Zemen Bank's Profit Grew by Two Million birr

Zemen Bank, the youngest but one of the prominent financial firms in the country, has registered two million birr more in profit in the 2011/12 fiscal year than the preceding year.

The bank, which joined the financial market three years ago, has registered 123 million birr in profit before taxes in the last fiscal year, while Zemen’s profit in the 2010/11 fiscal year was 121 million birr before taxes.

According to the statement of the bank, the net profit after tax is 86 million birr and for the second year straight, the bank delivered 58 percent earning per share in returns to its shareholders. In the 2010/11 fiscal year the bank’s net profit after tax was 84.7 million birr, which is 1.3 million birr less than the 2011/12 fiscal year.

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Ermias Eshetu, Vice President of Marketing and Corporate Services of Zemen Bank, informed Capital that, though the bank’s profit growth is slower compared to its previous year’s profit performance, the bank’s investment and capital has been tied up in provisional investment costs of the construction of its future head quarters and the National Bank of Ethiopia (NBE) bonds.  

In the last fiscal year the bank has purchased half a billion birr worth of bonds from NBE and settled compensations and other land deal duties for the plot of Zemen’s 33 storey future headquarters which will be located in front of Addis Ababa University School of Commerce.   
According to the bank’s report, deposit mobilization has grown significantly in the last fiscal year. The statement indicated that it has grown by 54 percent, rising from 1.162 billion birr to 1.792 billion birr, while gross loans surpassed the 1 billion birr mark in June 2012 compared to the 645 million birr a year earlier. Foreign exchange inflow collected by the bank rose to 15 million dollars per month and showed a 24 percent increase from the previous fiscal year. 

The statement of the bank indicated that Zemen Bank attributes its continued strong financial and operational performance partially to its unique business model which relies mainly on a single branch whose activities are supplemented by multiple service points such as ATMs, Internet Banking, Foreign Exchange Bureaus, and Banking Kiosks.  

This distinctive business model has facilitated the rapid introduction of innovative banking services and allowed for low overhead costs, without impacting the Bank’s deposit-taking, lending, and international banking activities.    
According to the report, the rollout of non-branch service centers expanded in 2011/12 and the bank’s six specialized Banking Kiosks are now mainly serving dedicated corporate clients. Usage of other service delivery channels such as ATMs, Internet Banking, and Corporate Payroll services were also expanded. 

Zemen Bank’s ATMs are now being used by over 12,000 customers every month who make over 19 million birr in monthly cash withdrawals and internet banking, which is being utilized by over 3700 customers per month to fulfil their banking needs, including electronic fund transfers to other accounts. The bank’s specialized corporate payroll service benefits over 12,000 employees, ranging from field workers at the nation’s largest commercial farms, to the staff of embassies and international organizations within Addis Ababa. 
In the current fiscal year, the bank is working on several on-going and soon to-be-launched initiatives, including an increase in the bank’s paid-up capital, an expansion of the bank’s unique “Doorstep Banking” services, whereby the Bank delivers or picks up cash from corporate clients who are signed up for the service, and the launch of a mobile banking service, dubbed ‘Z-Birr’, that is to be available to all mobile phone users (pending NBE approval).

Eritreans urged to join hands to oust regime in Asmara

The Eritrean National Council for Democratic Change (ENCDC) has called on Eritreans to join hands in the efforts to oust the dictatorial regime in Asmara.

ENCDC is an umbrella organization of all forces of good political will for change. It is an organization of the willing and represents and struggles for the Eritrean people’s salvation.

“It is time for the youth, women and professionals in Eritrea and abroad to join the struggle as the conditions in that country are getting worse and worse,” ENCDC Chairperson, Tsegaye Yohannes, said at the opening of the Council’s 2nd regular meeting here today.

Since its inception on November, 2011 in Hawassa, SNNP State, the Council has carried out a lot of mobilization works abroad targeting the Eritrean Diaspora, Tsegaye said.

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According to the Chairperson, the Council has chosen to fight from out side as the conditions in Eritrea are not favorable to struggle the regime being at home, he said.

Tsegaye highly praised Ethiopia’s support for the Council.

“Ethiopia has supported the council in all the best possible way. The late PM Meles Zenawi in particular has done a lot support to the Eritrean people to expel Isaia’s Afeworki’s regime,” he said.

ENCDC Deputy Chairperson, Freweyni Habtemariam, told WIC that all Eritrean, including the Diaspora, should stand together so as to end the suffering of Eritreans and the crimes of the Eritrean regime.

She added the Council is doing its level best to bring together Eritrean youth, women, professionals and the Diaspora to intensify the fight against the brutal leader in Asmara.

Council Executive Committee Chairperson, Dr Yusuf Berhan, on his part said the time is now for the Eritrean people to consolidate their fight for democracy. The Asmara regime has been destabilizing peace and security in the Horn of Africa region, he noted.

The 7-day meeting is expected to deliberate on ways of strengthening the fight against the authoritarian regime in Asmara.

Participants of the meeting are drawn from civic society, political parties, representatives of youth and women associations as well as Eritrean Diaspora in the US, Europe, Australia, Africa and the Middle East.

Wegagen registers 458.3 mln br profit

Wegagen Bank SC has registered a 458.3 million birr profit before tax in the past fiscal year that is an increment of only about 126 thousand birr in profit than the previous year. The 2011/2012 budget year earning per share has declined by 70 birr when compared with the 2010/11 fiscal year.


 
When compared with the performances of other banks or Wegagen’s own past performance, the profit margin was low and didn’t show any major growth.

The annual report of the bank indicated that the annual income generated from fees, charges and commissions, net gain from dealing in foreign currencies, income from ATM card payment and others is 363 million birr, which is a decline of 137 million  birr from the 2010/11 fiscal year. A year ago (during the 2010/2011 fiscal year), the bank had earned 500 million birr from the stated income sources.
According to the report, the income that was collected from fees, charges and commissions in the 2011/12 fiscal year (122.7 million birr) has declined by 125.8 million birr compared with the 2010/11 fiscal year (248.5 million birr).

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The growth of last year’s profit before taxes is stagnant when compared to the preceding year where the bank’s net profit after taxes and legal reserve had grown by 9.3 million birr. In the recorded year (2011/2012), the bank has earned 251.7 million birr net profit, while a year ago it was 242.4 million birr, but the earning per share in the past fiscal year has shrunk by 70 birr. On the 2010/11 performance the profit earning per share has been 448 birr while in the past fiscal year it has minimized to 378 birr.

According to experts on the sector, Wegagen has to expand its deposit mobilization to increase its performance in this fiscal year. In the last budget year, deposits collected from customers were 5.43 billion birr, which is 305 million birr lower than the preceding year which was 5.73 billion birr.

Bank experts stated that the bank’s total assets in the past fiscal year have not registered significant growth, which is one of the major perspectives to develop the bank’s performance. Last year’s report indicated that the total asset of the bank is 8.347 billion birr, which is 287 million birr higher than the 2010/11 fiscal year performance that was 8.060 billion birr.
On the other hand, the bank capital including reserves has grown to 1.6 billion birr from the previous 1.33 billion birr, while the paid up capital amount has increased to 953 million birr from 779.3 million birr. The loans and advances grew to 3.5 billion birr from 2.8 billion birr.

The experts indicated that the major step the bank has to take is to do business at the level of or in proportion to its capital, which is one of the problems observed in the past fiscal year. He suggested that the bank has to double its deposit mobilization to get significant growth.

On the general assembly that was held on Thursday, November 22nd, the Board of Directors that is chaired by the prominent former TPLF fighter Sebhat Negga, aka Aboy Sebhat, has indicated that deposit mobilization would be one of the alternatives to increase the bank’s performance. The board chairman also stated that the customer handling division and branch office expansions had to expand to increase the bank’s revenues.

On the 19th general assembly and 11th extraordinary meeting the general assembly has agreed to increase the paid up capital to 2 billion birr from the current 1 billion birr.
During the meeting, one point that was on the agenda for discussion was the minutes that was amended by the general assembly a year ago but was not ratified by NBE.

According to the Board of Directors, the National Bank of Ethiopia (NBE), which is the financial institutions’ regulatory body, did not accept last year’s (2010/11) minutes of the general assembly.  On the general assembly that was held in October 2011 the share holders had agreed to disperse 60 percent of the dividend to share holders and to use the remaining balance to increase the capital of the bank. But one of the share holders opposed the decision while three others abstained, therefore, the NBE declined to ratify the bank’s minutes for the year, citing the Country’s commercial code.

During this year’s general assembly (held yesterday, on Nov. 22, 2012) the Board of Directors of the bank proposed that shareholders present their decisions regarding the disbursement of the dividend of the 2010/11 fiscal year in 15 days to the general assembly.        
The other issue that was raised was the construction of the bank’s headquarters. Based on the plan, the construction should have commenced last year, but up to now, the project has yet to be implemented.

Wegagen, which is one of the oldest private banks since free market economy was introduced in the Country, signed an agreement with Jiangxin Corporation for International Economic and Technical Cooperation (CJIC), a Chinese construction company, on August 5, 2011 for the construction of the headquarters that is expected to cost 733 million birr. Wegagen’s project, which was expected to be completed in three-and-a-half years, was designed by ETG Designers and consultants PLC and will be located around the Addis Ababa Stadium, in front of Nani Building.

The Board of Directors have indicated that the project was delayed due to several reasons but will commence in the current fiscal year.
Established in 1997 with a 30 million Birr capital by 16 shareholders, the total capital of Wegagen Bank has now reached over one billion birr and the number of its shareholders has increased to 2,137.

Ethiopia wants Indian investments to reach 10 bln in 3 yrs

Ethiopia’s strong business relationship with one of the world’s emerging economies is yet again set to get a boost with the visit this week of a high level delegation from FICCI (Federation of Indian Chambers of Commerce), the oldest and largest industry body in India. 

The delegation led by R.V. Kanoria, Chairman & Managing Director of Kanoria Chemicals & Industries Ltd, included businesses involved in sectors such as, sanitation, construction tiling, paper products, agricultural manufacturing equipment and information technology with a focus on solutions for the health and agricultural sector. 

Kanoria himself is already in the process of investing 30 million dollars in a textile project, which he says is going to export 30 million dollars in product annually which will be set in Debre Zeit city about 45 kms southeast of Addis Ababa.

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“My business will contribute directly to the garment sector, help create new business opportunities around the planet where Ethiopian companies and smaller converters will convert our fabric into trousers and jeans, and other apparel” said Kanoria, adding that when completed at the end of 2013, it is expected to employ around 500 people.

Kanoria said Indian businesses should come to Ethiopia, to participate in the growth of the country which he described as safe, with people who are willing to learn new skills, with a rule based business environment, ample power, cheap raw material and economical workforce.

However Kanoria said there are some challenges to overcome in Ethiopia like the very high cost of logistics, difficult financing because of lack of foreign exchange and regular delays when conducting business, although he said the government is making improvements. FICCI representatives had a Meeting with the Prime Minister Haliemariam Desalegn, in which he reportedly stated that he wants Indian investments to be over 10 billion dollars from the current 4.3 billion dollars in the next three years.

Ethiopian Tariku Jufar Robi Wins the 2012 Beijing Marathon

Ethiopian runner Tariku Jufar Robi shrugged off the difficulties posed by cold weather and claimed the title of the men's competition at 2012 Beijing Marathon while local female runners continue their dominance in the annual event with Jia Chaofeng leading a 1-9 finish in the women's event on Sunday in Beijing.

The low temperature on Sunday posed a great difficulty to the runners with the wind blowing fiercely and the highest temperature being 8 centigrade.

But the 28-year-old Jufar Robi who won the 2012 Houston Marathon with a personal best time of 2:06:51, dealt well with the weather. Wearing a hat and a T-shirt below his running vest, Jufar Robi clocked 2:09:39 to cross the finishing line first.

Eliud Kiptanui of Kenya finished second in 2:10:15 while Solomon Molla Tiemuay also from Ethiopia settled with the third place in 2:10:20.

Jufar Robi insisted it was a good competition in spite of the chill while Kiptanui said the cold weather affected everyone and that the only thing to do is to live with it.

The hosts best performance in the men's competition was given by Yin Shunjin, who finished sixth in 2:12:30.

Compared with the lackluster performance of their countrymen, Chinese female runners enjoyed a comfortable dominance in the women's event, sweeping the top nine positions in the race.

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The 24-year-old Jia Chaofeng, who represented China in the 2011 IAAF World Championships in Daegu and finished 15th, won the women's race with a career best of 2:27:40. It was the second international marathon title claimed by Jia who always wearing a pair of glass during training and racing because of shortsightedness as she also won the Lanzhou International Marathon in 2011.

China's Sun Lamei trailed 15 seconds behind to finish second while the bronze medal went to another local runner Sun Weiwei, who clocked 2:28:03.

"I usually trained in Qinghai and Gansu province, which are both very cold in winter, so I guess I am used to the coldness," said Jia. "My coach often told me that a good runner should be able to cope with all kinds of weather and I am happy because I did that today."

Jia's gold winning feat extended China's overwhelming record in the women's event of Beijing Marathon as it was the 21st straight title won by Chinese women since 1992.

Holland Car Goes Bankrupt!

The first automobile car assembly plant in Ethiopia, Holland Car Plc, announced to its employees last Tuesday via teleconference that the company had gone bankrupt. The company’s founder and general manager, Tadesse Tessema (Eng.), conducted the teleconference direct from Holland with his employees in Ethiopia.

The company was founded in 2005 with an eleven million birr initial capital after Tadesse decided to establish it in a joint venture with a Dutch company Trento BV, Engineering.

The company could not settle the 20 million birr loan which it borrowed from Zemen Bank, The Reporter learnt.

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“In 2010 we were asked to come up with a solution for the shortage of public transportation in the country. Following that a task force comprising [the then] Addis Ababa Branch Office of the Federal Road Transport Authority, Anbessa City Bus Enterprise, Holland Car and a few experts from the Netherlands conducted a study and managed to come up with a possible solution. On July 2010, we presented the study at a meeting held at Sheraton Addis and the project idea wast accepted by the stakeholders. Afterwards, Holland Car started to build a factory that assembles buses and we displayed the first bus that was assembled at a cost of over 8.5 million birr. However, after we manufactured the bus, we were told that the stakeholders from the transport sector are not interested to work with us on public transportation and that’s how we incurred our biggest loss,” Tadesse explained to his employees.

He went on to say that foreign currency crunch, devaluation of the birr against the dollar, the rising inflation and other steep expenses including rent forced the company in to bankruptcy.   

According to sources, the company had deals with 600 customers to deliver assembled cars of different models. However, as the company could not carry on importing items and assemble orders from customers it had no option but to refund the money that was paid by some 480 customers. Though the company has managed to import parts for 120 cars, it has been slapped with a customs duty that is still outstanding  and is obliged to pay 85,000 birr apiece to the prospective owners due to the devaluation of the birr.

The company used to assemble cars under different brands namely Docc, Abay, Shebelle, Awash Executive, Abay Executive, Imay, Tekeze and Ahadu (trailer bus).
The company’s first assembly plant was built on a 20,000-sq.m plot near Modjo, 70 kms south east of Addis Ababa. The second plant was opened in late 2008 under the name Cassiopeia Assembly Factory in Tatek, a former military barrack located on the outskirts of the capital.

Holland Car was awarded the "JAC Motors Best Overseas Plant - 2009" award from its supply partner, JAC Motors. It was also awarded the prestigious SMME 2009 award in the most innovative category and was a recipient of the 2009 Africa SMME of the year Award which was held in Cape Town, South Africa in October, 2009.

Before establishing Holland Car Tadesse founded a company named Ethio-Holland which used to import used Lada cars from the Netherlands. Later he decided to assemble cars locally in Ethiopia and launched Holland Car.

In 2007, Holland Car assembled the Lifan 520 under the name Abayuntil it parted ways with the Chinese Lifan Group in 2009. In the same year the company concluded a new deal with another Chinese company, JAC Motors, to supply it with engines.
Currently, Holland Car has around 100 employees down from a high of 250.

Ethiopian to buy a stake in Air Malawi

The airline is also set to establish a new airline in Zambia, reports Kaleyesus  Bekele from Johannesburg

The Ethiopian Airlines is to buy a stake in the frail airline of Malawi.  The Government of Malawi recently asked companies to present expressions of interest for the partial acquisition of its failing airline. Subsequently, 11 airlines submitted these to the Malawi Privatization Authority. Ernest & Young has been undertaking a study on the privatisation of Air Malawi which ceased operation this week. After evaluating the expression of interest eight companies were selected to participate in the bid.

At the 44th General Assembly of the African Airlines Association (AFRAA) held in Johannesburg from November 18-20 CEO of Air Malawi, Patrick E. Chilambe, told The Reporter that the bidding companies will submit their proposals to the Privatization Authority. The companies that presented expressions of interest yesterday had a meeting with officials of Ernest & Young and the Malawi Privatization Authority in Blantyre. Com Air of South Africa is the other airline that submitted an expression of interest.

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The government of Malawi plans to establish a consortium by selling a 49 percent stake to a foreign airline and a local investor and keep 51 percent of the shares to Air Malawi.

Hired by the Malawian government, Ernest & Young advised the government to look for a partner and partially privatize the national flag carrier. Two of Air Malawi’s aircraft are in South Africa, retained due to fuel debt. An official close to the privatization process told The Reporter that Ethiopian is the best company among the eight companies that submitted an expression of interest.

Tewolde Gebremaraim, Ethiopian CEO, who was attending AFRAA’s 44 Annual General Assembly (AGA), told The Reporter that Ethiopian wants to help Air Malawi. “They are our African brothers and we want to share our experience,” Tewolde said. The CEO said that Ethiopian is planning to establish a new airline in Zambia. “We have been holding talks with the Zambian government and we hope to sign a Memorandum of Understanding with the government soon,” he said.

Ethiopian partnership with ASKY Airline of Togo has been successful. The Lome-based airline, ASKY, which operates Bombardier Q400 aircraft currently serves 15 destinations in West Africa. Ethiopian owns a 25 percent stake in ASKY.

In a related news, Ernest & Young this week announced that by 2025 Ethiopian will be bigger than South African Airways (SAA). Zemedeneh Nigatu, managing partner of Ernest & Young East Africa, who made a presentation at AFRAA’s AGA held at the Sandton Convention Center in Johannesburg, said that by 2025 Ethiopian will be bigger than SAA. Zemedeneh said SAA will still then be bigger than Kenya Airways (KQ). He attributed Ethiopian Airlines success to management independence. Zemedeneh pointed out that African carriers should collaborate to survive the stiff competition coming from non-African carriers.