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Month: March 2020

Local Firm to Operate Restaurant, Cinema in Ghion Hotel

Posted on by Web Master

Das Engineering Plc, a company co-founded by local filmmaker Tewodros Teshome, is building a restaurant and an open-air cinema inside the premises of the state-owned Ghion Hotel.

The company started constructing the facilities on a 5,000Sqm parcel of land after winning a bid that was announced for the project on June 2, 2019. The management of the Hotel set 91,000 Br a month as a floor price to lease the plot for 10 years. The Hotel also stipulated that the rental fee will increase by 25pc annually after the second year of the contractual agreement.

The management is dedicating land that has not been utilised by the Hotel, according to Gebretsadkan Abay, general manager of Ghion Hotel, which has been spending 400,000 Br a year to cultivate and take care of the plot.

“To reduce the expenses and increase the income,” said Gebretsadkan, “the management initiated the idea of leasing some of the land, and the board of directors of the Hotel approved it.”

Responding to the bid announced by the Hotel, four bidders including Das Engineering, Serawit Multimedia Plc, Z Press and Century General Trading Plc, bought the bid document. However, only Das Engineering and Serawit Multimedia returned the document with their financial and technical offers.

Das Engineering won the bid by offering the highest monthly rental fee, 400,000 Br. Das and the Hotel signed an agreement on July 5, 2019. The duo reached a deal for Das Engineering to build the facilities within three months. Das did not finish the construction in that time frame and has been paying the lease fee since October.

After eight months of the contractual agreement, the construction of the building is not completed but has reached the finishing stage. Das, which first conceived of the idea of developing the area almost a decade ago, finished the structural work of a one-storey building dedicated to the restaurant, which can host 1,000 people a day.

Das submitted a proposal and feasibility study to develop the area; however, the Hotel floated a tender to give other interested companies a chance to be involved in the project.

After commencing service, the restaurant is expected to sell 1,000 plates of food a day supplied by Ghion Hotel for 350 Br each.

“Das will add value to the food and gets a commission fee for each plate that is sold,” Gebretsadkan told Fortune.

Established in 1951, the Hotel lies on 123,000Sqm of land and operates with 480 permanent and contract employees. It has 195 rooms, including singles, doubles, twins, medium suites and large suites as well as seven different halls.

The Hotel recently tried to involve a private operator in the business but was unsuccessful. The Public Enterprise Holding & Administration Agency also attempted to partially privatise the Hotel a decade ago. However, it failed since the private buyer did not settle the payment on time. The Agency tried to fully privatise the Hotel eight years ago but was unable to attract bidders.

Similar initiatives that utilise idle space should be encouraged, according to Kumneger Teketel, managing director at Ozzie Hospitality & Management Consultancy.

“It’s common in other developed nations, and it is good when adopted in Ethiopia,” said Kumneger. “The project is under development with careful concern for protecting the environment and can be exemplary for other similar projects.”

Previously, Das leased 26 rooms from Ghion, but the contract was cancelled since the venture did not work out as planned by the company.

Ethiopia’s Flower Market at Dead End

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It was such an outrageously windy and sunny day in March; the clouds on the horizon were shaded with blighted, glaring white. The day was both a majestic mixture of patches of clouds with the sun; it was supposed to be a good day. But not for Abebech Feleke, 20, who is lying under the shade of a tree inside Yassin Legesse Johnson Flower Farm.

Abebech, who has been working at Yassin Legesse Johnson Farm for the last 14 months, now observes the rose farm filled with nothing more than cut buds.

Following the outbreak of the Novel Coronavirus (COVID-19), Ethiopia’s flower market is staring at a collapse due to the disruption the virus inflicted on the global economy.

Yassin Legesse Johnson Farm, owned by Yassin Legesse, is one of the 12 flower farms located on the outskirts of Bishoftu (Debrezeit) that has been losing over 140,000 Br a day for the last three weeks in light of the Coronavirus.

“I have never seen such a depressing season in my 13 years of working on this farm,” said Yohannes Akale, production manager at the Farm that had a turnover of three million euros in the last fiscal year.

“We’re operating at a loss, since Europe became the epicentre of the virus, incurring costs from labour, chemicals and fertilisers and running pumps and generators,” added Yohannes.

The 14-year-old farm, which has a daily production of 90,000 stems, employs over 500 people with main export destinations in Holland, Sweden, Germany, Canada and the United States.

“Letting go of employees isn’t an easy decision,” he said.

The company laid off 60 employees whose contract period is less than two months after paying their salaries. It also gave a two-week annual leave to 70 employees.

“I support my parents through the wage I get from working here,” Abebech said, “and if things continue at this pace, I’m unsure of a future working here.”

Ethiopia, which is the second-largest flower exporter in Africa next to Kenya, has over 72 active flower farms that are involved in the production of different varieties of flowers. Horticulture contributes close to 31pc to the agricultural export sector.

The horticulture industry in the country has over 126 investments and employs over 150,000 citizens in the export of flowers, fruits, herbs and vegetables that generated over 300 million dollars in the last fiscal year.

Among the 11 flower farms in Bishoftu, Joy Tech Plc is the only flower farm that has a production line of herbs and summer flowers that are affected by the pandemic.

With the reduced number of flights, the volume of summer flowers and herbs have been decreasing with only 30tn of herbs exported three weeks ago, according to Bisrat Hailselassie, farm manager at Joytech Fresh, which currently operates on 100ha and employs over 1,300 people.

As a result, from 26 different kinds of herbs, 22 varieties have been discarded, and the company was forced to completely uproot three hectares of summer flower production from a total of 11ha.

“It’s a tough decision to uproot as it takes six months to re-grow the parent plant,” said Bisrat.

The farm’s summer flower and herbs production mainly lands in Germany, Norway, Belgium, Holland and the United Kingdom. The summer flowers are sold on auction in Germany.

“Currently, we’re conducting a field rejection where the flowers are cut as soon as they grow hence they are rejected right in the field, and this has an immense cost,” he said. “The only option is to grant annual leave to employees who have it.”

Close to 15pc of the total employees have taken their leave so far this month, according to Bisrat.

The 16-year-old farm incurred a loss of more than one million dollars in the last three weeks.

“One of our biggest costs is transportation; hence, we expect the flight rates to be adjusted for us to maintain the current 30pc direct sales,” added Bisrat.

On average Ethiopian Airlines uses two planes to fly flowers and herbs out daily. At peak seasons, this can reach up to four planes with a rate of 1.72 dollars a kilogram. Currently, there is one plane that is flying to both Liège, Belgium and Frankfurt, Germany daily carrying less than its capacity.

“With the current volume we’re exporting,” said Bisrat, “we expect the flight rates to be adjusted following the current situation.”

In normal times, Ethiopia exports more than 160tn of different varieties of flowers a day mainly to Europe, the United States, Japan and Canada.

Amidst this disruption, the Ethiopian Horticulture Producers & Exporters Association wrote a letter to the Office of the Prime Minister two weeks ago detailing the dire situation the sector is currently facing.

At the beginning of last week, the Association and exporters held a deliberation with Girma Birru, board chairperson of Ethio telecom and the central bank and a member of the macroeconomic team at the Office of the Prime Minister, and Oumer Hussein, minister of Agriculture.

The Association, at the behest of the exporters, has requested that banks assist the sector by availing cash to cover their operating costs in these tight times. Additionally, the industry appealed for loan rescheduling and reclaiming the Value Added Tax (VAT) returns.

A few days after the discourse, the Office of the Prime Minister lifted the minimum price of selling flowers set out by the National Bank of Ethiopia and said it would expedite VAT returns. Currently, the Central Bank of Ethiopia issues a minimum price of 3.89 dollars a kilogram for the export of flowers.

“We have sales of less than 20pc where the price of the flowers has dropped, and we hope it will at least cover the production cost,” said Zelalem Melese, president of the Association and owner of ZK Flowers Plc. “Hence, with the uncertainty of the market, there is no chance we would be able to fill this threshold, which is why we have addressed it in our meeting.”

The sector is quite different from other industries, because of the easily perishable nature of the product. Regardless, production must resume at all costs, according to Oumer, minister of Agriculture.

“After the meeting, we have decided that the production of the flowers must resume and be dumped after harvest, as there is no other option to keep the employees,” he added. “And the workforce will not be laid-off from their jobs.”

To maintain this, the Ministry will ensure the supply of the chemicals and fertilisers and provide them to the growers without adding profits, according to the Minister.

The issue of working capital and loan rescheduling is to be addressed through the Ministry of Finance and the banks. Currently, the effect of the expenses is being discussed in detail, according to Oumer.

Looking at the current conditions, we expect there might even be a 100pc halt of the exports, since the sector by itself is vulnerable, according to Dereje Zebene, president of Zemen Bank, which had a net profit of 489.8 million Br and total assets of 14.7 billion Br.

“We’re very much willing to help them out as long as different policies are loosened up by the government,” said Dereje, who believes that the release of the NBE bill will address at least some of the cash concerns of the banks. “We’ve also recommended the slashing of the savings rate to two percent, which will automatically reduce the lending rate significantly.”

It is an excellent thing that the government is aiding the sector by listening to their concerns; however, there is also a concern that availing the NBE bills will increase inflation, according to a macroeconomist who wanted to remain anonymous.

“However, this shouldn’t be the concern right now, as it’s very urgent to address the economic problem of the country,” the expert said.

The macroeconomist recommends the Ministry of Agriculture come up with a better solution about the field rejection of the flowers.

Liquor Maker Cuts Denatured Alcohol Production Line

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Rorank Business Plc, a local company that makes spirits under the ownership of British giant Vasari Group, has ceased making denatured alcohol because of raw material shortages.

The production facility, resting on 2.2ha of land in Cha-cha Wereda near Debra Berhan town, Amhara Regional State, has been making and supplying denatured alcohol for five years to factories that make milk, cosmetics and medication.

However, the company stopped making denatured alcohol a month ago due to the excise tax and shortages of raw materials, according to a source at the facility.

Last month, the parliament legislated a proclamation that imposed a 60pc excise tax on denatured alcohol. However, the Ministry of Finance has temporarily waived the 60pc excise tax on denatured alcohol due to the spread of the Novel Coronavirus (COVID-19) in order to speed along the production of hand sanitizer.

The company has been both importing and buying the raw materials locally needed to produce pure alcohol.

Finchaa and Metehara are the two sugar factories that are currently producing ethanol from molasses with a combined production capacity of three million litres a year. The two plants sell 300,000lt of ethanol daily to the National Alcohol & Liquor Factory.

“After doing cost analysis, we decided to limit our production to drinking alcohol only,” said the source, who adds that the company is planning to downsize its 400 employees by half.

Ethiopia cannot afford to lose such investments in the manufacturing sector, while 70pc of the population is young and largely unemployed, according to Zerayakob Belete, managing partner at Nexus Investment Solution Plc.

“The government must give incentives for foreign investment in the agricultural, industrial and technological sectors, as they play a vital role in creating job opportunities,” said Zerayakob.

The liquor factory has the capacity to bottle and package 35,000 bottles an hour. It bottles whiskey, vodka, gin, ouzo and rum with alcoholic contents ranging between 20pc to 40pc and a variety of flavoured liquors such as lemon and super mint.

The plant’s monthly supply of drinking alcohol to the market was between 60,000lt to 90,000lt two months ago, according to a source close to the case. However, it is currently producing 30,000lt of spirits a month. Vasari Group has invested 50 million dollars in the plant that is known for making the Super Eagle and Crystal brands.

“Now the production capacity of the plant has fallen sharply,” the source said.

In the past fiscal year, Debra Berhan Investment Office has issued licenses for 130 investors. Out of that number, 86 have taken the land allotted to them. The city has registered over 29 billion Br in total investment capital with 461 individual investments over the past five years.

Once operational, the projects will create employment opportunities for more than 50,000 citizens, according to Teshome G.Amlak, head of Debre Berhan Investment Office, which expects 140 investments this budget year. The number includes 67 projects that have already started operations in the last three months alone.

The government has to evaluate the economic performance of alcohol and liquor factories with particular attention to productivity, profitability, capacity utilisation, marketing and their socioeconomic contribution, according to Suleiman Ahmed, a supervisor at Addis Abeba University’s (AAU) College of Law & Governance Studies.

“It’s rational to impose a large excise tax on the sector when the risks are unknown,” said Suleiman.

Shabu Filate, the spokesperson for the Ethiopian Food & Drug Administration, says that the number of enterprises entering the business of pure alcohol production is growing in response to the immense demand for the product.

“However, the profit margin of denatured alcohol production is relatively low,” said Shabu.

State Avails Stimulus Package to Rescue Banking Industry

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In light of the spread of Novel Coronavirus (COVID-19), the Office of the Prime Minister has announced the release of 15 billion Br through the National Bank of Ethiopia to address the liquidity crisis of the commercial banks.

Out of the 15 billion Br, commercial banks are awarded the amount they have paid for one year and three months to purchase the mandatory 27pc bond, which they have been buying for the last nine years that would have been paid from April 2020 up to June 2021.

“We’ve decided that the central bank will avail the money to private banks to enable them to reschedule loan payments and proffer additional loans to the private sector, said Prime Minister Abiy Ahmed (PhD) in a press conference last week.

Over the last week, the macroeconomic team chaired by Girma Birru had a series of meetings with key industry stakeholders like horticulture exporters, high-bracket taxpayers, coffee exporters and bankers to diagnose the pandemic’s impact and launch a major economic stimulus package.

During the deliberation, the banks requested that some of the legal framework be loosened and that the release of the NBE bond bills address the liquidity stress. In April 2011, the central bank introduced a directive and started mobilising resources from private banks to finance priority sectors identified by the government as the driving forces of the economy.

The directive compels private commercial banks to buy bonds worth 27pc of their loan disbursements with a five-year maturity period at an interest rate of three percent. Lately, it was raised to five percent, while the savings deposit rate stood at seven percent.

Although NBE repealed the directive in October 2019, it holds billions of Birr from the sales of bonds. The bond bill was growing by an average of two percent a month to reach about 94.6 billion Br as of December 2019.

However, starting from the last two months of 2019, the banking sector suffered from severe liquidity stress that has not been seen before.

The lowest liquidity level of all banks was in November and December 2019, averaging 14.4pc each month. This is not only less than the regulatory requirement of 15pc but also the lowest position of liquidity in the last three years.

The liquidity ratio of private banks specifically has been decreasing on a monthly average of 1.4pc and reached its lowest position of 16.7pc in December 2019.

On December 25, 2019, the central bank intervened by availing 5.5 billion Br in loans to commercial banks at a competitive bidding interest rate, and in the same month, it offered an additional nine billion Birr in loans to the cash-strapped banks at a competitive bidding interest rate.

This led the Ethiopian Banker’s Association to organise a study to find the root cause of the liquidity stress with a team of nine experts sourced from the private banks. The study had identified major findings in relation to the liquidity constraints in the banking industry. In the study, the mandatory 27pc bond bill coupled with its long maturity period stood among the findings that impacted the liquidity of banks.

It is very vague to say the impact of the NBE bill is the cause of the current stress of the banks, as the bill was ongoing for the last nine years, argues Abdulmenan Mohammed, a financial expert with close to two decades of experience.

The current liquidity stress is quite different from other times, and its mainly driven through the expansion of loans from the commercial banks from the first quarter of last year to the first quarter of the current fiscal year, which has increased by 150 billion Br, according to Abdulmenan.

In the first quarter of the current fiscal year, 39.6 billion Br was disbursed in fresh loans, which indicates a 31.8pc growth from the same period last year. The share of state-owned banks was 29.5pc, and that of private banks was 70.5pc.

The study showed that the banks were purchasing NBE bills on average at an equivalent to 42.7pc of their outstanding loans. The maximum amount was registered in July 2016 at 52pc, and the minimum was about 33.7pc in December 2019.

“We had requested to access our reserves with the NBE to address short-term payment obligations in our payment and settlement account, discount our assets and repay at least one-year of our NBE bills as a short-term solution,” said a senior bank official at one of the private banks.

“It’s a long-overdue move from the regulatory body to release the bills. Although the amount will be small, the banking and the inter-banking market will be hastened in a certain way,” added the official.

The NBE bill also consumed, on average, 29.3pc of deposits collected by banks. This is an indication that the NBE bill had reduced the liquidity of banks, according to the senior banker.

“By assessing the loan collection of the sector from April to June and operational expenses taking into account the shock of the COVID-19 outbreak, we assumed 15 billion Br to be adequate,” said a source close to the case.

“There is also the concern on the rise of the inflationary bar due to the injection of the cash, which can’t be ignored, as any cash injection will affect the small economy of the country,” said the expert.

The liquidity of the banks wasn’t only impacted by the NBE bond, but also since August 2019, net foreign assets have registered negative growth, which might be an indication for the sale of foreign currency reserves to the market.

In the last six months, the country’s net foreign assets were depleted by 73.4 billion Br. This suggests the National Bank of Ethiopia collected the equivalent from the market, and it may not go back into the market again if the foreign assets are sold in a local currency, according to the study.

“This is a completely wrong statement from the Bank’s study. There was a sale of forex but not to this magnitude, and it was immediately offset,” said the source close to the case.

The reduction in international reserves was accompanied by an increase in other assets, which must have been due to the forex that was sold to CBE, similar to what was done a few years ago, argued the expert. He added that the research has completely assumed that the international reserves were sold in cash using the payment settlement account, which isn’t true because credit sales will not reduce the liquidity but in fact actually improves the liquidity of the banks.

The other finding of the study was that the tax collection of the government in October has increased by two-fold in the last four years, according to the data in October. The highest performance was registered in October 2019 by scoring 8.1 billion Br, an increase of 33.8pc from the last year during the same period. The month has also registered the highest deviation between expenditure and tax collection, tax collection exceeded expenditure by 5.5 billion Br.

“It’s a very arguable computation, as it was compared by a month only, it should have looked at the expenditure of the government for the last six months, hence, the computation method should be looked over again,” said the source close to the case.

“The release of the NBE bills is a very timely decision by the government; and there might be a scenario where due to the panic caused by the Coronavirus, people might take cash out of the banks for security, so the banks should prepare for those kinds of scenarios,” said the expert.

The economic stimulus package also called for banks to give priority for importers that import goods to combat COVID-19 like ventilators, sanitary goods and medical equipment, including testing kits, when providing forex.

“With our current reserves, we are overly committed, and it’s very hard for us to obtain forex without economic activity. From the little income we have, surrendering 30pc of forex is a nightmare, and we have requested these kinds of legal frameworks to be loosened in these dire times,” said senior bank executives at one of the private banks.

“It is a very legitimate question, and the government is working toward the mobilisation of forex through development partners, it will be difficult to let go of the 30pc forex, as it is very important for the import of fuel and medicine,” according to the source close to the case.

“It’s true there is very high pressure on the commercial banks, and if the regulatory body can decrease the amount to at least 18pc, it will ease the burden for the banks, according to the expert.

Lion Welcomes Ex-Army Chief of Staff as Board Chair

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The National Bank of Ethiopia has approved Tsadkan Gebretensae (Lt. Gen.), former chief of staff of the Defense Forces, as the board chairperson of Lion Bank.

Tsadkan replaces Tassew Woldehanna (PhD), the current president of Addis Abeba University (AAU), as of March 28, 2020. Tassew’s term ended on December 20, 2020, after serving the Bank for two terms totalling six years.

Tsadkan was born in Checher, Raya, and left his studies toward a bachelor’s degree at Addis Abeba University to join the struggle against the Dergue regime. He obtained his master’s degree in business administration from the United Kingdom’s Open University and earned another master’s from George Washington University in international policy.

He served as the Chief of Staff for the Defense Forces between 1991 and 2001 and worked as the board chairperson of Methara Sugar Factory and Ethiopian Shipping Lines for eight years each. He was also the founder and board chairperson of Raya Beer, which was sold to BGI Ethiopia in 2018.

“With the team behind my back,” said Tsadkan, “I’m going to study the position of the Bank and discuss the current status with the management in addition to studying the banking industry of the country, as this is my first experience in the banking sector.”

Tassew mentioned that net profit growth of the Bank will be his achievement during his tenure. When he joined the Bank, Lion’s gross profit was 127 million Br, and it went up to 700 million Br in the last fiscal year.

“When I took the position, major shareholders had a great influence on the management of the Bank, and there was a rough relationship between the board members,” he said. “Hence, I have straightened out the lawlessness in the Bank and brought order to the working system.”

Born in 1964, Tassew first graduated from Ambo Institute of Agriculture in Ethiopia in 1982 and has earned a diploma in Cooperative Management & Accounting from Ardiata Cooperative Institute in 1984. He then obtained his bachelor’s degree in agricultural economics and received the Chancellor’s Medal from Haramaya University in 1991.

He also earned a master’s degree in agricultural and environmental economics and policy from Wageningen Agricultural University, the Netherlands, in 1995. He got his doctoral degree in household economics from Wageningen University in 2000. As part of his PhD studies, he also earned a diploma in general economics from the Netherlands Network of Economics in 1996.

Currently, he is serving as the 11th president of AAU as of February 12, 2020. He also served as vice president for Research & Technology Transfer, dean of the College of Business & Economics, associate dean for the Research and Graduate Program, graduate programme coordinator of Faculty of Business & Economics, an associate staff member of the Institute of Development Research (IDR) and chairperson of the AAU’s Press Board.

“I don’t have any regrets from working at the Bank,” said Tassew. “Through my time, I have done my best for the profitability of the institution.”

Established in 2006 with an initial paid-up capital of 108.2 million Br raised from 3,739 shareholders, Lion netted 527.2 million Br in profit and opened 30 new branches, which increased the workforce by 941. Its total assets have risen to 20.4 billion Br and mobilised 16.4 billion Br in loans. Lion invested 4.2 billion Br in NBE five-year bonds, representing 21pc of the Bank’s total assets and 26pc of its total deposits.

 

INSA Launches COVID-19 Monitoring Platform

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The Information Network Security Agency (INSA) has launched an integrated Novel Coronavirus (COVID-19) monitoring platform developed for 1.5 million Br from the Agency’s coffers.

Launched on March 23, 2020, the web-based platform provides information such as directions to the nearest pharmacies, hospitals, and police stations in the country. Individuals who develop symptoms or were in contact with people with confirmed cases can also give information to the Ministry of Health via the platform.

The system also enables users to report illegal or unauthorized activities, such as large public gatherings. People who are confirmed to be sick with the virus can also follow up on their cases and status through the platform.

The Agency developed the platform to contribute to the fight against the Coronavirus, according to Shumete Gizaw (PhD), director-general at INSA, who dedicated six staff members to developing the platform.

As a start, the website, which is accessed through the internet and uses GPS, has been launched in Amharic and English.

“We’re going to add more languages in the coming days,” said Shumete.

The platform was also made to be used for epidemics that might erupt in the future, according to Biniyam Abebaw, software developer at INSA, which started the process of designing the platform after the first Coronavirus case was reported in Ethiopia on March 13, 2020. As of Friday, March 27, 2020, Ethiopia has 16 confirmed Coronavirus cases.

“During the process of web development, we faced several challenges including getting accurate information from different offices,” Biniyam said.

Thirteen individuals, six from INSA and seven from the Ministry of Health, were deployed to maintain the platform and take the necessary actions once reports are received in addition to their current responsibilities.

The platform can help the effort to contain the virus by providing information on the health status of the country, according to Lia Tadesse (MD), minister of Health.

“Technology can play a key role in controlling such epidemics and improving other healthcare activities,” she said.

In the event of a rapid outbreak of the virus, the country has prepared two hospitals in the capital to isolate and treat people with confirmed cases. Bole Chefe is being used as a treatment centre for suspected individuals, and Yeka Kotebe is reserved for severe and critical cases.

Ethiopian Sky Light and Ghion hotels are also designated to serve as a quarantine location for travelers arriving in the country. All travelers who enter the country are required to stay in quarantine for 14 days at their own expense.

Yenebeb Abebe, general manager of Info World Link, says the system will play a significant role in the nation’s fight against the Coronavirus and also for other healthcare services.

“But I have seen some gaps in the system,” he said. “It primarily focuses on gathering data, and it needs to take the next step and make virtual treatment possible for those who isolate themselves.”

The platform also has some limitations. For example, it cannot be reached by individuals with phones that do not access the internet, so it would be better to prepare a messaging system for those users, according to Yenebeb.

 

 

Tech Teams Join Hands to Fight COVID-19 Threat

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Virtual meetings are taking place across the globe as well as in Ethiopia’s most decisive office – the Office of the Prime Minister.

Usually accompanied by ministers and high-level officials, on Thursday, March 27, 2020, Prime Minister Abiy Ahmed (PhD) sat by himself in his renovated office and held a virtual meeting with the COVID-19 Ministerial Committee on the necessary next steps.

One of the calls was for medical professionals to be on standby should the country demand their services. But volunteers inside and outside the country have started working on awareness-raising and fundraising campaigns some time ago.

Medical professionals, communication experts, tech whizzes and students alike are coming up with solutions to the problems the country expects to face soon. Where data is lacking, the country’s tech hubs are stepping in to fill in the gap.

Following the call-to-action by the Prime Minister’s office in early March, the Information & Communication Technology Association Ethiopia (ICT-ET) started mobilising and reaching out to companies and tech professionals. Within three days hundreds of volunteers and more than 100 companies were unified as the COVID-19 Response Team under coordinators Mike Endale from the United States and Yilkal Abate from Ethiopia.

The response team has many different divisions. Part of the team works on gathering information, ranging from where the country’s 3D printers are located to the latest guidelines by the government. A second team is working on a platform for tracking the number of people affected and under quarantine.

The team works remotely and also on the ground with the Ministry of Health, the Ministry of Innovation & Technology and the Prime Minister’s Office.

Another example is Ewenet Communications. Established five months ago by two engineering students and one marketing expert, this company is ready to roll out its newest trademark software named Corona. The new application was conceptualised long before the first confirmed case in Ethiopia and the layout is simple.

Filled with mostly static information about the Coronavirus, it gives the user information on symptoms, prevention and transmission methods and presents announcements obtained from the Ethiopian Public Health Institute (EPHI), the Ministry of Health, Centres for Disease Control (CDC) and the World Health Organization (WHO).

The application includes a Frequently Asked Questions section for information specific to Ethiopia’s context and proposes to be managed by Ewenet Communications and EPHI. The team works from their respective homes, only communicating by telephone.

Communication methods are no different at the 317Sqm compound that serves as Afritech Development’s office behind DH Geda Tower, which is mostly vacant these days. Communication takes place over Skype or by phone.

Established with a capital of 30,000 Br over two years ago, the enterprise has built a website that provides information on the Coronavirus and boasts over 4,000 views so far.

A team of 20 has finalised the development of the portal that will be directly linking customers with small businesses and different farmers with customers in Addis Abeba without collecting a service charge or a delivery fee.

Samuel Mekonnen, founder and CEO of the company, says this is done to avoid price inflation, provide products at government-set prices and keep small businesses afloat should the country go into lockdown.

Currently, they are negotiating to engage businesses and sign them onto the application. The application is in Amharic and English, while Tigrigna and Afan Oromo are being added.

Delivery is free, and while partners are welcome to assist in the initiative, Afritech is determined to cover all the costs if need be.

Not far away from Afritech on Namibia Street, Samuel Fekade, project lead at BlueMoon gets a team of 50 innovators together to make face masks. The goal, he says, is to produce 1,000 face masks every day. The tech hub works on 3D printing, website design and mobilising volunteers. Still, the shortage of masks in the country has demanded their full attention momentarily.

The innovators plan to make a total of 500,000 face masks. Spending close to 8,000 Br from their own pockets for every 1,000 masks, the team is looking for support to reach this goal. The masks are produced by the local garment manufacturers and are sanitized before distribution.

Initially targeting clinics and hospitals with shortages, the team will move to busy streets like Mercato where individuals exhibiting flu-like symptoms are likely to travel through. They gave out a total of 1,000 masks to Yekatit and Menelik hospitals on March 25, 2020.

Wubrest Tesfaye (MD), junior programme staff member at the Center for Reproductive Health & Training Center, says that there are benefits to wearing the masks.

Though the N95 respirators and surgical masks are the ones recommended explicitly for health professionals as they’re primarily designed to protect the wearer from airborne particles, other types of masks can protect the wearer as well, especially in a country where social distancing is hard to implement.

It is important to know that using masks and gloves comes with its own standards and discipline. If touched by hands and put back on they may cause more damage than help, according to her.

“However, unless the Ethiopian Food & Drug Authority approves the masks,” said Wubrest, “health professionals in close contact with patients shouldn’t be using them.”

Some tech movements do not have a physical presence, but their impact is just as substantial. When the Hakim Facebook page was started two years ago by Abraham Araya (MD), it was to create a platform where health professionals could share their day-to-day experiences. The page is used to gather opinions and questions from different professionals and non-professionals in the health sector and is guided by an editorial standard.

Now, this online platform has more than 130,000 followers and shares verified information about the Coronavirus, as well as opinions from people in the healthcare sector. Administered by medical doctors, the information on the page is verified and sometimes translated from different languages when it is necessary.

It does not end there. WhatsApp groups, Facebook live sessions and Twitter accounts are also chipping in. Selam Mussie, a media and communications professional, is in one such group.

Composed of professionals from the health to the education sectors, the group is primarily helping in verifying information, changing it into a more palatable form for the general public and translating it into different languages.

Their work includes monitoring call centres and making sure that they are functional and updated according to guidelines. Their Telegram page, Covid-19 Ethiopia, is the platform they use to share different informational posts related to the virus in different languages. The group is made up of 18 people, each using their different contacts to create a comprehensive source of information and support in disseminating information coming directly from the Ministry of Health.

YetenaWeg, a twitter page run by two Ethiopians, Ermias Kacha (MD) and Fitsum Tilahun (MD), talks about different issues related to the virus. Alongside a bi-monthly podcast, the medical doctors also run a website where they translate academic writings into Amharic.

Your Ethiopian Professionals Network (YEP), a group based in the United States that features inspirational speakers, hosts educational sessions and provides networking opportunities for Ethiopian professionals, has also shifted its platform to creating different digital events on the subject of the Coronavirus by working with health professionals in the Ethiopian community.

Even social media influencers in the city, like Abyssinia Vines, the famous trio behind the music “Dehna Nesh, Endet Nesh,” a Youtube video with nearly three million views, have jumped in. They have created short videos busting Coronavirus myths and other similar topics.

The internet and globalisation have been both a blessing and a curse says Marqos Lemma, founder of one of the first innovation and tech hubs in Ethiopia, Iceaddis.

“The virus spread so rapidly, because we’re very interconnected,” he said. “But it’ll also be the reason why we have a better chance to beat it than ever.”

If there is new information, everyone can access it within seconds. People can still work from home at a time like this, and society does not have to stop.

Azeb Asaminew (MD), psychiatrist and editor on the Hakim page, advises that people keep their sources of information limited to a few trustworthy outlets and limit their physical interactions even more.

It is not just the tech sector that is banding together at this time of crisis. Groups and individuals are popping up all over social media with call-to-action campaigns.

Hadra Ahmed and her friend started to put handwashing stations across the city, especially around taxi stops where a lot of people gather. Nubia Communications and Setaweet Ethiopia, a feminist research and training company in Ethiopia, is giving them institutional support, and the volunteers are placing handwashing stations along with banners and stickers around taxi stations.

They have started talking to different hotels to get sponsors for the handwashing stations and also plan to approach gulitowners, streetside vegetable vendors, to deliver their produce to the condominiums near where they work while making sure that the vendors have sanitizer, gloves and masks to protect themselves.

A simple Facebook post by Fikir Getachew attracted a group of 65 composed of university students, health officers and teachers to encourage people to stay home by running errands for them free of charge. They pay electric and water bills, buy groceries and drop them off.

In his latest piece for The Financial Times, Prime Minister Abiy Ahmed has asked the global community to band together and help Africa in this time of need for a lasting solution to eradicate the Coronavirus. While that is yet to be seen, Ethiopians are stepping up in the meantime.

Trade Ministry Moves to New Rental Building

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With the main aim of consolidating and governing two recently merged ministries under one roof, the Ministry of Trade & Industry has leased a seven-story building for a 2.65 million Br monthly fee.

Located in Arat Kilo behind the Ministry of Education, the building is owned by Ultimate Plan Plc, a company founded by its managing director Begziabher Alebel (PhD). The building rests on 11,640Sqm of land.

Previously, the then-Ministry of Trade had been operating from a building it rented for 1.5 million Br from the Development Bank of Ethiopia (DBE). At the same time, the then-Ministry of Industry worked at a government building located in Flamingo near National Stadium without paying rent. The two ministries used to occupy a combined 13,000Sqm of land.

The then-Ministry of Industry had been residing in a building that was constructed by the Ministry of Urban Development & Housing for 42 million Br. The building helped the Ministry of Industry save 900,000 Br in monthly rental fees for its former office, located opposite the United Nations Economic Commission for Africa (UNECA).

When the two ministries merged, the Ministry of Industry moved to the Trade Ministry’s building, leaving its building to the Civil Service Commission.

The Ministry, which is responsible for establishing the legal metrological system of the country and coordinating concerned regulatory bodies to enforce standards, was moved to the new office in February 2020.

The move to rent a new building follows the legislation of a law by the Council of Minister’s merging the two ministries in October 2018, according to Eshete Assfaw, state minister for the Ministry of Trade & Industry.

After receiving a go-ahead letter from the Public Procurement & Propriety Administration Agency along with guidelines for a lease tender on March 16, 2019, the Ministry established a five-member technical committee to investigate and approve buildings that would be proper for its requirements.

Following the specifications made by the committee, Ultimate Plan, Bloom Tower, Gashaw Assefa Building, Tropical Farmat, TK building, Gorgorios Plc, and Alfoz complex were identified as establishments that meet the qualifications set by the Ministry. The requirements include a parking area, the distance from the former building of the Ministry at Kazanchis, how advanced the construction of the building is, and price, among others.

Even though seven buildings were suggested, only three quoted square metre land prices within the range of requirements, according to Asaminw Teklemariam, finance and procurement director at the Ministry, which is mandated to provide commercial registration, business licensing, and control the use of business licenses for unauthorised purposes.

TK Building and Bloom Tower offered 439 Br and 454 Br a square metre, respectively. In comparison, Ultimate Plan Plc proposed the lowest price of 228 Br. Ultimate, which has 130 employees and provides consulting services on building permit applications and architectural and civil engineering structures, was awarded the contract in June 2019. The two then inked a two-year deal, after the Ministry paid four months rent in advance.

Before deciding to rent the office, the Ministry examined several options, according to Agilachew Addis, director-general of the Office of the Minister.

“The Ministry of Finance doesn’t approve more than 300 Br for a square metre of land for rent,” he said.

Abraham Seyoum, an economist lecturing at Addis Abeba University (AAU) with over 10 years of experience, believes that the government’s spending on rent is high. He also adds that since the Ministry has been operating with a rental office for years, it should have been thinking of owning its own building.

Abraham says that the government has to construct one or two buildings at least every year to save the ever-growing expense on building rentals.

“Many administrative offices spend a lot of money on infrastructure and furniture apart from paying rent,” he said. “These expenses will affect the economy where the budget can be spent on other important projects.”

Agency Disburses Trachoma Medications

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The government has started the process of distributing 971.4 million Br worth of trachoma medications that can treat over 14 million people.

Ethiopian Pharmaceuticals Supply Agency (EPSA) started the distribution of Azithromycin suspension, Azithromycin tablet and Tetracyclineeye ointment, all manufactured in the United States, to treat individuals from diseases related to visual impairment and blindness.

These pharmaceuticals will be distributed to 82 districts in Amhara, Oromia, Tigray and Southern Nations, Nationalities, & Peoples’ regional states. The medicines will be dispersed with the mass drug administration campaign [an approach to deliver medications to people in at-risk communities once or twice a year] set to begin in April. The Agency has already started allocating the medicines to warehouses in the districts.

The trachoma medicines are allotted to districts based on the prevalence of trachoma. If trachomatous follicular (TF) prevalence is less than five percent, there is no need for the campaign. If the prevalence is above five percent in children who are three to five years, the campaign is recommended once a year.

The latest initiative is the second round community-based mass drug administration campaign implemented by the Agency, according to Daniel Teferi, a supply chain technical advisor at the Agency.

“Besides, to limit destitution brought by visual impairment,” said Daniel, “it is essential to support families in different parts of the country.”

About 70 million people live in trachoma endemic areas in Ethiopia, which is 44pc of the global burden of active trachoma, according to an issue of the World Health Organization’s (WHO) Weekly Epidemiological Record in 2017.

Previously, the Agency distributed 1.7 billion Br worth of pharmaceuticals to treat over 24.6 million people for trachoma in a campaign conducted from October 2019 to November 2019. The pharmaceuticals were given out to districts in Afar, Benishangul, Gambella and Somali regions.

All trachoma medicine from the first round were distributed to intended districts through mass drug administration cascaded to each area of the regional states, according to the technical advisor.

In the two rounds of campaigns, a total of 2.7 billion Br worth of trachoma pharmaceuticals that can treat over 36.3 million people will be distributed.

The medicines are donated by Pfizer, an American multinational pharmaceutical corporation that has public benefit programmes that advance medical care by improving access to medicine, and the Ministry of Health and other partners, which will also carry out the campaign.

Azithromycin powder for oral suspension and tables donated by Pfizer were imported through the International Trachoma Initiative. Ministry of Health RTI International, Orbis, the Carter Centre, Amref, Fred Hollows Foundation, Light for the World, Menschen fiir Menschen and other donors donated the Tetracycline eye ointment.

The Agency allocated the pharmaceuticals based on quantified population size identified by the International Trachoma Initiative and put a request for a donation to Pfizer, said Daniel.

Gebrie Dinkayehu (MD), general surgeon and medical director of Debretabor Hospital, appreciates the distribution as a precaution for stopping the prevalence of trachoma.

But he fears that at this time, such types of distribution activities can be viewed negatively by the public in some parts of the country, because they are politicised.

“So, it is essential to create awareness of the society before starting distribution,” he said, “and it should only be carried out by health professionals.”

Moreover, to eliminate the disease, lessons should be prepared for children, their mothers and the rest the society, suggested the expert.

Last week, the Agency received 43 haematology analyser machines from Modjo Dry Port. The devices, which can perform 20 types of blood tests, will be distributed in the coming weeks to different parts of the country that do not yet have the equipment.

Last January the Agency inaugurated a cold chain warehouse with a capacity of 1,104.8 cubic metres of storage. The warehouse covers 3,000Sqm and was built at a cost of over 25 million Br supported by the Clinton Health Access Initiative.

During the current fiscal year, the Agency has supplied 1,373 articles of standard pharmaceutical equipment to 359 hospitals, 3,800 clinics and health hubs, 4,159 health centres and more than 14,000 health posts. In the first half of this fiscal year, it distributed vaccine pharmaceuticals worth one billion Birr.

Global Registers Moderate Profit, EPS Slides

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Despite moderate growth in profit, Global Insurance’s earnings per share (EPS) fell slightly by 10pc in the past fiscal year.

The company netted 22.1 million Br in profit, achieving four percent growth. However, its EPS fell by 10 Br to 88 Br as a result of an increase in paid-up capital, which increased by 15pc to 132.8 million Br.

Considerable growth in interest and rental income has helped the company maintain profitability.

Ahmed A. Sherif, chairperson of the board of directors, noted in his message to shareholders that the past fiscal year had brought a mix of challenges and opportunities.

“The increase in gross written premium, profit margins, assets and capital bases of the company should be considered a positive achievement,” he said. “Claims paid and total administrative expenses are adversely noted.”

Efforts that have been made on underwriting and investments improved the firm’s performance this year ahead of the preceding year, according to Tibebe Tesfaye, the company’s chief executive officer.

Last year the gross written premium of Global increased by 24pc to 109.8 million Br. Out of this, 26 million Br was ceded to reinsurers. The retention rate of Global has moved up by four percentage points to 76pc. The retention rate at Global is slightly lower than the industry average of 78pc.

The increase in retention rate was accompanied by disproportionate growth in claims paid to policyholders. Claims paid and provided for soared by 41pc to 48.1 million Br, hugely undermining the additional gross written premium collected throughout the year.

The management of Global should look into its customer screening and pricing policies, according to Abdulmenan Mohammed, a financial analyst with close to two decades of experience.

Spare parts and garage service costs along with other payments are the leading causes of the increase in claims. However, the management is establishing a claims leakage management strategy to control such gaps, according to the CEO.

In the reporting period, the company earned 8.2 million Br in commissions, an increase of three percent, and paid nearly 4.1 million Br in commissions, an increase of 17pc.

Global’s direct operating expenses increased by 28pc to 13.8 million Br.

The expansion of direct operating expenses should concern the management of Global, according to Abdulmenan.

“Global should put a strong cost control mechanism in place to make sure expenses are not out of control,” he said.

Expenses relating to branch expansion and more underwriting expenses have contributed to the increase of the firm’s costs, believes the CEO.

“Even if the expenses of the firm have increased,” said Tibebu, “we believe that we are at the tolerable margin.”

In the fiscal year, the insurance company has spent 24.4 million Br on staff and administration expenses, an increase of 16pc.

Last year, Global’s investments performed well. Interest income increased by 25pc to 15 million Br and rental income also went up by 25pc to 12.6 million Br.

The investment Global made in Ethio-Reinsurance and the time deposits it has at banks helped the firm to increase its income and profits.

Global’s total assets increased considerably by 23pc, reaching 372.5 million Br. Out of this, 111.9 million Br was held in interest-earning fixed deposits, 22.7 million Br was invested in shares and savings bonds, and 11.9 million Br was invested in property.

The proportion of savings and investments to total assets decreased by three percentage points to 39.3pc.

This must have been due to Global’s increased liquidity, according to the expert.

“This reveals that Global was maintaining excess liquid cash that could have been invested in income-generating activities,” Abdulmenan said.

Global’s increasing assets are similar to those of its peer firm, Nile, which increased its assets by 24pc to 1.4 billion Br last year.

Liquidity analysis indicates that Global’s liquidity level increased enormously. Cash and bank balances increased by 42pc to 59.6 million Br. The ratio of cash and bank balances to total assets increased to 16pc from 13.9pc.

Global maintained liquid resources way above its operational needs, according to the expert.

“The management should reduce its liquid resources by investing in income-generating activities,” recommended the expert.

Global’s capital and non-distributable reserves represent 39.7pc of its total assets. The ratio is far higher than the private insurer average of 31.1pc.

“Global should use its strong capital more efficiently,” remarked Abdulmenan.

The company is planning to build mixed-use buildings in the Bole and Kality districts, digitise its operations and launch an Islamic insurance policy, Takaful.

“Considering this, shareholders agreed to inject new capital of 250 million Br at the end of this fiscal year,” said the CEO.

Brace for Cultural, Socioeconomic Adjustment

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The world is almost at a standstill as it grapples with an impending tragedy. What started out as the spread of an unknown respiratory virus in a Chinese city most of us had never heard of before has developed into a pandemic impacting the whole world.

The virus is spreading unabated, with Europe being its current epicentre, almost every person in almost every part of the world has been affected. It is a testament to the profoundly interconnected and globalised world we have created that a sneeze in Wuhan, China, can have an impact on every nation.

Ethiopia is no different, and neither am I. Fortunately, I have the rare advantage of being able to work from home, doing my part to social distance since March 15, 2020. Although this pandemic has affected us, and me, in a very personal way, we need to recognise that we have to contribute our part in the effort to curb the spread of the virus.

Each generation has its test. Undoubtedly, this is one of those. But the sacrifices we are asked to pay at the moment, such as personal hygiene and limiting contact with other people, is the least painful to pay.

It is only fitting that our efforts are compounded by the bold measures the government is taking to contain the spread of the virus. While the efforts are commendable, we are in need of more dramatic changes given the vulnerabilities of our healthcare system. Precautionary measures are the only things we have on our side. And this mainly has to do with social distancing, an effective method since the virus does not spread by itself. We aid it.

This means that we have to profoundly change the way we live and connect, especially considering that around a dozen people have tested positive for the disease.

Before this crisis, we were all in our corners of the world, arguing and fighting over almost everything we can think of. Today, humankind and its way of life is put to the test. Our beliefs and socioeconomic structures will be reconsidered. The fact that we have been ravaging the Earth of its resources, that we have turned away from science and knowledge and that we had begun to believe that global solidarity is unimportant have all been proven to be naïve at best.

Today we brace ourselves for what is to come, watching nations with better financial and structural strength barely able to care for their own citizens. It is hard to say what will be awaiting Ethiopia’s over 100 million people.

There is no denying that aggressive measures are being taken. However, what is being asked of countries such as Ethiopia by the World Health Organization (WHO) or even our Health Ministry seems impossible to accomplish here.

Social distancing is not going to be easy for Ethiopia, Africa’s second most populated country. Neither do our cultures and customs, or even economic structure, which revolves a great deal around social institutions and activities, have space to accommodate such changes. We mourn, celebrate and mostly just pass the time together.

Fighting the spread of the virus requires a fundamental socio-cultural shift. Social distancing is not a luxury we can choose to consider. It is a necessity that will save lives. This means people observing the recommendations of public health officials very seriously, and adhering to them as much as possible. It entails having a comprehensive understanding of what is expected of all of us.

As we play our personal part in the fight against this disease, we should also not forget those who are vulnerable and need help. There are tens of thousands of homeless people living in the streets of Addis Abeba. An overwhelming proportion of these are young. It is unfortunate that there has not been an initiative focusing on these groups from either volunteer groups or the government.

Rationality needs to lead the way ahead. It is through a sense of togetherness that we can get out of this situation. The only other recent virus with this global scale of reach is the Spanish Flu, an influenza pandemic that purportedly took the lives of 50 million people. The globalised world of today has made the spread of such a virus much faster.

Fortunately, we have modern technology and techniques to fight off the epidemic. These will only work, especially the latter one, if we adhere to the measures that are being advised by officials.

New Full-fledged, Interest-Free Bank Queues Up

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Shabella Bank, an interest-free bank under formation, has sold 270 million Br worth of shares, of which 120 million Br has been paid.

Founded by 20 individuals from the Somali Regional State, the Bank is named after the Wabi Shabelle River, which means Tiger River in the regional language. The founders got approval from the National Bank of Ethiopia (NBE) to sell shares last October.

The organising committee, which is chaired by Mohammed Gani (PhD), the former president of the Somali Chamber of Commerce & Sectoral Association and former board director of the Ethiopian Chamber of Commerce & Sectoral Association, started selling shares in early November of last year with an official launch event in Saro Maria Hotel.

Omer Haji, the former head of the Regional State’s finance bureau, Abdualhi Abdul Kadir, owner of Rabah Construction, and Egal Mohammed, owner of Egal Construction, are among the founders of the Bank, which sells shares with a par value of 1,000 Br.

The minimum number of shares a shareholder can buy is 10, while the maximum is set at 50,000. The Bank is selling its shares through Commercial Bank of Ethiopia (CBE), Awash Bank, Wegagen Bank and Nib Bank.

Shabella is the seventh fully-fledged, interest-free bank that is under formation after the central bank issued the directive that allowed the establishment of such institutions last June. Hijra Bank, Zad, Nejashi Kush, Huda and Zemzem are the banks that are already established or are undergoing the establishment process.

The Bank has set its sights on integrating cultural values with the banking service to support the development of the Somali Regional State through investments, according to Mohammed.

“People in the Somali Regional State can also be served in their own language,” he said.

Initially, the Bank planned to sell shares worth two billion Birr. The founders, however, decided to cut the ceiling by half about two months ago.

“We pulled the cap down so as not to make the Bank too capitalized and to boost the profit margin,” Mohammed told Fortune.

The organisers aim to sell shares for the next six months and to start operations by the end of this year. It has set up an office in Najah Building in Jijgia, Somali Regional State, and it is also setting up an office on African Avenue in the capital, which will open its doors by April 16, 2020. After its formation, the head office of the Bank will be situated in Addis Abeba.

For the establishment process, the organisers hired AL MAALI Group Islamic Finance Training & Consultancy, a Dubai-based company. The company was engaged in handling the documentation, conducting the market and feasibility study, and drawing up the business plan and operational path of the Bank.

The company was hired after going through a bidding process that was announced by the founders three months ago. Eight international companies vied for the project and the Dubai-based consultancy firm won with the lowest offer.

“We have already started looking at prospective investment areas now,” said Mohammed. “The Bank will finance businesses in the areas of farming, livestock, poultry, dairy, honey and honey products.”

Until the latest proclamation from the central bank was issued, interest-free banking was only permitted as a window service alongside conventional banking. Out of the 17 commercial banks, 10 of them have started offering the service. In the first half of the current fiscal year, the entire banking sector has raised 103.2 billion Br in capital, of which 55.8pc was for public banks, while 44.2pc went to private banks.

The emergence of Islamic banking with a significant number of institutions opens the way for the competition and inclusion of different cultures in the banking sector, according to Abdulmenan Mohammed, a financial expert with close to two decades of experience.

“The central bank needs to fully equip itself as a regulatory body to manage these banks with a deep knowledge of the interest-free banking system,” said Abdulmenan.