ETHIOPIA: National Bank auction & more – 8th Aug 2024

Salaam salaam from BA! This is the Rorshok Ethiopia Update from the 8th of August twenty twenty-four. A quick summary of what's going down in Ethiopia.


The macroeconomic reform which stipulates that the country’s currency Birr should float has been the talk of the town for the past week. The exchange rate of the birr against the US dollar and other foreign currencies continues to come crashing down. Last week, we told you that the one US dollar was being sold for about eighty birr but as of Wednesday the 7th, the birr’s market value has plummeted even further; one US dollar is being bought for over a hundred birr. This comes after Prime Minister Abiy Ahmed said in an explanation session last week on Thursday the 1st that it is imperative to narrow the gap between bank rates and black market rates. In the black market, one US dollar is going for about a hundred and twenty birr, but the official market is catching up.

Prime Minister Abiy also addressed concerns about the reform saying that the government decided only to unify the black market and the official market, and has not devalued the birr. He said the decision was a tough pill to swallow and that the government knows that this change will severely affect residents. He also talked about how a task force has been established to monitor and take measures against individuals who are trying to exploit the public using this development. He added that subsidies will also be set in place; government workers will see their salaries grow significantly, and fuel and fertilizers will continue to be subsidized.

Speaking of fuel subsidies, the National Bank announced that the Ethiopia Fuel Supply Enterprise will receive about 670 million US dollars so that it can settle its payment obligations. This foreign currency supply will help the Enterprise catch up with the newly set market rates, pay its debts, and bring in fuel for this month. The National Bank also announced that it is going to auction off a significant amount of foreign currency to commercial banks. Although the Bank didn’t reveal how much foreign currency was up for grabs, it did say that from the total amount available for auction, a single commercial bank can win only up to 20%.

The auction was held on Wednesday the 7th and almost all the commercial banks in the country, about twenty-seven, participated. The auction fetched an average of almost 108 birr for one US dollar, a bit higher than what the banks are buying the US dollar for. The winning banks and the amount of US dollars that they received have not been revealed.

There is more news on foreign currency exchange as Ethiopian Airlines revealed that it will be using the foreign exchange rate of the Commercial Bank of Ethiopia when it charges its customers in birr. The company fixes its prices in US dollars but customers can also pay in birr using the Commercial Bank’s rates. The company’s PR head said this means that due to the floating of the birr, prices will fluctuate very frequently. She also said the company will try and keep prices stable and fair.

And for our final news in relation to the new foreign currency administration policy, individuals who have purchased homes from real estate developers agreeing to pay in the prevailing exchange rate of the US dollars are in distress. They say that the new reform is going to severely affect them because they are going to be forced to pay double the amount in birr compared to what they were going to pay prior to the policy decision to float the birr. Certain real estate developers claim that they will accept payment in accordance with the exchange rate prior to the decision to float the currency.

Taye Dendea, Former State Minister of Peace, has been in prison for more than eight months now. He was charged with disseminating propaganda messages in support of anti-peace forces and possessing weapons without a license. On Tuesday the 6th of August, he had his day in court as he appeared before the Federal High Court to defend himself against these charges. The Court examined evidence that the prosecution produced and decided to acquit Taye on the propaganda charges saying that he was well within his constitutional rights when he made critical remarks against the government. However, the Court decided that there was enough evidence to warrant a defense on the unlawful possession of arms charge. Taye will remain in custody as his request for bail was denied.

Individuals like Taye with cases in federal courts will have to wait because the Federal Supreme Court announced on Tuesday the 6th that for the next two months, all federal courts will be partly closed. This is because there is a law that states that due to the complex and demanding nature of judicial services, judges will have to take a break for two months every year. For urgent matters such as injunctions, divorce, and bail, some judges will still be presiding over cases. The Supreme Court also said federal courts have adjudged over 170,000 cases over the budget year, an 88% execution rate.

We have more news on legal disputes, as a US law firm representing the victims of the twenty nineteen Boeing 737-Max plane crash in Ethiopia said it will sue Boeing for fifty-eight billion US dollars in compensation. Currently, there’s a plea deal between Boeing and the US Justice Department in which Boeing pleads guilty to a criminal fraud conspiracy charge and is ordered to pay about 350 million US dollars. The firm wants this deal to be set aside as it does not reflect an adequate amount to punish the extreme criminal conduct of the company whose aircraft had issues in the manufacturing process. Recall that the accident killed 149 people right outside Addis Ababa in March twenty nineteen.

China has been Ethiopia’s partner for a long while now and their bilateral relationship has gotten stronger over the years. The former Chinese Ambassador in Ethiopia was Zhao Zhiyuan and after serving for three years in the country, he vacated the post to become China’s assistant foreign minister. His replacement Chen Hai was appointed on Monday the 5th when he presented his credentials to the Director General of Protocol Affairs of the Foreign Ministry. The Chinese Embassy in Addis said the new ambassador feels that it’s a great honor to be the sixteenth Chinese Ambassador to Ethiopia

Usually, in the Olympics, Ethiopian athletes are household names and they bring in several medals every four years but it seems this year’s Paris Olympics has not been so great for Ethiopia. The Ethiopian team has only managed to bring in two silver medals so far, with Tsige Duguma coming in second place in the women’s 800 meters on Monday the 5th and Berihu Aregawi doing the same in the men’s 10,000 on Friday the 2nd. The women’s 5,000, in which Ethiopia usually wins medals, was very disappointing; Ethiopia’s athletes came in fifth, sixth, and eighth. There are still a few more opportunities for Ethiopian athletes including the men’s and women’s marathons.

And for our final update, still at the Olympics, Ethiopia had three athletes compete in the men’s 3,000-meter final on Wednesday the 7th, but there was no luck there as well. What was surprising and sad was that in the final lap of the race, Ethiopia’s Lemecha Girma stumbled on the hurdle and got injured. Lemecha is the world record holder in that distance and experts believe that had it not been for that unfortunate stumble, he could have brought home the country’s first gold medal in the Olympics. Lemecha was taken to the hospital immediately, followed his treatment, and is doing well.

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

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Ciao!