
Fortune News | Feb 26,2022
Exporters have been barreling through from obstacle to disaster over the past decade, not unlike most other sectors. Things have only gotten worse over the last two years, starting from the economic impacts of the COVID-19 pandemic. Now, the headache is coming from the National Bank of Ethiopia (NBE), which recently ordered exporters to surrender four-fifths of all the foreign currency they earn. An overwhelming share goes into the central bank's coffers at 70pc, amounting to 400 million dollars over the past two months. Another 10pc is retained by the commercial banks where the exporters have accounts. Close to 10pc of the forex goes to cover freight costs.
Exporters have misgivings, albeit muted, over the amendment to retention rules, the third in about a year. The consequence, some of them told Fortune, would be to discourage the export business, which is critical to the health of the balance of payments. Moreover, it restricts foreign currency cash flow needed to import essential inputs for production. This is especially the case for exporters in input-intensive industries, such as horticulture and textiles, unable to substitute with domestic supplies due to quality issues. The two sectors earn foreign currency that covers 17pc of the 3.6 billion dollars generated from exports last year. Despite exporters' compunctions, the retention rules are here to stay as the federal government struggles to cover costs for importing essential items such as medicine, fuel, fertiliser and wheat. It also has the burden to settle external debt instalments. Some experts suggest that exporters should be allowed to retain all the hard-earned foreign currency they bring in, benefitting the sector and growing the overall pie through incentivisation. Others advise that exporters consider importing inputs through letters of credit (LC), in addition to the 20pc foreign currency they are allowed to retain. Unfortunately, the queues to obtain permits for letters of credit are too long and could take months or even years before they are approved.
Exporters will have to fend for themselves in the meantime or cease operations. Industry operators warn that they are a few months away from closing up shop.
You can read the full story here
PUBLISHED ON
Mar 05,2022 [ VOL
22 , NO
1140]
Fortune News | Feb 26,2022
Films Review | Sep 04,2021
Agenda | Jan 07,2022
Fortune News | Feb 19,2022
Fortune News | Jun 05,2021
Radar | Sep 18,2021
Films Review | Mar 28,2020
Editorial | May 29,2021
Films Review | Nov 02,2019
Commentaries | Dec 04,2021
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
May 31 , 2025
It is seldom flattering to be bracketed with North Korea and Myanmar. Ironically, Eth...
May 24 , 2025
Public hospitals have fallen eerily quiet lately. Corridors once crowded with patient...
May 17 , 2025
Ethiopia pours more than three billion Birr a year into academic research, yet too mu...
May 10 , 2025
Federal legislators recently summoned Shiferaw Teklemariam (PhD), head of the Disaste...