Posts tagged as: central

Nigeria: ‘Banking Sector Sheds 1,487 Workers in Second Quarter’

By Francis Arinze Iloani

The banking sector in Nigeria shed 1,487 workers in the second quarter of 2017 from the total of 77, 096 staff in the sector as at the first quarter.

Data released yesterday by the National Bureau of Statistics (NBS) showed that the total number of banks’ staff decreased from 77,096 in Q1 2017 to 75, 607 in Q2 2017.

The NBS stated that the Central Bank of Nigeria (CBN) administratively supplied the data while the NBS verified and validated it.

Analysis showed that executive staff population declined by 7.47 per cent, falling from 174 staff in the first quarter of the year to 161 staff as at the second quarter.

The data showed that senior staff population in banks fell by 3.21 per cent in the period from 20,483 in first quarter to 19,826 in second quarter.

Similarly, junior staff population also plunged by 6.68 per cent from 36,237 staff in first quarter to 33,783 staff in the second quarter of 2017.

It appears that the shedding may have been deliberate as the banks increased their contract staff by 7.91 per cent as this category of staff increased from 20,237 staff in the first quarter to 21,837 in the second quarter of 2017.

Further analysis showed that a total volume of 327,366,042 transactions valued at N19.78 trillion was recorded in the second quarter of 2017 as data on electronic payment channels in the Nigeria banking sector showed.

ATM transactions dominated the volume of transactions recorded. 187,805,431 volume of ATM transactions valued at N1.54 trillion were recorded in the second quarter 2017.

In terms of credit to the private sector, a total of N15.71 trillion worth of credit was allocated by the banks in the second quarter of 2017. Oil & Gas and Manufacturing sectors got credit allocation of N3.53 trillion and N2.22 trillion to record the highest credit allocation in the period under review.


Buhari Cancels First Meeting Since His Return

The weekly meeting of the Federal Executive Council will not hold Wednesday, according to President Muhammadu Buhari’s… Read more »

Waiguru Sworn Into Office as 2022 Succession Politics Play Out

By George Munene

Kirinyaga County Governor Anne Waiguru was Tuesday sworn into office in a colourful ceremony.

The event saw the Kirinyaga governor asked to offer herself as the Jubilee presidential running mate in the 2022 elections.

In what was seen as a move to rekindle the succession debate, Ms Waiguru was praised as a person who had made Kenyan women proud and asked not to shy away from going for the deputy presidency position.

During the event, which was attended by Deputy President William Ruto, women leaders said Ms Waiguru’s victory had demonstrated that women could easily ascend even to the second highest national political office.


Peris Tobiko, the Kajiado MP-elect, was the first to spark off the debate saying Ms Waiguru could become the running mate of Mr Ruto in 2022.

“I would like to congratulate Ms Waiguru for being elected as the first female governor of this region. She has made the women of Kenya proud and I have faith in her to bring development in the area and thereafter become the Deputy President of Kenya,” she said.

The event was held at Kirinyaga University during the swearing ceremony, which attracted thousands of residents and guests from the region and other parts of the country.

Former Governor Joseph Ndathi handed over the instruments of power to Ms Waiguru and wished her good luck.

Twelve other elected and nominated women MPs and senators among them Beth Mugo shared the same sentiments as Ms Tobiko.

They urged the Deputy President to take Ms Waiguru as his running mate once President Uhuru Kenyatta retires after completing his second term in office.


Ms Tobiko pleaded with Mr Ruto to help Ms Waiguru rise to national politics by picking her as his running mate.

“It is true Ms Waiguru is fit to be the Deputy President and she should go for the seat in the next General Election,” said Ms Mugo.

However, Mr Ruto steered clear of succession debate and instead congratulated Ms Waiguru for her election.

“In a special way I would like to congratulate Ms Waiguru for being elected as one of few women governors in Kenya,” he said

He also termed as historic the victory of Ms Waiguru, Dr Joyce Laboso (Bomet) and Charity Ngilu (Kitui) adding that as a nation we were proud of them.

The DP called on Kenyans to shun tribalism and noted that the Jubilee government was working hard to get rid of politics of tribalism and divisions.

“For the first time we have Jubilee MPs in Nyanza, Coast and Kisii. Kenya’s politics is changing. Kenyans are no longer voting along tribal lines,” he said.


Mr Ruto challenged all elected leaders to focus on improving the lives of the electorates or be weeded out in the next polls.

“Those who failed to deliver have been shown the exit. Therefore the newly elected leaders will face the axe if they fail to deliver,” he said.

Ms Waiguru, who took the oath of office together with her deputy Peter Ndambiri promised to fulfill all her pre-election pledges.

She singled out poor roads, low returns for farmers, poor health facilities, unemployment and lack of clean water as some of the problems facing the residents and promised to fix them.

She thanked the residents for breaking the ceiling of prejudice and bias against women leaders and promised that she will not let them down.


“I shall serve all without discrimination now that the residents made history by electing me as the first female governor in the region,” she said.

Five MPS-elect, Munene Wambugu (Kirinyaga Central), Gichimu Githinji (Gichugu), George Kariuki (Ndia), Kabinga Wathayu (Mwea), Moses Kuria (Gatundu-South) and Kanini Kega of Kieni assured the Deputy President that leaders from the region will back his 2022 presidency bid.

“You have stood with President Kenyatta and we shall also back you to takeover power after the Head of State retires,” said Mr Kega.

Liberia: ACDI/Voca Smallholder Oil Palm Project Supports Closes Projects in Liberia

By Marcus Malayea

The Chief of Party (CoP) of the ACDI-VOCA Smallholder Oil Palm Project Supports (SHOPS ll) Mr. Yarkpazuo Kolva has disclosed that his organization is closing its projects in Liberia.

ACDI/VOCA is an international development nonprofit organization based in the United States whose primary goal is to promote economic opportunities for cooperatives, enterprises and communities through the innovative application of sound business practice.

Making the disclosure at the Agriculture Coordinating Meeting at the Central Agricultural Research Institute (CARI), Mr. Kolva informed the meeting that SHOPS ll operated in six counties, namely: Bong, Lofa, Grand Bassa, Margibi, Nimba and rural Monsterrado counties, with different farming groups. .

Giving the overview of the project, Mr. Kolva explained that the duration of the SHOPS ll program was thirty months (Feb. 1, 2015 thru Aug. 31, 2017) with the overall cost of US$ 3,329,799.00 with funding from the United States Agency for International Development (USAID).

He told the gathering that the overall goals and objectives of the project are to strengthen Liberia’s smallholder oil palm sector, contribute toward agricultural growth, reduce rural poverty, and decrease deforestation activities resulting from smallholder oil palm expansion.

At the meeting, Kolva conducted a power point presentation, the essence of which, he said was to provide an update of SHOPS-II activities and achievements to the Bong County Agriculture Coordinating meeting, to show Partners and Farmer Groups where oil palm production and processing services can be located and sought to link the County Agriculture Coordinator (CAC) and Oil Palm farmers.

He said his organization operated in four components which include, Production: Nursery operations & Out- growers Plantation Schemes; Processing: Freedom Mills (FMs) Fabrication Trainings & FM Demonstrations (palm nut & kernel oil processors); Marketing: Improving market and trade capacity of oil palm; and Enable Business Environment: Improve smallholder oil palm sector business enabling environment and support functions.

“As a catalyst, we work with diverse actors to empower people in the developing world to lead healthy, dignified lives” Mr. Kolva emphasized.

He indicated that 45 nursery operators were trained to produce 200,000 improved pre-germinated oil palm seedlings sustainably; at least 125,000 seedlings were produced and sold by nursery operators and planted by 500 producers; promote farmers access to oil palm process technologies in 80 communities and trained seven garages on manufacturing oil palm processing equipment.

He said SHOPS ll created jobs from commercial Nursery Operators, manufacturing and sales of processors; private sector investment in agriculture (cost sharing) production of seedlings and purchase of equipment and improved livelihood of farmers and value chain actors (Income generation).

The SHOPS ll CoP named the lack of local source of Tenera oil palm seedlings, as well as low financial capacity of producers & processors to purchase improved oil palm seedlings, freedom mills and other technologies, as some of the challenges facing the farmers. He also said value added enterprises and banks are reluctant to lend to smallholder farmers.

For their part, the farmers lauded ACDI/VOCA SHOPS ll project and the United States Agency for International Development (USAID) for the funding and knowledge and maintained that the oil palm farms have served as means toward economic recovery for some of them and expressed regret over the closure of the ACDI/VOCA SHOPS ll program in the country.

Nigeria: U.S.$823 Million Abuja Metro Rail Ready By December

By Abdullateef Salau

The China Civil Engineering Construction Corporation (CCECC) has assured that the phase one of the Abuja Rail Mass Transit project will be ready for public use in the next four months.

The rail transit project, costing N299 billion ($823 million), consists of lot 1A and lot 3 covering a length of 45km with 12 designated passenger stations. It links the Nnamdi Azikiwe International Airport, Abuja to the Central Business District.

The rail project is a double-tracked line of right side running, and standard-gauge 1435mm.

Speaking to journalists during a tour of the site, the project manager, Mr Kong Tao, said work on the large scale project was going on smoothly and would be test-run by November and commissioned for public use in December 2017.

He said the project, after completion, would generate employment and boost the commercial activities of the host communities.

“Abuja rail mass transit project is bound to accelerate the growth of the national economy. The realization of this large-scale project will definitely deliver much benefits to the general public, such as better investment environment, better living condition, more employment, land value enhancement, energy saving and greater social responsibility,” he said.

Tao, however lamented that the perimeter fencing built to prevent trespassing had not stopped some residents of the host communities who crossed the rail track at will.

This, he said, endangered lives as operational trains moved constantly on the rail track.

“Safety is the most important thing in our operation. Even though we built a fence to prevent trespass, they break it to cross the rail track,” he said.

He also deplored the recurrent incidence of theft of the company’s equipment, including facilities installed at the passenger stations.

“Despite hundreds of security personnel employed to secure the facilities, thieves still steal something here almost every week,” he added.


Matric Board Fixes 2017/2018 Admission Cut-Off Marks

The Joint Admissions and Matriculation Board on Tuesday fixed the cut-off marks for admission into higher institutions… Read more »

Nigeria: Reducing Rate of VVF in Nigeria By Discouraging Early Marriages

By: Olagoke Olatoye, NAN

The United Nations Population Fund, UNFPA, observes that although Vesico-Vaginal Fistula, VVF, is a preventable birth injury, it has affected more than 800,000 women in Nigeria with several new cases every year.

According to the fund, VVF occurs as a result of the tear between the birth canal and the rectum or bladder, leaving a woman incontinent of urine or faeces or both.

Recalling her experience, a secondary school girl said she dropped out of school at the age of 15 years to become a housewife due to health situation arising from VVF.

“I was in labour for 24 hours before I was taken to a general hospital. Unfortunately, the hospital was on strike and there was no one to attend to me.

“After a day in the hospital, a nurse decided to assist me, but sadly, I have a stillbirth and when I realised I was incontinent of urine, I felt terrible and was confused.

“I was later referred to a specialist hospital where I was treated with support from UNFPA but then, my dream of becoming a medical doctor had been shattered by early marriage,” the teenager said.

In the light of this, medical experts note that the health of the teen can be compromised by early marriage which may result in VVF.

They warn that other health consequences of early marriage among adolescents apart from VVF may include early child bearing, prolonged or obstructed labour, social exclusion and increased risk of sexually transmitted infections.

They observe that in most cases, victims of VVF are from the poor and illiterate young mothers who live in rural areas with low access to quality maternal healthcare.

They express concern that although some cases of VVF are operated successfully, unlucky victims may have to live with the condition for the rest of their lives.

According to them, if untreated, VVF often leads to social isolation, frequent infections, kidney disease, painful sores and infertility.

Linking VVF prevalence to the rate of Maternal Mortality Ratio, MMR, in Nigeria, Isaac Adewole, the Minister of Health, said Nigeria had the highest MMR.

Maternal mortality is the death of a woman in pregnancy or within 42 days of termination of pregnancy.

But UNFPA assures the public that it will continue to work with governments and other stakeholders to end VVF and reduce the rate of MMR.

Apart from this, UNFPA says it has appointed a renowned Nollywood actress, Stephanie Linus-Okereke, as the Regional Ambassador for Maternal Health in West and Central Africa to collaborate with Fistula Foundation Nigeria in Kaduna, Kebbi, Sokoto and Ebonyi states.

Ms. Linus-Okereke said the partnership would boost education and information on sexual and reproductive health to prevent teenage pregnancy and promote girls’ rights.

“I will work closely with the fund to draw attention to the work that still needs to be done across the region and to increase universal access to comprehensive sexual reproductive health services and information.

“This is to stop women from dying in the course of bringing forth life; to empower women and girls to choose freely and for themselves,” Ms. Linus-Okereke said.

The ambassador restated that she had been advocating unhindered women and girls’ right to education and access to reproductive healthcare, information and family planning.

Justifying her appointment, Eugene Kongnyuy, UNFPA’s Deputy Resident Representative, the West and Central Region, said 111 women died every day in the region due to pregnancy-related complications.

“In scale and in severity, maternal mortality is the most neglected tragedy of our time; a tragedy that disproportionately affects developing countries, especially in Africa,” Mr. Kongnyuy said.

Mr. Kongnyuy noted that the costs of not taking action on maternal health would mean that poverty eradication efforts would be undermined.

“We need high profile public advocates for maternal health and the rights of young people to reach their full potential in Africa,” he said.

He also noted that more than 55 per cent of pregnant women still gave birth without any assistance from a skilled health worker.

However, observers note that as part of the efforts by the federal government to curtail the situation, Mr. Adewole had, on July 25, inaugurated a task force on accelerated reduction of maternal mortality.

Inaugurating the task force in Abuja, he said the high MMR was unacceptable and had become imperative to address the challenge as soon as possible.

“It is noteworthy that a woman is a primary caregiver, nation builder and contributes significantly to the economic and social development of our great country.

“Safe motherhood, therefore, is critical to national development and no woman should die while giving life,” Mr. Adewole said.

By and large, concerned citizens solicit pragmatic approach to some teenage reproductive health issues and the engagement communities and women in the formulation of policies that affect their health.

They, nonetheless, call for the implementation of the National Health Act, 2014, which makes provision for mothers, newborns and under-five year old children to have unhindered access to relevant health services.


Namibia: Manage Input Costs in Animal, Agronomy Farming

Windhoek — Farming profitability is determined by both output and input and the management thereof, says FNB’s North-Central Agri Manager, Andre Mouton.

Profitability in grain and animal farming is influenced by input cost management and – as with any business – the effective management of input costs can improve the profits yielded, Mouton adds, advising on the biggest expenses in animal and grain farming and proposing some cost-management measures for farmers in these sectors.

Fertiliser accounts for almost 40 percent of the direct variable costs, followed by fuel at +15 percent, herbicide and pesticides at +11 percent and seed at +10 percent. These, of course, will differ according to the commodity being produced, expected yield and whether it is in dry or irrigated land. In livestock production, the greatest expenditure is in feed and health costs.

In Namibia, the livestock sector is mainly an extensive farming operation making feed cost highly correlated with rainfall, which is out of the control of the farmer, says Mouton. The farmer can manage this cost by managing the risk of grazing shortages and by proactively adjusting the cattle numbers to reflect the available grazing, he says. He advises that the production system should also suit the area where the farm is located, as the more variable the rainfall, the more flexible the farming system should be.

“We would like to give some advice as to what farmers can do better to manage the expenditure,” says Mouton.

Grain farmers should adopt a sustainable purchasing strategy for fertiliser and herbicides, together these account for over 30 percent of production costs. About 80 percent of fertiliser and some herbicides and pesticides are imported and therefore subject to fluctuations in the rand/US dollar exchange rate and international prices. If one adds fuel to the mix, which means the farmer has no influence on prices of close to 49 percent of production inputs. Consider the use of solar power to reduce energy cost as a long-term investment.

“A prudent application of fertiliser/herbicide/pesticides is required at the right time, in the correct type and quantities. It also means regular soil tests, practising conservation agriculture and adoption of genetically modified (GM) crops that in turn help lower the reliance on pesticides and herbicides,” explains Mouton, adding that livestock requires an improvement in feed conversion ratios and a smart grain procurement policy, which considers the high price volatility.”

Mouton says the last few years have been tough, with the country experiencing some of the worst droughts in some parts. Grain prices in neighbouring South Africa – from where Namibia imports – skyrocketed and squeezed margins in the poultry, pork and feedlot industries. South Africa and Namibia also had a fall armyworm invasion. All of which put a squeeze on production, sales and, of course, profit margins.

About the rule of thumb to be kept to guarantee a sustainable farming business even in tough times, Mouton recommends a sound business and financial plan implemented and augmented from time to time to address the immediate and new risks.

“Like any business, profitability is increased by also managing spend better. A noble idea would be to sit with a financial planner, who can assist with a range of financial products to address individual and business needs. And, as with any business, farmers should also save and invest where they can to have a buffer in tough times,” he concludes.


Drought Affects Sheep Exports

The unavailability of slaughter-ready sheep (16kg and above) is one of the factors that contributed towards the 4.7%… Read more »

NGO Verification Is Good for Us All, Govt Says

By Ludovick Kazoka in Dodoma

THE government yesterday began a countrywide verification of all non-governmental organisations (NGOs), in a move aimed at establishing their level of capacity to serve the communities in partnership with the government.

The Permanent Secretary (PS) in the Ministry of Health, Community Development, Gender, Elderly and Children, Ms Sihaba Nkinga, noted here that the government has also suspended registration of new NGOs across the country up to November 30, this year or until the verification exercise comes to an end.

“… This will give room for government experts to process NGO information from all centres set up for the verification,” the PS told a joint press conference with members of civil society organisations.

Ms Sihaba Nkinga said the exercise would also enable the government to get the actual number of active NGOs operating within the country, adding that the 14-day exercise would also assist the government in reviving the database of active NGOs.

By last July, some 8,316 international and local NGOs with focus on health, education, environment, agriculture, good governance, human rights, gender and special groups were on record as having been registered across the country.

Ms Nkinga pointed out that the verification teams – expected to finalise their work on September 4 – requires that all NGOs submit receipts of annual fee payments or bank slips since the date of registration – plus original registration certificate.

“NGOs should hand over duly filled-in NGO forms with registration number – UHK/2017 – which is available online plus a letter from regional or district community development officers confirming addresses of the NGOs under review … in the areas,” she explained

.As she spoke, Tanzania Human Rights Defenders Coalition National Coordinator Onesmo Olengurumwa was quick to allay fears that the government would target any single NGO – saying it would instead help make public vital contributions made by civil society movements across the country, stressing the sector makes an important contribution to community development.

Back to government corridors, Ms Nkinga said in light of the country’s huge geographical size, the state had set up zones to facilitate smooth implementation, stressing that the exercise would be implemented in five zones with Eastern Zone alone covering five regions – Mtwara, Lindi, Coast, Morogoro and Dar es Salaam, where the teams would carry out the task at the department of NGO coordination offices along Kivukoni Street.

The Central zone would meanwhile cover four regions, namely: Kigoma, Tabora, Singida and Dodoma, whose verification exercise will take place in the building housing the community development portfolio at the University of Dodoma (UDOM).

The Lake Zone with six regions – Kagera, Geita, Shinyanga, Simiyu, Mara and Mwanza and that the centre is operating out of the regional administration secretariat (RAS) offices; the Northern Zone, will also span four regions, namely: Manyara, Arusha, Tanga and Kilimanjaro, whose centre of verification would likewise take place at the RAS offices.

Further, she said the Southern Highland Zone will cover six regions, which will include: Katavi, Rukwa, Ruvuma, Njombe, Iringa and Mbeya where the verification will take place in RAS offices at Mbeya.

The general secretary in National Council for NGOs, Mr Ismael Suleiman, welcomed the move, saying the move would help create an active system of NGOs across the country and urged the government to establish a board for NGOs to facilitate their activities.

He appealed to all NGOs to take part in the verification which takes place across the country for the first time.

Sudan: 42 Cholera Dead in South Darfur Camp

Nyala — In two months, 42 people have died of cholera in Kalma camp for displaced people in South Darfur. 539 others have been infected.

The deaths occurred between 26 June and 20 August, the coordinator of the camp in Nyala state, Yagoub Abdallah Furi, informed Radio Dabanga yesterday.

“There are three medical isolation centres belonging to two organisations from the United States that have been established in the camp since the cholera broke out here in June.”

Currently there are 37 hospitalised cases at the camp’s isolation wards. “There is a large shortage of intravenous solutions. We hope organisations working in the medical field and the Ministry of Health to provide us with medicines.”

The epidemic reached Manawashi, north of Nyala city, in the beginning of August.

Central Darfur

At least 36 people have been infected with cholera in Central Darfur’s Nierteti in the past 11 days. Four of them died, sources reported to Radio Dabanga. The UN Office for the Coordination of Humanitarian Affairs (OCHA) reported in its latest biweekly bulletin that “humanitarian access and insecurity remain major challenges for the implementation of key health and protection interventions” in Central Darfur.

“Nierteti’s hospital faces gaps in medicines, including oral and intravenous re-hydration solutions [..],” OCHA stated. “In Zalingei hospital, there are several sanitation issues, including lack of latrines and evidence of improper solid waste management [..].”

National epidemic

The National Epidemiological Corporation reported in early July that nearly 24,000 Sudanese have been infected and 940 cholera patients have died since the outbreak of the infectious disease in Blue Nile state in August last year.

The Sudanese authorities however, refuse to call the disease by its name, and instead refer to it as “Acute Watery Diarrhoea”. The National Intelligence and Security Service has repeatedly warned medics and the press in the country not to make mention of cholera.


South Kordufan Governor Says Tourism Festival Reflect the Stability His State Enjoys

The governor of South Kordufan state, Issa Adam Abakar, has confirmed that the festival his state was currently… Read more »

Ethiopia: How Much Is the Haircut for Banks’ Capital Buffer


The capital requirement of banks has a more than two-decade long history with a rising trend over this period that begun early after the country was renamed the Federal Democratic Republic of Ethiopia by the new government, which broke up the defunct government state monopoly of the financial sector by opening up the banking sector to local private players. The capital buffer was updated twice after it was first introduced in the early 1990’s, at 10 million Br (or 1.6 million dollars in the then Birr to dollar exchange rate).

Only five years passed before the central bank, National Bank of Ethiopia (NBE), raised the minimum capital requirement to start up a bank to 75 million Br (close to 10 million dollars in that time). But this did not stop 10 more private banks from joining the market, with Enat Bank being the last to do so. Nonetheless, the central bank moved yet again to raise the capital buffer to 500 million Br.

In line with the regulatory capital rule of the central bank, save for Debub Global bank, all the 15 private banks had fulfilled the minimum capital requirement by the end of June 2016. Debub bank, failing to meet the capital rule, had only a paid-up capital of 262 million Br, whereas Awash bank, raising more of its capital base had the largest paid-up equity holding close to 2.4 billion Br.

But while those banks that had less capital than the required were struggling to raise more capital from the public market by floating new shares and ploughing back shareholders dividend pay-outs, and those that already passed capital requirement were striving to grow their capital level, the central bank for the third time, through a circular it issued on September 26, 2015, called on all banks to significantly push -up their capital base.

To meet this new capital base level, banks are striving to grow their capital so that they would have sufficient equity funds to absorb any losses they suffer from operations and maintain their continuity.

And as the banks’ preliminary financial performance results have come to flood in for the just ended fiscal year, Awash bank is reported to hold the largest paid-up capital amongst the sixteen private banks at the end of June 2017, amounting to 2.6 billion Br. Following this pioneer private bank of largest paid-up capital, Wegagen bank has also increased its paid-up capital substantially, reaching 2.1 billion Br.

The four other older mid-sized private banks namely, Dashen, Abyssinia, Nib International and United had paid-up capital accounts of 1.9 billion Br, 1.8 billion Br, 1.8 billion Br, and 1.5 billion Br, respectively. Hence, the three former banks may reach the desired two billion Birr capital base within a year; a couple of years ahead of the 2020 time line. United bank too has the capacity to reach that level before the given time.

Among the small- sized banks, Berhan International bank appears to show the fastest capital growth, raising its paid-up capital to 1.4 billion Br, up from 730.6 million Br, last year. Four other small-sized banks – Cooperative Bank of Oromia, Oromia International, Bunna and Abbay have also increased their paid-up capital to a billion Br or a little over that amount. The rest four small-sized banks namely, Lion International, Addis International, Debub and Enat have reported a paid-up capital ranging from 351 to 938 million Br.

On the other hand, it is needless to mention that Commercial Bank of Ethiopia (CBE), that commands two-thirds of the banking business in the economy, is seen growing bigger and bigger every year with rapid deposits, loan advances, investment and asset growth. Its capital base has also grown, surging to 40.0 billion Br paid-up capital, up from nearly 8.6 billion Br, yesteryear. This capital base at present appears to be close to double of all the paid-up capital held by the 16 private banks.

What the current capital base position of the private banks implies is that, though the time line for the two billion Birr capital rule has three more years, some small-sized banks would have to struggle hard to raise more equity from the public market and meet the desired paid-up amount. This is because raising greater equity from the public market is contingent upon the purchase of additional shares by the public and the increased annual earnings that the owners reinvest in the bank, building its reserves with the hope that the management will profitably invest those earnings, increasing the shareholders’ future returns.

On the other hand, while the banks are striving to grow their paid-up capital, the central bank, underlining the importance of capital and the policy framework set for the financial sector, is reported to be in the preparation of a policy document which, amongst others things, includes a new higher capital rule that obliges all the banks to meet a certain threshold.

With this new envisaged capital requirement by the central bank, it becomes useful to examine the importance or role of capital to banks and how their capital adequacy or financial strength is measured.

The capital accounts play many pivotal roles in helping daily operations and ensuring the long-run viability of banks.

Firstly, capital provides a cushion against the risk of failure by absorbing financial and operational losses until management can address the bank’s problems and restore its profitability. Capital also avails the funds required to charter, organize, and operate a bank before other sources of funds come flowing in. A new bank needs a start-up funding to acquire land, building, purchase equipment, hire officers and necessary staff before opening the business.

Thirdly, capital promotes public confidence and reassures depositors or creditors concerning the bank’s strength. Capital must also be strong enough to reassure borrowers and the public that banks as lending financial institutions will be able to meet their growing needs even if the economy deflates.

Fourth, capital provides funds to use for the development of new banking services and facilities. Banks eventually outgrow the facilities they start with. An injection of increased capital will allow banks to expand into larger facilities or build additional branches in order to keep pace with the expanding banking business and follow their customers where ever they are.

Five, capital serves as a regulator of growth, helping the banks to ensure that growth is sustainable in the long-run and remain fit for the banking business.

So, the regulatory authorities of banks and the financial markets require that capital increases roughly in tandem with the growth of their risky assets. Hence, the cushion to absorb losses is supposed to increase along the banks growing risk exposure. For instance, a bank that expands its loans and deposits too fast will start receiving signals from the market and the regulatory body that its growth must either be slowed or additional capital be injected.

Thus, banks whose capital fails to grow fast enough, or declines far enough, will either find themselves losing market share to their competitors or, in the case of an economic downturn and global credit crises, go under.

On the other hand, as capital is the equity of banks that serves as a cushion to absorb any unresolved losses banks may incur, central banks have concerns on whether or not private banks have adequate capital to cover the losses they suffer in their operations. This adequacy is normally measured in percentage, banks are required to hold a minimum capital level of eight percent against the risk weighted assets on their books.

Total capital of banks is composed of equity capital, reserves, retained earnings, preference share capital, hybrid capital instruments and subordinated debt. And capital is split into Tier 1 capital and Tier 2 capital, in which Tier 1 constitutes equity capital, reserves and retained earnings. Tier 2 capital consists of the three remaining capital sources.

The quality of the capital in a bank reflects its mix of Tier 1 and 2 capital. Tier 1 or ‘core capital’ is presumed to be the highest quality capital, as it is not obliged to be repaid, and there is no impact on the bank’s public trust if it is not repaid. It will solely be absorbed by shareholders bank capital. Tier 2 is not ‘loss absorbing’, as it is repayable, within a shorter time period than equity capital.

As Tier 1 capital ratio is considered in the measurement of the capital adequacy ratio of banks in Ethiopia, based on the recent data, it is reported that all commercial banks are found adequately capitalized exceeding the minimum 8 percent regulatory requirement. In fact, the Tier 1 capital ratio, which represents the amount of high-quality non-repayable capital available to the banks, is observed to be significantly greater than the minimum requirement, ranging from 12.11pc to 26.26pc.

However, though the banks are currently adequately capitalized, the regulatory body, NBE, is empowered to acquire banks to raise their capital level above the stipulated minimum level. Furthermore, as the banks continue to expand their loans and advances, deposits and assets, they will increasingly be exposed to risks in their business operations, which they have to manage.

The regulatory body is therefore obliged to constantly review the capital levels of banks under its authority, and act accordingly so that such levels don’t fall below the level deemed sufficient to support the banks’ business activity.

In addition, as the economy is steadily growing, at a stellar rate, in a trajectory that would require large supplies of credit, loans and financial liquidity, the banks need to constantly raise their capital. They need also to modernize their services through the application of financial technology (FinTech) and security mechanisms to address cybercrime.

The vital position banks occupy in the economy and the likelihood that the banking sector may one day be open to foreign competition, demands a growing capital that enables banks to remain afloat, continue unperturbed in the face of evolving complexities in the banking industry, and avoid any unresolved losses emanating from excessive risk or economic downturn.

In total, in view of the vital role capital plays in daily operations, and to ensure the long term viability of loans to big businesses, deposits and assets, the banks need to raise their capital level substantially to become stronger and more competitive in the constantly evolving banking industry.

Banks, more specifically the mid-sized ones – whose capital is failing to grow fast enough, are losing their market share to competitors for the largest borrowing customers, failing to meet the minimum capital buffers within the given time line and are thinly capitalized compared to market averages – may find mergers hanging over their heads.

Writer With a Solid Background in Finance and Whose Identity Fortune Withheld Upon Request

Mozambique: Enough Medicines in Manica for Two Months

Maputo — Despite the fire that raged through the Manica provincial medical stores in the central Mozambican city of Chimoio on Saturday, the health units in the province have enough medicines for the next two months.

The provincial health director, Juvenaldo Amos, told reporters on Sunday “We lost a great deal of medicines that were in the warehouse that caught fire. But we have some stocks in the stores in each of the health units in all the districts. These are reserves that will ensure normal care for patients over the next two months”.

“We are urging the public to remain calm”, he added. “Work is under way to assess the losses caused by the fire, and to identify the causes of the fire. While this continues, we should all be tranquil because every health unit in the 12 districts is operating to the full, and nobody is going to die for lack of medicines”.

Amos appealed to the public to stay vigilant and not to be deceived by people spreading rumours in the communities, or trying to cash in on the fire by selling stolen or counterfeit medicines.

“Be careful with illegal sellers of medicines, who may turn up claiming that there are no medicines in the hospitals, in order to persuade you to buy their products”, he said. “It’s a lie. You should denounce them to the authorities because they are committing a crime”.

A joint team from the Ministries of Health and of the Interior arrived in Chimoio on Sunday morning to assess the damage and ascertain the causes of the fire.

Speaking in the northern city of Nacala on Sunday, Health Minister Nazira Abdulah said that medicines to replace those destroyed in the fire could be sent to Manica fcrom Beira, or from the central stores in Maputo.

She added that, although the fire had destroyed the computers in the Chimoio medical stores, the data they contained on all movements of medicines and medical material can be rebuilt based on the back-up copies of the files held in Maputo.


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