ETHIOPIA: A new proposed budget & more – 18th July 2024

Salaam salaam from BA! This is the Rorshok Ethiopia Update from the 18th of July twenty twenty-four. A quick summary of what's going down in Ethiopia.

We start off with news from the northern parts of the country. Debre-Tsion Gebre-Michael, the head of the Tigray People’s Liberation Front (or TPLF), told France International, a French media outlet, that unless armed forces from Eritrea and the Amhara region leave Tigray, it will not be possible to completely disarm Tigrayan combatants. He added that despite the lack of support from the federal government, the interim administration has already disarmed about a hundred thousand combatants. Debre-Tsion explained that the federal government assumes the primary responsibility for ensuring that Eritrean and Amhara forces leave the region and for implementing the Pretoria agreement, which ended the two-year-long war between the TPLF and the federal government.

They entered the news again last week. This time it was about the TPLF’s representation in the federal government. The TPLF brought up this matter in a conference last week evaluating the implementation of the Pretoria agreement. Additionally, the TPLF requested the federal government to release Tigrayan members in the national armed forces, re-register TPLF as a political party, and reinstate displaced Tigrayans. After the conference, it was announced that an agreement was reached to resolve these issues after a series of political discussions. The next meeting evaluating the implementation of the agreement is slated for November this year.

The National Bank of Ethiopia and the Central Bank of the United Arab Emirates (or UAE) signed agreements on Tuesday the 16th which will establish a framework for the use of local currencies on cross-border transactions, interlinking payment and messaging systems. This currency swap deal will allow the UAE and Ethiopia to swap their local currencies for a value of up to forty-six billion Ethiopian birr or eight hundred million US dollars. Another agreement that the two central banks signed aims to encourage the use of their local currencies in settling their transactions. The agreements, overall, are set to enhance financial cooperation ultimately leading to the development of the two countries’ financial markets and to the increase of bilateral trade and investment.

The Addis Ababa City Administration revealed its proposed budget for the upcoming twenty twenty-four, twenty twenty-five fiscal year, which is almost a quarter of a trillion birr or about four billion US dollars. The proposed budget indicates an increase of over a third of the previous fiscal year’s budget; the rise has been attributed to capital projects that the government is working on. Aside from mega projects, the budget will also be used for job creation, social sector development, and city reform.

Abiy Ahmed, the prime minister, appointed Takele Uma, the former Addis mayor and minister of mines, as the CEO of the Ethio-Djibouti Railway. The company was formed six years ago as a joint venture and operates the seven-hundred and sixty kilometers long electrified railway that connects Ethiopia to Djibouti’s seaports. It transports a hundred and twenty thousand people as well as two million tons of cargo every year. Takele took to his social media accounts to thank PM Abiy for the appointment and said it was an honor to serve the country once again. Takele replaces the former CEO who was recently appointed Executive Director of the Institute of Foreign Affairs.

There was even more change in Prime Minister Abiy Ahmed’s cabinet, as he replaced the Ministers of Trade and Culture. The former Minister of Culture has been appointed as an advisor to the PM’s office. His replacement is Shewit Shanka, chairwoman of the Urban, Infrastructure and Transport Affairs Standing Committee of the Parliament.

Moving on, the Ethiopian Capital Market Authority has issued a directive that will allow it to grant licenses for securities exchanges, derivatives exchanges, and over-the-counter markets. The directive, effective starting from Tuesday the 16th, lays out the paperwork and other prerequisites needed to obtain a license to engage as a securities exchange. Previously, securities were being sold and bought in a fragmented manner which did not ascertain the security of parties involved. Officials of the Authority say this directive will fix this and bring about a comprehensive, safe trading platform. The Ethiopian Securities Exchange, a share company, will benefit from this directive as Ethiopia prepares to launch its first-ever stock exchange. Note that Ethiopia remains the only country among the five biggest economies in sub-Saharan Africa without a stock market.

Speaking of the stock market, Frehiwot Tamiru, the CEO of Ethio Telecom, an Ethiopian telecommunication company, revealed that the company has completed preparations to sell ten percent of its shares to the public. She said that the asset valuation is complete and shares will be available for sale soon. Other government officials have also told media outlets that Ethio Telecom will change its form of company and it will go from being a corporation to a share company. They also said that although the government had plans to sell thirty-five percent of the shares to foreign investors, this figure will be significantly scaled back after observing the results of opening the telecom sector to foreign companies.

From an efficient government entity to another that is known for its corrupt practices, the Immigration and Citizenship Service said on Friday the 12th that it has lifted travel restrictions imposed on about ten thousand individuals. The Service’s director general said these restrictions date as far back as nineteen ninety-four and were imposed on these individuals because they posed risks to the country’s peace and security. She added that the restrictions have been lifted after the Service determined that these individuals don’t pose as much risk anymore. She also talked about how the Service has improved since her tenure as director general began recently. The Service has collected almost fifteen billion birr or more than two hundred and fifty million US dollars in the budget year that just ended.

The Commercial Bank of Ethiopia announced on Friday the 12th that it has raked its highest-ever amount in profits before tax this fiscal year - a significant twenty-six billion birr or more than four hundred and fifty million US dollars. The Bank’s president said that this successful year came about as a result of several reforms and cost-cutting strategies which helped decrease the amount of non-performing loans to a little over two percent. This year alone the bank loaned out over two hundred billion birr or almost four billion US dollars. Recall that the Bank had a system glitch that allowed customers to withdraw more than what they had in credit, the incident dominated headlines at the time, but the Bank managed to get the situation under control.

In sports news, the winners and runners-up of the country’s top-flight football competition Ethiopian Premier League, which have clinched spots in continental competitions CAF Champions League and Confederation Cup, found out who they will face off against in the preliminary rounds of these competitions. The Confederation of African Football (or CAF) held the draw this past week; league winners Commercial Bank will face Uganda’s SC Villa Jogoo late next month and runners-up Ethiopian Coffee will face Kenya Police.

Finally, in Ethiopia, Moha is the company that exclusively supplies world-famous Pepsi products. But in the past few years, the company has faced serious challenges and was on the verge of shutting down its factories. However, it solved its structural problems and production has begun again. In spite of this, the company’s general manager announced recently that the company is laying off several of its workers. Although in the letter announcing the layoff the company said each employee has received a two-month notice, the workers laid off are not content. They said that they were going to sue the company seeking either reinstatement or compensation. Moha is a subsidiary of Midroc Investment Group, a company that Sheikh Mohammed Hussein Al Amoudi, the country’s richest man, owns.

Aaand that’s it for this week! Thank you for joining us!

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