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  • JAPANESE GIANT NEC ENTERING TELECOM FRAY

    JAPANESE GIANT NEC ENTERING TELECOM FRAY 01 Jul, 2017

     
     

    Nippon Electric Company, Ltd. (NEC) has become the latest firm bidding Ethio Telecom’s multi-billion birr demand-based expansion project, The Reporter has learnt.

    The coming to the scene of the Japanese firm brings to the fray yet another competitor to the bid that had already attracted Chinese giants ZTE and Huawei as well as Sweden-based Ericsson.

    Ethio Telecom’s expansion projects have for the past few years been fiercely contested by the Chinese duo.

    In an exclusive interview with The Reporter on Wednesday, Ethio Telecom CEO Andualem Admassie (PhD) revealed that the latest telecom expansion project, which he branded as ‘demand-based expansion’, attracted some ten bidders to the floated expression of interest (EoI) for the project.

    However, only four of them that have met the required standards and terms issued by Ethio Telecom were shortlisted, the CEO told The Reporter.

    According to the CEO, one of the short-listed bidders is the Japanese firm NEC, which is taking part in a local bid for the first time while the other short-listed companies are the two Chinese giants and Ericsson.

    He further indicated that his company was engaged in negotiations with four of the short-listed companies as regards financial matters as well as agreement frameworks.

    He, however, refrained from disclosing specific details with respect to the bidders, but expressed hope that the winning party would be declared before long.

    He also hinted that the would-be-commenced expansion project might also introduce a 5-G networking system, at least on a trial basis.

    In the coming one or two months, negotiation is going to be conducted with the four short-listed bidders on the Request for Proposal (RfP) in addition to on how to secure financing, he said.

    He also indicated that the speed of negotiation with them depends on their respective proposals and RfI (Request for Information) in which the client could demand further information from bidders for they have different kinds of network solutions on offer that can include lists of specific technology, quality and type.

    From past experience, the current bidding process is expected to be fiercely competitive among the two Chinese giants as well as Ericsson and new-comer NEC.

    According to information obtained from NEC’s website, the Japanese company supplies equipment required for network implementation to telecom carriers, along with network control platform systems and operating services.

    In another news, Andualem indicated the current telecom network coverage in the country reached 85 percent while the total number of mobile phone subscribers is some 58,000.

    He also told The Reporter that the shortage of vouchers particularly the low-price top-up cards (worth 5 and 10 birr) has been addressed. He, however, noted that there was no shortage of cards in the country.

    “All the cards were in the hands of distributors. The problem was caused when distributors tried to hoard cards; yet there was no practical shortage in the country,” Andualem explained, adding the hoarding had come after a rumor circulated that Ethio Telecom had run out of stock.

    However, he did not deny there were still shortages, specifically 5-birr and ten-birr cards compared to higher denomination ones (worth 25, 50 and 100 birr).

    He also noted that measures had been taken against some distributors for their role in creating an artificial shortage.

    Among other factors that contributed to the shortage of cards, Andualem mentioned shortage of foreign currency.

    He pointed out that there was an undue delay in obtaining foreign exchange that prevented his company from importing cards.

    “The mobile card is our blood. Our survival mainly depends on the sale of mobile cards. Hence, when we face shortage of cards, our existence will be at stake,” he said.

    He further disclosed that the shortage of the two small-denomination cards is fueled by the fact that the majority of subscribers opt for them. But cards valued 50 and 100 birr are still in stock in bulk as demand for them is low. He further noted that since last week 140 million birr worth of 5-birr and 10-birr cards have been dispatched to all regional states through the post office as well as via chartered planes.

    Andualem told The Reporter that with a view to addressing the problem, the government was considering the possibility of assigning the task of printing voucher cards to local companies.

    “We have few local companies that expressed interest to print the voucher locally. In fact, it is not for us to decide. But I hope that we would be able to produce it here in our country,” he said.

    Still explaining alternative remedies to curb the shortage of airtime for mobile users, he added that electronic top-up system is being tested which the service has already piloted in some of the firm’s 240 stations in Addis Ababa and across the regions.

    The electronic voucher system is a new marketing scheme whereby customers can pay for airtime with a machine planted in selected time and they immediately receive text messages on the amount of the airtime service they are seeking.

    In a related news, Debretsion Gebremichael (PhD), minister of information and communication technology (MoICT), announced on Wednesday the government is yet to assign a new board chair and members for Ethio Telecom.

    Over the past 10 months, the government-owned telecom firm has been operating without a full board after its former chairman, Tefera Derbew, former minister of agriculture, left his ministerial position in favor of a new advisory role at the PM office.

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  • NBE RECONSIDERS BANK INVESTMENT LIMIT

    NBE RECONSIDERS BANK INVESTMENT LIMIT 01 Jul, 2017

     
     

    The National Bank of Ethiopia (NBE) revises its directive which limits the investment portfolio of banks to 10 percent of their overall equity investment. The new directive states that although the 10 percent limit is still there, NBE will henceforth retain the right to waive the limit on a bank-by-bank basis as it sees fit.

    For years, banks were allowed to invest up to 10 percent of their net worth in all non-bank businesses, including insurance companies. 

    However, the newly revised directive which became effective since the beginning of June, 2017 gave the central bank the power to lift the investment limit when it deems it necessary.

    “Notwithstanding the 10 percent limit, the National Bank may waive the investment limit where it deems necessary,” reads the article.

    This gave the central bank the power to regulate commercial bank’s investment based on their respective performance, said a senior banker working at a private bank.

    One of the basic reasons behind placing cap on the investment portfolio of banks is risk, comments one former bank director. “There are areas of investments which are risky and may lead banks into failures,” he said.

    The amended directive kept the basic provision which is commercial banks are not allowed to invest more than 10 percent of their net worth in real estate acquisition and development, other than for own business premises, without prior approval from the bank regulator (NBE).

    Similar to the same directive introduce in 2015, the amendment is aimed at setting aside bank’s direct engagement in insurance business.

    “No bank shall directly engage in insurance business. However, a bank may hold equity shares not exceeding 5 percent of an insurer’s subscribed capital in a single insurance company.”

    The new amendment has not yet clarified how these exception are applied and who will be the beneficiaries of this directive. And where will the NBE be forced to waive the limit.

    The specific article is open for different interpretation.

    “I see in both ways,” said another CEO of Bank whose name withheld upon request.

    One is that when the central bank says it may lift the 10 percent limit this might be to allow private banks to invest their money in government projects beyond the mentioned investment limit.  The way around this specific provision gave the central bank a power to force some of the banks from investing, explain the CEO.

    Since the financial opening in 1994, Central Bank has introduced three similar directives concerning limitations of investment of banks. The first was introduced back in 1996 where it introduces much relaxed provisions.

    In this respect bank were not allowed engage in insurance business but may hold up to 20 percent in an insurance company and up to a total of 10 percent of the bank’s equity capital in such business.

    The banks were also allowed to hold shares in a non-banking business only up to 20 percent of the company’s share capital and total holdings in such business shall not exceed 10 percent.

    Moreover, 1996’s directive prohibited banks from engaging directly in non-banking businesses such as agriculture, industry, and commerce.

    Currently, there are now 16 private banks operating in the country with a total capital of 43 billion birr as of June 30, 2016. 

     

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  • SINGLE-WINDOW SYSTEM TO IMPROVE LOGISTICS

    SINGLE-WINDOW SYSTEM TO IMPROVE LOGISTICS 01 Jul, 2017

     
     

    In a bid to transform the logistics industry, Ethiopia is to kick of a USD 32 million project which will help the country establish a single-window service system.

    The Single-Window System is said to be critical to relieve the bottlenecks surrounding export and import of items into and from Ethiopia.

    The project, which will be executed in two phases, is estimated to be completed within four years; and is financed by the World Bank Group (WBG).

    A national committee chaired by Prime Minister Hailemaraim Desalegne will oversee the Single-Window System project.

    It is to be recalled that in April, 2017, the WBG has approved USD 150 million in financial assistant to improve the efficiency of the overall trade logistics system in Ethiopia which includes the Modjo Dry Port facility.

    A company from South Korea has been selected to undertake the implementation of the project and a contract agreement between this company and Ethiopian government has been signed recently.

    The implementation of this Single-Window System will considerably shorten the timeframe to obtain document clearances during import and export.

    A number of studies conducted in Ethiopia’s trade as well as transport and logistics industry indicate that the sector is still suffering from a number of shortcomings.

    For instance, a recent World Bank report puts Ethiopia’s logistic services sector at a lower rank compared to both the international and the Sub-Saharan standards. For example, in order to complete a single custom clearance process, one has to pass through 103 procedures and shuffle around some 21 documents, the report indicated.

    It will at least take 42 to 44 days, according to WB’s survey, to import containers. This is still behind the sub-Saharan standard.

    This particular project will connect close to 40 government agencies which are involved in the logistic value chain. In this regard, the first twenty agencies will be integrated during the first phase; and the remaining in the second.

    Agencies such as Ethiopian Revenues & Custom Authority (ERCA), Ministry of Finance & Economic Cooperation, Ministry of Trade, Ministry of Industry, and Ministry of Agriculture & Natural Resource will be linked with banks and insurances via the single-window system.

    “We have almost completed all the needed preparation concerning the project,” said Debelle Kebata, director for Branch Operations Assistance at ERCA.

    So far, a project office which will oversee the implementation of the project has been established. Moreover, different studies on the current trends of the Ethiopian logistic industry and what it ought to be are being conducted, at the present. Again, action plans and selection of activities has been completed.

    “We are only left with one national committee meeting,” said Debelle. “After that, we will officially launch the project”.

    Purchase of information technology equipment will be next on the to-do list, according to Debelle.

    “This is something that we have been waiting for, for a long time,” said Mulugeta Assefa, president of Freight Forwarders and Shipping Agencies’ Association.

    “I hope it will bring a significant change to the industry,” he said.

    Established in 1998, the association strives to achieve a change in the freight forwarding and shipping sector of Ethiopia.

    The association has been advocating for an increased involvement of the private sector in the logistics industry.

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  • CIVIL AVIATION AUTHORITY LAYS CORNERSTONE FOR NEW HQ, AVIATION MUSEUM

    CIVIL AVIATION AUTHORITY LAYS CORNERSTONE FOR NEW HQ, AVIATION MUSEUM 01 Jul, 2017

     
     
    • Plans to restore first aircraft assembled in Ethiopia from Italy

    The regulatory organ of air transport industry in Ethiopia, the Ethiopian Civil Aviation Authority (ECAA) on Thursday laid a cornerstone for a new headquarters building and aviation museum in its existing premise near the Addis Ababa Bole International Airport. 

    The cornerstone was laid in the sidelines of the International Civil Aviation Organization (ICAO) Meeting on Air Cargo Development in Africa held June 27-29 at the Addis Ababa UNECA Conference Hall.

    The Minister of Transport Ahmed Shide, State Minister of Public Enterprises, Getachew Mengiste, and    Olumuyiwa Benard Aliu (PhD), president of the ICAO Council laid the cornerstone for the construction of the new headquarters building and aviation museum. Former President of Ethiopia, Girma Woldegiorgis, former CEO of Ethiopian Airlines, Girma Wake, senior executives of ECAA and the Ethiopian Airports Enterprise and other prominent personalities of the Ethiopian aviation industry attended the cornerstone laying ceremony.

    The planned six storey building, which is estimated to cost some 400 million birr, will have offices, conference halls, aviation training school, aviation museum, sport and recreation centers. The design of the building was conducted by a local architectural firm K2N.

    More than 70 years ago, in 1944, when the Ethiopian Civil Aviation Entity was first established, it had only three full time employees, and was carrying out its duties from a small office in the Golf-club premises.

    Later on, as the duties and responsibilities of the entity increased and the organizational structure expanded, a need arose to transfer the headquarters to the Old Airport where Aviation Regulation, Air Navigation and Airport Services functions were undertaken for a long time.

    Construction of the existing ECAA building was completed in the mid-1970s. Director General of ECAA Wossenyeleh Hunegnaw (Col) said that presently the number of employees and specialized fields have increased so much that office space is becoming a critical problem.

    Though Ethiopia has a long history in the aviation world it does not have an aviation museum that depicts the long history of aviation development.   

    According to Wossenyeleh, aircraft technology was introduced in Ethiopia in 1935 with the assembly of the first aircraft registered as Ethiopia-One. The aircraft was looted by invading Italian fascist forces and it is still found on display at a museum in Rome.

    “We hope that when this new headquarters building is ready for service, it would restore Ethiopia-One to its rightful place besides solving the existing office space problems,” he said.

    Anmut Lemma, promotion and public relations manager with ECAA, told The Reporter that ECAA would soon float a tender to hire a contractor. Anmut said the construction would commence in two months’ time.

    ECAA manages the Ethiopian airspace, provides air navigation service, licenses airlines and aviation professionals, and inspects and certifies aircraft.    

     

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  • KIFIYA, MASTERCARD TO PARTNER IN DIGITAL FINANCE

    KIFIYA, MASTERCARD TO PARTNER IN DIGITAL FINANCE 01 Jul, 2017

     
     

    Four years after building the mechanism for a unified billing system for basic government services such as payment on electricity and water in ‘Lehulu’ in a pioneering private-public-partnership (PPP) Kifiya Financial Technology is teaming up with MasterCard to launch an ambitious plan to integrate and serve an ever-expanding Ethiopian diaspora in a digital driven way.

    This new partnership coincided with the digital Ethiopia conference that runs until tomorrow and where one of the key themes discussed was digital finance. Kifiya hopes the new partnership will produce an affordable and convenient way to serve international clients.

    At the conference, there was a concentrated discussion on an industry that is fast becoming fragmented that is being pushed by various players. The key theme was the need to develop the ecosystem in Ethiopia that connects various stakeholders in the digital payment space.

    Munir Duri of Kifiya and Lehulu was a moderator and hosted industry players such as Amaha Bekele of Deloitte and Peter Gichangi from Safaricom. The gathering heard the noted successes from the East African region specifically of Mpesa, the global renowned mobile payment platform in Kenya were explained. With individuals and the fintechs and financial institutions driving their own agenda, industry experts raised their concern around getting an oversight committee to drive the strategic direction the country should be driving.

    It was noted how cash is still the conventional method of payment in Ethiopia where 95 percent of the population still uses.

    The new partnership of Kifiya and MasterCard was one of the most talked about topic at the conference. Industry experts are challenging why the company is choosing to team up with one of the leading technology companies in the world, blocking banks that do not issue MasterCard cards from being players in the remittance industry now worth billions. Some are also voicing concern the need for an international clearing route, when Ethiopia has just launched a national switch in the country.

    “MasterCard and digital financial service provider Kifiya has partnered to introduce first of its kind consumer to business remittance to pay digital payment platform focusing on Africa with the first toll out in Ethiopia,” Kifiya said.

    However, while the company preached of cash-less society, it still only accepts cash as a payment.

    “Lehulu experience is not a success. Basically it has been done to facilitate and avoid queue in public institutions. But what were done was just the locations but the queue remained,” an observer at the conference told The Reporter. No technology has been introduced that have changed the clients’ experience.”

    Some are also questioning why banks and financial institutions such as Premier Switch Solutions (PSS) or Eth-Switch still not allowed to process utility payments. The new system is also authorizing Kifiya to partake in the remittance business that was once monopolized by banks and not any other private institutions.

    “The merchants are all required by the Ethiopian Revenues and Customs Authority (ERCA) to have electronic cash register with internet connection, so a part of the infrastructure is already there,” an industry player told The Reporter. “Why don't we encourage added values creations to the merchants so that we can build our next financial ecosystem instead of going for specific agents? ERCA as main stakeholder should push for this type of innovation,” he said.

    “There will be changes coming to Lehulu and we will soon be accepting digital payment in three months,” Elfagid Aregahegne, digital payment manager at Kifiya, told The Reporter. “There has been a new eco-system allowing us to move forward with new method of payments.”

    “Customer adoption, development of telecom infrastructures and banks investment in technology which will allow Lehulu to move towards digital payment,” he said.

     

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