Addis Abeba is in a bizarre mood lately. And for a good reason. Business is in all-time slow due largely to the hold up in the federal government’s budget disbursement; the subsequent crunch in liquidity; the shortage in foreign exchange and the painful delays by the banks to process letters of credit. Confidence among business people and investors has plummeted.
The uncertainty and anxiety Addis Abebans currently feel is evident in the skepticism many seem to have on the ability of the Revolutionary Democrats to bring their house in order. So much has been pledged by their leaders to rid the vices of their administration, while there has so far been so little to show for it.
There is little comfort many find in the establishment’s resort to its trademark business of marathon meetings from top all the way down to the lowest rank of government. It is absurd to see ministries lock up their doors so they can meet for day to discuss how to address the cause of the problem that has created problems in the first place.
In the meantime, there appears to emerge a wider feeling even among the staunch supporters of the Revolutionary Democrats that the ruling party, for all its accomplishments and positive records in the past, has a leadership that has failed to match the ingenuity of a generation it has been instrumental in creating. The Revolutionary Democrats are helplessly failing to reinvent themselves to remain relevant to contemporary Ethiopia and to the little more sophisticated macroeconomic reality than the one they inherited over a quarter of a century ago.
Not surprisingly, a climate of fear of uncertain future is driving meager capital away. The economy is haemorrhaging foreign currency, sending the exchange rate of Birr against the Dollar to 27 Br in the parallel market.
This has made an already precarious situation worse. Too many people are now putting their properties up for sale, thereby transforming the once lucrative property market from sellers to buyers dictated transaction.
For those with a little bit of liquidity and bold enough to gamble, it appears to be time to invest in properties as some of the foreign investors are seen doing. These are foreign investors who have made tons of cash in the local currency but are unable to wire it out due to the crunch in forex; the central bank could sometimes end up holding onto their applications for transfers for close to a year.
It should not be surprising to find some of these investors trying to change their cash in Birr – which loses its value fast due to depreciation against a basket of currencies to the modest inflation – into property assets. Take, for instance, Aliko Dangote, the Nigerian billionaire whose net worth in 2016 was estimated to have reached over 12 billion dollars. After installing and running one of the largest cement plants in the country, Dangote is in shopping spree in Addis Abeba for properties, offering 200 million Br for a residence and far larger amount to commercial buildings.
His latest bid is to acquire the property of Capital Hotel, on Haile Gebresellasie Avenue, which consumed close to 900 million Br investment when it was opened four years ago. Dangote has offered close to 100 million dollars for the property, an amount declined by the owners, the family of Yemane G. Sellasie. The owners have asked for additional 50 million dollars to give up ownership of a property that has become one of the landmarks in Addis Abeba’s skyline, claims gossip.
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