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Ethiopia devalues currency by 15 percent to boost exports



ADDIS ABABA, Oct 10 (Reuters) – Ethiopia’s central bank devalued the Ethiopian birr by 15 percent on Tuesday, its first such move in seven years to boost lagging exports.

The birr was quoted by the National Bank of Ethiopia at a weighted average of 23.4177 against the dollar on Monday, compared to what will be 26.9215.

“The devaluation was made to prop up exports, which have stagnated the last five years owing to the birr’s strong value against major currencies,” Yohannes Ayalew, the bank’s vice governor, told a news conference in the capital Addis Ababa.
The International Monetary Fund (IMF) and the World Bank, have both repeatedly urged Ethiopia to consider devaluing its currency to boost exports as they are mostly unprocessed products and need to stay competitive on price.

Ethiopia has operated a managed floating exchange rate regime since 1992.

The Horn of Africa country is the continent’s biggest coffee exporter but its total export revenue has been falling short of targets for the last few years owing to weaker commodity prices.

Addis Ababa earned $2.9 billion in the 2017-2018 fiscal year, versus a target of $4 billion.

On Tuesday, the central bank also announced that it has raised the main interest rate to 7 percent from 5 percent to stimulate savings as well as to counter inflation.

“The rate was pushed to mitigate the inflationary pressure that could arise from the devaluation,” Yohannes said.

Ethiopia’s inflation rose slightly to 10.8 percent year-on-year in September from 10.4 percent a month earlier, according to figures released by the statistics office on Friday.

Ethiopia’s economy is one of the fastest growing in Africa, with the IMF expecting a growth rate of 9 percent for the 2016/17 fiscal year.

The expansion, however, has mainly been fuelled by huge public expenditure. The government has invested heavily in dams for hydroelectric power, new highways and an electrified railway linking the landlocked nation to a port in neighbouring Djibouti.

The IMF has said Ethiopia needs to attract more private sector investment to maintain growth. But Addis Ababa has in the past tended to brush off such advice and said it would keep charge of key sectors. (Reporting by Aaron Maasho; Editing by John Stonestreet and Andrew Heavens)

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DP World says Djibouti incident could hurt Africa investment



DUBAI (Reuters) – Port operator DP World said on Thursday that Djibouti’s decision to seize control of a terminal project could hurt African efforts to attract investment.

The Dubai state-owned port operator is facing twin political challenges in Africa.

Djibouti abruptly ended its contract to run the Doraleh Container Terminal last month and Somalia’s parliament voted this week to ban the company.

DP World has called the Djibouti move illegal and said it had begun proceedings before the London Court of International Arbitration, which last year cleared the company of all charges of misconduct over the concession.

“Africa needs infrastructure investments and if countries can change their law [to take assets then this] is going to basically make it more difficult to attract investment,” Chairman Sultan Ahmed bin Sulayem told a news conference in Dubai.
DP World reported 14.9 percent rise in 2017 profit to $1.18 billion profit and said that it would invest $1.4 billion across its global portfolio including in Berbera in Somaliland. [L8N1QX0F2]

It is developing a port in Berbera in partnership with the governments of Somaliland and Ethiopia. It is also developing a greenfield free trade zone in the breakaway region.

Bin Sulayem said he was not concerned by the vote in Somalia’s parliament to ban DP World from the country, which the parliament said nullified their Somaliland contract.

It is unclear how Somalia’s federal government could enforce the ban given Somaliland’s semi-autonomous status.

Europe, the Middle East and Africa accounted for about 42 percent of the cargo DP World handled in 2017.

Reporting by Alexander Cornwell; editing by Jason Neely

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INTERVIEW: Somalia gears towards improving its monetary policies



CGTN — Somalia’s central government imposed a five percent sales tax this month as part of efforts to win billions of dollars in international debt relief. This was followed by protests in Mogadishu’s main market by traders opposed to the tax. CGTN’s Abdulaziz Billow sat down with the country’s minister of finance who shed more light on the country’s monetary policies

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Somalia Tax Argument From Both Sides: Bakara Traders vs The Government



Somalia’s busiest and largest open-air market in Mogadishu has been closed for the past two days.

Business owners in Bakara market are protesting over a five percent tax imposed by the government, in an effort to pay back some of its international debt.


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