Ethiopian prime
minister Hailemariam Desalegn in his second ever pres conference spoke of his country’s progress to
local and foreign media. He admits bureaucratic inefficiency and fiancé are the
bottleneck to Ethiopia’s decline in export. Which is one of the reasons why the
country is experiencing shortage of foreign exchange reserve. In July it only
had 2.3 billion Dollars, which is only good enough to buy two months of
imports. Apparently according to Ethiopia’s Finance & Economic Development
minister Ms. Sufian Ahmed the issue is expected to last much longer than the
next few years. Production of textile and leather are the hopeful goods to
bring in some foreign reserve. The premier also said, encouraging means to
increase remittance as well as encouraging the manufacturing sector with
finance will be other means to help over come the challenge.
The weakness of the private sector has
also been touched on, of which the private sector and some international
institutions such as the IMF blame the government’s policies as source of the
problem. The government’s policy forcing private banks to allocate 27% of their
loans to buy cheap government bonds and the central banks directive which
restricts 40% of the loans that private banks receive to be a short term one
year period loans are seen as significant challenges. As a subsequent some say,
the private sector loaned only 44.5 Billion Birr compared to the loan the
government banks gave which was 83.4 Billion Birr in the FY 12/13. The
government defends this by saying some of the things that the government loaned
should be considered as private such is the 14 billion Birr that was given to
farmers.
A summary of an article by Fortune’s
Managing Editor Tamrat G. Giorgis.
I recommend visiting Addis Fortune's website and read two informative articles titled "Links to Vision 2025 Call for Rethinking
Finance" and "NBE’s New Directive Lifts Microfinance paid up
Capital to Two Million Birr"
Cheers,
Daniel
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