Welcome to Addis Fortune's weekly digest of major economic and business news. This week's headlines feature Africa's insecurity undermining growth, a woman suing BGI Ethiopia alleging fraudulent share transfer, central bank reforms shaking up the banking industry, right-of-way compensation payments being transferred to regional states, and Nib Bank's executives clearing house in an attempt to rebrand.

The African Development Bank (AfDB) President Akinwumi Adesina (PhD) expressed deep concern over escalating insecurity across Africa, emphasising the impact of terrorism, ethnic conflicts, and fragile states on investment. Insecurity in sub-Saharan Africa surged from 34,848 events in 2022 to 38,327 in 2023, resulting in over 59,000 fatalities and 40.4 million displaced persons, primarily due to conflict. Adesina supports the idea of a political risk insurance facility tailored for Africa to reassure foreign investors and create a more predictable investment environment. He emphasised that an African credit rating agency could provide fairer assessments, enhancing creditworthiness and facilitating investment in infrastructure and development projects. Kenya's President William Ruto proposed establishing an African credit rating agency to counter perceived biases from global agencies, which he believes exaggerate African economies' risks. This proposal aims to offer more accurate assessments, potentially reducing borrowing costs and improving access to capital.

Regulators at the National Bank of Ethiopia (NBE) are gearing up to open the country's banking sector to foreign banks, discussing reforms on entry modalities, acquisitions, and corporate governance with local bankers. They presented draft legislation to boost competitiveness and stability, outlining four entry options for foreign banks: setting up a subsidiary, opening a branch, establishing a limited-function representative office, or buying up to 40pc shares in local banks. Bankers have expressed concerns about regulatory challenges and emphasised the need for foreign banks to serve rural areas and retail customers, not just corporate clients. While supporting the changes, they caution that the timeline for reform needs careful consideration. The banking sector is poised for transformation as it opens to foreign investment, promising increased competition and expertise while maintaining local banks' stability and independence.

In a high-stakes legal confrontation, a businesswoman emerged from the shadows, taking on BGI Ethiopia and its affiliates, alleging an unlawful seizure of her ownership stake. Her legal team pleaded to a court to restore her shares, reinstate her role, and compensate her for unpaid dividends. Eighty-year-old Zewudnesh G. Asrat has taken legal action against BGI Ethiopia, Jean P. Blavierre, Brasseries International Holding Limited (B.I.H), and Hebu Properties Limited, seeking 8.28 million Br for a 27pc ownership stake she claims was unlawfully taken from her. The affidavit, filed on Friday, May 31, 2024, before the special commercial bench of the Federal First Instance Court, will be adjudicated by the court. Her legal counsel has pressed for judges to summon the first defendant directly and deliver the summons to the third and fourth defendants through the first defendant. In her plea, Zewudnesh appealed to judges to restore her as the share owner in BGI Ethiopia and order the payment of unpaid dividends from the time the shares were “unlawfully transferred.” She also seeks a court order for a criminal investigation into the defendants' “fraudulent activities,” including preparing “false documents and unauthorised share transfers.”

The responsibility for right-of-way compensation payments is being transferred to regional states, relieving federal authorities of this duty. This change aims to end the current practice where wereda-level officials conduct evaluations and then obtain the payments from federal authorities. Concerns were raised about possible violations of jurisdiction if the ability to obtain legal rulings is transferred from regional states. Another shift in the amendment is removing the right to place a court injunction on the funds of a federal office by a regional court. All bank account freezes of federal institutions would need the president's approval of the Federal First Instance Court. Similar instances of exaggerated compensation claims were common among Administration officials, currently dealing with court disputes amounting to eight billion Birr.

Executives of Nib Bank are looking to rebrand the first-generation financial institution's reputation on customer service and address liquidity issues. Upon taking the helm of leadership three weeks ago, Emebet Melese (PhD) wasted no time in terminating 10 high-level executives, including three of her vice presidents. The bold move was taken by surprise in the industry where human capital competition is currently heated up. The Bank provides daily status reports to the central bank on key account balances, including its advanced fund utilisation. An internal assessment based on the recommendations of the central bank's ongoing investigation resulted in the termination. However, some raised a question of impartiality, as the staff involved in the assessment had previous relationships with the executives. Industry veterans applauded the recent moves while recommending caution, considering training attempts in case of leadership issues. However, Nib's troubles partly stem from a liquidity challenge, which resulted in the Bank borrowing around 2.5 billion Br from the NBE amid a serious cash shortage.