NBE contemplates to make deposit at TDB
By BirhanuFikade, Mahe Islands, Seychelles
During the 33rd Annual General Meeting of the Board of Governors of the Eastern and Southern Africa Trade and Development Bank (TDB) aka PTA bank, which was held in Mahe Islands, Seychelles, Ethiopia as one of the major shareholders of the bank, was told that it will be expected to increase its prescribed shares by the end of 2019, The Reporter has learnt.
Admassu Nebebe, State minister of finance and economic cooperation was among the attendees of the annual general meeting (AGM), which was held from Tuesday to Thursday, representing Ethiopia.
According to Admassu Y. Tadesse, president of the bank, Ethiopia together with other sovereign members are expected to decide on how much shares it has to buy to increase the existing 7.15 shares it holds at TDB.
As of December 2016, the par value of member state shares aka class “A” share, reserved only for member countries, has been USD 22,667 and the total number of shares which is held by class “A” shareholders stood at 17,700. Out of that amount, Ethiopia holds 1,265.5 shares having a value of USD 28.7 million.
Some 20 percent of the total shares are payable up front while the remaining 80 percent shares are callable for the sovereign shareholders. But in addition to raising shares, many member states prefer to keep stock of dividends as a means of increasing the values of shares they have.
According to the state minister, Ethiopia would agree to commit an additional amount of share values corresponding to the upcoming agenda of raising shares.
At the side line of the AGM, Yoahannes Ayalew, vice governor of National Bank of Ethiopia (NBE), told The Reporter that there are possibilities of depositing NBE’s money at TDB sometime in the future. However, that has to be carefully studied and sorted out so that it goes in accords with the rules of the central bank.
There are areas where TDB is leveraging on to attract more investments by attracting pension funds and sovereign wealth funds among others. But pension funds are not allowed to be invested outside of Ethiopia due to the hard currency constraints. But, TDB looks optimistic about the future that there are corporate institutions in Ethiopia that are aware of the credit and investment facilities the bank has at its disposal.
For reasons of securing long term funds, the bank works with the likes of Africa Development Bank (AfDB) and European Investment Bank (EIB) together with other 10 long term finance providers to raise short, medium and long term development oriented financing.
In ways of governance and freedom of management, financial statement soundness and management funds, TDB has been rated as an investment friendly bank by the likes of Fitch and Moody’s for consecutive years. The latest ratings yet to be publicized by Earnest and Young (EY) indicated that out of the 100 points, it has secured scores of 97.6 points. Currently, it has been credited as BB and BB+.
In an effort to increase the number of sovereign state members aka classes “A” shareholders, TDB has launched eminent persons’ panel chaired by Rupiah Bwezani Banda, former president of Zambia, and looking for countries such as Madagascar, the only Indian Ocean country yet to be a member of TDB. Comoros, Mauritius and Seychelles are member states, having a combined share of less than 10 percent in the bank. As an incoming board chair of TDB, Seychelles pleaded to convince countries to join TDB and also pledged to increase the amount of shares it has prescribed.
At the end of the board of governors meeting on Thursday, it has been decided that the bank should scale up further and build upon the gains so far registered. Hence, a five year corporate strategic plan that spans from 2018 to the end of 2022 has been ratified by the board of governors.
The structure of TDB is based on a supra-national entity where the governance is based on a charter binding on all members. Meeting once a year, board of governors, mostly comprised of ministers of finance, economic planning, trade and central banks, approve TDB’s annual financial statements. Consisting of 11 members, the board of directors includes the president as the only executive member.
Currently, TDB has two principal offices in Burundi and Mauritius along with offices in Ethiopia, Kenya and Zimbabwe which serve as regional hubs.
The success of TDB has been recognized both by the governors and eminent personalities as an outcome of the leadership role and quality of the president.
An economist by training, Admassu has a rich experience and academic background in the financial sector. His biography indicates that Admassu did his studies at the London School of Economics and Political Science, Wits Business School and the University of Western Ontario. He was also trained in advanced management and banking at Harvard Business School and INSEAD, graduate business school based in France.