Fineline | May 18,2019
The Office of the Prime Minister has formed a high-level committee that will assess the damage suffered by investments and business entities due to instability in the country. With four institutions as members, the committee has started its operations by requesting that banks and insurance companies submit data about clients whose businesses were affected by a spate of violence.
The Ethiopian Investment Commission, the Development Bank of Ethiopia (DBE), the Commercial Bank of Ethiopia (CBE) and the Ethiopian Insurance Corporation are the members of the committee. The Commission sent letters to the Ethiopian Bankers Association and the Association of Ethiopian Insurers two weeks ago, inquiring about companies and investments affected.
The committee was formed as part of the government's latest efforts in helping investments recover quickly from vandalism sustained due to the recurrent violence that has engulfed the country, according to a letter sent by the Commission.
A few weeks ago, the National Bank of Ethiopia (NBE) started drafting a directive to set up loan schemes geared toward redressing damaged investments. The directive is expected to specify the interest rate and preconditions for the loans.
After receiving the Commission's letter, the Bankers Association dispatched a request to banks requiring the submission of information about damaged companies, including the companies' total capital and outstanding loans. The Association also attached a form that the member banks are to fill out and send back to the Association within a week. The banks have been required to provide details about the 419 companies listed by the Commission.
The companies are engaged in the service, agriculture and manufacturing sectors across four regional states and one city administration. About 326 of them are from Oromia Regional State, with the majority located in Ziway town. The second and third highest numbers are registered in Amhara and Benishangul-Gumuz regional states, totaling 58 and 31, respectively. A single company from Dire Dawa is also on the list.
Sher Ethiopia, B.G.I. Ethiopia, Castel Winery, the National Mining Corporation's Daleti Quarry Site, ELFORA Agro-Industry's Melgie Wendo Food Processing Factory, Tana Beles Sugar Development Project, Haile Hotels & Resorts, and Horizon Plantations' Limu Coffee Farm are among the companies included on the list.
The Bankers Association has a plan to extend the deadline since not all of the banks have filed the reports. The deadline might be pushed back to the middle of this week, according to the Association.
Ermias Andarge, acting president of Enat Bank, confirmed that the Bank had dispatched the form to all of its branches to check whether the listed companies are their borrowers and report any damage to their investments.
"We're waiting for responses," he told Fortunelast Friday.
The Association of Ethiopian Insurers has also received an inquiry from the Investment Commission concerning the identification of listed companies that have purchased insurance policies from them. The request has also been dispatched to member insurance companies.
However, the Association's leadership is preparing to ask clarification from the Commission regarding specifications about the kinds of insurance policies the companies have purchased, according to a source close to the case.
After collecting the information, the committee will use it to determine whether the investments need support from the regional or federal government, according to a source from the Commission.
Lately, the country has been experiencing sustained political uncertainty, which has led to the repeated vandalising and looting of local and foreign investments. Over the past two-and-a-half years, many lives have been taken and many properties have been destroyed by 113 major conflicts that have engulfed the country, according to a statement by Prime Minister Abiy Ahmed (PhD) during his address to parliament a few weeks ago. Most of the conflicts occurred in Amhara and Oromia regional states.
Before 2018, the government had been reimbursing the loss of investments due to violence in cash. The government was also providing the companies with additional duty-free benefits and exemptions for importing any property lost. Between 2014 and 2017, the government spent a total of over 800 million Br for damaged investments through DBE and CBE. However, over the past three years, the reimbursement has stopped since the government could not financially cover the high cost of the damage.
A study conducted by the Commission indicated that a total of 485 investments were vandalised over the past two years. There are over 700 damaged investments backlogged from the past as well those which are currently undergoing damage assessments. The investors have applied in the past, but due to many reasons, have had their requests delayed. The Commission is facilitating tax payment extensions and loan rescheduling for impacted investments.
PUBLISHED ON Dec 26,2020 [ VOL 21 , NO 1078]
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