Ethiopia’s central bank granted financial services license to a foreign-owned company- Ethio Lease- for the first time. The company, it is learnt, will lease equipment such as MRI scanners, tractors and drilling rigs to companies, which are not in a position to import these equipment for want of foreign exchange. This leasing arrangement, which is being the first to come in the country, will help build capacities and would enable the domestic enterprises to use state-of-the-art technologies and equipment in the country, which otherwise would not be possible on their part.
Ethio Lease is expected to provide local businesses with access to high-quality equipment, allowing businesses to grow their operations and thereby creating jobs and increasing productivity throughout the country.
The opening up of the leasing space is construed as a new reform measure of the present dispensation in power in Ethiopia. Ethio Lease is owned by New York-based equipment leasing firm Africa Asset Finance Company (AAFC). To begin with, the company would import equipment worth US$600 million.The corporate world has welcomed the new move and said that it would create a number of employment in various sectors. Also, there will be up-skilling of people. The original equipment manufacturers will have to train the local hands in the operation of the equipment. Besides, the move is expected to create a strong leasing sector in the country, like in many developed and emerging economies, which play a crucial role in the growth of these economies.
Importantly, increasing foreign direct investment is the main focus of Prime Minister Abiy Ahmed’s reform agenda to increase private sector growth. In a country, where unemployment is a crucial factor and the cause of many ethnic and tribal conflicts, the reform savvy prime minister has top walk extra miles to meet the aspirations of the people, who have reposed great hopes on him. Admittedly, the recent killings of some of the top political and military leaders have cast shadows on the reform process. The young prime minister has to ride rough shod over this negative process to gravitate towards its people and the foreign investors, who have pinned great hopes on him as an astute reformer.
There is a shortage of non-bank financial institutions in Africa. While the developed and emerging economies have a huge leasing space, which is valued at trillion of dollars, African leasing market was estimated to be just US$ 5.4 billion in 2015. the International Finance Corporation (IFC) has estimated the Pan-African market at US$ 40 billion in 2017. Experts feel that the increased adoption of leasing will be economically transformative and accelerate the development of many African nations and companies.
| ReplyReply allForward |
