Welcome to the latest edition of Addis Fortune's Weekly Digest, where we present an engaging and comprehensive roundup of our top five stories. We cover a range of topics, including in-depth analyses of significant economic developments, trends and forecasts, insightful updates on policy, detailed reports on business and investment opportunities, and compelling stories. Addis Fortune remains your go-to source for reliable news and expert analysis.
In a bold move signalling a shift in the monetary policy, Mamo Mihretu, the governor of the National Bank of Ethiopia, outlined a comprehensive three-year strategic plan to overhaul the financial regulatory framework, coming 10 months into his tenure. A crucial component of Mamo's plan dwells on a thorough overhaul of the central bank's internal processes, including human capital recruitment, legislative reforms, and a significant push towards digitisation. These reforms are seen as vital steps in improving the central bank's regulatory capacity, operational efficiency and responsiveness to the dynamic economic environment. The Governor's strategic plan is also designed to address these critical issues, setting an ambitious target of reducing the inflation rate to 20 percent by the end of next year. Economists are far from impressed with his ambitious inflationary targeting, questioning his claim that inflation has dropped by five percentage points. According to a macroeconomist, monetary policy measures take time to be effective because economic agents' behaviour does not change overnight.
One of the largest brewing companies, BGI Ethiopia, is in the throes of a major transition that has spurred unrest among its workforce, while relocating its operations from its 30,000 square meter facility in Mexico Square to Meta Abo, in the outskirts of Addis Abeba. The brewing behemoth, with around three decades of operation and owning six of the largest brewing plants, includes the iconic Saint George Beer brand that has been a staple for over a century. The management's announcement exacerbated the anxiety of workers who now find themselves in a precarious position. They face the dilemma of either adapting to a reform that seems uncertain at an unfamiliar location or risking termination with what they perceive as inadequate severance packages. The announcement was the tipping point for a group of workers to strike in protest against the company's policies. In response to the strike, an emergency meeting was convened where the company's executives' hope to pacify the distress fermenting for the past two months was dashed.
In a bid to meet the growing demands of Ethiopian farmers, Minister of Agriculture, Girma Amentie is leading a charge to procure 14.8 million quintals of fertiliser, with hopes of averting the shortage which was pronounced last year. The strategy includes a new procedure introduced by the Finance Ministry, which encompasses direct purchases, private imports, restricted bids, and government-to-government transactions. State Minister for Agriculture, Sofia Kassa, stressed the critical need to diversify procurement sources. She hopes the diversified approach leverages competitive international prices and ensures fertiliser availability for farming seasons, such as the planned summer wheat irrigation. It is essential for tapping into more favourable international market conditions, according to Sofia, who revealed that two million quintals of fertiliser had already arrived at Djibouti ports, with a total of 3.7 million quintals expected to be distributed to regional states by the following month.
Navigating through turbulent financial waters, the Bank of Abyssinia has announced a significant profit increase of 19.6 percent, reaching an impressive 3.87 billion birr, for the ended year. In the words of its Board Chairman, Mekonnen Manyazewal, the result is a remarkable feat of financial agility. While the profit growth despite facing daunting foreign exchange constraints is commendable, the slowdown from the previous year's impressive 141 percent increase was noteworthy. A key strategy that paid off for Abyssinia was a sharp focus on interest income, witnessing a 46 percent growth. Its President, Bekalu Zeleke, said the strategic move was vital in offsetting the ongoing losses in foreign exchange, an area that continues to challenge the Bank. Abyssinia Bank's aggressive expansion strategy, marked by the opening of 123 new branches, demonstrated a determined push for growth. Its workforce grew significantly, with 2,145 new employees joining, bringing the total staff count to 11,508. However, it is not without its costs, as the Bank struggled with increased expenses in administration and human resources in a highly competitive market.
Ethiopia's accession to the regional trade area overlaps with the leather industry struggling with policy fragmentation and loose value chains, while subpar products plagued the international market. Although there are 18 operational tanneries, 21 footwear and 25 leather product manufacturers, one of the oldest industries is grappling with export earnings that dropped threefold over the past five years. Representatives from the Ethiopian Leather Association gathered to discuss the prospects and pitfalls of the sector, as Ethiopia has sent initial tariff offers of 6,402 trade goods to the African Continental Free Trade Area secretariat in Ghana as the 47th country. In the offer, 448 goods made the seven percent sensitive list while 192 goods are under the three percent exclusive list. Leather has been deemed in products slashing duties under 90 percent which will be implemented in the next 10 years. The payment system once the participation of African Continental Free Trade Area is fully realised was a popular question raised indicating that African countries lose over 5.2 billion dollars annually while converting local currencies.
That’s all for today. We’ll be back with more updates next week.
May good luck and fortune always be with you.