The 40/60 project hiccup: Where is the problem – CBE, the state, politics & ideology, disorganization or every bit?

16 Oct

By Keffyalew Gebremedhin

In reading Addis Fortune’s The Fine Line, (Oct 14), it is possible to sense that our oldest state-owned Commercial Bank of Ethiopia (CBE, 1942) may be in some difficulty. I turned to other Ethiopian local news sources for more insight.

In a story titled 40/60 Housing Project Created Chaos in Addis Ababa,, Ezega’s Seble Teweldebirhan reports:

    “Addis Ababa, October 15, 2012 ( – Addis Ababa Administration announced that a registration date for the 40/60 housing project is not yet settled. After a rumor that there will be a registration on Saturday this week, the residents of Addis Ababa were in rush to get documents from the Keble administration to be ready for the registration. The rumor was that the registration on Saturday will be for only 15,000 people. There was also some information that the registration will take place on ‘first come first serve’ bases. That created a huge concern that there might be a wild crowd and rush to be one of the 15,000.

    The crowd was huge and unmanageable at times. Keble Administrations was unable to manage the number of people who showed up in their doorsteps almost unexpectedly and police had to interfere in some of the areas. The branch offices of CBE in Addis also had trouble with a crowd trying to get information.

    Many suggested that the crisis this week is a statement for two different factors. The first is the desperation of the residents and willingness to do whatever it takes to benefit from the program. The other is a warning to the government to find another suitable way for registration. With the excessive number of people who are interested to register and the limited opportunities to be registered, the crisis that will follow might cause another dangerous scenario.

    The government today announced that residents were misled with wrong information. According to the Mayor’s office, the city administration is not yet ready to announce the exact registration date for the 40/60 housing project. “We have finalized all the preparation. However, we did not decide a date for registration. There will be an announcement regarding where, how and who can register for the program. Until then we kindly request patience from the residents,” the statement said.”

In its Saturday’s edition, The Reporter also discussed the problems surrounding the 40/60 project and the extent of citizens’s frustrations. Here is an excerpt:

    “ነዋሪዎች ካላቸው ጉጉት የተነሳ አዲስ መታወቂያ ለማውጣት ሲሄዱ ‹‹ለጊዜው አዲስ መታወቂያ አሁን አንሰጥም›› መባላቸውንና ዕድላቸውን እንኳን ሳይሞክሩ አጋጣሚው ሊያልፋቸው መሆኑን የሚያናገሩት ነዋሪዎች፣ በቀላሉ ከአሥር ደቂቃ በታች የሚወስደውን የማንነት መለያ መታወቂያ ከተከለከሉ፣ የቤት ባለዕድል ቢሆኑ እንኳን ሊያገኙ የሚችሉበት ሁኔታ አጠራጣሪ መሆኑን አስታውቀዋል፡፡

    ለሚያስተዳድረው ሕዝብ የሚያስብና የሚቆረቆር የመንግሥት አካል ምዝገባው መቼና ምን እንደሚያስፈልግ አስቀድሞ ቢገልጽ ይኼ ሁሉ ውዥንብርና ችግር እንደማይፈጠር ገልጸው፣ አሁን ግን መታወቂያ ለማውጣት ወረፋ ለመያዝ እስከ መቶ ብር መክፈላቸውን ገልጸዋል፡፡ የቤቱ ምዝገባ ቀን ሲታወቅ ደግሞ ምን ሊሆን እንደሚችል መናገር ‹‹ትርፉ ጉንጭ ማልፋት ነው፤›› ብለዋል፡፡

    የኢትዮጵያ ንግድ ባንክ መስከረም 25 ቀን 2005 ዓ.ም. ለሁሉም ቅርንጫፎቹ ሥራ አስኪያጆች በጻፈው የውስጥ ደብዳቤ፣ ቤት ፈላጊዎች የሚመዘገቡባቸውን 50 ቅርንጫፎችና የሚደርሳቸውን ልዩ የቁጠባ ደብተሮችን ጭምር በዝርዝር ያስታወቀ ቢሆንም፣ ሰሞኑን በመንግሥት መገናኛ ብዙኅን ‹‹ምንም ያልኩት ነገር የለም፤ ያስተላለፍኩት ትዕዛዝም የለም፡፡ ምዝገባውም ቅዳሜ አይጀመርም፤ ሥራዬን አጠቃልዬ ስጨርስ በቅርቡ ለሕዝቡ አሳውቃለሁ፤›› ብሏል፡፡

    አንዳንድ ስማቸው እንዲገለጽ ያልፈለጉ የባንኩ ሠራተኞች ለሪፖርተር እንደገለጹት፣ ‹‹ባንኩ ምንም ያልኩት ነገር የለም፤›› ያለው መረጃው ለሕዝቡ ስለደረሰውና ወረዳዎችና ክፍላተ ከተሞች በሰነድ ፈላጊዎች መጨናነቃቸውን አይቶ መሆኑን ተናግረዋል፡፡ ባንኩ ቀይ ልዩ የቁጠባ ደብተሮችን ለቅርንጫፎቹ ማሠራጨቱንና ምዝገባውም ባለፈው ቅዳሜ እንደሚጀመር ትዕዛዝ አስተላልፎ፣ መመዝገቢያ ፎርሞችን እስካለፈው ዓርብ ማታ ድረስ እንደሚላክላቸው ማስታወቁን አረጋግጠዋል፡፡

    አንዳንድ አስተያየት ሰጪዎች እንደተናገሩት፣ መንግሥት መካከለኛ ገቢ ያላቸው ዜጎችን በየወሩ ቆጥበው የቤት ባለቤት ለማድረግ መወሰኑን ከተናገረ በኋላ ‹‹በአንድ ጊዜ የከፈለ ቅድሚያ ይሰጠዋል›› ማለቱ ስህተት እንደሆነና ለአንዳንድ ባለገንዘቦች ልዩ አካውንት ተከፍቶላቸው ገንዘቡን ገቢ ሳያደርጉ እንደማይቀሩ ግምታቸውን ተናግረዋል፡፡

    መስከረም 30፣ ጥቅምት 1 እና 2 ቀን 2005 ዓ.ም. ማስረጃ ለማግኘት በየወረዳው የተገኘውን ሕዝብ የየወረዳ ሠራተኞች ማስተናገድ አቅቷቸው ሲቸገሩ ታይተዋል፡፡ በአንዳንድ ወረዳዎች ደግሞ መረጃ ጠያቂዎች በመብዛታቸው በፖሊስ እስከመበተን ተደርሶ እንደነበር ለማወቅ ተችሏል፡፡ ወረዳዎች ግራ ተጋብተውም ቢሆን ጠዋት ስም ብቻ ቢመዘገቡም ከሰዓት በኋላ ማስተናገድ ማቆማቸውን ነዋሪዎቹ ገልጸዋል፡፡

    ለ40/60 የቤት ግንባታ ምዝገባ ራሳቸውን በማዘጋጀት በመጠባበቅ ላይ ያሉ ነዋሪዎች ለሪፖርተር እንደገለጹት፣ የኢትዮጵያ ንግድ ባንክ ከምዝገባው ጋር በተያያዘ የተምታታበት ጉዳይ አለ ወይም የዝግጅት ጉድለት አለበት፡፡ ምዝገባው ቅዳሜ ይጀመራል ሲባል ለማስተባበል የተጠቀመበት የአነጋገር ስልት ችግር ሲኖርበት፣ ለመደባበቅ የሚፈልገው ነገር ሳይኖር አይቀርም ብለዋል፡፡ ከባንኩ ሠራተኞች ጋር በጉዳዩ ላይ ተነጋግሬያለሁ የሚሉ አንድ ነዋሪ ለሪፖርተር እንዳሉት፣ የንግድ ባንክ ኃላፊዎችና ሠራተኞች የሚሉት የተለያየ ነው፡፡ ‹‹ለ50 ቅርንጫፎች የቁጠባ ደብተር ልከው ለምዝገባ ከተዘጋጁ በኋላ ለምን እንደሚደነባበሩ አይገባኝም፤›› ሲሉ በመገረም ጠይቀዋል፡፡ እንዲህ ዓይነቱ ግራ የሚያጋባ ሁኔታ ሲያጋጥም ሥጋት ይፈጥራል በማለት ባንኩ ተግባሩን በግልጽነት ያከናውን ዘንድ ጠይቀዋል፡፡”

In The Fine Line, Addis Fortune writes of 40/60, as follows:

    “To the great anticipation of thousands in the lower middle class of Addis Abebans, the Administration announced putting its house in order to provide a state financed scheme of housing with the magic formula of “60/40”. It has dual policy objectives: To provide housing quality better than the low cost condos and that fits the life style of a rather growing lower middle class is one. Most importantly though, tempting people of this group to raise 40pc of the construction cost for each unit is believed to encourages and boost national savings.

    It is proven to be a design with glorious intention but runs amok in its implementation, gossip revealed.

    Despite public announcements made by messieurs Kuma Demekssa, mayor of Addis Abeba, and Mekuria Haile, minister of Urban Development & Construction, for the registrations to start last week, members of the administration have not sorted out the crucial issue of where potential homebuyers under the scheme need to go to get registered. Many had thought the idle place is the financier, the CBE, as opposed to Kebelle administrations, claims gossip.

    The decision was communicated to Bekalu through Teklewold; the latter wanted the state bank to register 8,000 homebuyers, disclosed gossip. Bekalu defied – privately – such instructions from his regulator, claiming that the bank is not in a position to verify the eligibility of registered homebuyers, claims gossip. Teklewold had subsequently called one of Bekalu’s deputies in a bid to let their boss be informed that the number has inflated to 16,000, claims gossip. Departed he did, but without an agreement reached on the dispute, gossip disclosed.

    CBE’s boss dreaded the decision because he believes it ought to be the kebelles that are qualified to determine whether applicants have their own homes, gossip disclosed. He went on to see Mekuria to lobby him reverse the decision, claims gossip. If CBE was to review the eligibility of applicants for loans, its requirements would be more stringent than what the state devised scheme would want to accomplish, the Minister was allegedly told, according to gossip.

    The Minister’s hunch was to stick to what the Governor, who happens to be a chap in the same national party in the ruling coalition, decided CBE ought to be doing, gossip disclosed. Unhappy, and perhaps disgruntled, Bekalu rushed to visit Kuma at the municipality, claims gossip.

    According to gossip, the Mayor was incensed for publicly committing himself to the excitement of thousands of residents only to discover that the guys in the financial circle have not done their job; not yet. He decided to hold things on until the return of the Governor from the Far East, while advised Bekalu to speak to the media announcing the government has “suspended” its intention to register for a while, claims gossip. Bekalu made a “U” turn press statement on Friday night.”

Aching for a financial institution with long history and huge prospects

If numbers can reflect a happy reality, then CBE’s standing is, and it should be encouraging news to all as it basks under the blaze of ETB 7.6 billion profits in 2011/2012, announced in July, revenue of ETB 11.5 billion, over 80 percent customer satisfaction, according to an external research, and only 0.7 percent non-performing loans (NPL).

On 21 August, CBE had its performance review at the UN-ECA Conference Hall, according to its report. In an otherwise underbanked country, CBE actually showed in deeds that it still is the first and only major interface with as many rural folks with most of its branches outside Addis Abeba, even limited as they are. Now almost a third of its branches are linked in integrated core banking functions – 190 of them out of 550 branches.

CBE is also planning to open 150 more branches in 2012/2013. This progress need not be undermined because of failure to resolve problems, or distortions by politics or ideology. Bear in mind that, in Sub-Saharan Africa, Ethiopia is the only underbanked country with one bank serving over 76,000 people by the end of 2011, according to the annual report of the National Bank of Ethiopia (NBE).

I am curiously waiting to see the standing of CBE amongst its peers – Africa’s over 200 commercial banks in 2011/2012. The annual survey and ranking is sponsored by The Africa Report and Jeune Afrique. So fierce had the competition been that in 2010 CBE was at a standing of 41st. In 2011, it backslid into 46th. CBE’s shortcoming is the problem of speed and profitability others enjoy, anchored on combination of technology, management, expansion of markets, and unfettered competition etc.

Positive as CBE’s profit numbers are, for that matter they also need to be seen against the backdrop of the country’s double-digit inflation and the disadvantage the private commercial banks suffer, relative to CBE. The fact that the private commercial banks are required to carry treasury bills, and not the CBE, according to the IMF, has in a way been creating “mismatch in the private banks balance sheets”, thereby impeding or limiting their ability to play their traditional role of intermediation.

In a country where the state is more into the ideas of development, but not the fundamental prerequisites, these relatively small private commercial banks have found it difficult to get inspiration, incentives and energy to see their long-term interests, especially in respect of service improvements through better technologies. In the circumstances, they strive to keep their heads above water, focussing on the profits trying to satisfy their shareholders’ cravings for more dividends, not service and modern banking.

CBE is burdened to do and be everything. As to its problems, from statements by its officials at the August review, especially from their appeals for team spirit and increased efforts, it is easy to glean that they are drawing attention to the real internal problems. Yes, part of the problem is where it hurts most. Over 50 percent staff are dissatisfied, according to external research. Clearly, under such circumstances the smile on everyone’s face about the profits and modernization efforts can neither be effective nor sustained in this kind of environment.

To elaborate this point further, based on internal documents provided to it by whistleblower(s) from within, in its 7 October issue The Reporter alerted its readers that CBE’s president has been doling out loans to individuals/entities without adequate guarantees.

This is a very serious charge, which also speaks to something that requires some digging. At the same time, there is als the question of how the bank could be so profitable if the allegation is true? Or should the state, the bank’s owner jump to its feet, realizing that, if it were not for this, CBE could have profited more, the president allegedly allowing some ‘unworthy’ creditors to make use of its ‘substantial amounts lost in the process? Of course, the automatic interpretation is, as one of the funding sources for the government, the loser is Ethiopia’s development. Such holes have already increased through the misuse of the bank and the people’s resources, doling out funds to undeserving influence peddlers.

When this 40/60 hiccup blew on everyone’s face, it now looks like all fingers are pointing toward the CBE. As The Fine Line has reported, PM Hailemariam Dessalegn had asked the president of CBE to stay behind and sort out the mess its management has created around the housing project, instead of flying to Tokyo for the annual joint meeting of the IMF and the World Bank.

What is holding back CBE in respect of the 40/60 initiative?

It appears to me that this problem and CBE’s honest views need to be discussed, as appropriately and as transparently as possible, to arrive at satisfactory solutions. Caution and swift action is required. Otherwise, allowing this internal problem to needlessly fester would only weaken a huge national institution that already has weathered a lot of harsh treatments to date and now is supposed to cut a corner for its future.

What the government needs to consider is the long-term interests of the country – not political interests of individuals, or party hacks – who have nothing else to offer than acting as parasitical landlords. The state also needs to look into its own known cases of disorganization and moving on emotions and impulse. The emotion relates to politics and ideology, and the impulse to individual survival – not even the bank or the collective’s success – as a nation.

The present success in CBE’s profits also have adverse implications, when seen it is the reality of Goliath in competition with 15 private small commercial banks. This also reveals that the decline in profits some of them registered in 2011/2012 should awaken government to the difficulties and barriers they suffer.

It is possible that stunting may be the future of the small commercial banks, even some of them eventually falling into the trap of financial corruption.

By the end of the 2010/2011 fiscal year, the Annual Report of NBE shows that most of the private commercial banks are showing reasonable expansion trends to the regions, with reasonable balance in the capital city, which also is the nation’s financial center. Therefore, 13 of them have a total of 426 branches, 221 of them out in the regions – 52 precent. This needs to be encouraged.

On the other hand, CBE over the years has managed to overcome a number of difficulties, especially in deposit mobilization and the huge non-performing loans (NPL) it was loaded with. Because of the NPL, it was subjected to IMF’s harsh criticisms from the early 2000s to 2008 and some heads had also rolled. While lucrative consultancy service contracts were provided on IMF’s behest for UK and Indian banks, IMF’s criticisms and recommendations have in the and helped.

The objective was to help CBE, among others, to severely cut down its NPL, fantastically improve its deposit mobilization capacities and modernize Ethiopia. I think the tortoise is getting where it needs to be; only government appears to be in need of doing better regarding its own role, lest every difficult gain to date managed in a difficult environment be lost and it is greeted with what it hates . rising anger and frustration of citizens – poor governance Ethiopia has been known for.

More important for Ethiopian officials is to improve the environment in which banks operate. Given Ethiopia’s underbanked status and technological backwardness in every regard- not only banking – CBE and the other private commercial banks need to be given serious encouragement and support. They need to be involved in decision-making about financial and investment matters, instead of government in the endi using the gavel to falsely claim “we are all agreed.”

If, out of curiosity, one checks the travel advisory to Ethiopia by foreign governments, they tell their citizens to carry both cash and credit cards. In those advisories, one would also notice the warning that ATM machines are only in hotels and in places in the capital city or possibly some towns and the Ethiopian Airlines. Most often they say these ATM machines do not work either because of connectivity problems or they are empty.

Clearly, the connectivity problem is a power issue. The lack of money in ATM’s is quizzically takes us back to the question of the private sector not being getting adequate government support to be active in catching up, in introducing and expanding services and new technologies.

Empty ATMs are partly signs of problems of financial deepening – huge markers of a nation and its citizens’ lack of of access to vitally needed services. Unless corrected, through greater engagement of the private sector, the goal of reducing the country’s widespread poverty would reamin unrealized in meaningful ways for several decades to come.

National development, human resources and the Ethiopian problems

Ethiopia’s developmental problems have many dimensions. One strand I would like to bring out here is that the importance of employees in Ethiopia in general is hardly examined and little appreciated. A powerful state has always seen them as rivals. This has also been transmitted into the behavior of institutions. When this hits service providing institutions, such as banks, in this age of instant communication and the needs of business, the consequences to a nation are staggering, with perpetual backwardness as its end.

The folly of the Ethiopian state is seen in its unhealthy approaches to management, where in case of problems it chooses to ‘eliminate’ the staff or the manger and ‘save’ the institution’, because of which Ethiopia has invariably lost everything, if one invokes testimony from the country’s reality and its history of build and destroy.

Without a balanced approach to growth and development, in this case staff and institutions, Ethiopia’s efforts in economic growth would simply be stunted for lack of adequate nourishment. The consequence of this is that small growth that is attained, by government’s definition seven years of double-digit, is becoming a booty for the few (state + the wired + waste), while the rest of the population is simply be condemned to illusion of a better future, while stuck in perpetual poverty and backwardness.

While tomorrow’s growth and development of Ethiopia is very important, the lack of perception into the excesses of power and extremes of policies, as discussed above, are hurting many across our nation. It is no secret that this has been the product of bad political and macroeconomic policies, noted for their injudiciousness and imbalances.

Finally, whistleblowers and their cooperation with the media must in fact be encouraged. The country would become the ultimate beneficiary through its role as cultivator of official accountability. If one is to go by stories appearing in the local media, amongst the complaints by staff about the operations of CBE is also the priority claim on resources being made by wealthy individuals with political influence such as Sheik Al Amoudi, whose approved loan of close to a billion ETB was stopped recently.

Of course, the sheik is not the only one who has the privilege of priority claim on a poor country’s resources. At the core of Ethiopia and under the two-decade old disposition, inequality is being honored. As we live in the Middle Ages, might has again allowed the appropriation of everything by the one that has designated itself as the first amongst equals. Why should it become surprising if this angers some of the staff at CBE?

Nevertheless, it is not clear whether the staff pressure had any role in the case of Al Amoudi’s disapproved loan. If some individuals from CBE constantly leak information, the possibility of staff displeased with the situation is a possible conclusion. This is very important from perspective of the country’s long-term interests, where politicians soaking wet with ‘greasers’ seem to forget their primary responsibilities. There are others from within, who may be deprived of the legal recourses in such situations, but ingenuity is always at hand for people with persuasions.

Irrespective of the situation, who or what, the golden rule in the case of information by whistleblower is that no one should be considered guilty, without adequate evidences and courts of law that merely serve the law pronouncing themselves on the evidences. This would not diminish the importance of whistleblowing, in protecting our nation in an environment where its politics and institutions are failing it.
*Updated with additional materials.
TE – Transforming Ethiopia

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