Ethiopian business leaders have renewed criticism of their government for failing to address the longstanding issue of letter of credit (L/C) shortages due to a lack of foreign exchange.

The renewed criticism came after the Ethiopian prime minister, Hailemariam Dessalegn, addressed parliament on its return from recess after the first half of the current fiscal year.

Criticism

Business representatives say Dessalegn chose to focus mainly on macroeconomic issues, and failed to address the L/C shortages faced by businesses reliant on imported goods.

One businessman, a CEO of a 15-year old IT firm told local media he was hoping to hear from the prime minister about how his administration proposes to address the issue of foreign exchange scarcity and extremely limited access to L/Cs, which he says are preventing companies like his from fulfilling their contractual obligations.

Customised imports

Most of the Addis Ababa based company's business is based on importing hardware and software, especially for the financial sector, which it then customises to fit the needs and systems of the domestic financial sector, which wants to automate its transactions to meet customer demand.

But according to the businessman, he is losing contracts, including one for US$900,000 it won in June 2016 to install a system for a public enterprise. It was due to be delivered within six months of the contract signing.

Approval delays

"Eight months ago, we applied for an L/C to obtain hard currency," according to the CEO, who says he has yet to obtain approval to open an L/C in respect of the contract.

Over a year ago, it emerged that Ethiopia's shortage of foreign exchange had become so critical that opening an L/C could take up to one year, or in some cases longer (DC World News, 12 February 2016).

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