Hello, this is Addis Fortune, bringing you the top business news of the week. We touch on the pulse and oilseed exports business, pharmaceutical manufacturers getting preferential access to supply, a World Bank report that predicts Ethiopia's economic setback, Enat Bank's strong financial performance in the ended year and authorities addressing compliance issues which could impact the fresh-cut rose exports. Stay tuned for details into these significant developments.

The Ministry of Trade & Regional Integration has issued a directive requiring exporters of pulses and oilseeds to match or exceed their purchase prices from the Ethiopian Commodity Exchange in international sales contracts. The aim is to control pricing strategies in the export sector, boost export revenues, and prevent the practice of reporting sales of discounted items to fund imports. The government views this practice as a threat to the country's export earnings and warns of administrative sanctions for non-compliance. The new policy diverges from previous attempts to regulate the market and aims to narrow the margin between purchase and sale prices to reduce "imported inflation." While some farmers are hopeful, exporters express concerns over potential impacts on their ability to finance imports and support domestic manufacturing. Critics warn of loopholes, while others advocate for improving the quality of exported goods to secure better prices in international markets.

The Ethiopian government has launched an initiative to grant 17 local pharmaceutical manufacturers preferential access to a multi-billion Birr supply contract scheme. The aim is to boost local pharmaceutical production, reduce foreign currency expenditure on imports, and address foreign currency scarcity in the sector. The Ethiopian Pharmaceutical Supply Services will provide up to 55 percent of foreign currency payments for inputs to these manufacturers. The move is part of a broader strategy to ensure a reliable supply of pharmaceuticals, reduce dependency on imports, and achieve a self-sufficient healthcare system. It has already resulted in signed agreements for two billion Birr worth of supplies. While the plan is lauded for its potential to create jobs and boost the domestic industry, concerns are raised about operational challenges and the need for stringent regulatory supervision to maintain product quality.

The Country Climate & Development Report published by the World Bank indicates that Ethiopia needs billions of dollars in financing over the next 25 years to effectively address the impacts of climate change. The report predicts severe consequences, including reduced agricultural productivity, damage to infrastructure, economic setbacks, and increased poverty levels, if reforms worth nearly 27.6 billion dollars are not implemented. While representatives from the World Bank and International Finance Corporation advocate for a market-led decentralised economy with private sector involvement, Ethiopian officials emphasise the indispensable role of development partners' financing. The report highlights the disproportionate impact of climate change on Ethiopia's lowlands and recommends structural reforms to address macroeconomic instability. Ethiopia has already invested significantly in climate change mitigation and adaptation programs, but the report underscores the need for continued financial support to achieve climate change objectives amid broader economic targets.

With a strong financial performance in the ended operating year, Enat Bank has demonstrated a remarkable 73 percent growth in profit, reaching 543 million Birr. The Bank's earnings per share surged by 54 Birr to 239 Birr, showcasing impressive growth but still lagging behind the industry average. Despite trailing in some financial metrics such as Return on Equity and Return on Asset, Enat Bank's total assets grew by 32.5 percent to 22.8 billion Birr, surpassing some of its peers. The Bank's President, Erimias Andarge, attributed the surge in operational costs to an aggressive branch expansion strategy and defended it as necessary for risk reduction and capability enhancement. Despite challenges in the industry, Enat Bank has maintained a solid capital base with a capital adequacy ratio of 20.2 percent. The Bank faces operational hurdles, including staff shortages and delayed loan repayments, but its commitment to improving service culture and operational procedures remains strong. Enat Bank's strategic expansion and operational adjustments reflect a commitment to sustainable growth and shareholder value, with a focus on community ties and trust among its shareholders.

Ethiopia's agriculture authorities are urgently addressing compliance issues with the European Union's new standard on False Coddling Moth, which could impact the country's fresh-cut rose exports. The Europe union's rules have heightened inspections on cut rose flower exports from countries like Ethiopia, with scrutiny increasing from five percent to 25 percent. The move aims to identify potential contamination by False Coddling Moth before flowers cross the Europe union's borders. Ethiopia's agriculture officials, led by Deriba Kuma, are actively engaging with European regulators to ensure the country's flower production aligns with the stringent requirements that took effect in May. The action plan includes technology upscaling for inspections at airport checkpoints and discussions with federal agencies to improve access to foreign currency for flower exporters. Compliance challenges may increase production costs, making Ethiopian flowers less competitive internationally. Some companies are seeking a prolonged transition period for effective False Coddling Moth control during warm May temperatures, while others suggest exploring alternative markets in the short term.

that’s all for today. We’ll be back with more updates next week. 
May good luck and fortune always be with you.