SELLING THE PLAN

Finance Minister Ahmed Shide (left) and Seleshi Bekele (PhD) (centre), minister of Water, Irrigation & Energy, walk President Sahle-work Zewde out as she leaves the hall of the United Nations Economic Commission for Africa (UN-ECA) on Menelik II Avenue. She has just opened a meeting with diplomats based in Addis Abeba to discuss the 10-year national development plan drawn up by the Planning & Development Commission.

“After many years of economic growth, we still face staggering economic challenges,” the President said, standing behind the dais inside the ECA’s main hall, addressing spread out crowd of seated diplomats.

The President left the meeting shortly after the speech, leaving the platform to Fitsum Assefa (PhD), head of the Planning Commission. She went into great detail briefing the diplomats on the country’s structural challenges, the lessons it has learned, and the path forward the government has in mind.

“Considering our challenges with low productivity and competitiveness, the countries and institutions these diplomats represent can support us,” Fitsum told the media.

Recently, the Commission has released the document outlining the much-anticipated plan. While it sees a different path to development than government-centric growth, like the Growth & Transformation Plans (GTPs), it is just as ambitious. On the macroeconomic front, it plans to reduce annual inflation to seven percent, expand the gross domestic product (GDP) to 10pc every year and further reduce the economy’s dependence of the agricultural sector.

The plan, drawn up after each ministry prepared their own, has been criticised for not being sufficiently inclusive, but it is now being moved by the Commission into the next stage. The agency is preparing guidelines for implementation, monitoring and evaluations. It also answered a question diplomats emphasised — whether regional states would also develop their own plans, citing that decentralisation remains among the Commission’s focuses.

To See Eye to Eye with the Biden Administration

There has been no American envoy serving in Ethiopia who has seen so much within such a short time as Michael Raynor has. To much of it, he gave his full support. A career diplomat and specialist on Africa, Ethiopia was his second assignment to serve as an Ambassador, appointed in 2017, when Ethiopia was going through its most delicate time. Popular discontent led to unrelenting protests, pushing the EPRDFites to swim or sink. They chose to swim until they were made to sink by the very person they voted for chairman.

Bidding farewell last week, he was given an audience not by the Prime Minister but by Deputy Prime Minister Demeke Mekonnen, who is also moonlighting as a foreign minister. Ambassador Raynor leaves Ethiopia in a much more precarious situation than when it welcomed him. Ethiopia is at war with itself, forcing tens of thousands to flee, millions to be food insecure, and unknown numbers to die.

Together with his boss, Tibor Nagy, who previously served as an ambassador to Ethiopia, Raynor gave his tactful blessing to the military conflict in the Tigray Regional State when it broke out in November 2020. From the outset, then Secretary of State Mike Pompeo tweeted that the TPLF had attacked the Ethiopian National Defense Forces, provoking the federal government to declare what Addis Abeba saw as a quick and surgical law enforcement operation. Messieurs Nagy and Raynor did not see the need for attempts to bring the warring parties to negotiate initially.

Nagy dismissed the idea of equivalency between the federal government and TPLF in charge of the Tigray Regional State. He saw the latter as a faction of the government running a region in Ethiopia that “has decided to undertake hostilities against the central government.” He chose to see the military conflict in a positive light, convinced that it “has brought the Ethiopian nation together . . . because this has really stoked Ethiopian nationalism, and hopefully that – those positive forces will remain.”

Both diplomats brushed aside the prospect for a negotiated settlement, seeing both sides’ determination to see the military conflict through.

“Neither side felt they could articulate a basis for a negotiated or a mediated solution,” Raynor said during a press briefing, held virtually.

Nor did the Ambassador seem to feel it either.

Last week, Raynor was a more worried person than the bullish demeanor he exuded a few months ago. Speaking to the local media, he was concerned about the spawning ethnic violence across the country and alarmed by “extrajudicial killings and other sporadic violence” in Tigray Regional State, long after federal authorities declared victory. Indeed, in particular, the situation in Tigray is best captured by Michelle Bachelet, chief of the UN Commission on Rights: It is “heartbreaking as it is appalling.”

The Ambassador and Bachelet are now in the long and growing list of people across the world calling for the parties in the conflict to cease hostilities, ensure the protection of civilians, allow full and safe access to humanitarian work, and uphold international human rights laws. The pressure for independent international investigations on reports of atrocities, sexual violence, and human rights violations in Tigray and other places is not relenting. Neither will it be.

Raynor`s public statement in showing how much Washington is “troubled by the activities of Eritrean actors in Tigray region” would be one that is the most unpleasant for Addis Abeba to hear. Ambassador Raynor’s dramatic change of position only reflects the change in policy with the arrival of the Joseph Biden administration. It was ironic that the day Americans went to the polls to cast their votes and global attention was fixated on it that the war broke out in Tigray.

Not surprisingly, the recent presidential election in the United States was rocky, and one of the most consequential acid tests to democratic institutions a mature democracy has ever seen. But Biden has been inaugurated as President, following a bumpy transfer of power, unusual for American political culture, and to the disbelief of the world.

The United States has a disproportionate sway over every other country globally, even as the gap is thinning. It built the current international order; has a significant influence in multilateral institutions such as the United Nations and the World Bank; its corporations mostly run the means of communications in the digital space; and has more military bases in other countries than Britain, France and Russia combined. As the presidential election went on, and now with the Senate confirmations, the world watched very closely.

Ethiopia is no different. With the international media having portrayed the federal government negatively in its military operations in the north against the Tigray forces – deserved or not – there is a great deal of interest in how the Biden administration will respond.

Times have changed. Addis Abeba may not have as aloof or even as friendly a partner in Washington as during the Trump administration. The Democrats now control both legislative houses, however narrow the margin, and the White House. Their tone is growing critical of Prime Minister Abiy’s administration, as statements from the Senate confirmations show.

The newly confirmed Secretary of State, Anthony Blinken, called for accountability for the “atrocities directed at people in Tigray,” and reiterated deep concerns for the situation there. This contrasts with the government’s assertion of an improving humanitarian and security situation in the region.

Biden’s nominee for US Ambassador to the United Nations, Linda Thomas-Greenfield, was most forthcoming in her testimony on how the humanitarian situation unfolding in Tigray has her very worried. She joined a growing and every louder cry across the world that Ethiopians are, in her own words, “in the middle of a war against their own people.”

If confirmed as ambassador, Greenfield wants to have a “very frank and open discussion” with Prime Minister Abiy to “stop what they are doing and stop the fighting.”

But the most worrisome to Addis Abeba should be her determination to see the United Nations take this situation on.

The turnaround in rhetoric from Washington has not gone unnoticed. This would mean that the Ethiopian government would be starting in what is at least a colder climate with the new administration, complicating its foreign policy objectives and domestic priorities. Two critical factors may determine the relationship going forward.

One is the US strategic interests and how Ethiopia figures into its overall global foreign policy. The other is the situation in the Tigray region and whether or not it improves.

Boasting the second largest population and the third biggest economy in Sub-Saharan Africa, it is reasonable to believe Ethiopia remains an important strategic partner for the US to insist on close relations. It is hard not to imagine American aversion to allowing it to be in China’s sphere of influence at such a juncture. China will undoubtedly feature as prominent in the minds of those in the American foreign policy establishment during Biden’s administration as has been the case with his predecessor.

Addis Abeba may have ground to build on, especially on climate policies, another priority for the new US administration. The Prime Minister has proffered environmental policies – from mass tree-planting campaigns to climate-friendly tariffs – to see eye to eye with the Biden administration. Greater integration into the world economy and policies to boost the private sector is also actively encouraged by the multilateral institutions the United States continues and will continue to influence.

As strong a determinant of US-Ethiopia relations will be the situation in the Tigray region. The United States wants its strategic support to achieve stable and, if possible, democratic states. But a flow of refugees, continued fighting and self-induced humanitarian crises is no way of invoking confidence with partners. Ethiopia ceases to be an essential ally relied upon to keep the peace in the region.

Addis Abeba can change course to find common ground to work with the Biden administration. The issues over which the latter are insisting are what should be Ethiopia’s government priorities. Allowing unfettered humanitarian access into the region remains top on the agenda. It is to the interest – not to mention the population that is caught up in the crossfire – of the government to facilitate access. It would be a tragedy for the country to slide back into mass starvation after decades of effort to change such a grim reality.

No less vexing is the presence of Eritrean soldiers on Ethiopia’s soil. Ethiopia keeps denying it, but US diplomats have confirmed it, and even Raynor has called for their withdrawal. His words should be heard. Much credibility can be restored if Addis Abeba regains confidence in allowing international investigations for alleged atrocities in Tigray by all parties.

Such push by the Americans should be welcomed. The two countries may have their differences, but it is hard to claim that the United States may not wish Ethiopia well. But if Addis Abeba departs too much from the US strategic interest, and is too unstable to be reliable, it certainly will lose the most powerful hegemon history has ever known as a partner.

COVID-19: The Price of a Clean Bill of Health

Last month, a very unlikely Novel Coronavirus (COVID-19) patient walked through Yerer Hospital’s halls. Yerer was the third private hospital licensed to provide treatment to the victims of the pandemic, a service that was previously limited to government-run hospitals and health centres in the country, though the new private options carry steep price tags that the average Ethiopian could hardly afford. The patient: a 60-year-old domestic worker.

Yerer, which is located in the Goro neighbourhood and has joined the ranks of Addis Abeba Silk Road and Hallelujah Hospital, was an option for those who were willing to pay for better care and attention than was provided at free government-run centres. The domestic worker, who wishes to remain anonymous, hails from a very modest background in the rural area of the country’s northern region. Nearly 15 years ago, she came to the capital looking for work, and she found it in the domicile of a well-to-do family.

Over the years, she grew close with her employers, and their bond turned into one of family, a bond that would eventually help save her life. A family member in the house had tested positive a few days before she started showing symptoms herself. The illness would eventually require her to seek respiratory support, and the family took her to Yerer Hospital, where they paid an initial deposit of 90,000 Br. By the time she was discharged, 10 days of oxygen support, multiple laboratory tests, meals and other costs meant that the family had to top that up with an additional 30,000 Br.

Hers is one of the less shocking stories that would make the rounds in the city as people were reportedly discharged from private health centres with bills as high as 1.5 million Br. Initial deposits varied from one private health centre to another, ranging from 25,000 Br to nearly 300,000 Br.

Though intended to buffer and support the COVID-19 response, private healthcare providers’ addition in the fight against the pandemic is turning out to be less altruistic than intended. The high bills come with an even longer list of justifications, primarily personal protective equipment (PPE), the cost of which is covered by the patient in care.

Face masks, face shields, hazmat suits and gloves are all tacked on to the bill upon discharge. Medication like Heparin, an anticoagulant prescribed for patients in critical condition, is valued at over 700 Br a pill while other commonly used ones are tallied around 300 Br. Risk pay for specialists like anesthesiologists, emergency specialists and internists is then added to the price tag, all before profit margins come into play.

At some hospitals like Addis Abeba Silk Road General Hospital, the costs run even higher as most staff live in a hotel to mitigate contagiousness, seeing as they provide around-the-clock COVID-19 healthcare. Silk Road, a Chinese-owned and operated hospital specialising in neurosurgery, was the first private COVID-19 treatment centre on the scene after signing a memorandum of understanding with the Ministry of Health to cater to high-end clientele such as diplomats.

The Hospital, built at a cost of 300 million dollars, originally opened its doors in November 2019 with acclamation from the then Minister of Health, Amir Aman (MD), who would leave his post a mere month before the pandemic dramatically altered healthcare both in the country and around the world.

In order to attend to needs arising from the pandemic, the Hospital shut down all other operations and dedicated its 100 beds to COVID-19 patients. Nearly 50 staff, physicians and nurses were relocated to stay at a nearby hotel, personal protective equipment was procured, and the Hospital even went as far as facilitating training and experience sharing by a team of Chinese doctors in April last year.

Its connections helped it source PPE relatively easier than other treatment centres. It provided disinfecting services to public health facilities and quarantine centres when they were still functional. Inadequate resources have since then forced the closure of all quarantine centres with only five public COVID-19 treatment centres still operating.

But costs were running very high for the Hospital itself, which had left its expensive, state-of-the-art operating rooms and diagnostic machines idle, according to Ruth Eshetu, human resources & administration manager at Silk Road. To mitigate the expenses, it contracted beds out to the likes of the United Nations and the Chinese Embassy.

The Ministry of Health then put a manual in place to involve the private sector in the efforts against the pandemic, which had an ever-rising number of positive cases, and as a response to patients who had the financial means for levels of personal care the government could not provide.

With nearly half of healthcare in the country provided by the private sector, engagement in COVID-19 care was unavoidable. Recently, Bethzatha General Hospital and the American Medical Centre have been added to the private COVID-19 treatment centres, bringing the total number in Addis Abeba to five.

But regulating the private sector in this regard would prove to be tricky, according to Yakob Seman, head of medical services at the Ministry of Health.

“We wanted to create a sense of confidence in the general public first before opening [treatment] up to the private sector,” he said. With that in mind, training private facilities and slowly initiating them into the process through the provision of free testing centres was started.

The manual was set in motion last August to set a standard method of operation and to regulate COVID-19 treatment at private health centres with directions set to limit prices for treatment. The reviews on the price caps, which were based on price assessments conducted throughout hospitals in the city, were mixed. But even as operations commenced following the guidelines, complaints flowed in from patients who believed they were unfairly charged.

“There were centres operating within the legal lines but that were using other means to make more money,” explained Yakob.

Laboratory test prices may have been regulated, but the frequencies would be manipulated, as assessments carried out by the Ministry revealed later on.

“Instead of running one test, they’d do five or six,” said Yakob. The manual’s loopholes were not taken for granted.

But the support was still substantial, explained Yakob, as it provided alternative options for treatment and elevated the image of the country. The complaints coming to the Ministry were handled through stern letters so as not to discourage efforts.

Providing PPE and other necessary supplies for free to private healthcare centres was considered as a way to lower the costs, according to Yakob. But the proportion of public to private facilities in the country would make that plan hard to implement. Public hospitals providing COVID-19 treatment in the country contain over 90pc of the 2,500 beds available for patients; PPE and other supplies were in very high demand.

The global disruption had also affected the procurement of PPE. Contract cancellations, delays in arrival and other issues were an obstacle to the required amount reaching the country. Nonetheless, the Ethiopian Pharmaceuticals Supply Agency has recently disbursed a round of COVID-19 supplies, its ninth since the pandemic’s onset.

This fiscal year, the Agency has distributed supplies, including nearly 300 mechanical ventilators, worth 1.7 billion Br. But officials at the Agency estimate this number to be higher as donations included in the supplies are calculated at much lower prices than market value. Despite this, security disruptions across the country had hindered the deliveries with road blockades delaying trucks carrying the supplies to the Agency’s 19 hubs across the country.

PPE was also an initial challenge for Hallelujah General Hospital, the second to have received a license for COVID-19 treatment from the government. Hallelujah, which also provides services like dialysis treatments for kidney problems found only at a handful of institutions in the country, had started preparations for the pandemic much earlier as well.

Training and distribution of lifesaving PPE for its 40 medical staff were first on the to-do list. This was even prior to March 14, the date when the first positive COVID-19 case was recorded in the country, according to Kaleab Dereje (MD), assistant medical director at the Hospital.

It also donated its branch in Arat Kilo for government use along with equipment and health professionals, incurring a monthly cost of 1.2 million Br a month, according to him.

The prices here too, like any private hospital, are high, and options for a single bed, double bed and even the VIP treatment are on offer to patients. But for those who cannot afford it, the Hospital’s COVID-19 treatment unit medical director states that referrals to the five public institutions have so far been smooth with no visible delays.

Even so, the laws are adapting to the quickly shifting landscape of COVID-19 healthcare. A new manual is operational as of last week, relaxing specifications for running a COVID-19 centre and lifting the price cap on items related to COVID-19 treatment.

The revision rescinds regulations like necessitating a separate building for COVID-19 treatment and instead targets integrated case management to allow both COVID-19 and other treatments to continue simultaneously. The risks are minimised as the manual dictates a higher patient to health professional ratio than before.

The rationale behind this is to meet the needs of non-COVID-19 patients. More importantly, it looks to encourage more private health providers to join and foster competition, which is hoped to regulate costs in a price cap.

The decision to reverse the older manual also comes bearing what the Ministry states is a better capacity for receiving patients. In December, ICU beds in public hospitals and health centres were filled to the brim with 13 people in line waiting for mechanical ventilators. Last week, there were idle ventilators across public hospitals in the country, according to data from the Ministry. With the chances of recovery for a person on mechanical ventilation at around five percent, this could be interpreted as either a good or a bad data point.

Hallelujah Hospital has so far successfully treated 300 people since commencing operations. Mechanical ventilators, needed for the most severe cases, are rare here much like anywhere else in the city, and the Hospital has been getting patients referred at very critical stages when chances of survival are low.

“It does give us confidence in our capabilities to care for patients on the one hand,” said Natnael Fitsum (MD), Hallelujah’s COVID-19 treatment unit medical director.

Even so, the private sector’s involvement is lauded by many healthcare experts, especially seeing as the need for patient-centric care is on the rise.

The best way to ensure this need is met is to engage the private sector, according to Tegbar Yigzaw (MD), a public health specialist and president of the Ethiopian Medical Association.

“The supplementary support is good for the country, even in times of regular procedure, let alone emergencies,” said Tegbar. “The private sector can also fill gaps in sub-speciality.”

In the case of COVID-19, needs may not be adequately addressed through government efforts alone, according to the expert, who explained that there is definitely demand for private care among those who can afford it.

“The authorisation by the government, though arguably late, is the right decision,” he said.

Tegbar maintains that quality care should come alongside affordability, adding that treatment costs should not leave patients bare-handed afterwards. The rising cost of healthcare is concerning, especially when less than one percent of the country’s population can afford to access it, remarked Tegbar.

Central Bank Blacklists Individuals for Alleged Forex Fraud

Authorities at the central bank have ordered all banks to immediately terminate business relationships with 65 individuals suspected of foreign exchange fraud valued at 13 billion Br. The list includes three businessmen who were found to transfer, in multiple transactions, from 1.1 billion Br to over three billion Br in three months. The authorities have also notified the banks to cut ties with customers suspected  of making repetitious account-to-account transactions.

Sent to the banks on January 22, the letter stated that the due diligence carried out showed that the individuals in question allegedly committed forex trading fraud in values ranging from 21 million Br to 3.2 billion Br. Signed by Solomon Desta, a vice governor at the central bank in charge of financial institutions supervision, the letter stated that the alleged illegal transactions took place at 10 banks.

Almost half of the transactions were reported at Wegagen Bank, followed by Lion International Bank and Commercial Bank of Ethiopia (CBE).

Abyssinia, Awash, United, Berhan, Abay, Addis and Cooperative Bank of Oromia were also included in the list with one to five transactions taking place at each.

The highest alleged foreign currency fraud was made by an individual named Mohammed Ali, totaling 3.2 billion Br through Wegagen Bank. The second and the third highest values, amounting to three billion Br and 1.2 billion Br, were recorded at Cooperative Bank of Oromia and CBE, respectively.

For the financial sector’s safety and soundness, there are basic requirements that banks know their customers and conduct due diligence, according to Solomon.

“However, there were gaps from the banks in complying with these requirements,” Solomon told Fortune.

After observing these gaps, the central bank, along with the Financial Intelligence Centre of Ethiopia, carried out the investigation and due diligence in its regular supervision activities, according to him.

Solomon adds that on top of failing to comply with the requirements, the central bank observed that some banks work with unlicensed financial institutions with no physical presence in the country.

“Our mandate is to order the banks to cease services to these individuals,” he said. “We left the remaining to law enforcement bodies. We’ve transferred the list of the individuals and detailed information to the Federal Police for further investigation.”

The letter stated that a huge sum of money was withdrawn and credited from and to the banks through illicit transactions in addition to foreign currency fraud. Repetitious daily account-to-account transfers made by a few individuals were traced, according to the letter.

About 531 million Br was debited from banks via illegal transactions, according to the letter. Twenty-three individuals made 30,290 transactions through six bank branches located at border cities, namely Togochale, Qefira, Bullae, Hartishek, Sulul and Jehedin.

The letter also asserted that through 9,580 transactions, 218.2 million Br was credited into the banking system by 33 individuals at different bank branches. Eighteen individuals have also withdrawn 414.8 million Br through 8,047 transactions.

The central bank has also reported that it has identified individuals that made multiple account-to-account transactions between July and September. During this period, 20,178 account holders made more than 1.4 million transactions, according to the central bank.

Last May, the central bank put a cash withdrawal limit on individuals and businesses. Individuals were allowed to withdraw 100,000 Br daily and a million Birr monthly. Businesses were permitted to withdraw 300,000 Br a day and a maximum of 2.5 million Br a month. In October the central bank altered the directive and decreased the daily withdrawal limit to 50,000 Br and 75,000 Br for individuals and businesses, respectively.

Following the currency demonetisation process carried out in September, the central bank has outlawed local money transfer services and the depositing of cash into third-party accounts. It allowed only account-to-account transfers. A few weeks ago, the central bank issued another circular that restricted account transfers to just five a week.

The latest letter from the regulatory bank ordered all of the commercial banks to refrain from opening an account for the listed individuals and from commencing any business relationship with them.

“The customers have been reasonably suspected of engaging in suspicious transactions that include the undertaking of multiple transactions to various recipients for illegitimate and unlawful purposes,” reads the letter.

The central bank has also informed the banks to strictly address all shortcomings, including those in technological systems, policies, controls and procedures directed by the anti-money laundering and financing of terrorism proclamation and directive. The banks were notified to rectify the issues by the end of this coming April at the latest.

Other than imposing financial penalties, the central bank will issue “cease and desist” orders to the banks to stop rendering remittance services altogether, as well as suspend and remove members of management if they fail to comply with the guidelines, according to the letter.

Berhan Bank Profits on Upswing

Berhan Bank, one of the mid-sized banks, registered noteworthy profit growth in the past fiscal year, ended July 7, 2020. Its net profit recorded a 25pc jump to 551.6 million Br.

Parallel to the profit growth, Berhan’s earnings per share (EPS) also rose by five percent to 25.9 Br.

The growth of profit and EPS at Berhan is remarkable, according to Abdulmenan Mohammed, accounts manager at the London-based Portobello Group.

Berhan’s growth was driven by a surge in income from financial and non-financial intermediations. It generated 2.1 billion Br in income from interest on loans, advances and National Bank of Ethiopia (NBE) bonds, a growth of 34.5pc. Revenues from service charges and commissions also grew by 12.3pc to reach 618.8 million Br. Foreign exchange earnings also showed a marked rise of 62.2pc to 132.2 million Br.

The growth of income, particularly from foreign exchange dealings, in an economic environment where many banks were hit by a serious reduction of income in this business area is impressive, remarked Abdulmenan.

“Our Bank mobilised 155.7 million dollars despite a decline in remittances from abroad due to the lockdowns around the world,” said Abraham Alero, president of Berhan.

The overall foreign currency earnings of the Bank has dropped by four percent from the previous year, according to Abraham, who adds that the first three quarters kept the Bank from further decline.

Gumachew Kussie, the board chairperson of Berhan, stated that the Bank could sustain the positive growth despite the fiscal year’s challenges.

Deposit mobilisation was one of the toughest challenges in the industry following the overall liquidity crunch that affected the banking industry in an uncommon and unprecedented manner, according to him.

“The industry was also a victim of the Novel Coronavirus (COVID-19) pandemic, which demanded changes [in everything] from daily operations to rescheduling of loans and interest rate adjustments,” commented Gumachew.

Interest expenses climbed by 32pc to 817.8 million Br, while salaries and benefits also shot up by 25.3pc, hitting 780.9 million Br. Other operating expenses have also shown a 12.7pc increase, exceeding 326.8 million Br.

During the past fiscal year, the Bank has opened 31 new branches, pushing its total branch network to 231. It also recruited 847 new employees during the year, bringing the total number of staff to 4,572.

Berhan’s assets expanded by 11.4pc to 21.4 billion Br.

This is a modest expansion in terms of the banking industry, according to Abdulmenan.

Abraham argues the Bank’s asset expansion growth rate was strong. However, he adds that the management will be focused on further strengthening the rate in the coming years.

Over 12.7 billion Br in loans and advances were disbursed by Berhan during the reporting period, marking a 25.5pc increase. The Bank mobilised 15pc more deposits in the last fiscal year, reaching 16.6 billion Br. The increment pushed the Bank’s loan-to-deposit ratio up to 69.2pc, about two percentage points higher than the previous year.

The loan-to-deposit ratio of Berhan is reasonable, according to Abdulmenan.

Berhan’s investment in NBE bonds dropped by 12.4pc to reach 3.8 billion Br, representing 18pc of the total assets and 21.1pc of the total liabilities of the Bank.

Every bank’s investments in NBE bills dropped last year following the central bank’s move to repeal the mandatory bond that required commercial banks to surrender 27pc of their gross loans and advances in exchange for the bonds. With a maturity period of five years and a five percent interest rate, the bonds were redirected to the Development Bank of Ethiopia (DBE), which finances priority areas selected by the government.

Berhan’s liquidity level has shown a reduction both in value and relative terms. Its cash and bank balances went down by 8.5pc to 2.8 billion Br. The ratio of liquid assets to total assets declined by three percentage points to 13.1pc, and liquid assets to total liabilities decreased by 3.1 percentage points to 15.6pc.

The Bank’s paid-up capital increased by 22.5pc to reach just under 2.5 billion Br. Its capital adequacy ratio (CAR) stood at 16.7pc, twice the minimum threshold.

Negalign Nigatu, a new shareholder at Berhan, claimed that he expected higher returns last year based on the information he was provided by other shareholders about the previous years’ performances.

“However, I’m not disappointed with the performance since the Bank is investing the money in areas that can bear income in the future,” he said.

He joined the Bank last year by buying 30,000 Br worth of shares, which were returned from former shareholders. Negalign decided to reinvest the money he gets from the dividends into new shares.

“The Bank has a positive future,” he said. “I also plan to buy more shares in the future.”

 

Council Establishes Corp. to Absorb Residual Debts

The Council of Ministers approved a regulation that will establish the Liability & Asset Management Corporation, which will be soaking up debts owed by state-owned enterprises to external lenders and the Commercial Bank of Ethiopia (CBE).

Set to be established as a state-owned enterprise with 570 billion Br in capital, the Corporation will be in the business of absorbing and administering the enterprises’ debts; managing assets and liabilities; and handling the investment activities of the enterprises that will fall under its portfolio. It can further engage with commercial activities for income by transforming state-owned enterprises’ assets into income-generating investments.

In the making for a year and a half under the supervision of the Ministry of Finance, the regulation was approved by the Council yesterday, January 30, 2021.

The formation of the Corporation is part of macroeconomic reforms that include the restructuring of state-owned enterprises, according to Eyob Tekalign (PhD), state minister for Finance. The accumulated debt was a serious macroeconomic issue, according to him.

“It was a tough decision, but profound,” said Eyob. “It’ll function as a conduit in preventing debt crises.”

The Corporation will administer a little over half a trillion Birr in residual debt from CBE and other lenders including China. The Sugar Corporation, Chemical Industry Corporation, Ethiopian Electric Power, the then Metals & Engineering Corporation (MetEC), and the Ethiopian Railways Corporation owe the debt. The EEP carries the largest debt, amounting to 370 billion Br. The Railways Corporation and MetEC follow with 120 billion Br and 74 billion Br in debts, respectively. The Sugar Corporation had 70 billion Br in debt.

The Corporation, which will be reporting to the Ministry, will be capitalised from the industrial fund and funds to be mobilised from development partners, according to Eyob.

Taking over the enterprises’ liabilities, the Corporation will be servicing their debts through the resources to be redirected from the Industrial Development Fund, which was set up by the  Public Enterprises Privatisation Proclamation to administer the revenues generated from the liberalisation and privatisation of the state-owned enterprises.

It will also administer the debt of companies selected by the Ministry of Finance and those who have requested their debts be taken off their balance sheets.

A committee composed of members from the Ministry, the National Bank of Ethiopia (NBE) and the Public Enterprises Holding & Supervision Agency proposed the Corporation’s formation. The team, which has been diagnosing the enterprises’ debt stress, proposed the Corporation’s formation to partially absorb the debt and clear their balance sheets. It also assessed the enterprises’ solvency, their capacity to pay off their debt, and their debt-service coverage ratio to assess the serviceable and residual debts.

The Ministry has presented a couple of rough organisational structures for the Corporation, according to Eyob, who adds that it will be operated by high calibre experts with a background in finance.

“Most of the legwork to operationalise the Corporation has been done,” Eyob said.

It is a new beginning for the company, according to Hiwot Mosisa, CEO of Ethio-Engineering Group, formerly known as MetEC.

“And it comes at the right time,” she said. “It came onto the scene when we were about to finalise our major reforms.”

The company’s new management has been working on the restructuring and rebranding that covers changing its name, restructuring human resources, converting its finance and accounting system into International Financial Reporting Standards (IFRS), and fine-tuning its focus area.

One of the major problems of the company was financial issues, on top of being disconnected from its main objective and diverting into megaprojects, according to Hiwot.

“It’ll give us a good financial look and enable us to do better deals with financial institutions,” she said, “such as getting working capital, project financing and support in foreign currency.”

It will also make the company credible and give confidence to the private firms that want to partner with the company, according to her.

“Now we’ll be focusing on import substitution,” she said. “Then we’ll focus on exporting.”

The Group will also contribute its share, such as resources for the capital of the new Corporation, according to Hiwot.

Ethio-Re Celebrates Another Profitable Year

The nation’s first reinsurance firm, Ethiopian Reinsurance S.C., aka Ethio-Re, made a huge profit in the last fiscal year for the second year running. Ethio-Re bagged 164.6 million Br in net profit, a 23pc rise from the previous year.

The underwriting profit of the company also registered a remarkable 42.5pc increase, reaching 105.3 million Br. However, the earnings per share of the firm sunk slightly to 21.3pc from 21.4pc.

This considerable increase must have been good news to the shareholders, according to Abdulmenan Mohammed, a financial statement analyst with two decades of experience.

The performance has already delighted Robel Yimer, one of the shareholders, who says that the firm’s achievements exceeded his expectations.

“I expected that the transition of the CEO could have an impact,” he said. “But it was smooth and didn’t affect its performance.”

Following the departure of founding CEO Yewondwossen Itefa, the board of directors appointed Fikru Tsegaye as acting CEO, effective September 19, 2020. Fikru had been serving as an executive officer of strategic planning and business development at Ethio-Re.

The major cause for improved performance of the firm was an increase in gross premium and investment income combined with minimal claims growth.

Gross underwriting premiums showed a striking 25pc increase to 874.7 million Br, out of which 202.2 million Br was transferred as retrocession, which went up by 82.7pc. Ethio-Re ceded 189.3 million Br to reinsurers, marking a 12pc increase.

The gross written premium growth is way above the industry average of 18pc, according to Fikru.

The 1.2 billion Br investment in time deposits and the 121.9 million Br equity in bonds generated 129.2 million Br in income. This investment income registered a 25pc spike.

Ethio-Re did very well in investment activities, according to Abdulmenan.

Claims paid and provided for slightly rose by two percent to 335.7 million Br. This shows that Ethio-Re controlled claims very well, according to Abdulmenan, adding that this helped Ethio-Re considerably in improving its profit after tax.

Operating and other expenses at Ethio-Re rose by 46.5pc to 48 million Br, which the expert asserted was a considerable increase requiring the management’s attention.

Fikiru says that expenses have expanded due to the support the company provided to national projects such as Dine for Sheger and Dine for Nation and various school feeding projects.

The company’s total assets increased by 10.5pc in value, reaching almost 1.8 billion Br, and long-term insurance business assets represented nine percent of the total, a rise from the 7.3pc recorded the previous year.

Ethio-Re invested 1.2 billion Br in time deposits, 52.2 million Br in shares and 121.7 million Br in bonds. These investments account for 74pc of the total assets of Ethio-Re.

This is a considerable proportion by industry standards, for which the management should be applauded, according to Abdulmenan.

Liquidity analysis shows that the liquidity level of Ethio-Re declined both in value and relative terms. Its cash and bank balances decreased by eight percent to 101.2 million Br, while the ratio of cash and bank balances to total assets dropped to 5.6pc from 6.7pc.

Ethio-Re should take precautions against a further reduction, according to Abdulmenan.

Fikru asserted that the firm has adequate preparation for meeting its liabilities.

“Our risk management report shows a healthier liquidity ratio, and [we are] the most liquid financial institution in Ethiopia,” he said.

Ethio-Re also managed to raise its paid-up capital by 30pc to 787.6 million Br. The company’s capital and non-distributable reserves accounted for 46.6pc of its total assets, demonstrating that the firm’s strong capital base is far higher than its operational needs.

Ethio-Re needs to use its capital efficiently, according to Abdulmenan.

Ethio-Re incurred losses during the first two years of operation following its founding in July 2016.

The board has been exerting maximum effort to understand the business environment, major challenges, and opportunities facing the company to take the necessary corrective measures and bring the company on track, according to Hailemariam Assefa, the board chairperson of Ethio-Re, which signed a memorandum of understanding for future cooperation with Oman Re early last week.

“During the course of the stay,” said Hailemariam, “we’ve been engrossed in strengthening the relationship with the primary insurance market, the regulator, our business partners, shareholders and other stakeholders to guide the company to perform as expected.”

All 17 insurance firms transfer five percent of all insurance policies to Ethio-Re, 25pc of treaty sessions, and policy coverages, assigned to other reinsurers. In August, the central bank also issued a directive that made Ethio-Re the lead reinsurer for any risk that falls out of a treaty signed between the insurance company and reinsurance firm. The directive also requires insurance companies to receive confirmation from Ethio-Re before covering a risk that exceeds 30pc of their gross retention capacity.

Robel also anticipates that the company will perform better in the coming years as it is the lone local reinsurance firm.

“I expect a major shift in the coming years,” he told Fortune. “I also see a bright future for the company in the coming years as many international companies are coming to the country.”

Roads Authority Debars Four Financial Institutions

Four financial institutions face a ban from issuing any guarantees and securities for construction companies hired for projects under the Ethiopian Roads Authority (ERA). The letter signed by Habtamu Tegegn, the Authority’s director-general, stated that the companies were excluded for failing to discharge their obligations in a timely manner.

The Cooperative Bank of Oromia, Enat Bank, Africa Insurance and Nib Insurance are the companies that were debarred from extending guarantees and bonds for construction companies. The letter dispatched to the project development and construction projects management divisions of the Authority stated that the ERA would not accept any new bonds and insurance policies from the companies until further instruction is given on the matter.

“The companies have been exhibiting limitations to the timely discharge of their obligations as per their promises and directives of the National Bank of Ethiopia (NBE),” reads the letter. “The companies exhibited persistent disobedience and similar previous experiences.”

While giving projects to contractors, the Authority requires the companies to hold guarantees from banks and insurance firms as to their performance and any advance payments as well as to replace retention money held as per the contract requirement.

The Authority’s contract framework also requires contractors to take out and maintain insurance coverage for the works; plant and equipment; personnel; and vehicles as protection against damages, losses and liabilities during the projects’ overall lifespan. Thus, insurance firms sell policies to contractors such as the Contractor’s All Risks Policy, Contractor’s Plant & Machinery, Workmen Compensation and Professional Indemnity. Contractors also need to be furnished with different bonds as to their performance, advance payments, and other similar issues that require insurance coverage.

Considering the extended reputation of these financial institutions as credible and preferable for providing such guarantees and mainly taking into account their longer relations with ERA, the Authority had been willing to accept any guarantees supplied from them, according to the letter.

“Most of the financial institutions have been discharging their obligations and have fulfilled promises indicated in the contracts and conditions stated under the guarantees,” reads the letter. “Nonetheless, some financial institutions have been exhibiting limitations to the timely discharge of their obligations.”

Zufan Abebe, CEO of Nib Insurance, says that the Authority did not formally communicate with them about the issue; instead, they heard it from their client, whose guarantee from Nib would not be accepted by the Authority.

Nib is included on the list for a conditional bond for a construction company as an advance payment guarantee, according to Zufan, who adds that the construction company and the Authority are in a court battle, both suing each other. Nib was also involved in the court case.

“However, since the nature of the case [the guarantee Nib gave to a contractor] is a tripartite agreement,” she said, “our case went to an arbitral tribunal under the Addis Abeba Chamber of Commerce & Sectoral Associations after the three of us agreed on it. And the case is pending there.”

Zufan also says that the insurance company sent a letter to the Authority asking for clarification regarding the case’s status. The arbitration tribunal has sent a letter to the Authority explaining the status of the case, according to her.

She argues that it should be noted that the case involves reinsurers as well, as large guarantees normally do. “If we pay ERA without having sufficient evidence that the contractor has failed, we’ll lose the amount of money that should be recovered from [the] reinsurer,” she explained.

“We’re positively waiting for a response from the Authority,” she told Fortune, stating that she is confident that the ERA is taking this seriously and will correct its position.

Zufan also adds that Nib is willing to discharge the value if the tribunal rules that the insurance firm is liable to pay the compensation for the guarantee it gave to the contractor.

“We’ve previously paid different claims to the Authority,” she said.

The claims value is minimal, and it is not something that can ruin the Bank’s relationship with the Authority, according to Deribe Asfaw, president of Cooperative Bank of Oromia, which was required to pay six million Birr for a guarantee it gave to a construction company.

Deribe says the Bank has already settled the money, and it is about to start a clearance process.

“Since it’s an unconditional bank guarantee,” said Deribe, “we’re supposed to pay the liability when the receiver defaults.”

Initially, Commercial Bank of Ethiopia (CBE) and United Insurance were included on the Authority’s list; however, they were removed after they settled the payments they were liable for, according to a source close to the case.

United was excluded from the list after settling 55 million Br in compensation for the performance guarantee bond it gave to Tibeb Construction, which failed to carry out a road project awarded in 2009. United paid the value after a seven-year court battle, which ended with the declaration that the construction firm had defaulted on the project.

Second Interest-Free Bank Welcomes Founding CEO

The National Bank of Ethiopia (NBE) has approved the first president of the nation’s second fully-fledged, interest-free bank (IFB), Hijra. Dawit Keno, who has been serving at Commercial Bank of Ethiopia (CBE) as vice president in charge of resources & credit management, was named Hijira’s CEO as of January 27, 2021.

Dawit has three decades of experience at CBE under his belt, where he started his career as a customer service officer. He then landed a management position as a district manager in Jimma where he served for three years. Dawit later moved to Addis Abeba in a managerial role before being appointed vice president. Before moving to Hijra, he served for four months as VP of resource & credit management, a year as VP of financial management, and another year as VP of banking operations at CBE.

He was appointed after fulfilling the central bank’s directive that requires chief executive officers of banks to have at least a decade of experience in the banking industry, five of which in a managerial position.

His natural growth in the industry made him an appealing candidate for the board directors, according to Mukemil Bedru, the board chairperson at Hijra, which secured a pre-formation license in June 2019 and obtained 9,000 shareholders who have subscribed for 1.2 billion Br worth of shares, of which 650 million Br is paid.

“Dawit’s experience in credit, which is a tough area for banking, is another reason for the appointment,” Mukemil said.

Frezer Ayalew, director of banking supervision at the central bank, confirmed Dawit’s appointment.

The new CEO will be in charge of operationalising the Bank, human resource recruitment, especially executive team members; procurement of core banking and digital banking technologies; and setting up the Bank’s offices and branches. The appointee’s last focus area is preparation of policy and strategy documents needed for the commencement of operations.

Dawit sees the novelty of fully-fledged, interest-free banking as an obstacle. He believes that potential customers will need time and convincing to subscribe to Hijra’s services. But he also believes that the mode of banking bears a great opportunity for the sector.

Bringing the community seeking interest-free banking into the mix will have a positive contribution toward the country’s economy and the community as well, according to Dawit.

Hijra originally anticipated being operational at the beginning of the Ethiopian new year. Still, the Novel Coronavirus (COVID-19) pandemic and the process of appointing its first CEO contributed to the delay, according to Mukemil.

The Bank had previously nominated Nuri Hussein, IFB vice president at CBE, to be the founding president of the Bank. The organisers forwarded the appointment to the central bank to get approval; however, it did not materialise after Nuri withdrew from the candidacy.

Dawit’s new management team is expected to review and update existing documents prepared by consultants and the founders, who have almost completed compiling policy documentation and branding work.

“We’re getting ready to open our doors with several branches over the next two or three months as the only compliance left was the appointment of a CEO,” said Mukemil.

The unavailability of skilled personnel in interest-free banking and the procurement of technological banking solutions requires a high amount of forex, which will be burdensome for a newly formed bank, according to Mukemil.

Ibrahim Dawd, an expert in IFB with more than 12 years of consulting experience, agrees that interest-free banking in Ethiopia has its fair share of challenges.

Initiated a decade ago by Zem-Zem Bank, the formation of an interest-free banking system went through various challenges. Promoters of Zem-Zem started the process following the legislation of the interest-free banking proclamation. But their attempt did not materialise after the issuance of a directive that limited IFB to window service only. The Bank finally received and operational licence in September 2020

“At the time, there were barely any experts on IFB,” said Ibrahim. “Since then, however, 11 banks have started adopting IFB through window banking services.”

However, a year and a half ago, the central bank issued a directive that allows full-fledged IFB service, triggering many banks including Zem-Zem, Hijira, Zad, Kush, Huda and others to start the establishment process.

Ibrahim believes that there are more professionals than in the past, but it is still hard to find skilled personnel for managerial positions. Another barrier Hijira and other interest-free banks will soon face, according to Ibrahim, is the procurement of core banking technology that is fitting for an IFB.

“Most core banking systems are not designed to accommodate IFB,” he explained, adding that there are only a handful of companies providing core banking systems specifically designed for IFB per Sharia Law.

“It is a global problem,” said Ibrahim. “What the tech companies do is tweak the conventional core banking system.”

Ibrahim recommends that it is important for the Bank to work with companies who design core IFB solutions widely used in Middle Eastern countries.

New Luxury Apartments on the Horizon

Metropolitan Real Estate is set to break ground on a new luxury apartment site near the African Union Headquarters in Sarbet. The 19-storey apartment project is expected to be launched in March with a total investment of one billion Birr.

Dubbed Central Tower Apartments, the new complex will lie on a 1,135Sqm area of land. The apartment will come equipped with a generator, water tank, security system, underground parking, common terrace, fitness centre and clubhouse. The units have already been put up for sale this month.

Three-bedroom and two-bedroom units with sizes ranging from 128Sqm to 144Sqm in size will be available in four years. Prices vary from 50,000 Br to 80,000 Br a square metre depending on the customer’s preferred payment scheme and the type of unit bought.

Metropolitan, a United States-based company, has joined the Ethiopian real estate market with its Sarbet Gabriel luxury apartments project inaugurated in 2017. Following Sarbet Gabriel, the real estate company went on to launch three more projects in two years, two of which are labelled luxury apartments.

The land for the apartment was acquired almost three years ago, but the company decided to hold off on construction as land ownership issues were not settled and the area needed to go through development, according to Leul Dereje, marketing & sales director of Metropolitan.

The company also researched what kind of apartments are best suited for the area before deciding to build luxury housing, according to him.

The construction of the apartment building, like all of Metropolitan’s projects, is going to be handled by European architects and engineers. The company inaugurated Bole Midtown luxury apartments, its second project, in late October of last year. The apartment was built and delivered in one year and nine months, three months earlier than the promised completion date.

It is also currently constructing its Metropolitan Tower apartments located near Bole Rwanda Embassy and its Westview standard apartment complex located in the Zenebework area. Leul says that 85pc and 25pc of sales on those projects, respectively, have already been completed.

Providing a modern living space, availing personal amenities and spatial designs crafted by high-end designers, situating them at good locations such as Sarbet, Kazanchis and parts of Bole make an apartment luxurious, according to Nega Asfeha, an expert with over three decades of property management and consulting experience.

The construction sector in Ethiopia makes up around 21.1pc of the country’s GDP. However, the new 10-year Perspective Plan developed by the National Planning & Development Commission is shifting focus away from construction and expects the construction industry to have a lower GDP contribution in 10 years, amounting to 17.9pc.

“Although there are a considerable number of real estate companies in the market, strains from structural and financial problems has left them unable to attain their expected potential,” he said.

The private sector is expected to build around four million housing units in the coming decade, according to the Plan, including projects done in collaboration with the government and foreign and local investors.

Nega sees the lead the private sector is going to take as a positive step forward. The exponential growth of the population coupled with the existing deficit has made living in Addis Abeba unaffordable, especially for the middle class.

The government needs to place stringent regulations and monitoring for private sector developments if the private sector is needed to satisfy housing demand, according to Nega. He also says that well-researched and competitive land provision and increasing the availability of loans are required from the government.

“Private companies can partner with local and foreign developers to contribute to the availability of affordable housing,” Nega said.

Ministry Lifts Price Caps for Private COVID-19 Healthcare

In an updated manual for the regulation of private healthcare, the Ministry of Health has lifted previously imposed price caps on the provision of COVID-19 healthcare in hospitals. The amendment from the first manual, in place since August of last year, has also lifted the mandatory requirement of providing COVID-19 treatment in a different building to other healthcare services.

The amendment, initiated to encourage the private sector’s engagement with less stringent criteria, intends to introduce integrated case management, whereby COVID-19 and non-COVID-19 patients will receive treatment simultaneously. However, the manual maintains that the treatment rooms need to be separated and requires private healthcare institutions to provide treatment at reasonable prices.

The latest manual, in place since early January, also drops the responsibility of private healthcare institutions to provide separate housing, transportation, food and other items to designated health professionals providing treatment. Separate dining, laundry and mortuary rooms are encouraged but no longer mandatory so long as there are separate schedules for the performance of these duties.

Private healthcare institutions, which want to withdraw from giving such services, are obligated to notify the government a month ahead of time, according to the manual.

This will encourage the influx of private health institutions, which are already expected to increase significantly in the coming weeks, according to Yakob Seman, director of Medical Services at the Ministry of Health.

Five private hospitals are currently providing COVID-19 treatment in the capital: Addis Abeba Silk Road General Hospital, Hallelujah General Hospital, Yerer Hospital, American Medical Centre and Bethzatha Hospital.

“The ensuing competition between multiple private treatment providers will result in price regulation,” explained the Director-General. “Initially, the price caps were in place as we were in a state of emergency.”

The updated manual applies to primary and general hospitals, laboratories, home-based healthcare providers and pharmaceutical companies. In addition to the five private medical centres, five public centres — Eka Kotebe General Hospital, Semegn Kebede Health Centre, COVID-19 Field Hospital, Millenium COVID-19 Care Centre and the ICU section of Saint Paul’s Millennium Medical College — are providing treatment.

The impact of encouraging the private sector to join in COVID-19 treatment is no doubt helpful, especially as public health institutions reach capacity, according to Adamu Addissie (MD), associate professor at the School of Public Health at Addis Abeba University.

“It opens up more options available for patients,” he said. “It’ll also strengthen the private sector’s emergency and critical care, which had been minimal up to this point.”

Considering that there will be circumstances that will necessitate this in the future, capacity building of the private sector is commendable and compliant with the country’s health policy, he added.

But the expert recommends the presence of governmental supervision.

Bias in the selection of patients due to the expensive nature of the treatment on the one hand and the survival needs of private healthcare institutions on the other presents an ethical dilemma.

“Everyone falls sick, regardless of their socioeconomic background,” said Adamu, “so there needs to be a mechanism where either the government subsidises the costs or insurance schemes can be set up.”

If not, the financial repercussions, especially for those requiring intensive care, may be hard to come back from.

Out of the nearly two million COVID-19 laboratory tests conducted, a total of 137,021 have tested positive, and 2,091 people have lost their lives, according to a report by the Ministry of Health dated January 30, 2021.

Bitter Fruit: Vendors Sour on Storied Vegetable Market Relocation

It has been over two years since Abaynesh Rega, a small-time vegetable seller, began struggling to make ends meet. She works day and night selling onions, tomatoes, potatoes and kale to passersby on the wide pavement of a road in the area known as Haile Garment in Nifas Silk Laphto District.

It is the only means of income she has to take care of her three kids, and rest is a luxury she can ill afford. After toiling well into the night at her trade, she needs to tend to her motherly duties before she can catch a wink of sleep. A story like hers is nothing out of the ordinary for the many women who work as vegetable vendors in the area.

A short while ago, a glowing opportunity seemed to present itself to Abaynesh and her colleagues. The construction of a vegetable and fruit market laid its foundation right in the neighbourhood where they worked, although many had to vacate the area due to the construction work.

“Struggling for one month wasn’t an issue compared to the advantages, and the doors [the market] could open for so many women like me,” said Jemila Mohammed, another small-time vegetable vendor.

Though Jemila and others like her were optimistic initially, the story has so far proven to be a sombre and disappointing one.

Following the onset of the Novel Coronavirus (COVID-19) pandemic, Atikilt Tera, a vast open vegetable and fruit market originally based in Piassa, temporarily moved to the fields of Jan Meda, a sports ground, to curb the spread of the virus. The market stayed in Jan Meda for over five months. Ultimately, it was given its new home at the Lafto Vegetable & Fruit Market Centre in the Haile Garment neighbourhood of southwestern Addis Abeba. The location seemed to surprise both customers and vendors.

The location is relatively well-suited for a fruit and vegetable market. It affords easy access to basic infrastructure, according to Abdulfeta Yusuf, head of the Addis Abeba Trade & Industry Bureau. “Getting such a plot of land that is relatively near to the city centre is no easy feat,” he said.

With a construction period which lasted only a month, the 8,000Sqm market was opened for business in early January 2021. It cost an estimated one billion Birr to build, and space in the marketplace is being rented out at 100 Br a square metre.

The market contains 980 compartmentalised shops accommodating 516 small-scale vendors, 46 distributors and 24 farmers. The stands lie in rows with wide spaces dividing the sections. It has a large parking area and is well-secured with constables guarding the compartment rows. The market opens at 6:00am and closes around 7:00pm.

The construction of this vegetable market has created jobs for more than 2,000 people. This includes caretakers and those who worked loading and unloading produce at the previous market in Jan Meda, as well as 100 waste collectors hired to keep the area clean.

One of the motives behind this project is to give a platform to women with small-time vegetable selling businesses, according to Adanech Abeibei, deputy mayor of Addis Abeba, speaking at the inauguration of the Centre a few weeks ago.

However, behind the shops, there is an abandoned plot of land fenced off with corrugated iron sheets where small-time vegetable vendors like Abaynesh and Jemila have settled in makeshift stalls with plastic tarps over their heads for shade.

They relate that promises they had received from officials about the allotment of space in the new market have yet to materialise.

It is an unpleasant prospect that faces the small-time vegetable vendors who are struggling to cope. They are not allowed to sell during the daytime with guards patrolling the market to make certain of it. They are forced to work at night and in the early morning to afford their daily bread.

“It’s tough to fight injustice when regulations tie both your hands,” remarked Senayit Awelachew, one of the struggling vendors.

The issues are exacerbated by the fact that most vendors carry identification cards from Oromia Regional State. To organise themselves into a legally recognised association or union, they need to carry identification from a kebelein Addis Abeba. And since kebelesare not currently distributing new identification cards, they are unable to work.

“We were excited to have a horse in the race, but we didn’t get anything we were promised even though we have been paying our taxes and delivering on our duties,” a frustrated small-time vendor mentioned. “We were asked to rent a tent for 500 Br and a shop for around 1,500 Br to 2,000 Br a day.”

On the contrary, in the opinion of Getnet Yawkal, an expert on corporate and commercial law, paying taxes and settling in an area for a long time does not grant either property rights or the right to ask for it.

“In Ethiopia, the land belongs to the government,” said Getnet. “Without evidence that shows their ownership, it’s a far-fetched argument.”

The government itself insists that it is mobilising to help these women.

“We’ve already identified a working space for them and immediately started the construction,” said Abdulfeta. “It will be completed in a short period of time.”

Another point of concern is that when the market was located in Jan Meda, large numbers of vendors worked without business licenses, according to the Bureau head. The fact that the new vegetable market does not allow these clandestine small-scale vendors to operate is a source of deep concern for them, and they are demanding solutions from the government.

The legalisation of these small-time vegetable sellers is being assessed, and 380 of them are in the process of being legalised, according to Abdulfeta.

The legal vendors and distributors working in the market also have their share of dissatisfaction.

“Even though the modern arrangements are good, the far-off location drives away many customers,” mentioned a distributor who wished to remain anonymous. “I’ve lost over 40,000 Br due to the market’s inaccessibility and the lack of people that used to help us in loading and unloading our produce.”

Abdulfeta Aziz, a distributor, mentioned that he used to sell at least 10ql of onions every day when the market was in Piassa.

“Now we barely sell two quintals,” he lamented.

Abdulfeta, who says the far location of the centre limites customers from visiting the area, claims that he sells a maximum of three quintals of tomatoes a day. In contrast, he used to sell between nine and 11 quintals a day in Piassa.

There are other problems too, with a lack of adequate space being a big one. Evidently, the vendors who own their own shops use some unorthodox methods to make some extra money. If one vendor gets a large product delivery and lacks the space to store the goods, another vendor will temporarily rent out some space to them and charge as much as 2,000 Br a day.

“The structure is completely missing the necessary outlets for our products, and we are losing money over it, with our products lying around on the pavement,” said one vendor. “It’s like leaving a lump of meat on the floor and expecting to sell it afterwards. We’re selling at reduced prices to attract buyers.”

However, some are pleased with the new market, viewing it as a glass half full. Vendors coming from Qera are particularly content.

“The market here is preferable, since Qera was an expensive area to sell at,” stated Girum Ayalew, a vendor from Qera. “But now it’s extremely cheap, the vegetables we receive cost less, and the variety of products coming in is better.”

Girum added that the electricity infrastructure is adequate, an important factor since the fruits and vegetables are delivered and stocked late at night.

Similar fruit and vegetable market projects were implemented over a year ago, including the markets in Furi and Jemo. However, due to disappointing results and poor maintenance, many vendors chose to leave the markets. Part of the reason for this is that the markets were not promoted well, and there was a lack of customers. The Bureau maintains that these markets are getting a second chance after being renovated and reopened.

“The new traders showing interest as well as the capacity to provide different industrial and agricultural products in a fair amount are lifting up the market now,” said Abdulfeta Yusuf, the Bureau head.

Building one or two markets is not enough, according to Zegeye Chernet (PhD), assistant professor and deputy director at the Ethiopian Institute of Architecture, Building Construction & City Development.

The markets were in the city centre, which can make the city more crowded. Since Addis Abeba has a complex transportation system, the way to solve the problem is to decentralise the market, according to the expert. He recommended building a market for every district so that customers and sellers would not have cost and transportation difficulties.

“One of the reasons for urban planning is to integrate location, time and activity in the urban area in order that it will create a pattern and eliminate unnecessary hustle,” he said.