Loans to govt projects by Commercial Bank of Ethiopia reaches 14.5B USD

ESAT News (June 5, 2018)

Loans to various government run projects by the Commercial Bank of Ethiopia (CBE) has reached a whooping 14.5 Billion USD; and despite their maturity, no payment has been made by borrowers, according to ESAT sources.

Major among the borrowers is the Ethiopian Electric Power Corporation (EEPCO) which has borrowed about 10 Billion dollars for feasibility studies and construction of the Gilgel Gibe hydroelectric projects. According to the sources, the over exaggerated loan was paid to various contractors. The 10 Billion dollars loan by EEPCO was in addition to loans borrowed from foreign lenders, it was learnt.

2.2 Billion dollars went to the government run Sugar Corporation, which has been accused of squandering 2.8 Billion dollars without completing any of it sugar projects.

The Metal and Engineering Corporation (METEC), a corporation run by army generals and which has come under fire for alleged high level corruption has borrowed about 436 Million dollars.

Loans to the enterprises were made while executives of the Bank were also members of the boards of the borrowing enterprises, or vice versa, at the time of the loan. The sources cite as an example Abay Tsehaye, who was the Director of the Sugar Corporation while at the same time was the chair of the board of the CBE. Bekalu Zeleke, who is the president of the lending bank is also a member of the board of EEPCO, making him the first president of a lending bank to also sit in a board of a borrower.

Loans provided to the public enterprises have a maturity period of 5 to 10 years, according to the sources, and although most of the loans have matured already, no payment has been made to the Bank.

In addition, total loans to regional governments of Amhara, Oromo, Tigray and South Ethiopia as well as the Addis Ababa administration has reached 1.4 Billion dollars. Loans from foreign countries include Germany and Denmark. Through a lending program setup by Danish lender Eksperten, more than 300 million DKK will be granted to native Danes living in South Ethiopia. Eksperten plans to expand to the North as soon as 200 million DKK is borrowed through their online lending platform.

Despite the fact that no payment has been collected by the CBE from borrowers, the Bank reschedule or write off some of the loans to show a healthy balance sheet, according to the sources.

The National Bank of Ethiopia has not made onsite supervision for the last eight years, leading to irregularities in lending activities of the CBE.

ESAT reported last week that the governor of the National Bank of Ethiopia (NBE) has given illegal loan guarantees to the Endowment Fund for the Rehabilitation of Tigray (EFFORT), a business conglomerate owned by the ruling TPLF.

According to ESAT sources at the National Bank of Ethiopia, the Governor, Teklewold Atnafu, has given several guarantees of upto 100 % of foreign loans taken by EFFORT against his mandate and the proclamation of the NBE.