DBE president submits resignation! Nation wonders why this one of the nation’s oldest banks become terrible performer! TPLF needs to provide explanation!

19 May

Posted by The Ethiopia Observatory (TEO)

by The Reporter May 19, 2018

Almost two years after joining the Development Bank of Ethiopia (DBE), Getahun Nana, former vice-governor of the National Bank of Ethiopia (NBE), has tendered his resignation to the Office of the Prime Minister, The Reporter has learnt.

This came almost two years after the removal of Esayas Bahre, a long-serving president of the policy bank, who left the Bank in 2016 after he was suspended from his post.

It is to be recalled that Esayas’s tenure came to an abrupt end after his dismissal by the Public Financial Institutions Supervision Agency, an institution tasked with overseeing the state-owned banks.

The resignation of Getahun came as a surprise and said to have followed an intense meeting with the Board of the Bank, chaired by Minister of Agriculture & Livestock, Shiferaw Shigute.

There were frustrations over the levels of Non-Performing Loans of the Bank which is still above the 15 percent maximum cap set by the National Bank of Ethiopia.

According to the Bank’s nine-month report, following the incoming of Getahun–DBE has started to show few improvements in its Non-Performing Loans (NPLs) ratio.

The report indicates that NPL has declined from 28 percent to 20.54 percent. From the total NPL basket, the majority is accounted for by two sectors: manufacturing and commercial farming. As of January, 2018, DBE’s NPL level is 8.6 billion birr.

Geathun has in fact disclosed of his frustrations over the performance of the bank and the pressure he had to withstand to his close friends in the banking industry, a close source told The Reporter.

Sources from DBE have also said that the controversial case of one indebted textile factory and the fact that it has billions of unpaid loans might have created a problem to Getahun.

The Bank, instead of foreclosing the factory or taking measures, has decided to tolerate, another official from the Bank disclosed to The Reporter.

Given its current status, taking a measure against this factory might send a bad message to the overall foreign direct investment in the country and particularly investments in textile.

In addition to this, the factory employs thousands of people, explained the official.

These two cases I think are behind the frustrations of Getahun which boiled down to tendering his resignation, said a second official.

The Reporter has also learnt from sources that there was a meeting held between the members of commercial farm investments and Shiferaw as of last week.

“During the meeting, we have expressed our dissatisfaction over the Bank,” said a commercial farm investor.

Getahun was the fourth president of DBE, the only policy bank of Ethiopia, following Esayas, Wondowesen Teshome, and Moges Chemere in the last 25 years.

Before his appointment, he was one of the longest serving financial sector watchdogs at the central bank and served as a vice governor of the National Bank of Ethiopia (NBE) for seven years. He was appointed by the then Prime Minister Hailemariam Desalegn to revive DBE.

The removal of Esayas, which was at the time largely related with a controversial finding by a study conducted in the Office of the Prime Minister that exposed the misuse of loans disbursed to commercial farms, particularly in Gambella Region has put the bank in a limelight.

Following the incoming of Getahun, the Bank has limited the amount of loans to commercial farms and completely stopped disbursing loans to rain fed commercial farms.

Looking at its third quarter of this year’s performance, the Bank disbursed 1.9 billion birr from its initial plan of 2.5 billion birr. From this, the 55.5 percent was disbursed to the manufacturing sector followed by a 22.7 percent and three percent of financing made to SMEs in form of a lease finance and agriculture respectively.

Getahun came from a regulatory part of the financial sector, so operating such a complicated Bank must be a hard job, according to a former senior official of the Bank.

Following the submission of his resignation to the PM, his letter had to be accepted by the PM to be cleared to leave.

The Reporter’s repeated efforts to contact Getahun using phone calls and texts messages bore no fruit.

 

Related:

What a mess at DBE! Boils down to TPLF’s inefficient use of bank’s resources to beneift TPLF members

Gambela land grab breeds TPLF lawlessness & corruption; DBE & its ponzi scheme at the centre of it!

 

 

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