Contrary to what the official line is, many of Ethiopia's businesses continue to howl over an acute foreign exchange crunch in the financial system for imports. Indeed, the nation's trade deficit has ballooned by 43pc to nearly eight billion dollars in 2010/11, from what it was a year earlier.
Although massive imports by the government of capital goods are attributed to this imbalance, consumer and miscellanies goods brought in by the private sector were two of the three largest factors, gossip discovered. Little should thus be surprising for private companies (except those involved in the manufacturing sector) to wait for an average of two to three months before their applications for letters of credit (LC) pass the bureaucratic grill in the banking system.
It seems that size and position in the market has little relevance to shield companies from the crunch, if the experience of Equatorial Business Group (EBG), an affiliate of MIDROCEthiopia, could tell, gossip disclosed. Another affiliate of the latter is trailing behind the Chinese, in finishing the hotel complex the African Union (AU) would have it built inside its lavish premises, south of the city, where the Chinese built a headquarters, on schedule, claims gossip.
Originally scheduled to be completed within two years, the hotel to be built and run by companies Mohammed Ali Al-Amoudi and his families own, it remains under construction, despite the original deadline long past, and the project had to suffer occasional snag as a result of labour disputes, gossip observed. It appears that things are moving a little faster lately, with the project requiring importing two elevators and a generator at a combined cost of nearly five million euros, brought through EBG, gossip disclosed.
The trading house in the MIDROC family of companies - EBG is owned by Al-Amoudi's brothers - has had to face the unpleasant "No!" as an answer to its application to the state owned Commercial Bank of Ethiopia (CBE), to open an LC, gossip disclosed. Gossip attributed CBE's decline to the resistance which came from the highest echelon of the central bank. It took a form of intervention from the board of directors, who see AU's project directly contributing to the nation's positive image, to change course in favour of EBG, gossip disclosed.
CBE's senior managers have subsequently released the LC, to the satisfaction of EBG's managers, according to gossip.
Whether or not this snag on MIDROCEthiopiahas a patter remains unclear, gossip observed. Nonetheless, the Saudi tycoon behind the companies also faces bumper here and there, including an unusual posturing by city authorities under Kuma Demekissa (Mayor), deciding to reclaim plots under the possession of his subsidiaries, claims gossip. Two prominent prime properties are up in Piazza andMexico Squareareas, where the real estate firm under MIDROC fenced off plots longer than anyone's expectations.
City authorities' inability to date not to take measures on these cases has come to be a source of public embarrassment, if not an evidence of double standard in enforcing the law, claims gossip. They are overzealous in reclaiming plots from other developers who have allegedly failed to commence constructions in time, while these two areas have been as good as neglected for close to a decade now, gossip observed.
Al-Amoudi reacted fast to the news that city authorities would reclaim these plots, gossip observed.
He flew to Addis last week, to have a one-on-one meeting with Muktar Kedir, minister of Civil Service in the rank of deputy prime minister, on Tuesday, December 11, 2012, gossip disclosed. The nature of discussion at this meeting, where Al-Amoudi was accompanied by Abnet G. Meskel, his closest confident, remains beyond the reach of gossip corridor, for obvious reasons.
However, gossip contemplated that Al-Amoudi's pleas for more time to resume constructions seems to be unabated, judging by what he did next, gossip disclosed. The following day, he had an audience with Prime Minister Hailemariam Desalegn; again, the result of this discussion remains off gossip's reach.