The case made its way to the central bank
A disagreement between Bunna Bank and five truck importers reached the National Bank of Ethiopia (NBE) after the financial institution refused to reimburse a commission payment for a service that had not been delivered.
The businesses made a deal with Bunna based on the presumption that the latter already had an arrangement in place with Afrexim Bank for the importation of cargo and fuel trucks. They accused the executives of Bunna of demanding a commission while being aware that the financial institution in question does not have an arrangement with the Pan African financier.
These businesses were among the 150 businesses to bring in 2,250 fuel and cargo trucks, with a few more hundreds added, as part of a government’s drive to address logistical gaps. They were picked from 274 businesses that had registered to import the trucks under the scheme, which went into effect following a decision by the National Logistics Council and the National Macroeconomic Committee.
Afrexim Bank will provide loan guarantee on the supplier credit and is expected to settle payment in the event that the government fails to release the necessary amount of foreign currency to allow banks to settle the payment.
Among the businesses the government selected, eight of them nominated Bunna Bank to arrange the letter of credit (LC) in their pursuit to procure the trucks from a Dubai, United Arab Emirates, based company, Jampur International FZE. The process to import the trucks was initiated by the businesses after Jampur won the bid to supply around 95 percent of the trucks being imported.
As per the invoice the supplying company issued to the businesses, which The Reporter reviewed, and that the bank depends on to prepare the LC, payment conditions force LC opening banks to confirm having established line of credit with guaranteeing bank, Afrexim Bank.
With the trucks ready to be shipped by the supplying company, these and more companies failed to provide the LC based on the requirement of Afrexim, which requested at least two years of credit line facility for the Ethiopian banks. Bunna didn’t have this credit line facility.
So far, four banks (Abyssinia, Awash, Enat and Commercial Bank of Ethiopia), that had the credit facility arrangement lasting two years with Afrexim Bank, had their opened LC accepted and trucks begun to be imported.
The delay in import of the trucks by the other companies had prompted the Ministry to revoke the privileges from 108 businesses on December, 16, 2022. However, following the discussion with state minister for Transport, Denge Boru, the businesses were given extension of a month period.
It is during this period that five of the businesses that had the processes begun at Bunna Bank requested to shift to another bank, having their paid money refunded. However, the bank refused to reimburse commission fees collected to provide the service while refunding only the down payment.
Opening an LC worth a total amount of over USD three million at Bunna Bank, the five businesses paid commission fees up to 19 percent of the total amount, with only a few of the amount such as the commission for NBE returned from Bunna Bank.
In a letter written to NBE and Transport Ministry, the businesses are waiting for a response from the regulatory body and for reimbursement of the commission with annual interest payment, according to Melaku Abebaw, who was processing to import eight fuel trucks with LC opened with a value of USD 751,680.
According to Mulugeta Alemayehu, president of Bunna Bank, his office can’t provide further information as these businesses complained to NBE and processes to solve the issue are underway. “We’re already in discussion with the NBE, and it is yet to be seen whether there was a fault or not. We believe there was nothing done wrongly,” he said.
The director of Foreign Exchange Monitoring and Reserve Management at NBE, Yenehasab Tadesse, confirmed to have received the complaint a few days ago, and that her office requested the bank for an explanation.
Even though the committee formed to coordinate the 108 businesses on the process of importing the remaining 1,700 trucks hasn’t yet discussed the issue with Bunna Bank, Jemal Muzeyin, member of the committee told The Reporter that he is aware of the situation.
“If the bank had received the proforma invoice to prepare an LC, they should have clearly said to the clients whether they have the credit facility with guaranteeing bank or not,” Jemal said. “Should there be any cost incurred by the bank while on the process, then they should have that reduced and reimburse the commission fees, but I don’t think they incurred any cost.”
For Jemal, his peers should receive the service they have paid for, and in the occasion of not receiving the service, the payment should be reimbursed.