Ethiopia’s Real Estate Response to the Recent Foreign Currency Reform

Ethiopia’s Real Estate Response to the Recent Foreign Currency Reform In a major economic move, the National Bank of Ethiopia has shifted from a decades-long, fixed exchange rate to a market-based foreign exchange rate. This reform aims to restore market balance and stability, ushering in a new era for Ethiopia’s financial environment. While the change has sparked debate among economists and business leaders, with public discussions on social media, the real estate sector has not received much attention. The sector may face higher costs due to currency volatility, increasing construction material prices and development costs.This article will explore these impacts and the broad implications for Ethiopia’s real estate market. Real estate in Ethiopia is increasingly attractive for investors seeking to shield their assets from inflation. Recent years have seen significant changes due to economic reforms, a rising middle class, and urbanization. The government has introduced various policies to boost foreign investment, streamline property transactions, and simplify registration, aiming to enhance investor confidence and reduce bureaucratic obstacles. Despite these efforts, challenges remain, such as the 10% investment for banks in real estate and the 14% credit cap imposed by the NBE last year, which has unintendedly impacted bank lending. Additionally, the recent shift to a market-based foreign exchange rate and the near 100% devaluation of the birr present both new challenges and opportunities for the sector. “The shift to a market-based forex rate presents both pros and cons,” said an anonymous real estate developer. “On the positive side, we can now issue our own Letters of Credit (LC) and purchase foreign currency at the official rate and retain, compared to the previous reliance on exporters’ LCs. However, a significant downside is the rapid increase in local market prices; for instance, steel prices have surged from 130 ETB to 180 ETB in just a week.” He added that this new forex policy exacerbates the impact of the existing 14% credit cap, potentially affecting demand in the real estate sector. When evaluating the recent reform, it’s important to consider its effect alongside the ongoing credit cap by the National Bank of Ethiopia. Nathan Wondayehu, a Property Valuer and Civil Engineer at a Private Commercial Bank, states, “In the short term, the real estate market is likely to remain slow if the credit cap persists. According to the NBE’s strategy, the cap is crucial for reducing inflation, leading investors to redirect funds into their businesses instead of real estate. Many are even selling properties to raise capital, resulting in stagnant short-term investment in fixed assets. Long-term buyers, mostly middle- and lower-income individuals, can’t afford high-end properties, which slows the market. The new foreign currency reforms will also impact buyers, particularly those with foreign currency contracts, due to currency volatility. The long-term effects of the reforms are uncertain, but given Ethiopia’s status as a net importer, expecting sufficient foreign currency to offset these challenges is unrealistic. Buyers unaffected by the credit cap and planning long-term investments will benefit greatly, as fixed assets are a key way to protect wealth from the new FYC reforms.” According to Leul Dereje, an experienced real estate consultant, the recent reforms have several implications for the sector. He notes that most transactions are conducted in USD due to sellers’ lack of trust in the birr’s devaluation and the need to import materials. The shift to a market-based forex rate primarily affects buyers with existing contracts, who now pay above 101 ETB per USD instead of 58 ETB. Even if buyers leave the down payment, sellers may struggle to resell due to the birr’s devaluation. Conversely, developers benefit from the dollar’s appreciation by selling at higher prices. He doesn’t anticipate a significant increase in the cost of imported finishing goods, as these are typically bought on the parallel market. Additionally, he points out that the reform will reduce developers’ costs associated with the black market, thereby making transactions appear legitimate. Moreover, Ethiopians living abroad can now safely purchase real estate through the official market, with the gap between the official and parallel markets having narrowed. Nathan also notes that the costs of construction materials and machinery, including rebars and cement, have risen due to increased import prices, which will also drive up rental prices. Buyer sentiment might naturally lean toward investing in real estate due to the Birr’s devaluation, but this is constrained by the availability of liquid cash among high-income buyers. As a result, developers face additional challenges. The Ethiopian real estate market faces affordability issues and struggles to meet the demand from people relocating to Addis Ababa. Leul Dereje cites contracts allowing developers to set prices freely as both barbaric and problematic. He worries that the shift will increase salaries and local prices, inflating real estate costs and complicating pricing for developers. However, he views the situation as short-term, noting, “It will be resolved once the foreign currency market becomes more familiar with the Ethiopian market.” As a direct contribution for the country, He stated that the shift, combined with the open market for foreigners, will be a significant source of foreign currency for the country. Their involvement in the real estate sector will also spur local developers to compete more and offer more affordable housing. According to Andualem Goshu, Assistant Professor at Addis Ababa University, the rise in local market prices will likely impact demand. He draws a parallel with Nigeria, where implementing a market-based forex rate led to a doubling of the parallel market rate, increasing import costs and inflating goods prices. He suggests that unless currency fluctuations stabilize, real estate prices will be affected. In the long term, while investors might be attracted by the depreciation of the birr, developers may shift towards local producers to capitalize on lower costs, thus promoting import substitution. The Ethiopian real estate market is facing a tragedy with the challenge of the NBE’s last year 14% credit cap and the recent shift to a market-based foreign exchange rate. While this reform brings potential benefits, it also exacerbates existing issues, leading to soaring costs and insufficient housing supply. Immediate intervention is crucial to mitigate these effects and address the sector’s dire needs. Experts recommend several strategies to tackle current challenges. The National Bank of Ethiopia should consider easing or adjusting credit caps for certain sectors and promote large-scale affordable housing projects through public-private partnerships, along with providing incentives like tax breaks and low-interest loans. Strengthening real estate regulations by standardizing buying, selling, and renting processes is also advised. Developers should keep informed about capital market and currency trends, adapt their business practices to move away from reliance on contract down payments, prepare for heightened competition, diversify their offerings to cater to different demand levels, and adjust contract terms as necessary. They should also consider using floating birr for transactions and employ a range of marketing strategies to appeal to the diaspora and increase foreign currency inflow. Additionally, assembling a diverse team of professionals can improve operational efficiency and cost-effectiveness. Many buyers are reluctant to read the terms and conditions, which is barbaric. They should thoroughly review these terms when signing an agreement and also keep themselves informed about trends in currency fluctuations and real estate prices. Activating mortgage banking to leverage retirement deposits for long-term home loans could stimulate job creation and address housing shortages. Additionally, strengthening regulations to ensure market stability is crucial. The current inefficiency in real estate services across various ministries suggests the need for a dedicated ministry focused solely on real estate to effectively address these challenges. Furthermore, the country should utilize its land more effectively; currently, only a small portion is cultivated. Expanding cultivation and adding value for export can increase foreign currency supply, reduce the trade deficit, and promote industrial development. As Ethiopia implements this economic shift, understanding the impact of the market-based foreign exchange rate on real estate is vital for stakeholders. Key strategies include investing in local materials and construction innovations to stabilize costs, adopting flexible financing models to widen buyer access, and implementing dynamic pricing to stay competitive. Additionally, training real estate professionals can enhance decision-making and efficiency. These approaches will help Ethiopia’s real estate sector adapt to the reform and explore new growth opportunities. 1 COMMENT Ethiopia’s Real Estate Response to the Recent Foreign Currency Reform - Ethio Diaspora Hub Service August 8, 2024 At 11:38 am […] Click her to learn more […] […] Click her to learn more […] Comments are closed.

Ethiopia Immigration Service Passport Fees Increased by 733%: New Rate Effective Tomorrow

Ethiopia Immigration Service Passport Fees Increased by 733%: New Rate Effective Tomorrow The Ethiopian Immigration and Citizenship Service has announced a revised fee structure for various services, including passport issuance, expedited services, and more. These changes are set to take effect from August 1, 2016, following approval by the Council of Ministers. The updated fees aim to streamline the process and ensure efficient service delivery to the public. New Passport Issuance and Renewal New Passport: The fee for issuing a new passport is 5,000 birr. Passport Renewal: The renewal fee is 5,000 birr. Renewal with Address Change: The fee remains 5,000 birr. Renewal with Name and Picture Change: The fee is 12,500 birr. Expedited Services Expedited Passport (2 Days): The fee for expedited service in 2 days is 25,000 birr. Expedited Passport (5 Days): The fee for expedited service in 5 days is 20,000 birr. Expedited Passport Renewal (2 Days): The fee is 13,000 birr, with an additional cost of 33,000 birr. Expedited Passport Renewal (5 Days): The fee is 13,000 birr, with an additional cost of 28,000 birr. Lost Passport Replacement Replacement Fee: To replace a lost passport, the fee is 13,000 birr. Birth Certificates New Issuance: The fee for issuing a new birth certificate is 3,000 birr. Replacement Issuance: The replacement fee is 3,000 birr. Certificates of No Criminal Record New Certificate: The fee for obtaining a new certificate of no criminal record is 2,000 birr. Certificate Renewal: The renewal fee is 2,000 birr. Residence Permits Residence Permit Issuance: The fee is 5,000 birr. Residence Permit Renewal: The renewal fee is 5,000 birr. Permanent Residence Permit Issuance: The fee is 12,500 birr. Permanent Residence Permit Renewal: The renewal fee is 10,000 birr. These new fees and services will be implemented starting tomorrow, and the public is encouraged to take note of these changes for planning their transactions.

Ethiopia Immigration Service Passport Fees Increased by 733%: New Rate Effective Tomorrow

Ethiopia Immigration Service Passport Fees Increased by 733%: New Rate Effective Tomorrow The Ethiopian Immigration and Citizenship Service has announced a revised fee structure for various services, including passport issuance, expedited services, and more. These changes are set to take effect from August 1, 2016, following approval by the Council of Ministers. The updated fees aim to streamline the process and ensure efficient service delivery to the public. New Passport Issuance and Renewal New Passport: The fee for issuing a new passport is 5,000 birr. Passport Renewal: The renewal fee is 5,000 birr. Renewal with Address Change: The fee remains 5,000 birr. Renewal with Name and Picture Change: The fee is 12,500 birr. Expedited Services Expedited Passport (2 Days): The fee for expedited service in 2 days is 25,000 birr. Expedited Passport (5 Days): The fee for expedited service in 5 days is 20,000 birr. Expedited Passport Renewal (2 Days): The fee is 13,000 birr, with an additional cost of 33,000 birr. Expedited Passport Renewal (5 Days): The fee is 13,000 birr, with an additional cost of 28,000 birr. Lost Passport Replacement Replacement Fee: To replace a lost passport, the fee is 13,000 birr. Birth Certificates New Issuance: The fee for issuing a new birth certificate is 3,000 birr. Replacement Issuance: The replacement fee is 3,000 birr. Certificates of No Criminal Record New Certificate: The fee for obtaining a new certificate of no criminal record is 2,000 birr. Certificate Renewal: The renewal fee is 2,000 birr. Residence Permits Residence Permit Issuance: The fee is 5,000 birr. Residence Permit Renewal: The renewal fee is 5,000 birr. Permanent Residence Permit Issuance: The fee is 12,500 birr. Permanent Residence Permit Renewal: The renewal fee is 10,000 birr. These new fees and services will be implemented starting tomorrow, and the public is encouraged to take note of these changes for planning their transactions. 1 COMMENT Ethiopian Immigration Law Update: Ethiopian Passport and Permit Fee revised August 9, 2024 At 4:35 am […] other immigration-related processes. Accordingly the Ethiopian Immigration Service Passport Fees Increased by 733%. These changes, approved by the Council of Ministers, will be effective from August 7, 2024, and are […] […] other immigration-related processes. Accordingly the Ethiopian Immigration Service Passport Fees Increased by 733%. These changes, approved by the Council of Ministers, will be effective from August 7, 2024, and are […] Comments are closed.

NBE Announces Special Foreign Exchange Auction to Manage Market Dynamics

NBE Announces Special Foreign Exchange Auction to Manage Market Dynamics The National Bank of Ethiopia (NBE) has announced a Special Foreign Exchange Auction scheduled for August 7, 2024. This auction allows interested banks to bid for US dollars, an essential step in managing foreign exchange reserves and ensuring currency stability within the country. Background and Purpose Foreign exchange auctions are a critical tool used by central banks to regulate the supply and demand of foreign currencies, particularly the US dollar. In Ethiopia, foreign exchange is vital for various economic activities, including international trade, debt servicing, and securing essential imports. By conducting these auctions, the NBE aims to allocate foreign exchange resources efficiently, stabilize the exchange rate, and manage the country’s foreign exchange reserves effectively. Auction Details The NBE has outlined specific procedures and guidelines for the upcoming auction: Date and Time: The auction will take place on August 7, 2024. Banks are required to submit their bids between 10 AM and 12 Noon on the auction day. Submission Requirements: Bids must be submitted to the Foreign Exchange Monitoring and Reserve Management Directorate (FEMRMD) at the National Bank of Ethiopia. Each bid must include: The volume of US dollars being requested. The offer price, expressed as Birr per USD, at which the bank is willing to purchase the availed US dollars. Bid Submission Process: All bids should be sent to the designated email address ([email protected]) by a duly authorized bank official. Allocation and Settlement Successful banks will be allocated US dollars based on the bid price they have offered. The NBE has specified that no single bank will receive more than 20 percent of the total funds available at the auction. This measure ensures a more equitable distribution of foreign exchange resources among the participating banks. Additionally, banks are required to settle their purchases on the same day as the auction. The prompt settlement requirement is crucial for maintaining the integrity and efficiency of the auction process. Announcement of Results The NBE will announce the weighted average bid price of all successful bids by 3 PM on August 7, 2024. This information will provide transparency and allow participating banks to understand the auction’s outcome and the market’s overall sentiment. Future Auctions The NBE has indicated that, depending on market conditions, additional foreign exchange auctions may be conducted over the coming weeks. This flexibility allows the NBE to respond dynamically to changing economic and financial conditions, ensuring a stable and orderly foreign exchange market. The Special Foreign Exchange Auction by the National Bank of Ethiopia is a significant event for the country’s banking sector and broader economy. It serves as a mechanism for managing foreign exchange liquidity, stabilizing the exchange rate, and ensuring fair access to foreign currency resources. As Ethiopia navigates complex economic challenges, such auctions play a vital role in maintaining financial stability and supporting economic growth. 1 COMMENT Derbew Hailemariam August 7, 2024 At 12:04 pm Cash economy will be boosted. The purchasing power Birr for local products — agricultural — will be diminished. Cash economy will be boosted. The purchasing power Birr for local products — agricultural — will be diminished. Comments are closed.

Ethiopia’s Economic Surf: Riding the Reform Wave to Sustainability

Ethiopia’s Economic Surf: Riding the Reform Wave to Sustainability By Eyob Asfaw The Sunday night of the date- July 28 was different for Ethiopians living elsewhere within its boundary; especially for the urban elites who access the media and can easily resonate what was said.  On that date, the government unusually released a communique on which announced the macro-economic reforms, including its u-turn policy of foreign exchange liberalization. Henceforth, some commentators and analysts used to reduce the reform as a mere foreign exchange policy per se, other than a complete set of macro-economic policy.  Notwithstanding the criticism over the government surrenders for the Britton Woods Institutions as an impulse for desperate demand for forex currency, once has to look meticulously where the surfing macro-economic reforms are heading to in terms of  bringing social justice, regulating free riders,  ending poverty and taming hyper-inflation. Be that as it may, this piece will cover a snapshot overview that pinpoints on how best anchoring the recent macro-economic reforms in the pathways of Sustainable Development. From the vantage point of pathways of sustainable development, SDG- 1 ( end poverty in all its forms) and SDG-8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all) have a close connection to the recent macro-economic reforms. In its nature, macro-economic reform is a local plan which is not yet sufficiently embraced as a specific goal in SDGs. Exceptionally, SDG 17.13 stipulated:  ‘enhance global macroeconomic stability, including through policy coordination and policy coherence’.  In pursuant to SDG 17.13,  the national ten year plan of Ethiopia has specifically, nevertheless, sought to have coherence and integration with SDGs.  Therefore, policy coherence is one scheme of anchoring the surfing macro-economic reforms. Nevertheless, the people and the business community are looking for a preacher who eloquently explains the economic forecast.  By and large, the rule of the game introduced by this new forex through floating ought to be understood well by economic man to positively regulate its economic behavior. In resonance, I remember an encounter in which an old enough guy once upon a time suddenly yelled to bless youngsters; ‘Let the price of teff go down now by the divine intervention of God!!’ referring an Ethiopian staple crop whose price hiked due to inflation by then.  Understandably, the blessings shows how an ordinary economic man in Ethiopia do not know even what inflation means since it is unlikely to see price decrease in an age of hyperinflation  To his ignorance, I heard an expert was sharing his opinion: ‘ Demn! This forex liberalization resulted all of a sudden the money stock at the bank immediately inflated overnight’.  In contrary, we learnt that such opinion is erroneously forwarded, resulted precisely from misunderstanding what was going on. Arguably, inflation in the past was, and currently is, not a disease per se. Notwithstanding inflations’ multifaceted nature as a viral disease, the consuming community alike sometimes seems to develop an immunity through constant co-habitation with inflation. In the course of this surfing macro-economic reform, real devaluation are nor appearing coincidently the moment forex market liberalized. In his counterparts, the PM explanation during his Q&A session with higher official, can roughly be summed as follows: “ In Ethiopia, apart from fuel and fertilizer, what is not working on the black market? Including clothing…. Let alone that , when the government gives a contract for construction project( such as road) the contractors submit the price interms the black market account….There is no job in Ethiopia that normally costs 50 Birr for 1 dollar. Everything works in black market currency….The government buys fuel and fertilizers. Apart from that, everything else is determined by the black market.” In pursuant to his explanation, PM Abiy claims that the reform was not as such currency devaluation rather it can be taken as ‘unification’ of two forex markets ( be it the ordinary and the parallel-black market). On eve of the reform, indisputably, the export sector was highly discouraged than ever. Precisely his entire earn of USD can only be exchanged at the normal rate closer to 57 ETB/USD. Nevertheless, ‘unification’ is not known within the policy and academic circles, the real inflation was already predetermined by the black market before the current forex liberalization. This is not, however, to neglect the worst inflation upcoming. As anti-dote, the worst inflation can be tamed if we record productivity in investment and intensive agriculture through re-doubling efforts of hard working habits. In fact, the PM Abiy’s characterization on the reforms as bitter pill for the macro-economic malaise could turn out to add a salt into a wounded injury of the poor. A yearlong economic hardship can’t be underestimated for someone who can understand multi dimensionality of poverty. It has be remembered that the 2023 UNDP report underscored 68.7 percent of the population in Ethiopia are multidimensional poor;  involving nutrition, child mortality, years of schooling, school attendance, cooking fuel,  sanitation,  drinking water,  electricity  and housing assets in the measurement. In resonance, the PM Abiy said: ‘no further implementation if the macro economic reform affects the poor after evaluating in six months.” The questions are : are we going to suspend the fight to end poverty while we pay the price of macro-economic reforms?  How far the safety net scheme of this reform is reliable enough to relieve the deprivation to come? Against this backdrop, beyond the salary increment for low income employees, the government ought to disclose procedures that ensure resilience from the inevitable multidimensional poverty resulted in an age of macro-economic reforms. As a general thumb rule, however, we don’t have to forget that the defining major goals of macro-economy are economic stabilization, ­ distributional equity, ­ the achievement of broad social goals. Added to that, the Britton wood institution intertwined macro-economic reform within the framework of sustainable development to include financing sustainable development. Furthermore, macro-economic stability indisputably enhances growth prospects, increases employment and incomes and ensures that the right price incentives work to preserve the environment. .This is, however, not to hide the underlying error of the macro-economic reform provokes legitimate skepticism over the IMF and WBs priority for their intent to bring private sector into the forefront of the economy. How the private sector can be a reliable institution for our struggling economy is a question for many of us. In spite of its contribution, some actors in the private sector turn out to be free riders in the middle of abyss in economic recession. Being reduced to the rules of Mercato (largest open market found in Addis Ababa), the bigger private sector is criticized to be operated by business community ruled by the irrationality leading to monopoly and oligopoly. This feature, indeed, will make the Britton wood institutions’ prescriptive forecast about the private sector a null and void. In this milieu, I would like to forward a query: ‘Are we going to beef up a private sector which is impenetrable for tax extraction?’ Often the government laments that, the government couldn’t proportion tax evasion in spite of its potential to fiscal policy. As an analyst, I can say, that is the imminent danger which are facing to and will persist in the months to come.  Against the abovementioned background, the surfing macroeconomic reforms ought to regulate irrational economic behavior which is a chief reason for impoverishment of many. In short, we need to have the rigor and will to know surfing macro-economic reforms are heading for which eventually it will anchor on the pathways of Sustainable Development.  Be it ending poverty or ensuring inclusive economic growth, fundamentals of social justice ought not to be neglected in an age of fore market liberalization. Eyob Asfaw ([email protected]  ) is staff of Addis Ababa University and currently a PhD student of Sustainable Development at CSD, AAU. His interest includes governance, sustainable development, peace and inclusion.

Genesis Investment Bank Set to Launch with Comprehensive Financial Services Portfolio

Genesis Investment Bank Set to Launch with Comprehensive Financial Services Portfolio Addis Ababa, Ethiopia – Genesis Investment Bank™, a new financial institution founded by Ermias Amelega, is preparing to enter the market with a broad range of financial services. The bank aims to provide comprehensive solutions including underwriting, venture capital, private equity, and asset management, targeting both local clients and foreign investors looking to engage with Ethiopia’s emerging markets. Genesis Investment Bank’s capital raising goal is set at 1 billion birr, a significant increase from the minimum 25 million birr required for an investment banking license. This ambitious target suggests the bank’s intention to establish a strong financial footing and operational capacity from the outset. By attracting substantial investment, the bank plans to support various sectors and drive economic growth through diverse investment opportunities. At a recent briefing, Dr. Mulugeta Mengeste, a representative from Ethio Legal Shield Law Firm, detailed the procedural steps currently underway. The law firm, which provides legal services for Genesis Investment Bank, is overseeing the completion of the registration and licensing processes. Dr. Mengeste reported that these processes are expected to be finalized in the coming week. Subsequently, the application for a Capital Market License will be submitted, with the expectation of obtaining the Investment Banking License within three to four weeks. This timeline suggests that the bank is on track to meet regulatory requirements and begin operations promptly. Genesis Investment Bank’s strategy includes a strong focus on attracting foreign investors. By providing tailored financial services and insights into the local market, the bank aims to bridge international capital with local opportunities. This approach is part of a broader effort to integrate Ethiopia’s financial sector with global markets, potentially increasing foreign investment in the country. The bank’s visual identity, crafted by Identico™, emphasizes a modern and secure brand image. The branding is designed to convey the bank’s commitment to innovation, empowerment, and transparency. This new visual identity is intended to resonate with both potential investors and clients, aligning with the bank’s service-oriented approach. Ermias Amelega has indicated that Genesis Investment Bank will become fully operational within the next six months. The bank’s entry into the market is being closely watched by industry observers, as it could bring new opportunities for investment and economic growth in Ethiopia. Tags asset management ermias amelega Ethio Legal Shield Law Firm ethiopia financial services foreign investors investment banking investment banking license private equity underwriting venture capital

Federal Government Introduces 551 Billion Birr Budget Increase

Federal Government Introduces 551 Billion Birr Budget Increase Federal Government to Present Additional Budget of 551 Billion Birr State Minister of Finance, Dr. Eyob Tekaleni, announced that the federal government will present an additional budget of 551 billion birr to the House of Representatives. This budget, which was approved by the government in June 2017, will bring the total budget for the fiscal year to approximately 1.5 trillion birr, marking the first time the federal government’s annual budget will exceed 1 trillion birr. Breakdown of the Additional Budget Dr. Eyob detailed the allocation of the additional budget, highlighting the following key areas: 240 billion birr will be directed towards “social support,” which includes: Safety net programs Wage increases for workers Subsidies for medicine and oil Fuel subsidies Revenue Adjustments The revised revenue budget will also be presented to the House of Representatives. The federal government’s revenue projection has been adjusted from 563 billion birr to 851 billion birr, despite there being no tax increases. Dr. Eyob emphasized, “Our aim is not to raise funds by increasing taxes or tax rates. Instead, we plan to boost revenue by addressing economic distortions. We will ensure strict enforcement to prevent tax evasion. An investor who previously bypassed taxes will now have to comply with the law.”

IMF Agrees to $950 Million Exemption for Koysha Hydroelectric Dam and Project Completion

IMF Agrees to $950 Million Exemption for Koysha Hydroelectric Dam and Project Completion IMF Support for Ethiopia’s Macroeconomic Reform Program The Board of the International Monetary Fund (IMF) has recently endorsed Ethiopia’s macroeconomic reform program, detailing the decision and the agreements made with the Ethiopian government. A central aspect of this support is the Koysha Hydroelectric Dam project, a pivotal development initiative for the country. Koysha Hydroelectric Dam Project Overview The Koysha Hydroelectric Dam is a landmark project in Ethiopia’s quest to enhance its energy infrastructure and drive economic development. This ambitious project aims to provide a significant boost to Ethiopia’s electricity generation capacity, especially for rural areas that currently lack reliable power supply. The dam is situated on the Omo River, a vital waterway in southern Ethiopia, and is expected to contribute to both rural electrification and regional economic development. Current Status and Construction Progress As of the latest update, the Koysha Hydroelectric Dam project is approximately 66 percent complete. The project has faced several delays primarily due to difficulties in securing sufficient concessional financing. Despite these setbacks, the Ethiopian government remains committed to completing the dam, which is integral to its development strategy. Importance and Benefits The Koysha Hydroelectric Dam is not just a significant infrastructure project; it also plays a critical role in Ethiopia’s broader development goals. The dam is designed to: Enhance Rural Electrification: By providing a stable and sustainable power supply to rural communities, the dam will improve living conditions and support local development. Generate Export Revenues: The dam’s electricity generation capacity will enable Ethiopia to export power to neighboring countries, creating a new revenue stream and strengthening regional economic ties. Contribute to Climate Change Mitigation: Hydroelectric power is a renewable energy source that helps reduce reliance on fossil fuels, thereby contributing to Ethiopia’s climate change mitigation efforts. IMF Agreement and Exemption Under the IMF agreement, the Ethiopian government is generally restricted from taking non-concessional (high interest rate) foreign loans during the macroeconomic reform program. However, an exemption has been granted for the Koysha Hydroelectric Dam project due to the critical need for financing to complete the dam. Details of the Exemption The Ethiopian government has requested to borrow $950 million at market rates for the completion of the Koysha project. This exemption from the usual restriction on non-concessional borrowing is justified by the inability to secure concessional financing for the project. The exemption underscores the project’s importance to Ethiopia’s development goals, including: Rural Electrification: Ensuring reliable electricity supply to underserved areas. Economic Development: Generating export revenues and fostering regional economic integration. Climate Change Mitigation: Supporting Ethiopia’s efforts to reduce greenhouse gas emissions through renewable energy. The project is currently 66 percent complete and has received approval from financial institutions due to its significance in providing electricity to rural communities and contributing to Ethiopia’s economic growth. Funding and Financial Arrangements To address the remaining funding needs for the Koysha Hydroelectric Dam project, the Asset and Debt Management Corporation (LAMC) has announced the issuance of 900 billion birr in bonds. These bonds are a key component of the financial strategy to support the project and address associated debts. Bond Issuance Details The bonds issued are designed to: Guarantee Debt: They will cover the debts of government development organizations, which are crucial for managing financial obligations related to the dam project. Repay Existing Debt: The bonds will address the remaining debt of the Ethiopian Electricity Corporation. Increase Capital Capacity: The funds raised will also be used to bolster the capital of the Commercial Bank of Ethiopia, ensuring it has the financial strength to support ongoing and future projects. Usage of the Bonds The Commercial Bank of Ethiopia will use the bonds to write off 580 billion birr of debt accumulated by government development organizations under LAMC. Additionally, the bonds will enable the bank to repay the remaining 240 billion birr owed by Ethiopian Electric Power. The remaining bond amount will be used to enhance the bank’s own capital. The bonds, issued on June 7, 2016, have a ten-year term. They can be converted into cash either by pledging them to the National Bank or by utilizing them in financial transactions between banks. This flexibility is designed to provide the bank with the necessary liquidity to manage its operations and support the Koysha project. World Bank Loan The World Bank has agreed to provide a $700 million loan to strengthen the Commercial Bank of Ethiopia and the Development Bank of Ethiopia. This loan is essential for supporting the financial infrastructure required to complete the Koysha Hydroelectric Dam project. 1 COMMENT Mohammed Taquee Dambal August 5, 2024 At 6:09 am Requesting for koyaha hydroelectric dam team, I am keen interested for power generation through hydro power. But it seems we can multiply the power generation by adding two units if required. Basically the outward flow of water may be connected to fuel cell, where we can generate only hydrogen gas and run hydrogen steam turbines whenever required and the parallel water desalination for further water supply. Requesting for koyaha hydroelectric dam team, I am keen interested for power generation through hydro power. But it seems we can multiply the power generation by adding two units if required. Basically the outward flow of water may be connected to fuel cell, where we can generate only hydrogen gas and run hydrogen steam turbines whenever required and the parallel water desalination for further water supply. Comments are closed.

Ethiopian Airlines Under Fire: Kenyan Woman Plans to Sue Over Passport Confiscation and Video Deletion

Ethiopian Airlines Under Fire: Kenyan Woman Plans to Sue Over Passport Confiscation and Video Deletion Kenyan Woman Removed from Ethiopian Airlines Flight Speaks Out A Kenyan woman who was removed from an Ethiopian Airlines flight to allegedly make room for a minister has shared her distressing experience, sparking a wave of public outrage. In a viral video, she revealed that despite having confirmed reservations, she and her husband were offloaded and had to wait 24 hours without accommodation or an apology from the airline. She further claimed that their passports were confiscated and videos of the incident were deleted by airline staff. The passenger described feeling “scared, terrified, and stripped naked” due to the treatment she received. Distressed by the lack of apology and communication from Ethiopian Airlines, she is considering legal action. Ethiopian Airlines initially responded to the allegations by addressing the first viral video, clarifying that the removal was due to overbooking and not influenced by a VIP passenger. The airline stated that the couple bypassed security and ignored staff advice, leading to their removal. Ethiopian Airlines asserted that they followed standard protocol and rebooked the passengers on the next available flight. CNN International Journalist Larry Madowo tracked down the passenger, Aisha, and shared her experience on social media, providing additional context to the incident. Madowo tweeted: “Receipts: Ethiopian Airlines called me a liar, so I tracked down the passenger in my viral video who was offloaded for a minister. ET called police on Aisha and her husband, forced them to delete their videos & left them stranded in Addis for 24hrs. They’ve received no apology.” Aisha’s testimony starkly contrasts with the airline’s explanation. While she claims that their removal was to accommodate a minister and involved significant mistreatment, Ethiopian Airlines maintains that it was a standard overbooking issue. The airline’s statement did not address the specific allegations of confiscating passports or deleting videos, which has fueled public concern about the transparency and handling of the situation. The incident has ignited widespread criticism on social media, with many condemning the airline’s treatment of the passengers. Despite the growing outrage, Ethiopian Airlines has yet to issue a detailed public statement addressing the specific allegations made by Aisha. 1 COMMENT Anteneh August 5, 2024 At 11:15 am I had a chance encounter to see the vicious video of the lady. Here is my view. The passenger, initially on the waiting list, boarded the plane without proper authorization. She falsely claimed that she relinquished her economy class seat for a late-arriving minister. However, her account contained several inaccuracies: firstly, Ethiopian staff do not provide such instructions; secondly, an Ethiopian minister, as a VIP traveler, would not occupy an economy class seat; and thirdly, her claim of being stranded for 24 hours contradicts the frequent flights to Nairobi. These are clear evidences that contradict the passenger’s claims. The fabricated allegations are a deliberate attempt to damage Ethiopian Airline’s reputation. I had a chance encounter to see the vicious video of the lady. Here is my view. The passenger, initially on the waiting list, boarded the plane without proper authorization. She falsely claimed that she relinquished her economy class seat for a late-arriving minister. However, her account contained several inaccuracies: firstly, Ethiopian staff do not provide such instructions; secondly, an Ethiopian minister, as a VIP traveler, would not occupy an economy class seat; and thirdly, her claim of being stranded for 24 hours contradicts the frequent flights to Nairobi. These are clear evidences that contradict the passenger’s claims. The fabricated allegations are a deliberate attempt to damage Ethiopian Airline’s reputation. Comments are closed.