![](https://addisfortune.news/wp-content/uploads/2021/09/Jemal-Ahmed-Chairman-Horizon-Company.jpg)
Radar | Sep 10,2021
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]
Radar | Sep 10,2021
Fortune News | Apr 26,2019
Radar | Jul 11,2021
Radar | Oct 23,2021
Fortune News | Jul 03,2021
Fortune News | Apr 17,2021
Radar | Aug 28,2021
Year In Review | Jan 04,2022
View From Arada | Oct 16,2021
Fortune News | Jan 02,2021
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transportin...
Jul 13 , 2024 . By MUNIR SHEMSU
The cracks in Ethiopia's higher education system were laid bare during a synthesis re...
Jul 13 , 2024 . By AKSAH ITALO
Construction authorities have unveiled a price adjustment implementation manual for s...
Jul 13 , 2024
The banking industry is experiencing a transformative period under the oversight of N...
Jul 20 , 2024
In a volatile economic environment, sudden policy reversals leave businesses reeling...
Jul 13 , 2024
Policymakers are walking a tightrope, struggling to generate growth and create millio...
Jul 7 , 2024
The federal budget has crossed a symbolic threshold, approaching the one trillion Bir...
Jun 29 , 2024
In a spirited bid for autonomy, the National Bank of Ethiopia (NBE), under its younge...