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When a professor came from East Germany in 1977 at
the height of Ethiopia’s military led revolution,
his advice was perplexing, recalls Leulseged Teferi,
president of Dashen Bank. He told the Governor of
the National Bank at the time, Legesse Tikie, that
the government should practice “socialist banking”,
thus encouraging him to merge the two commercial
banks at the time, Addis Abeba Bank and the
Commercial Bank of Ethiopia (CBE), so that the
country could have a mono-banking system.
“It helps avoid competition,” the Professor told
Ethiopian authorities.
The Germans who made a brief appearance in Addis
last Thursday were of a different mindset. Not only
were they Germans living in a country with no
separation between east and west, they also believe
in competition and offered Ethiopian commercial
banks a training opportunity in Frankfurt. Building
human capital in the financial sector was one of the
few but strong demands put forth by presidents of
the 11 banks currently operating in Ethiopia when
they met senior managers of Germany's second largest
bank, Commerzbank, at the Sheraton Addis.
Although Commerzbank has been one of the three
international corresponding banks familiar to
Ethiopian financial institutions beginning relations
at the end of the Second World War, it just opened
its liaison office last week at a high profile event
attended by Prime Minister Meles Zenawi and German's
Chancellor, Angela Merkel. It was for the first time
in the 37-year history of Commerzbank that two heads
of government were present at an opening of one of
the 27 representative offices it runs across the
world, according to Klaus-Peter Muller, chairman of
the Bank's Board of Directors. He described the
Chancellor's interest to attend the meeting as
"something that is not a normal state of business".
"Much to the surprise of many, we are opening an
office here," said Mr. Muller. "We have to make sure
that we provide efficient and satisfactory services
to our customers [the banks] in this part of the
world."
It followed a different view that Mr. Muller
described as rather "fresh", adopted by his top
management. The representative office - opened to
liaison with commercial banks in Ethiopia and
countries in the region, as well as conduct research
- is one of the two opened in Africa this year; the
other is in Lagos, Nigeria.
"The time has come to pay more attention to Africa,"
Mr. Muller told the bankers.
Ethiopia, German bankers said, has offered the
platform for Commerzbank to operate from Addis Abeba,
an office also responsible for about eight countries
in the Horn and East Africa. But nothing is more
pleasing to Ethiopian bankers and Prime Minister
Meles than to hear that in the three-decade
relationship the Bank has had with Ethiopia, the
latter has never defaulted on its commitments.
Meles described this relationship as a
"distinguished association".
It appears this is what prompted Abie Sanu,
president of CBE, who rather took the role of Abi W.
Meskel in explaining at length investment
opportunities available in Ethiopia, to ask managers
of Commerzbank to lobby their government to provide
concessional loan facilities to his bank at a much
lower rate in order to guarantee German companies
operating in Ethiopia. He just signed such a deal
amounting to 250 million dollars with officials of
Chinese Ex-IM Bank a few weeks ago in Addis Abeba.
Industry observers say, however, the money has yet
to come.
"The foreign currency reserve is not sufficient to
finance the high-rate of investments and the ever
increasing oils bills," said Abie.
It was a voice echoed by Meles later on in the
seminar, after he joined the bankers at about noon,
together with Chancellor Merkel.
It was the second visit for German's Chancellor to
Ethiopia in five years, although hers was only for a
day before she took off to South Africa the same
night. Mrs. Merkel's Africa tour, including Liberia,
was inspired by a growing concern in Europe of
China's increasing influence on Africa.
"Europe must do more," Merkel told ambassadors of
African countries accredited to the African Union
(AU) on Thursday afternoon. "It is in Europe's best
interest to intensify [these] relations."
She conceded that Europeans had neglected Africa in
recent years, but promised to increase development
aid by 2015, and urged the industrial nations to
stick to their pledges of providing 0.7pc of their
gross domestic product (GDP) to poor countries.
Speaking at the bankers' seminar at the Sheraton,
the Chancellor conveyed the message she was urged to
deliver by German businesses, particularly of those
small and medium enterprises.
"The economic relationship between the two countries
is not to the level we envisaged," she told the
bankers. "Look at the type of exports from Ethiopia
to us; they are still traditional."
Nonetheless, Germany was Ethiopia's second largest
buyer from among 100 countries, claiming close to
10pc (99 million dollars) of Ethiopia's total export
during the 2005/06. For instance, one third of
Ethiopia's coffee goes to Germany.
This amount is rivalled only by China, a country
that was the largest buyer Ethiopia's products
during the same year worth 134.5 million dollars,
13.34pc of the total export. China's growing
importance in Ethiopia, mush as in the rest of
Africa, goes beyond partnership in trade. Chancellor
Merkel seems to be well aware of this fact.
"Germany cannot compete with countries such as China
in infrastructure development, although China uses
our expertise," she said.
Meles too admitted that even Ethiopian construction
companies are unable to compete against the Chinese
in Ethiopia, the former building infrastructure
"better and cheaper". But he wants to see Germany do
what the government of China did in helping their
companies avoid international bidding, by providing
concessional loans at a very marginal rate.
The Prime Minister told Mrs. Merkel how China helped
his government undertake a major expansion of mobile
infrastructure by making 2.5 billion dollars
available, thus exclusively reserving it for Chinese
companies to bid in the tender.
"German companies are disadvantaged in this
respect," Meles told his visiting counterpart. "We
would very much hope this [provision of concessional
loans] would be considered."
Mrs. Merkel was noncommittal. But she urged the
Ethiopian government to create more room for
companies from Germany to participate in the
financial sector, although she said she would
understand how difficult it could be to expose the
fragile industry to international competition.
"There is an interest in Ethiopia from German
businesses," she told the seminar.
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