The Development Bank of Ethiopia (DBE), which has a greater worth of non-performing loans (NPL) than its operating capital, has started pursuing its borrowers with fervour, beginning with the foreclosure of two pharmaceutical companies in the past two weeks.
 

On September 19, 2006, DBE foreclosed the sole syringe producing company in the country, ETAB Syringe Manufacturing Plc. now, on September 25, 2006, it foreclosed Bethlehem Pharmaceutical Plc.
 

The NPL of the Bank is around 1.9 billion Br while its capital is 1.8 billion Br, according to the Bank’s Public Relations Department. This year, bank managers hope to collect 642 million Br from all debts.
 

Bethlehem was launched with a 47 million Br investment and started production in 2001. Although the Bank refused to disclose the amount the Company owed, information shows that Bethlehem took out a loan of over 17 million Br before starting operation. The company employed 105 workers.
 

Although 11 pharmaceutical companies have been established in the country over the past 15 years, Bethlehem is the fourth company to have been foreclosed by DBE and the Commercial Bank of Ethiopia (CBE). The three other companies that were shut down were the two private IV fluid producers, BIOSOL Plc and Lifeline Solutions S.C., and ETAB.
 

Bethlehem was established by Yordanos Tadesse who lived in the US for 17 years and decided to come back to Ethiopia to found a pharmaceutical company when both his brother and sister passed away. He believed that the reason for illness-related deaths in the country was because of the shortage of  available medication.
 

Since imported medication is cheaper, the Company only produced at 30pc of capacity, although the facility could produce 400 million tablets and 280 million capsules a year.
 

The Ethiopian Pharmaceutical and Medical Supply Manufacturers’ Association has aired its concerns to the government by stating that if duty and tax charges are not reduced when pharmaceutical companies import supplies used in the manufacturing of medication and medical goods, then all companies working in this sector will eventually be shut down.
 

“I, too, expect to lose my factory in the coming few weeks unless the government takes urgent measures,” said a pharmaceutical owner.
 

When importing raw materials used in medicine manufacturing, the government charges 25 to 40pc in duty and tax; but when ready-made medicines are imported, only five percent duty is charged.
 

The country spends over 120 million dollars every year on medicine. From this, only 15 to 20pc goes to local manufacturers, according to information from the Ministry of Health.
 

“Although the Bank has the autonomy to take foreclosure steps, the measures it is taking now are not going to be beneficial to any of the parties,” an official from the Ministry of Trade and Industry told Fortune.
 

A management staffer from DBE said that the foreclosures neither benefits the owner nor the Bank, since all foreclosed pharmaceutical companies still have yet to find a buyer.
 

“Nevertheless, we believe that it is better for the Bank to foreclose the companies and they remain idle rather than having the debt accumulating even more interest,” he said.
 

Fortune was not able to get further explanation, because the owner of Bethlehem Pharmaceuticals Company was not in the country during the foreclosure. Nevertheless, staff members from DBE’s Foreclosure Department, accompanied by police and officials from the Bole District, closed the Bethlehem factory, located in the area known as Gerji Yerer Ber, on Monday morning.
 

“We still have not done a property inventory as the owner is not in the country,” said an official from the Bank. “As soon as he returns, we shall tackle that aspect and put the property up for auction.

He said that the auction should take place in the next two months.