The Curious Case of Construction & Business Bank

Businesses want to become big. They want their presence to be felt in every corner of the world. Investors explore different avenues to do this by injecting capital, selling equities, reinvesting their profits, opening different branch offices, acquiring other firms or merging with other entities. By the same token, corporations may also use these tactics to either dominate the market or protect their infant industry from other big entities.

All of these factors for expansion may also force Ethiopian business people to engage in changing their style of business. Nowadays, the government is trying to attract foreign investors by creating industrial parks, adding incentive packages and simplifying the service provision and bureaucratic aspects of the investment climate.

On the other hand, the government seems to engage in strengthening the capacity of its enterprises too. The focus on these enterprises may seem to either strengthen their capacity and prepare them for future challenges (or threats from other entities), or save the struggling entity through the umbrella of the successful one.

In this regard, the recent news about the amalgamation of Commercial Bank of Ethiopia (CBE) and Construction & Business Bank (CBB) can become a talking point among lawyers and economists. It can also trigger a lot of interesting debates and analyses.

Amalgamation is not a new phenomenon. It happens frequently worldwide. To give a recent example, Du Pont and Dow Chemicals, the largest US chemical companies, merged with capital of 113 billion dollars.

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Legal Aspects of Electronic Commerce: The Case in Ethiopia

 

 

Introduction

The century we are living in is the age of information and communication technology. Increased use of these electronic communications improve the efficiency of commercial activities, enhances trade connections and allows new access opportunities for previously remote parties and markets, thus playing a fundamental role in promoting trade and economic development, both domestically and internationally.

Commerce is the exchange of goods and services. It can be either conventional or electronic. The conventional commerce is the exchange of goods and services with the physical meeting of people. Unlike the conventional commerce, electronic commerce is a real-time transaction in the virtual space.

E-commerce could have both cross-border and within a jurisdiction facets. A cross-border e-commerce is one that involves international online trade with sale or purchase of products via online shops across national borders. The focus of this term paper is, however, limited to e-commerce within a single political entity; i.e. the Ethiopian context.

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የአስቸኳይ ግዜ አዋጁ ትኩረት ያልሰጠበት የገበያዉ ሁኔታ እና አተገባበሩ

 

መግቢያ

የኮሮና ወረርሽኝን ተከትሎ በሽታዉን ከመቋቋም ጎን ለጎን ኢተዮጵያ ካጋጠማት ችግሮች መካካል አንዱ የገበያ በተለመደዉ የፍላጎትና አቅርቦት መርህ (Demand and supply) አለመሄድ ነዉ፡፡ ይህ ችግር በአብዘኃኛዉ ያደጉ ሃገራት ላይ በተለይ በእንደዚህ አስጊ ሰዓት የመፈጠር እድሉ በጣም ዝቅተኛ ነዉ፤ ይህም የሆነበት ምክንያት በንጽጽር በአደጉት ሃገራት ያሉ ነጋዴዎች ያዳበሩት የንግድ ስነ ምግባር (Business ethics) ከእኛ የላቀ መሆኑ ነዉ፡፡ በሽታዉን አስመልክቶ በገበያዉ ብዙ አይነት ሸማቹን አደጋ ላይ የጣሉ ነገሮች ከአዋጁም በፊት ይሁን እሱን ተከትሎ እየተከሰቱ ይገኛሉ፡፡ ለአብነት ያክል ወደ ጎን /ወደ ታች/ ባሉ ነጋዴዎች የሚደረግ የንግድ ዉድድሩን የሚገቱ ስምምነቶች፤ እነዚህም ስምምነቶች ዋጋን ከፍ ማድረግ፣ መጠንን መቀነስ፣ የንግድ እቃዎችን መደበቅ፣ ሸማቾችን መምረጥ (ማግለል ) እና መሰል ድርጊቶችን ያካተቱ ናቸዉ፡፡ እንዲሁም ነጋዴ ወይንም ነጋዴ ባልሆኑ ሰዎች ደግሞ የማከማቸት ስራዎች በተለይ በከተሞች ላይ ጎልተዉ የሚስተዋሉ ችግሮች ናቸዉ፡፡ ኢትዮጵያ ምንም እንኳን እነዚህን ጉዳዮች የሚገዛ የህግ ማዕቀፍ ማለትም (የገበያ ዉድድር ና የሸማቾች ጥበቃ አዋጅ 813/2006) ቢኖራትም ነገር ግን ችግሩን ለማቃለል ብዙ የአፈጻፀም ጉድለቶች ይስተዋሉበታል፡፡ ይሀንንም አስመልክቶ ትልቅ ተስፋ የተጣለበት የአስቸኳይ ግዜ አዋጁ ና አሱን የሚያብራራዉ ደንብ ነበር፡፡ ነገር ግን በተጠበቀዉ ደረጃ ሳይሆን ገበያን ከመቆጣጠር አንጻር ትልቅ ክፍተትን ያሳያል፡፡

በዚህ አጠር ያለ ፅሁፍ ላይ አዋጁ ገበያን ከማረጋጋት አንጻጻር ትኩረት ማድረግ የነበረበትን ነገሮች እና ክፍተቶቹን፣ እንዲሁም ደግሞ በአፈጻጸም ደረጃ መሻሻል ያለባቸዉን ነገሮች ለመዳሰስ እንሞክራልን፡፡

 

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What You Should Know About the Establishment of a Capital Market in Ethiopia

 

Introduction

Part of the Ethiopian Government’s recent reform measure aims to correct imbalances and safeguard macro-financial stability in the country, among others. As part of the requirements for macro-economic stability, the reform program provides improvements to access to finance and the development of a capital market, where securities such as shares, bonds and derivatives are bought and sold. As a result, the National Bank of Ethiopia (NBE), which is the central bank of the country, was tasked to prepare the legal framework and came up with a draft capital markets proclamation, which was later approved and enacted by the Federal Parliament in its regular session held on June 10, 2021, as Proclamation No. 1248/2021. Consequently, actions are being taken by the government to operationalize the Ethiopian Capital Market Authority by the end of 2021 and finally the Ethiopian Securities Exchange through public-private partnership arrangements in 2022.

Historical Reference

As share companies started to flourish in Ethiopia in the 1960s, shares were being traded by the NBE. Later on, the Addis Ababa Share Dealing Group was established to trade shares and government bonds in 1965. The Group started with the listing of 15 companies and four government bonds. The number of companies listed reached 17 the next year. The Addis Ababa Bank, Ethiopia Abattoirs, Bottling Company of Ethiopia, Indo Ethiopian Textiles, HVA Ethiopia, and Tendaho Plantation were some of the traded companies. With a socialist government coming to power, led by Derg, which overthrew the imperial regime in 1974, all the traded companies were nationalized, and consequently, the stock market was shattered.

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The Horse and International Commercial Arbitration

In an old English case [Richardson v. Melish, 2Bing. 228(251) Court of Common Pleas, England (1824)] Judge Burrough stated that public policy is “unruly horse and once you get astride to it, you do not know where it will carry you.”  This judge has sufficient reason for saying public policy is unruly horse: case law and scholars have tried to define public policy; but none succeeded in giving a concise, precise, and short definition. Its concept remains controversial.

In English case law from 1853 [Egerton v. Earl of Brown, 4HL 1], House of Lords (the former English supreme court) said that what is denominated is, public policy is the obligations to perform all the duties which men owe to society; and anything having tendency to operate in opposition to that is void.

One scholar articulated that “public policy constitutes general principles of a state that exists in all legal systems, even in the absence of specific rules or judicial precedents to that effect and a principle which may be opposed to the application of any law…” (Pierre Lalive “Transnational (truly international) public policy and International Arbitration” VIII International Congress on Arbitration, New York, May 1986, Congress Series no. 3, Kluwer Law International, 261)

Public policy is held to be superior as it reflects the fundamental interest of the society. When a case is presented before a judge, and if it presumed to violate public policy, then the otherwise applicable law, whether or not foreign, will be disregarded. For example, in case of contracts, contracts that go against morality and law cannot be executed. The standard of morality can be related to public policy that ties the society together.

However, the application of public policy becomes controversial in case of international arbitration. This means that an arbitral tribunal seated in Switzerland may be forced to consider Ethiopia’s public policy. Nevertheless, the criterion for applying public policy of a certain state is ill-defined. The controversy that emanates from public policy gets its shape from the nature of international arbitration.

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Corporate Social Responsibility as a New Way of Advertisement

 

Traditionally, corporations were responsible only to their owners; and their primary and only objective was profit maximization. Corporations’ responsibility towards the community and the environment in which they operate was overlooked. Hence, Corporations’ responsibility towards the community and the environment which is commonly known as corporate social responsibility is a recent development in the area of corporate governance.

Corporate social responsibility, often abbreviated "CSR," is a corporation's initiatives to assess and take responsibility for the company's effects on environmental and social well-being. The term generally applies to efforts that go beyond what may be required by their memorandum of association, regulators or environmental protection groups. CSR can involve incurring short-term costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change.

The same money and influence that enable large companies to inflict damage on people and the environment allows them to effect positive change. At its simplest, a corporation can give money to charity. Companies can also use their influence to pressure governments and other companies to treat people and resources more ethically. Companies can invest in local communities in order to offset the negative impact their operations might have. A natural resources firm that begins to operate in a poor community might build a school, offer medical services or improve irrigation and sanitation equipment. Similarly, a company might invest in research and development in sustainable technologies, even though the project might not immediately lead to increased profitability.

Today, a shift has occurred in the way people conceptualize corporate social responsibility. For decades, corporate business models have been assumed to be necessarily harmful to certain communities and resources. The intention was therefore to mitigate or reverse the damage inherent in doing business. Now many entrepreneurs consider profit and social-environmental benefit to be inextricable. 

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Letters of Credit in General

 

Introduction

Letter of credit transactions have been developed since the middle Ages in connection with the trade of goods at the international level. Individuals and companies have found themselves dealing with partners of whom they know little, who are located in distant countries with often insecure political and economic situations. Furthermore, the dynamism of the actual economy creates a need for financing that requires a guarantee of payment at a time and for an amount that must be certain. Diversity in geographical nature, weather, climate, production system and globalization in culture and fashion has made the countries dependent on each other for the daily necessities. Similarly, one continent is, largely, dependent on the products of other continents. In addition, diversity in human appetite and attitude, unequal development of technology, desire for luxury, and the development of communication system and tale-communication, revolutionarily, increase the necessity of transnational, transcontinental business activities.

As far as the payment issue is concerned, market reality, distance, geographical barriers, uncertainty and lack of confidence among the business actors discourage the global commercial venture. In market reality, the buyer, always, wants to pay the seller only after selling the imported products in the internal market. On the other hand, the seller wants payment as soon as possible ‘if possible, even before shipment’. Moreover, in transnational business transaction, where the goods and the payment are not exchanged simultaneously there is a risk that parties to an exchange may not fulfill their obligations. In such a case the seller may take the payment and not give the good or the buyer take the good and not give the payment. Furthermore, trade transactions between different countries involve different payment systems, conflict of laws, barrier of languages, lack of understanding and reliability among the business partners and other barriers.

Fortunately, letter of credit (LC) or ‘documentary credit’ or ‘banker’s commercial credit’ has Brought a revolutionary solution to all this problems and has ensured sufficient securities and certainty in payment transaction.

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