consequently, the horrendous human rights violations states and groups, such as the TPLF, that have cultivated friendly ties with the West or dutifully carry out the West’s bidding, commit are whitewashed or completely ignored. That is why the assertion that the ICHREE magnified the alleged atrocities committed by the Ethiopian government while making a perfunctory mention of the slaughtering of innocent civilians, rape and sexual abuse, use of child soldiers, pillaging, and destruction of civilian infrastructures the terrorist-designated group is guilty of would not be far off the mark. If the U.N. or for that matter any other international body tasked with advancing the protection of all human rights for all people, empowering people to realize their rights, and assisting those responsible for upholding such rights in ensuring that they are implemented, they must never be weaponized for political ends.

Budget allocated by the Ministry of Education for public universities has been utilized for political purposes, a report published by the Ethiopian Ethics and Anti-corruption Commission reads.

The Commission’s report, which was initiated to assess corruption risks in the private and public educational sector, highlighted a plethora of issues in both public and private-owned educational institutions which severely compromise the quality of education.

The report, which The Reporter has obtained, shows that there is a corrupted and political party-affiliated organizational system in educational development programs in those institutions. Illegal and inappropriate recruitment of teachers and other staff members, employing relatives and family members and recruitment of staff with fake educational certificates are also mentioned.

Many staff members of some educational institutions have employees with fake education certificates, while private university colleges are printing and selling degrees and diplomas like a good, and registrars purposely destroy students’ certificates and request money to replace them, according to the report.

It showed that while the university structure attempts to preserve the reputation of those who are in power, private schools, on their part, seek to preserve the interests of their students as commodity customers.

The absence of teachers from their classes, fake educational certificates, leaders’ engagement in theft, illegal employee recruitment and development, inappropriate procurement, lack of clear transparency and working system, inappropriate registrars’ staff members’ engagement malpractices, and tender embezzlement pose risks to educational quality, according to the finding.

The report underlines how colleges and university administrators compromised the quality of buildings by plotting and signing with the contractor to accept buildings before their completion date.

The study, which was conducted in 61 institutions, revealed a lack of internal financial control mechanisms, purchased goods of low quality, and budget allocation for politically motivated activities outside educational institutions’ key responsibilities.

Most of those educational institutions were reluctant to provide the requested information to undertake the assessment, unable to obtain accurate information and due to the absence of leaders in their working places, according to the finding.

The Reporter’s endeavors to get comments from the Ministry of Education bore no fruit as some officials were unable to respond.

However, Ethiopia’s education and training authority communication director, Tarekegne Geresu, speaking about private colleges, said that despite there being certain issues that might be considered findings, the authority has clear criteria to uphold rules and regulations in private schools.

Tarkegne also mentioned the authority’s ongoing efforts to identify and take serious measures against over 200 institutions, reaching up to the revocation of licenses and closure of institutions.

“After graduation, we provide authentication for every single degree certificate, and unless the authority certifies this certificate, employers should not recruit those with unverified certificates from private colleges,” Tarkegne told The Reporter.

Only seven insurers meet the new threshold

The National Bank of Ethiopia (NBE) raised the minimum paid-up capital of insurance firms by six-fold. The revised ‘Minimum Paid-up Capital for Insurance Company’, which is effective as of September 15, 2022, replaced the existing threshold introduced in 2013.

The new capital requirement to obtain a general insurance license is 400 million birr, up from 60 million birr. The minimum capital for long-term insurance licenses was also raised from 15 million to 100 million birr. A company needs to deposit 500 million birr in a closed account to obtain a license for both, which was 75 million birr under the old directive.

Existing insurance companies whose paid-up capital is below the new threshold are given a five-year window period to meet the new minimum threshold by the end of June 30, 2027. However, these insurers are required to submit an action plan to the NBE by October 16, 2022.

“There is plenty of time to fulfill the requirement. The minimum requirement was very low from the outset,” said Zafu Eyessueswork, a veteran in the industry and founder of United Insurance and Hibret Bank.

Fikru Tsegaye, an insurance profession known for his commentaries in the sector, also welcomed the decision.

“The inflation has been eating the capital of insurers. If you compare capital of insurance companies against dollar, it was declining, so the amendment is a step in a right direction,” said Fikru.

Out of the 18 existing insurance companies in the country, only seven have capital of more than 500 million birr, according to NBE’s report. The insurance industry has been struggling with low market penetration and declining premiums in a stiff competition for the limited market niche.

However, the old directive remains active for new insurance firms in the pipeline until September 15, 2023. This means organizers of new insurance firms can attain a license under the existing directive in the next year. A discussion is underway to adjust license fee required to acquire new license and renew existing ones. The fee is expected to be adjusted by 2000 percent, though that is still under discussion.

The new directive states that insurance companies in the process of share subscription that successfully collect a minimum paid-up capital of 60 million birr for general insurance business, 15 million birr for long-term insurance business, or 75 million birr for both, and submit a final application to NBE within one year after the effective date of the new directive, shall get the license.

Industry players called the new directive “hair-raising,” as the insurance industry’s growth remains nascent.

“Raising the minimum capital from 75 million to 500 million birr at once is very difficult. The new directive is inconsiderable to the difficulties the industry is facing. The industry has achieved very little capital growth in the past 20 years due to the nascent environment. The NBE itself has contributed to the weakness of the industry,” said an insurance consultant speaking to The Reporter regarding the new directive.

“The NBE was never giving appropriate attention to insurance, as the central bank was primarily occupied with banks. We have been requesting the government for the insurance industry to be regulated by a commission, authority, or agency separate from the NBE. We believe this will help the insurance industry to get better support and better attention,” the consultant explained.